McDonald’s is a global multinational corporation, which is represented on all six continents and in over 100 countries. 80% of the company’s fast-food restaurants are owned on a franchise basis. The company offers a uniform product, with some accommodations considering local customs and beliefs since one of the main aims of McDonald’s is to be well-adapted to the local environment, in both menu and marketing strategies. The prices are adapted to local markets as well. The other objective is to deliver the most high-quality product, which is ensured by a number of checks, audits, and control visits on each step of production. The company is also constantly involved in many charity campaigns.
The prospective employees are offered either a restaurant job, an office job, or franchise owning. All of these types present an opportunity for career growth based on the performance of an employee. The workforce of McDonald’s has a long history of diversity, and the HR staff of the corporation has developed workable instruments and strategies to manage this diverse workforce. The purpose of this work is to examine the ways in which the company’s HR specialists manage the human resources and cope with their diversity.
The HR departments of McDonald’s are responsible for studying labor laws and finding out all the information related to the workforce when the company starts its business in a new country. Even though the HR specialists of the corporation work according to the established standards, the recruitment process is decentralized, i.e. the HR of each branch of the company acts independently, which is a natural decision for such a big organization. The company’s HR employs various strategies of recruitments, such as job positioning and succession planning on an internal basis and online recruiting, advertisement via newspapers and magazines, and college recruiting on an external basis.
The training of the new employees can be performed at the working place, as well as in specialized training facilities, located in the USA and five other countries. In the training centers, the curriculum is provided in 22 languages. Among others, future HR staff study at the training facilities. The facilities offer diverse classes related to Asian, Pacific, Middle Eastern, Hispanic, female, and sexual minorities’ career development. McDonald’s uses various employee business networks to manage interconnection between employees, and Intercultural Learning Lab to share intercultural knowledge.
McDonald’s had a developed system of benefits and rewards. The latter is based on the level of performance of an employee. The company also uses cash-based (attendance allowance, annual allowance, medical allowance, and leave fair assistance) and non-cash-based (the crew of the year, the crew of the month, the branch of the year, access to gift certificates, and free food) incentives.
Overall, the study, conducted by the author of this work, has proven that the HR management, including the issue of diversity, of McDonald’s in on a high level, which is recognized by numerous major magazines and crowned by many awards.
Overview of the Company
McDonald’s Corporation is a well-known international company founded in the 1940s, which owns and franchises McDonald’s fast-food restaurants. The company is currently a leader (by sales) among foodservice companies, being represented on all six continents of the world, with its 30,000 restaurants, serving around 52 million visitors a day in over 100 countries (“McDonald’s business overview,” n.d., par. 1). In 2012, McDonald’s was given a fourth place in BBC’s rating of the world’s biggest employers for having 1.9 million employees, even though over 78% are hired by the company’s franchisees (Ruth, 2012, par. 5). In 2014, the corporation received 27.44 billion US dollars of revenue (“Annual Financials for McDonald’s Corp.,” n.d.). The headquarters of the corporation (McDonald’s Plaza) is located in Oak Brook, in the state of Illinois.
McDonald’s offers the following types of franchising: conventional franchise, developmental license, and affiliate. The franchise of the first kind typically lasts for around 20 years. According to it, McDonald’s corporation owns or leases the very building of the restaurant, while franchisees provide equipment, decorations, etc., and they must reinvest in the business as time passes. This type of franchising benefits the corporation through rent and royalties that depend on the sales percent, as well as the payments for starting a new restaurant or a new franchise (“McDonald’s Corp,” n.d., par. 2).
Developmental license means that it is a franchisee who owns or leases the building. McDonald’s Corporation is not responsible for investing capital into a business. The company is benefitted through royalties based on sales percent and initial fees for a new restaurant or a new license. This version of franchising is the most popular one in Latin America and the Caribbean. In general, McDonald’s restaurants owned on the basis of developmental licenses exist in more than 70 countries of the world (“McDonald’s Corp,” n.d., par. 3).
The corporation also has investments into foreign affiliated markets, the biggest of them in Japan. In this type, again, McDonald’s receives a royalty based on the percent of sales (“McDonald’s Corp,” par. 4).
