McDonald's and Walmart HRM Practices in the US, Europe, and Asia

Introduction

The role of human resource management has changed dramatically over recent decades. Once regarded merely as operators of machinery who blindly implemented managerial decisions, employees have gradually transformed into an organization's most valuable assets. They pool their knowledge to create intellectual capital and support employers in attaining their objectives.

Modern staff members create value for the organization and represent it across all dimensions of business, interacting with a wide range of stakeholders — customers, business partners, the general public, and governmental and non-governmental institutions. This growing importance of the human resource is supported by the rise of the services sector — the largest generator of revenues and employment — but it is equally present in companies across all industries.

In this context, human resource management becomes a key success factor by striving to generate employee loyalty and performance, and by providing the ultimate support in attaining organizational goals. Developing and implementing an HRM program is, however, a complex task. It depends on a broad array of elements, including managerial traits, the sector in which the company operates, the organization's resources, and the nature of the work performed.

Many of these factors are quantitative, meaning they can be measured and addressed in a numeric and objective manner. Yet other factors are more elusive and harder to address. One such factor is culture: it is genuinely intriguing to observe how the culture of a given region shapes the human resource practices of the economic agents operating there.

Answering this question is a highly complex endeavor, precisely because the role of culture in shaping human resource management is qualitative — it cannot be measured or easily quantified. It will therefore be addressed through systematic research into companies operating across diverse global regions. Emphasis is placed on the HRM practices these companies have developed, with the aim of identifying whether differences occur and whether those differences are linked to features of local cultures.

Human Resource Practices in Selected Comparisons

The role of culture in shaping human resource processes is difficult to estimate, but it is widely accepted that such a role does indeed exist. Laraine Kaminsky (2002) argues that "culture impacts on every stage of the HR cycle, from selection and recruitment, to feedback, evaluation, coaching, and exit interviews." In other words, when conducting international operations, a multinational corporation would develop HRM practices that reflect features of the local culture.

On the other hand, a different body of researchers argues that multinational corporations develop their own distinct cultures, which they then implement globally. Under this view, regardless of the market in which they operate, multinationals apply the same HRM practices derived from their own organizational culture rather than from local cultural features. As K'Obonyo and Dimba (2007) observe, "organizations develop a culture of their own that is distinct from the national and industry contexts in which the organization is embedded, thus ignoring the potential impact of external environmental factors on organizational culture."

These statements regarding the role of culture in HRM development are quite general. In order to address the issue from a more specific vantage point, it is necessary to review the HRM practices implemented by particular multinational corporations operating in Europe, Asia, and the United States. For purposes of comparison, the cases of fast food giant McDonald's and retailing leader Walmart are assessed.

Culture and Location in Management

McDonald's and Walmart are two of the most successful companies at the global level. They are often criticized — McDonald's for its contribution to unhealthy nutrition, Walmart for the human costs associated with its lowest-price model — but from an economic standpoint, they represent the epitome of business success and the emblem of the globally triumphant American corporation.

The human resource management practices at McDonald's are centered on attracting employees, retaining them, and providing training. McDonald's is globally renowned for promoting employees to middle management positions and for offering flexible schedules, enabling staff to balance personal and professional responsibilities.

Within the United States, HRM practices focus on raising enthusiasm and integrating staff members within the overall organizational culture. Employees are motivated to be proactive and to demonstrate their worth, with the company promising rewards through incentives such as competitive wages, free or discounted meals, flexible hours, management training, promotional opportunities, medical insurance, and even profit sharing.

"We strive to hire and keep the brightest and the best. And to do that, we've put together perks designed to make you smile — even before you pick up your paycheck. From flexible schedules and competitive wages to management training and investment opportunities, our benefits let you know you're a valued part of our team" (McDonald's, 2011).

This culture is highly prevalent within the United States, where companies focus on creating a dynamic, competitive, and rewarding work environment. Firms strive to integrate staff members and align individual goals with company objectives. A similar approach was adopted by Walmart, which attempts to foster a cheerful working climate. Employees gather each morning to give a cheerful salute, starting the day in an upbeat mood.

However, when this culture is exported to other global regions, it is less successful. The most relevant example is Walmart's failure in Germany. The retailer operated there for several years before ultimately closing its stores and counting its losses.

The reasons for Walmart's failure in Germany are multiple and involve various stakeholder groups, yet on closer examination, they all stem from the company's inability to recognize and adapt to the traits of local culture. For instance, the German retail industry was already populated with strong European competitors such as Metro, Carrefour, and Cora, and Walmart was unable to compete effectively. At the level of human resource policies specifically, Walmart failed to recognize that the German population is comparatively private and does not respond well to enforced displays of enthusiasm such as the morning cheer. German employees were also more strongly protected by employment law and resisted both minimum wage limitations and the company's prohibition on forming and joining unions.

Furthermore, the managers placed in charge of Walmart's German operations were all Americans who refused to learn German, with the result that English became the de facto official language of Walmart Germany. These managers also disregarded the specifics of the German market and its legislation (Knorr and Arndt, 2003).

Overall, Walmart's HRM practices in Germany were essentially imported from the United States with little adaptation. The company imposed its own culture without recognizing the particularities and importance of local culture. The eventual closure of Walmart Germany demonstrates that neglecting local culture in the development of organizational strategies is an inadequate course of action.

