Situational Analysis of McDonalds - Case Study Example

Reward Management Name ID: Class: Lecturer: Situational analysis (McDonald’s) McDonald is a fast food chain which has been rated among the most successful in the world. The company brand name has gained reputation due to the services that have been provided to its customers. The chain has more than 30,000 food restaurants which sell fast foods. The company has faced stiff competition in the food industry but have managed to make to the top ten fast food chains in the world. The company has been able to manage and motivate a multicultural workforce who has driven the company to the position it is in. At the moment, the fast-food chain has the ability to serve more than 52,000 customers around the world situated in more than 100 countries. Currently, the fast-food chain is rated as among the companies that depict globalization in a positive light. In the last ten years, there has been a push for healthy eating and living. This has affected the fast food industry in a great way as most of the media has criticized fast food (Smita & Walfried 2009). The situation has led to the fast food chain to react and work in retaining the market. The company worked in introducing a healthier menu. This was done with the help of their employees who were highly motivated. The situation at the moment is that consumers have accepted McDonald’s products. The company is still making profits despite the issues in the market. McDonald’s have invested a lot in their employees as well as equal opportunities all (McDonalds, 2013b). Current performance management system (PMS) The company performance management system was established to improve the employee’s output toward the company. Initially, the company’s performance management system was not uniform in their countries of operations. This made the company face difficulty in rewarding the best performing individual in its chains. The problem was also experienced by the mangers since they could not be able to define the best criteria to select the high performing employee. The communication channel was not working well between the employees and management. These difficulties lead to the redesigning of the company’s performance management systems. The current performance management system was based on the performance development system (PDS) that was established. Under the system, the company is able to differentiate performance more easily at the individual level. The performance management system also enables the management to provide feedback to the employees in a prompt and honest manner. The company rewarding system is directed to the highest performer. One of the strongest points in MacDonald’s talent management is talent management at the top level (McDonalds, 2013b). The talent management has three main objectives. One of the objectives is to make sure that every position has a high performing leader. Talent for replacement is always kept in place in every leadership position. The last objective is making MacDonald a learning and development company for the employees (Yang, 2008). MacDonald’s performance system has several key components which includes; individual performance plan, development plan, the performance calibration, end of the year review and talent review. MacDonald’s performance development system begins with the company making business strategies. The business strategies are then aligned with the performance plans based on an individual. The final step consists of reviews and planning. The individual performance plan is based on making the employee focus on the company’s priorities. This helps in differentiating different employees based on their performance. The plan is set out during the last month of the year where the management collaborate with employees in coming up with the objective to be attained in the following year. The aim is to come up with a tool that is capable of aligning the employees’ objectives with the business, department and the company’s strategy. The objectives that are met using this approach uses the SMART criteria in that they should be specific, measurable, achievable, relevant and time bound. The plan makes it possible for employees to develop themselves and gives guidelines on the areas where the employees need to work and improve on. The individual development plan focuses on making sure that the employees’ are aware on their skills and what they need to improve on. This is followed by the mid year review which the employees and the management looks at the performance progress as well as what drivers the employee. At the end of the year, employees submit what they have achieved to their management. The meeting is conducted face to face to ensure that the management understands clearly what the employees have done. Through a well defined rating system, the employee achievement is assessed for the advancement (McDonalds, 2013b). The end of the year review is evaluated based on performance results and the performance drivers. Mc Donald’s drivers are outlined as having clear objectives and accountability, acting in the best interest of the system, communicating effectively, embracing change and a strategic focus. By combining this rating, the employees overall performance is determined. The management meets later and discusses and looks at the employees’ performance. In these meetings, the quality and fairness of the ratings is looked to ensure that the same standard is applied to all employees. The talents are reviewed in a round table, and the management identifies the employees who are viable for advancement. In this meeting, the management finalizes the ratings based on the employee’s