The primary objective of McDonald’s is to develop a uniform product, regardless of the country a restaurant is located in. Although such unification is money-saving, sometimes the local environment can present challenges, such as laws, customs, religious beliefs (Vignali, 2001, p. 99). McDonald’s restaurants present a standardized menu with some regionalized versions in various countries, depending on the local tastes and religious prescriptions (Shahi et al., 2014, n.p.). For instance, in Israel, due to the religious ban to consume meat along with dairy products, there is no cheese in Big Macs. Indian McDonald’s offers its visitors vegetarian McNuggets and Big Macs with mutton instead of beef. Such changes allow the restaurants in India to serve Muslims, who cannot eat pork, Hindus, who do not eat beef, and Jains, who are vegetarians. There are plenty of other examples how McDonald’s adapts to the traditions of various countries (Vignali, 2001, p. 99).
Another aim of the company is to deliver a high-quality product. According to Vignali, the quality control process involves quite a number of various types of checks and inspections, and sometimes unexpected ones, to all facilities and restaurants. Workers are given precise instructions, which prescript all the stages of production, quality standards, and exact characteristics of a ready product (2001, p. 100). When receiving a delivery from a production center, the restaurant staff had to ensure that all quality and safety requirements are followed. Food safety and hygiene are included in the training process of restaurant staff (Vignali, 2001, p. 100).
The pricing strategy of McDonald’s is the following. The price is separately determined for each particular market. First, the company finds the price objective, then determines demands, estimates the costs, examines what the rivals offer, chooses a pricing method, and after that finally establishes the price. Pricing strategies differ from country to country (Vignali, 2001, p. 101-102).
As for the marketing strategy, it adapts to each country’s environment as well. The company considers cultural and ethnic specificities, customs, and preferences to develop the strategy. The company’s specialists analyze local tastes, beliefs, attitudes, moral and religious features, needs, and aims of the local people. Even though the brand is global, the advertisement is local (Vignali, 2001, p. 104).
McDonald’s Corporation is connected with such a non-profit charity organization as Ronald McDonald House Charities (RMHC), which was co-founded by the founder of McDonald’s itself. The mission of RMHC is to support the children, who have problems with health, as well as their families, to whom the organization provides the mobile “Ronald McDonald houses” to make family members able to be close to hospitalized children. From time to time, RMHC announces charity programs, which the visitors of McDonald’s can participate in by buying some additional items at a restaurant. RHMC helped around 5.7 million children in 2014. It has branch offices in more than 60 countries (“Our relationship with McDonald’s,” n.d., par. 1).
In general, McDonald’s can be considered a global corporation; they were able to achieve this only by employing the “act local, think global” principle. The company’s market in the USA grows slower than their global market (Vignali, 2001, p. 110).
McDonald’s HR Planning and Managing a Diverse Workforce
McDonald’s Corporation offers three types of jobs: restaurant staff, office employees, and franchise owners. Working in a restaurant presents an opportunity for career growth through the following steps: crew member, crew leader, floor manager, assistant manager, restaurant manager. There is also a possibility to work as an area supervisor, operations consultant, trainee manager, and customer care representative. Office workers are divided into three levels: initial, middle, and higher. The initial level is for beginners. Middle-level workers’ responsibility is the connections between team members and the team’s following the standards while working. Higher-level executives are responsible for the performance of certain tactics and strategic plans (Shahi et al., 2014, n.p.).
McDonald’s is known for the diversity of its workforce. According to McDonald’s itself, in the United States, 70% of McDonald’s employees are women and minorities, and over 25% of them are in leadership. 45% of the franchisees are women (“Inclusion & Diversity,” n.d., par. 2). According to Forbes, in 2010 women and people of color made up 73% of the company’s total workforce, 43% of its franchisees, and 55% of the suppliers (Singh, 2010, par. 7).
