Human Resource Management and Leadership - McDonalds Corporation - Case Study Example

Human Resource Management and Leadership Introduction The McDonald’s Corporation is a multinational company that specializes in the provision of fast food products such as hamburgers, chicken, cheeseburgers, French fries and soft drinks among many others. The company has one of the world’s largest fast food chain restaurants serving over 68 million customers everyday in over 100 countries around the world. Furthermore, the company operates in over 30,000 restaurant chains and has over 1.5 million employees (Vignali 2001; Love 2008). McDonald’s has managed to expand into the international market through franchising. It earns revenue in the international market both as an operator of restaurants and as a franchiser of restaurants (Sidhpuria 2009). In the United Arab Emirates (UAE), the first McDonald’s Franchise was opened in 1994 since then, various McDonald’s restaurant chains have been opened in various regions in UAE. To date, there are over 90 McDonald’s restaurant chains in UAE (McDonalds UAE 2012). Over the years, the company has experienced tremendous growth and success. Much of the company’s success can be attributed to its effective management and leadership strategies (Love 2008). This paper seeks to examine human resource management and leadership practices in McDonald’s UAE. Foremost, it will provide an overview of the organizational structure of McDonald’s restaurant chain in the UAE. Secondly, it will examine some of the key human resource management strategies and practices employed in McDonald’s UAE. Moreover, this paper will discuss the company’s practices of emiritization particularly with regards to remuneration and benefits, knowledge transfer and the challenges experienced by the company. In addition, this paper will describe performance appraisal strategies in the company and the various incentive plans that exist in the company. Organization structure Generally, McDonald’s is managed and operated distinctively in four geographic segments namely; Europe, the United States, Asia/Pacific Middle East and Africa (APMEA) and Other Countries & Corporate (OCC) such as Latin America, Canada and Corporate. The company’s key goal is to become the customer’s favorite place and way to drink and eat by serving food that customer’s enjoy. The company views itself primarily as a franchisor and mainly believes that franchising is essential to driving profitability and providing great experiences for its customers. By 2010, 80% of the company’s restaurants were franchised. Worldwide, nearly 59% of McDonald’s restaurants are conventional franchisees, 20 % are operated by the company and 21% are licensed to affiliates (McDonald’s 2010). In the UAE, McDonald’s restaurants are franchised by Emirates Fast Food Company. Restaurant chains are located in areas such Dubai Media City, Jumeirah Beach Road, Al Garhoud, Jumeirah Beach Road, Spinneys Trade Centre Road and Al Wal Road among many other areas. The company’s franchising system is a strategic network. McDonald’s head quarters in Oak Brook, Illinois acts as the strategic centre for the networks franchisees. The head quarter office employs financial controls and strategic controls to ensure that the operations of the franchisees create great value to the overall network (Hitt, Ireland & Hoskisson 2010). The Board is the ultimate decision making and governing body of the corporation. Members of the board are selected by the company’s shareholders. The main role of the board is oversight, it also acts as a counselor and advisor to the senior management of the company. Furthermore, the board is charged with the responsibility of selecting and evaluating the Chief Executive Officer (CEO). The company’s business is conducted under the direction of the CEO. Currently, the corporation’s CEO is Jim Skinner (McDonald’s 2012). In the company, employment can be categorized into two main levels namely; the corporate level and the branch or franchise level. Corporate staffs work either at the corporate headquarters or at the company’s 40 regional offices. McDonald’s corporate staff include; the CEO, geographic presidents, regional directors and operating officers, Human Resource Management Personnel and Marketing personnel among many others. The key roles of the staff at the corporate level include; overseeing the operations of restaurants, monitoring the accounting and reporting practices of restaurant chains and overseeing the compliance of restaurants chains with the company law. In addition to this, some corporate staffs deal with human resource and marketing issues (Epstein 2008). At the branch or franchise level, the franchise owner is the main overseer and decision maker of the restaurant at the local level. The franchise owner or owners are responsible for hiring the branch manager. The branch or franchise managers are responsible for planning, organizing and controlling the operations of the restaurant. Managing an entire restaurant as one manager is usually challenging thus in most restaurant chains there are assistant managers who act as assistants