performance. The managers are required to look at the employees’ weak points and strengths so that they can recommend the required development needs (McDonalds, 2013b). The management then utilises web based tool to make their final decisions on compensating and allocations to the employees. This information on allocations and compensations is forwarded to high levels in the companies for approval. This is done to ensure that there is enough funding for the employees. The scheme encourages employees to have the best planning in their jobs so as to win the company recognition. This system is a talent management initiative in a business that has led to high performance in the Mc Donald’s (Kuvass & Dysvik, 2009). Researches have proved that having an effective and timely reward system is one of factors that lead to employees’ productivity and performance (Wren & Daniel, 2005). By looking at the rewarding system used by MacDonald’s, the company makes sure that it offered at the right time. The performance management system has also been applied in diverse cultural areas. For example, the company Pakistan unit was faced with a different culture. The company was able to note that their performance management system was not working well in the country. The employees did not appreciate then reward system that was being used by the company. The company made a reward system that fitted the local culture. The company connected the employee’s reward with the community they came from. The company could buy a present for the head of the family for the best performing employees as a form of appreciation. They would even put the names of the best performing employee on a billboard. This initiative was highly appreciated by the community and the employees. The performance of the employees increased, and the restaurant gained the results they were looking for. The intercultural intelligent reward system helped in making the company succeed in the new culture where honor was more valued (Alvani,Yamchi, Nickmaram, and Ahmadi, 2012). PMS and the company strategy McDonald strategy is to have employees who are committed to the company’s mission and vision. The employees should be committed to their duties and have the company interests in their hearts (Zia Ur Rehman et.al. 2010). The performance management system used by the company fits well with its strategy. The firm has created the incentive to encourage and promote the employees. The company has been motivating the workers and employees with the aim of having the best talent and working relations in the company. The success of the performance management system according to their strategy can be proved by the company increased profits and high volumes of sales. The restaurants have also been able to offer satisfactory services to the customers. The main determinants of how the successful the promotional management system has been can be gauged through sales, firm cost reduction and motivational level of the employees. The company managed to maintain sales by increasing their volumes and cutting costs. The company strategy has been enforced in different cultures and has been able to deliver on the company goals (Gungor, 2011). Recommendations The rewarding system at MacDonald has acted to help the company in gaining sales in the restaurants industry. The company should make sure that they implement their promotional management system in a manner that caters for different cultures (Hamel, 2007). This is evident in Pakistan case where the system failed and had to be substituted with a cultural relevant one. The company should also put more effort in educating the employees on the benefits of performance measurement (Armstrong & Stephens, 2005). This will make the employees even more motivated about their duties. Employees at Mc Donald’s should be made aware on how the system works in grading them. The process used should be laid open to all employees to make sure that they are able to contribute and appreciate it; this is one way of transparency (Armstrong, 2006). Conclusion MacDonald’s today has been able to make it in customers and employees satisfaction. The performance management system that is being utilised by the fast food chain has been able to deliver according to the company’s goals. There have been perfect alignments of the business strategy with individuals’ performance which have helped a lot. Macdonald has been able to establish a high performance culture based on its rewarding system. References Armstrong, M 2006, Handbook of Human Resource Management Practice, London, GBR: Kogan Page, Ltd. Armstrong, M., & Stephens, T. 2005, A handbook of employee reward management and practice, London, Kogan Page ltd. Alvani, S.M., Yamchi Gharibi, H., Nickmaram, S & Ahmadi Zahrani, M 2012, ‘Explaining the effect of model of encouraging the employees in the public sector with a holistic approach towards reward’, Improvement and Change Management Studies, 64, p. 1-17. Gungor, P 2011, ‘The Relationship between reward management system and employee performance with the mediating role of motivation: A quantitive Study on Global Banks,’ Journal of Procedia social and behavioral sciences, Vol. 24, No. 1, p. 1510-1520. Hamel, G 2007, The future of management, Boston, Harvard Business School Press. Kuvass, B & Dysvik, A 2009, ‘Percieved Investment in Employee Development, Intrinsic Motivation and Work Performance’, Human Resourse management Journal, Vol. 19, No. 3, pp. 217-36. McDonalds.co.uk 2001, Management Opportunities – Your Reward, viewed 27th November 2013, McDonald’s Corporation 2001, McDonald’s Corporation Annual Report 2000, George Rice & Sons. 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