However, in January 2015, ten McDonald’s employees (nine African American and one Hispanic) in the state of Virginia sued the company for race-based discrimination. According to the plaintiffs, three supervisors told them that they were “too dark,” “ghetto,” and that there were “too many black people” before they were fired and replaced with white workers (Jamieson, 2015, par. 2). However, the franchisee who fired them, Michael Simon, was also black (Jamieson, 2015, par. 7). As a response, the company stated that “McDonald’s has a long-standing history of embracing the diversity of employees, independent Franchisees, customers and suppliers, and discrimination is completely inconsistent with our values,” (Jamieson, 2015, par. 14), which is perfectly supported by the above-mentioned figures.
In 2009, McDonald’s has proven the advantages of an age-diverse workforce. Lancaster University Business School has held research and found out the following figures.
Customer service was 20% better in those restaurants where the staff was 60 and older (Woods, 2009, par. 1). 69% of McDonald’s managers believed that elderly workers are good at communications with managers, 47% of the managers said that older employees are more likely to try harder to provide a perfect service than the other workers (Woods, 2009, par. 2). Therefore, mature workers are an essential part of McDonald’s workforce, despite the fact that the majority of the employees are youngsters (Woods, 2009, par. 7).
In 2013, Rich Floersch, a Chief Human Resources Officer (CHRO) at McDonald’s, gave an interview to Forefront magazine. Floersch told the interviewer about his way from a Masterate student at the State University of New York to a top HR manager at McDonald’s. He attributed his interest in leadership skills development to his professor, George Milkovich (Flagg, 2013, par. 1-2).
Floersch gained his first experience in HR while working for a consulting company in the state of Connecticut. However, he names his job as a Manager of Compensation for General Foods as the one that prepared him best for his future work for McDonald’s. At General Foods, Floersch was responsible for the whole personnel of Research and Development HR. As he put it, “They got me out of my comfort zone.” He also worked for Phillip Morris as the head of the Compensation Unit (Flagg, 2013, par. 3-6).
Floersch started struggling for the CHRO job at McDonald’s once the vacancy opened up. At that moment, the corporation had restaurants serving around 69 million people a day in 118 countries. He recalls his own excitement and his urge to improve the company’s HR management and reward system. After getting the position in 2003, the first thing the new CHRO did was to interview the entire HR staff (total 200 people) in order to find out what exactly needed improvement. Floersch was surprised to hear them all mention the same problem: it was necessary to preserve the culture of personal interactions while uplifting working performance. Knowing that Floersch and his assistants proceeded to action, working on the improvement of the reward system (making it more up to date) and the leadership skills of the executives (Flagg, 2013, par. 9). According to Floersch, his management style included trusting the team: the head established standards, leaving the team enough opportunities to do the job (Flagg, 2013, par. 15). The team created a system of performance-based rewards and updated the development curriculum for promising managerial employees. Their activity was successful; soon, McDonald’s was placed on the top 10 list of the best companies for leaders by Fortune magazine, and Floersch has received quite a number of awards, among them, being named the Most Admired HR Executive by Human Resource Executive magazine (Flagg, 2013, par. 10). He has become a member of the National Academy of Human Resources (Flagg, 2013, par. 10). Despite the obvious positive result of his work, Floersch was still not entirely content; as he said, “We can’t ever declare victory, or say we cracked the code. We have to keep improving” (Flagg, 2013, par. 12). He also gave valuable advice to his fellow HR specialists: it is to “put people in jobs that play to their strengths and passions” (Flagg, 2013, par. 14).
Floersch is currently Executive Vice President of the company (in addition to his position as CHRO), and he plans to retire on December 31 (“Leadership,” n.d.).
McDonald’s Corporation is known for its high-quality, streamlined HR strategy. The separate HR department performs the following functions: administrative, bargaining and negotiating, policy-making, and supportive. The HR department is responsible for awarding outstanding workers according to the standards (Shahi et al., 2014, n.p.).
