McDonalds Corporations HR Management

McDonalds Corporation is renowned as one of the most successful fast food restaurant across the globe and the epitome of globalization. As the largest chain of fast food restaurants worldwide, McDonalds Corporation has a customer-base of more than 60 million people every day. Since inception in the late 1950s, the corporation has experienced tremendous growth and profitability due to its sound business strategies and practices. Some of the factors that have contributed to its success include providing quick meals at reasonable prices, global expansion, and commitment to hiring the right people. A critical aspect of the firm’s success and profitability in the market is its human resource practices. This paper examines human resource practices at McDonalds Corporation and their role in the firm’s operations and success.

McDonalds’ History
McDonalds Corporation was founded in the late 1950s in California by brothers Dick and Mac McDonald (Han, 2008). During this period, the two brothers run the business as a small burger stand before it was bought by Ray Kroc who transformed it into a business characterized by uniformity and conformity. As part of the transformation, Kroc developed new, uniform production methods for McDonalds based on the concept of mass production ethic. Some of the changes brought by the new production methods during the initial years of McDonalds’ operations include production of genetically-modified potato instead of the use of locally grown produce. The use of a new, uniform mass production method during this period was geared towards ensuring that the firm’s products have the same uniform taste.
Since its inception, McDonalds Corporation has experienced tremendous growth and profitability characterized by increased global expansion and a huge customer base across the world. The global expansion has made McDonalds to become one of the most respected and recognized brands across the globe. As of 2016, McDonalds Corporation operates approximately 36,900 outlets and serves nearly 69 million customers daily across the globe. Throughout the years, McDonalds shapes its operations by using sound business strategies and practices that are based on specific outcome goals. One of these critical business strategies is quick response to changing customer tastes and preferences through transforming its products. Secondly, the company operates its outlets either as affiliates, franchises or the corporation itself, which provides a solid foundation for operations and profitability.
Challenges/Opportunities Facing McDonalds
While McDonalds Corporation is renowned as one of the most successful and profitable firms in the fast foods industry, its operations has been characterized by challenges over time. In addition, the firm has faced various opportunities for enhancing its growth and profitability in the market. One of the major challenges that McDonalds Corporation is currently facing is widespread criticism regarding the nature of its foods. As the modern customer has become more health and nutrition-conscious, healthy foods have emerged as a critical issue in today’s society. Consequently, McDonalds has faced criticism regarding the health and nutrition elements in some of its food items. Even through the corporation has constantly develops new menu items to attract customers, it has been criticized of providing unhealthy food items given the large obese population in the U.S. (Mishra & Dwivedi, 2013). In this regard, McDonalds has been criticized for promoting unhealthy food habits, especially among socio-economic classes.
Secondly, McDonalds Corporation faces challenges relating to its environmental practices given that some of its production processes are considered to have environmental contaminants of unknown origin. These questionable environmental practices are attributable to the fact that McDonalds utilizes genetically-modified potatoes for its fries rather than locally grown potatoes. The use of such raw materials is problematic to the environment since they are obtained from extreme measures that could be environmentally harmful. Third, the company faces criticism of obsession with the American culture since most of its food items are American. This challenge is evident in McDonalds’ overseas markets such as Asia where the accompanying American cultural norms in food production and items are considered relatively problematic. According to Nawaz (2011), McDonalds is facing issues regarding its human resource practices since employee motivation is low because of low wage rate, poor relationships between the workforce and management, and less reward.
In light of these challenges, McDonalds faces numerous opportunities including the need to produce healthy and nutritious food items and promote an image of a socially responsible company. The company is facing the need to adjust its menu items to meet the demands for healthy foods as well as utilizing business practices that are environmentally-friendly in order to enhance its reputation and success in the market. The other opportunity for this company is to transform its human resource strategies and practices in order to maintain a highly motivated workforce, which will in turn enhance workforce productivity.