to the branch manager. The restaurant managers are also responsible for recruiting and managing restaurant workers. McDonald’s restaurant chains in the UAE often employ an average of 50 employees. A majority of employees are part time workers who are paid hourly wages. The company’s suppliers are also part of the overall organizational structure. Suppliers are charged with the responsibility of product innovation, complying with the company’s standards, collaborating on safety and quality initiatives and upholding environmental and social stewardship (Epstein 2008). Human resource strategies and practices According to Armstrong (2008), human resource strategies are approaches that determine how the strategic goals of an organization will be realised through human resource policies and practices. Human resource strategies are often designed to develop behaviour, attitudes and skills among employees that will help the organization actualize its goals. Human resource strategy incorporates principles of managing employees through HR practices and policies. It also comprises of different human resource functions like performance management, reward and recognition, compensation and recruitment among many other strategies (Armstrong 2008). One of the key aspects of McDonald’s HR strategies involves determining the kind of employees required to work in the organization. The recruitment of effective employees is one of the key HR strategies that the company capitalizes on in order to realize its overall business strategies. The company’s thoroughness in the recruitment of employees is epitomized in its employment policy. The company operates a global employment policy that aims at recruiting employees who have a positive attitude towards themselves, their fellow employees and customers. The company also aims at recruiting a workforce that is capable of delivering the services of high standard and cleanliness to customers. For McDonald’s employees are its most crucial asset. This is mainly because customer satisfaction starts with the abilities and attitudes exhibited by employees thus recruiting effective employees is one of the company’s best route to realizing its strategic goals (Aswathappa & Dash 2007). As a result, the company strives to recruit the best employees and provide for its employees a good working environment. In order to ensure that the right people are recruited at the corporate and branch level, the company has identified essential behaviors and skills that applicants should have or demonstrate in order for them to be considered. For every job position there is a pre-determined job description stipulating typical responsibilities, duties, person competencies, specifications and skills required. According to the McDonald’s recruitment policy, each franchise or individual restaurant is responsible for recruiting hourly paid employees or crew members. The Management Recruitment departments in each franchise or the owners of the franchise are responsible for coordinating the recruitment of branch managers. McDonald’s uses different avenues to recruit its employees. Positions in the company are generally advertised in the restaurant. The company’s history of recruitment shows that the best method of recruiting quality staff is hiring people living in the local region. Furthermore, McDonald’s uses recruitment avenues such as local career fairs and job centers. In addition to this, the company uses the internet as a recruitment avenue (Aswathappa & Dash 2007). Training is another HR strategy used by McDonald’s to realize its overall strategic goals. The company’s success can be attributed to its provision of quality, high standard and clean services. Well-trained crew members and managers is the first step to actualizing these standards. The company endeavors to provide career opportunities that enable employees to develop and exploit their full potential. Therefore, the company offers comprehensive training programs for crew members and managers. McDonald’s provides training at all levels so as to help its employees refine their skills and grow in their current job position or transition to new and advanced roles in the company. The company believes in lifelong learning, thus it regularly provides training for its employees. Like other McDonald’s business restaurant chains, McDonald’s restaurant chains in the UAE offer unique training opportunities to its employees so that they can fulfill their aspirations as they grow in their careers in the company (McDonald’s, 2011). Moreover, the company has developed a curriculum that provides a framework for its training programs. The company’s curriculum is delivered through a combination of hands-on lab activities, e-learning modules, classroom instruction and goal-based scenarios. Through this curriculum, the company attempts to align its training programs with the specific career paths of its employees. The curriculum incorporates career development paths for crew members, restaurant chain managers, assistant managers and executives at the corporate level (McDonald’s 2011b). In addition to this, the company also has leadership