Issues with McDonalds's Performance and Reward Management Strategy and Practices - Case Study Example

Author’s Name Instructors’ Name Course Date Analyzing McDonald’s Business Strategy Introduction Over the years, companies have tried to formulated and implement management strategies to enhance service delivery to customers (Trothers 2010). The following paper intends to discuss the quality, operations, and reward management policies by McDonald Company, which is one of the largest firms in the food industry across the world. The paper briefly discusses the three strategies, their connection as well as the impact on the achievement of McDonald’s goals. Background of McDonald’s Strategies MacDonald is one of the famous food chains in the world. Over the years, there have been issues raised against the company, which has not adversely affected the company (Pickford 2010). The company’s management has worked hard to ensure the increase of sales. To ensure that the performance and sales of McDonald’s are increased, the person in charge implements business strategies. The company employs various strategies in ensuring that it continues to attract new customers and improve its performance as well as maintaining its competitive advantage. One of the strategies is the application of quality management mechanisms that led to phasing out of some of its chains. For example, the company eliminated the Super-Size French fries and soft drinks to create a positive reputation among the public. The move was due to the growing concern over the increase of fast food in the company’s chains, which has been blamed for increasing the rate of obesity and other health issues in the society. Other menu changes include switching to a sausage burrito and cinnamon roll as the main elements in the breakfast offerings for its customers. Further, the company also applies operation management to improve the service delivery. Operations management refers to the management of the available resources through planning, designing, controlling, improvising as well as scheduling the systems of the company and functions. The main aim is to ensure that the company is able to deliver on the primary products or services to the customers (Borones 2012). Operations management is core to the manufacturing and service firms by helping in timely delivery of goods and services and achieving the goals in a cost effective way. The process involves the application of various functions such design and industrial engineering, quality management, channel and facility management, production management, improvising productivity, workforce management, improving customer services, enhancing product design, and operations research. McDonald has applied operations management to ensure that the flow of services and quality delivery is integrated into all departments (Lebech 2009). One of the ways that the company has applied the strategy is by ensuring that the workforce is qualified enough to deliver quality services to customers. On the other hand, the company has integrated technology to bring sanity and timely delivery of services. Besides applying the above strategies sin improving the services to customers, McDonald has enhanced the welfare of the workforce by using various strategies s in terms of incentives and general compensation systems (Reardon 2012). One of the strategies in the rewarding of employees is by following the "pay for performance" philosophy where employees are given incentives based on their performance and delivery. Employees have been promised greater pay opportunities if their results are better. The company offers base pay to employees, which is the fixed amount of money that an employee receives at the end of the month. The management determines the base pay of its employees after the comparison has been done on what others receive from other companies on the same level position (Bayertz 2010). However there are other considerations such as what other employees are earning in McDonald, the experience, and skills .of n individual as well as the one’s general performance at the workplace or contribution to the company in given period. The company also applies short-term incentives to its employees’. Unlike the use of base pay as a fixed amount that one is compensated, short-term incentives vary from time to time based on the performance at a given time (Ian & Jessica 2013). In most cases, the rewards are determined on the yearly basis. It is important to not that the incentive are not only dependent on the individual performance but also the performance of the business. The measures are tied directly to the strategy of McDonalds. The payouts aligned to the yearly performance of the section that one is assigned. On the other hand, the long-term incentives in McDonald are given as stock awards to the qualified employees (Kirchhoffer 2013). The objective of applying long-term incentives is to ensure there is a link between the McDonald's business performance and the employees who are likely to grow to or are currently at the level that can influence the results of the enterprise. Recognition programs are also used as a way of compensating employees in Mcdonald. The program is meant to recognize and reward the active performers in the company. For example, Presidents’ Award is given to the top performers at the regional, division, and corporate levels. The Circle of Excellence Award is given to the top teams worldwide to recognize their contributions to advancing the company’s vision. On the other hand, the company implemented the “company car program” where