McDonalds’ Key HR Functions
As previously mentioned, one of the most important success factors to McDonalds operations is commitment to hiring the right people and maintaining a highly motivated workforce. The firm’s human resource department plays a crucial role in personnel management through carrying out various HR functions. The key human resource functions at McDonalds Corporation include policymaking, administrative functions, bargaining and negotiating, support services, and employee welfare. The three main kinds of jobs at McDonalds Corporation are franchise owners, office employees, and restaurant staff. Additional opportunities include customer care representative, operations consultant, area supervisor, and trainee manager. Each of these opportunities or jobs has different career growth paths given the different roles and responsibilities in every job.
The company’s human resource department handles recruitment and selection, compensation and benefits, and training and development of employees. In relation to recruitment and selection, McDonalds utilizes a decentralized approach in which its franchises recruit internally or externally depending on their specific needs. Additionally, the corporation has a comprehensive recruitment and selection process that includes two-week trials. McDonalds Corporation is also committed to employee training and development and uses different training methods including orientation, on-the-job, and classroom training. In relation to compensation and benefits, the firm has established a system of benefits and rewards based on performance, which is determined through semi-annual performance review.
However, the key HR functions adopted by McDonalds Corporation are not effective given the low employee motivation and the fact that its employees do not consider working in the company as their future career (Nawaz, 2011). The low employee motivation is brought by poor relationship between the workforce and management given that the company utilizes a non-union approach in managing employee relationship. While the management has provided an avenue for employees to express their grievances, they are rarely acted upon (Royle, 2005).
Based on the Classical Economic Theory in human capital management, labor is regarded as a commodity that is traded in terms of purchase and sale (Marimuthu, Arokiasamy & Ismail, 2009). In this regard, an organization should establish suitable approaches through which employees are appropriately rewarded for their labor and contribution to organizational processes. McDonalds Corporation’s key HR functions are ineffective in this regard because of low wages that have contributed to low employee motivation. Nawaz (2011) state that most employees at McDonalds complain that the firm’s wage rate is not fair and contend that the firm does not reward employees for their hard work.
However, the firm’s investments in its employees with regards to training and development are considered effective. Based on Human Capital Theory, human capital management is investment in human beings in terms of knowledge, skills, and abilities (Marimuthu, Arokiasamy & Ismail, 2009; Kucharcikova, 2011). McDonalds approach to investing in its employees is effective since it focuses on enhancing their knowledge, skills, and abilities through various career development opportunities.
Strategies for Improving Selected HR Management Practices
As evident in the analysis, McDonalds Corporation needs to enhance employee-employer relationship and employee compensation and benefits since these are problematic HR management practices that have contributed to low employee morale. One of the strategies towards enhancing the selected human resource management practices at McDonalds Corporation is the establishment of a cordial working atmosphere (Nawaz, 2011). This would entail creating a working environment characterized by improved interactions between employees and the management. In this regard, the HR department should build on the existing program that allows employees to express their grievances and incorporate measures through which these grievances are addressed without discrimination or victimization. In essence, policies and processes for addressing workers’ grievances should be established. The other aspects of this approach include giving employees enough breaks, reducing workloads, and promotion of staff members as part of employee retention (Ukandu & Ukpere, 2011).
The second strategy is for McDonalds to revise and improve its current approach to employee compensation and benefits. First, the existing premium and overtime rates should be revised depending on industry standards. Secondly, McDonalds should ensure that its salaries and wages are based on the established minimum wage and industry standards. In this regard, the firm should utilize competitive wages approach to help ensure that its employees are appreciated for their work. Third, the corporation should establish an incentive and rewards program in which employees are not only rewarded for their input to organizational processes, but also receive rewards based on improved organizational profitability. Through this program, workers should be entitled to bonuses and fringe benefits for improved organizational profitability and success.