Walmart appears to have absorbed this lesson when entering Asia. China was the first Asian country the corporation penetrated, and Walmart again initially sought to apply the same HRM model and organizational culture as in the United States. To avoid repeating its German failure, however, it made some concessions — most notably allowing Chinese employees to join unions (Dessler). Beyond this, the HRM policies at Walmart China remain similar to those in the United States, focusing on enthusiasm, employee commitment, and staff support for customer satisfaction and organizational goals (Walmart China, 2011).

The trajectory of Walmart's international expansion portrays a company focused on its own culture and placing little emphasis on the cultural features of the regions in which it operates. The corporation strives to export its operations, business model, and human resource strategies, making minimal effort to adapt its HRM practices to local management norms.

In the case of McDonald's, the management approach applied in China is also broadly similar to that in the United States. The emphasis again falls on integrating employees within the organizational culture, and comparable benefits are offered. Differences occur primarily in wage levels, which are regulated by national institutions in each country.

One observable difference in HRM policies between China and the United States, however, concerns quality. While managers in the United States tend to be highly experienced, managers in China tend to be younger. This likely reflects a deliberate strategy to signal the company's commitment to youth, enthusiasm, and management development.

Another notable difference involves training programs. Both countries offer specific training on machine operation, food preparation, surveillance, and other operational tasks. In the United States, however, employees who complete training programs have the opportunity to attend Hamburger University — McDonald's Center of Training Excellence. No equivalent facility exists in China, meaning that training there is less comprehensive and lacks the same professional finality.

"If you are promoted to be a manager, you have the chance to go to Hamburger University. However, in China, there is no Hamburger University for crew members or managers. Here crew members are taught easily on how to follow procedures — not a complete training program. That means it is not a professional program. China McDonald's are just aware of the quantity, not the quality" (JPKC).

A further difference lies in the incentive packages available. McDonald's China offers significantly fewer benefits than the United States operation, with educational assistance and profit sharing notably absent.

"There are some benefits that China McDonald's employees don't have, such as educational assistance. China McDonald's don't provide any program or scholarship for employees; profit sharing is also uncommon for China McDonald's employees" (JPKC).

These incentive differences carry real consequences for employee motivation. In the United States, a more generous incentive structure drives higher levels of motivation, leading employees to regard their work as an opportunity rather than merely a job. In China, the reduced incentive package contributes to lower motivation levels and a more transactional employment relationship.

Within Europe, McDonald's HRM approach is broadly similar to that in the United States. The underlying principles remain the same, with differences emerging where national legislation requires adaptation. In Germany and the United Kingdom, for instance, McDonald's was obliged to respect union agreements and pay determinations set by domestic authorities (Royle, 2003).

The specifics of incentive offerings also diverge along cultural lines. In the United States, sabbatical leave is uncommon outside academia. In Europe, however, individuals place greater emphasis on work-life balance, and at McDonald's this cultural trait has resulted in some executives in the UK, Germany, Switzerland, and the Netherlands receiving sabbatical leave based on tenure with the firm.

Another difference between U.S. and European HRM practices at McDonald's involves profit sharing. While profit sharing is common in the United States, it is largely unheard of in countries such as France, Sweden, Portugal, and Italy. McDonald's argues that its incentive packages in European markets are already competitive and do not require this particular benefit (Berrone).

Despite these differences, McDonald's HRM and development policies remain broadly similar across regions. The company strives to centralize its HRM decisions and maintain equity in employee incentives. To address cross-country variation in wage legislation and competitive intensity, McDonald's employs its Targeted Incentive Program (TIP) — a short-term incentive package applied as a global standard.

In terms of wage competitiveness, McDonald's consistently aims to offer slightly better pay than rival fast food companies in every market, though this is driven by legislative requirements and competitive dynamics rather than cultural considerations.

"These overall policy decisions reflect a company trying to balance internal and external fairness concerns. Competitive base wages require that local and regional labor markets have a central role in a somewhat decentralized decision process" (Berrone).

Taken together, both Walmart and McDonald's function as significant international employers whose primary orientation is toward exporting American organizational culture into the regions where they operate. Their HRM practices for management and development closely mirror those applied in the United States, with two specific exceptions: first, when local legislation requires adaptation in areas such as working hours or wages; and second, when HRM policies in other global regions are inferior to U.S. standards and can be applied at lower cost.

These findings lead to the conclusion that both Walmart and McDonald's treat the global market primarily as a new source of revenue. They tend to disregard the features of local cultures and rarely incorporate them into the design of their human resource policies. In other words, HRM policies and practices are shaped more by organizational culture than by the cultural diversity of the markets in which the firms operate.

Measuring Success of HRM Processes

The means by which each economic agent develops and implements human resource management processes depend heavily on its internal decision-making systems. Still, firms must also evaluate the success of their HRM programs. Because human resource management efforts are often qualitative and involve sensitive issues, quantifying the results they generate is complex. Several approaches can, however, be employed:

One approach involves measuring employees' levels of job satisfaction both before and after the implementation of HRM practices, which can be achieved through anonymous questionnaires. A second approach involves comparing employee turnover rates before and after HRM processes have been introduced; this is relatively straightforward since the required data is typically recorded in organizational documents and need only be retrieved, processed, and interpreted.

A third approach involves assessing levels of customer satisfaction before and after HRM implementation. This measure is most applicable in service organizations, where employees interact directly with customers. Employee satisfaction serves as a direct indicator of employee performance, which in turn is reflected in customer satisfaction. When customer service levels improve following HRM implementation, a reasonable conclusion is that the HRM processes have been effective.