the qualified employees are given cars after a particular achievement. In most cases, an employee is allowed to choose the car he wishes, though this depends on the position that one holds in the company. All the above strategies are instrumental in helping McDonald achieve its goals. The Alignment of Performance and Reward Strategies It is critical to realize that the overall objective of the procedures put in place by McDonalds is to ensure that the quality of service to the customers is improved which consequently leads to the enhancement of sales that translates to good profit margin by the end of a given business period(Tan 2012). As noted above, the food industry is a sensitive and a complex field that requires a critical look. As such, quality is one of the most important elements that cannot be underestimated. Therefore, quality management strategy is intended to enhance the competitiveness of McDonalds in the industry. This can only be met through improving operations, which is covered by the application of operations’ management. However, to ensure excellent service delivery to customers, employees need to be motivated by having good reward management systems. Therefore, the alignment of these three strategies is critical for the company to achieve its goals. Failure to alignment the plans means that the quality of services will be weak, which is due to poor management of operations and reward that, demoralizes employees thus affecting achievement of goals. Issues with McDonalds’s Performance Management Strategy and Practices The key questions with McDonald are the improvement of the quality of its services to customers and enhancing employee’s performance, which is critical in service delivery (Ian & Jessica 2013). It is important to note that especially its shareholders have criticized McDonald on several occasions concerning its general operations as well as the quality of food offered to customers. In 2011, the top executive was forced to defend itself against accusations of poor marketing strategy and the quality of fast food and drinks. The management rebuffed the claims in the annual shareholder meeting but later embarked on a worldwide improvement of quality and operations of the company. The Key Issues with McDonald’s Reward Management Strategies and Practices Poor pay is one of the demoralizing issues in any business. The quality of services offered to customers can heavily be affected by how employees are remunerated (Bayertz 2010). This is especially crucial in the food industry. The concern in the McDonald Company was that it was spending billions in ‘irrelevant’ areas such as athletic sponsorship instead of handsomely rewarding its employees. Secondly, shareholders were also concerned about the equity in compensation, where some staff were paid handsomely while others were poorly paid under the same job category. The extent to which performance and reward management strategies are integrated The use of ‘payment by results’ in McDonald is directly related to performance (Bayertz 2010). The approach is applied by using the simple concept that specific rewards will be based on the individual and business performance. It is critical to note that ‘payment by results’ is a system that is dependent on the principle of scientific management as well as tasks that are measured using standards assessment. Therefore, the value that an employee is bringing to the company matters in the evaluation process. This can only be done through the quality of services one delivers and the speed to which quality goods and services are produced (Bayertz 2010). The result is the employees are motivated, which helps McDonald to achieve its overall targets. The Impact of the Performance and Reward Management Strategies to Managers The above strategies are instrumental in helping managers in motivating their subordinate staff since the strategies allow managers to set targets and promise incentives for the work completed (Tan 2012). For example under its motivational programs, McDonalds has recently started ‘Ray Kroc Awards’ where operations managers and directors choose the bests performing managers across Europe. Additionally, under the recognition schemes, managers were highly involved in the selection of best performing employees as was the case in the Olympic Champion Crew (OCC) initiative of 2012, where the winners of the program were given an opportunity to work in the McDonald’s four restaurants at the 2012 Olympic and Paralympic Games. Recommendations There is need to ensure that all employees’ representatives are involved in the formulation of strategy. The involvement of relevant departments and personnel is critical in improving the company’s performance and service delivery to customers worldwide. Since McDonald is a multinational company with more than 70,000 employees, communication my become challenging. However, effective channels need to create to provide efficient and timely delivery of information to all employees. Conclusion Despite the problems of quality and compensation that McDonald has previously encountered, the company’s management has come up with strategies that if implemented will see McDonalds continue maintaining its competitive advantage. Therefore, proper implementation of operation, quality, and reward management will further improve McDonald’s service delivery. References Borones, S. G. (2012). McDonald restaurants. Rozelle, N.S.W., Lawbook Co. Bonefeld, B. (2011). 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Aspects of food service. Lanham, Md, Rowman & Littlefield. Read More