Value and Impact of the Improvements
These human resource management improvements have considerable impacts in driving McDonalds’ competitive advantage. One of these impacts is that they will contribute to enhance employee morale, which is a crucial aspect of enhanced workforce productivity. Since these issues are the root causes of low employee morale at McDonalds Corporation, an improvement in them will in turn contribute to enhanced employee morale (Ukandu & Ukpere, 2011). This will in turn help drive McDonalds’ competitive advantage because of improved workforce productivity. Secondly, the improvements will contribute to enhanced employee job satisfaction, which enhances loyalty and productivity of individual employees (Sageer, Rafat & Agarwal, 2012). As employees are more satisfied with their job, they enhance their input to work processes since they are motivated to work, which in turn enhances an organization’s profitability. The other impact of these improvements in driving the firm’s competitive advantage is improved working environment, which also enhances workforce productivity. According to Sharma & Lakshmi (2016), improved working environment generates positive impacts on employees’ productivity level, which enhances an organization’s competitiveness.
Evaluating the Success of the Plan
The success of the proposed improvements in addressing the current challenges facing McDonalds Corporation will be evaluated using several variables or measures. One of the variables that will be utilized in evaluating the success of the plan is the rate of employee turnover in the company. Data on employee turnover will be collected regularly and analyzed to determine the success of the plan in achieving its goals and improving employee retention. Secondly, employee interviews and surveys will be carried out to collect data on their perceptions regarding the working environment in terms of the improvements. The surveys and interviews will help generate important insights on employees’ views and perceptions of the improvements. The third way of measuring the success of the plan is examining the organization’s profitability and performance in the market. Since these improvements are geared towards improving the company’s competitive advantage, performance and profitability data will act as an indicator of the success of the plan. Therefore, the success of these improvements will be reported on the basis of employee turnover, employees’ views, and company performance.
In conclusion, McDonalds Corporation is one of the most profitable companies in the modern business environment given its global operations, huge customer base, and improved profitability over the years. However, the company is experiencing several challenges including criticism regarding unhealthy food items, criticism on its environmental practices, cultural issues, and poor employee morale. While the firm’s key human resource functions address major issues relating to employee welfare and well-being, there is low employee morale because of poor relationships between workers and the management and low compensation and rewards. They can be addressed by creating a cordial work environment and reviewing rewards and benefits.
References
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Kucharcikova, A. (2011, February). Human Capital – Definitions and Approaches. Human Resources Management & Ergonomics, 5, 60-70.
Marimuthu, M., Arokiasamy, L. & Ismail, M. (2009). Human Capital Development and Its Impact on Firm Performance: Evidence from Developmental Economics. The Journal of International Social Research,2(8), 265-272.
Mishra, B. & Dwivedi, S. (2013, July). Success Story of Mc. D in India: Story of Its Struggle in Indian Market. Asian Journal of Science and Technology, 4(7), 66-70.
Nawaz, A.S.M.S. (2011, March 29). Employee Motivation: A Study on Some Selected McDonalds in the UK. African Journal of Business Management, 5(14), 5541-5550.
Royle, T. (2005, October 24). Worker Representation Under Threat? The McDonald’s Corporation and the Effectiveness of Statutory Works Councils in Seven European Union Countries. Comparative Labor Law & Policy Journal, 22, 395-432.
Sageer, A., Rafat, S. & Agarwal, P. (2012, Sep-Oct). Identification of Variables Affecting Employee Satisfaction and Their Impact on the Organization. IOSR Journal of Business and Management, 5(1), 32-39.
Sharma, S. & Lakshmi, R.V. (2016, December). Workplace Environment and Its Impact on Employee’s Productivity: A Case Study of Banks in Raipur. Open Journal of Advances in Business and Management, 1(3), 51-63.
Ukandu, N.E. & Ukpere, W.I. (2011, November 16). Strategies to Improve the Level of Employee Motivation in the Fast Food Outlets in Cape Town, South Africa. African Journal of Business Management, 5(28), 11521-11531.