development programs. The company acknowledges that it requires leaders who can lead the company’s business to new heights. McDonald’s career development programs focus on personal growth and talent management. Through these career development programs, the company hopes to inspire its employees to uphold McDonald’s values and demonstrate leadership regardless of their position or level (McDonald’s 2012b). Besides these HR strategies, the company also employs different HR practices geared towards motivating its employees and realising its overall organizational goals. One of the HR practices that the company employs is talent management. Over the years, the company has invested heavily on talent management through rigorous and consistent talent planning and management systems. One of the key methods that the company uses to manage talent is training. Through talent management, the company hopes to ensure that it has committed and high-performing employees (McDonald’s 2012c). Moreover, McDonald’s uses employee retention strategies so as to attract and maintain its employees. One of the strategy that the company uses includes, providing for its employees flexible working hours. In addition to this, the company provides to its corporate employees competitive wages, medical insurance, discounted or free meals, prescription drug coverage, educational assistance and paid vacations. These benefits are designed to attract, motivate, retain and reward the company’s top talents (McDonald’s 2010b). Additionally, the company believes that it is essential to strike an appropriate balance between work and the outside. Hence, it provides different programs that are aimed at helping its employees to maintain the right balance. For instance, McDonald’s provides paid vacation for restaurant managers and other staff. Nevertheless, the vacation time is dependent on how long an employee has worked. Furthermore, the company provides a leave of absence to employees who are faced with difficult situations. The company has specific policies relating to leaves such as medical leave, family leave, funeral leave and adoption leave among many others. Performance Appraisal Griffin (2006) notes that performance appraisal is a formal evaluation of how well employees are performing in their jobs. Performance appraisal is conducted regularly so as to determine the effectiveness of training programs and to identify training needs. Furthermore, performance appraisal helps in making decisions particularly with regards to promotion and pay raises. This process can also be used to provide feedback to employees and the overall management of an organization on performance and how performance can be improved. It also helps employees to plan for their future career (Griffin 2006). Generally, McDonald’s has an audit committee whose main role involves performance appraisal. The committee is part of the Board of Directors committee. The audit committee assists the Board to carry out its oversight responsibilities that involve assessing the integrity of the company’s reporting process, financial controls and financial statements. The committee also evaluates the performance of the CEO, geographical presidents, regional directors internal auditors and other corporate personnel. Moreover, the audit committee assesses the company’s compliance with regulatory and legal requirements. One of the ways that the audit committee appraises performance is by reviewing and evaluating audit reports presented by the company’s independent auditors (McDonald’s 2011c). At the branch level, McDonald’s conducts performance appraisal on its crew members, assistant manager and branch mangers on a regular basis. The key aim of conducting these appraisals is to establish whether the performance of each employee is in line with the company’s mission, strategic goals and the objectives. Moreover, the company conducts performance appraisal in order to make decisions regarding employee payment and promotions. Some of the common appraisal strategies that the company uses include; conventional appraisals, employee self- and evaluations. The conventional performance appraisal strategy that is used by the company involves written evaluations or reviews by restaurant managers or supervisors. In most cases, these evolutions cover a particular period of time. The written evaluations comprise of a list of strengths and achievement of employees and areas that require improvements. These appraisals also list the objectives and goals that employees are expected to achieve and provide a framework of evaluating employee based on the set objectives or goals. Furthermore, the appraisals provide constructive feedback to employees that they can use to as a basis for initiating improvements. Employee-self evaluation is also another performance appraisal strategy used at McDonald’s to evaluate the performance of employees. In this case, employees are given a template to guide them through the process of evaluating their own performance. In the template employees are required to provide a detail of their strengths, weaknesses and achievements over a particular period of time (Schneier et al 1999; Love 2008). McDonald’s Incentive Plans McDonald’s incentive plans is based on a “pay for performance philosophy.” The better an employees’ performance, the greater their pay opportunities. Some of the company’s incentives plans include; Base Pay, Short Term Incentives, Long Term Incentives and Recognition Programs. Base pay is the fixed amount of cash compensation that employees receive for working at McDonald’s. This incentive is determined by looking at what employees in the same job type but in other companies are paid. It is also determined by how well an employee performs in their job, their experiences and skills. McDonald’s short-term incentives include the variable and at-risk portion of cash compensation that employees earn each year. These incentives are based on the annual performance of employees that are measured against the company’s business strategy. McDonald’s gives long-term incentives stock awards to employees who are eligible when it comes to securing the company’s performance in future. Long-term incentives are also give to employees have the potential to grow into a level of influence in future. McDonald’s has also put into place recognition programs that are designed to recognize and reward outstanding performance. For the company’s corporate, region and division offices there is the Presidents’ Award that is given to 1% of individual performers globally. The Circle of Excellence Award is given to top teams globally so as to recognize and reward their contribution for advancing the company’s vision. McDonald’s practices of emiritization Emiratization is an initiative designed by the UAE government with the aim of providing to its Citizens efficient and meaningful employment in both the private and public sector. As a company operating in the UAE, McDonald’s holds emiritization as one of its integral values thus the company consistently strives to provide to its UAE national employees not only with financial rewards but also sustainable and long-term opportunities for career development. One of the ways that McDonald’s UAE upholds emiritization as its core value is by taping into the talent pool at the local level. In various McDonald’s restaurant chains in UAE, a large percentage of employees are UAE nationals. Most McDonald’s restaurant chains in the UAE, recruit their employees at the local level. Most restaurant chains also try to give priority to applicants who are UAE nationals during the recruitment process. Furthermore McDonald’s UAE, upholds emiritization as its core value by supporting and providing employment opportunities to women. Just like men, the company gives women a platform to advance in their careers. In some restaurant chains women have been given a chance to take up leadership roles such as managerial positions. In addition to this, McDonald’s restaurant chains in the UAE provide opportunities to its employees to advance in their careers by providing training. On a regular basis most restaurant chains organize occupational seminars and employment workshops with the aim of helping their employee to advance their knowledge and skills (Budhwar & Mellahi 2006; Love 2008). Nevertheless, the company experiences various challenges when it comes to upholding its commitment to Emiratization. Some of challenges experienced by the company revolve around compensation structures particularly with regards to remunerations and benefits. For instance, in most restaurants employee wages are unilaterally determined by the management. As a result, McDonald’s restaurants in UAE have been critiqued for giving low wages and not providing benefits to some of its employees especially crew members working for hourly wages. The company has also been accused of underperformance especially when it comes to employee training and job enlargement. Given the fact that the labour market in UAE is heavily dominated by men and job positions at McDonald’s are demanding, some restaurant chains are reluctant to employ women in managerial position stereotyping them as less efficient and unable to work under pressure (Budhwar & Mellahi 2006; Love 2008; Asuka 2007). Conclusion Over the years, McDonald’s Corporation has experienced tremendous growth and success. Much of the company’s success can be attributed to its effective management and leadership strategies (Love 2008). The recruitment of effective employees, training and development, performance incentive, performance management and appraisal are among the key HR strategies that the company capitalizes on in order to realize its overall business strategies. As a company operating in the UAE, McDonald’s holds emiritization as one of its integral values thus the company consistently strives to provide to its UAE national employees not only with financial rewards but also sustainable and long-term opportunities for career development (Budhwar & Mellahi 2006; Love 2008). Bibliography Armstrong, M., 2008, Strategic Human Resource Management: A guide to action, Kogan page publishers, New York, pp.33-34. Asuka, J., 2007, McDonald’s Corporation Human Resources Issues, Retrieved on January 31, 2012 from Read More