Before McDonald’s starts a new business in a country, the HR department of McDonald’s finds out the answers to such questions: what are the labor laws in this country, whether it is possible to establish part-time and flexible work schedules, and what maximum of working hours is normal for this particular country (Vignali, 2001, p. 107). Political, economic, and cultural factors, the state of the local public transportation system (to know if the potential employees can easily arrive at their working place) are taken into consideration as well. As a way of getting the necessary information, McDonald’s HR specialists may contact the HR experts of a different US company having branches in that country to ask them about the business situation there. As a result, the specialists develop a detailed outline (Aswathappa, 2007, p. 192). So, the HR department tries to act specifically in each situation. The managerial staff is always local since it is necessary for the company that the department hire managers, who understand both global and local culture (Vignali, 2001, p. 107).
The employment process begins once it is decided to open a new restaurant. To hire managers, the HR specialists use applicant screening and interviews, looking for individuals with high leadership skills, who are ready to work in the stressful area of a fast-food restaurant (Aswathappa, 2007, p. 192). The recruitment process is decentralized: every branch is able to fill in the vacancies separately, which is inevitable in such an enormous corporation. Usually, one restaurant can recruit up to 60 workers (both managerial and floor-based staff). Recruitment can be of two types: internal and external. McDonald’s employs such methods as job positioning and succession planning during internal recruitment. In job positioning, vacancy notices are published on the corporate website so that the already-employees can apply for higher of different positions if they want. In succession planning, the HR staff selects a candidate, who is already working for Mcdonald’s and has proven their ability to perform well. Internal recruitment is preferred by McDonald’s HR staff (Shahi et al., 2014, n.p.). External basis presents a number of ways of recruitment. As for online recruiting practices, to attract new candidates, McDonald’s’ created a complex of employee testimonials, which was posted on social networking websites such as Second Life (Dessler, 2013, p. 41). On its own website, the company publishes open jobs and encourages potential applicants to send their CVs. Advertisement via newspapers and magazines is also used. College recruitment is performed through internships (Shahi et al., 2014, n.p.).
The selection process is complicated and consists of a written process, an initial interview, aptitude tests, reference checks, a final interview, and relocation (Shahi et al., 2014, n.p.). When a candidate is chosen, they are first asked to work for two weeks in a restaurant, so that both the applicant and the HR workers can see if an applicant fits (Aswathappa, 2007, p. 192).
The first stage of training is the so-called welcome meeting, where the company’s expectations are announced. Most part of the training is “on-the-job” training. Training methods include orientation, “on-the-job,” and classroom training. The levels of training are: computer-based one, a crew member’s one, and a manager’s one (Shahi et al., 2014, n.p.).
McDonald’s owns a training facility, the so-called Hamburger University, where managers, assistant managers, and future franchisees. Other facilities are located overseas: in China, Germany, the UK, Australia, and Japan (Vignali, 2001, p. 108).
These centers use the same curriculum as the center in the United States (Aswathappa, 2007, p. 192). The students are provided training in 22 languages. They study the secrets of cooking hamburgers and learn to apply quality standards to the work of the restaurants. The future HR staff is taught to interview the potential employees (Vignali, 2001, p. 108).
The courses that the curriculum offers include diversity studies and career development classes. Among the latter are: Asian Pacific Middle East Career Development; Black Career Development; Hispanic Career Development, Lesbian Gay Career Development; Women’s Career Development; and Intercultural Learning Lab (“Internal programs,” n.d., par. 2). A web-based mentoring tool is also used in the studying process that facilitates the interaction between a student and an advisor. Studying centers employ both individual and group strategies of learning (“Internal programs,” n.d., par. 3).
McDonald’s also uses employee business networks, i.e. interconnected groups of employees providing support and representation to their members. Additionally, the groups serve as a means to bring a sense of unity to their participants. Employees can join these groups of their own free will. The networks are responsible for providing the employees with information, education, and advice as well. The present-day McDonald’s disposes of such employee business networks as Asia Pacific Middle East Network, Hispanic Employee Network, McDonald’s African American Council, McDonald’s PRIDE Network, McDonald’s Veterans Employee Resource Group, Women’s Leadership Network, Working Mothers’ Council, Young Professionals Network. The networks are aligned with the business plan and are believed to be a means for a significant increase in the company’s earnings (“Internal Programs,” n.d., par. 4-5).
The education of the workforce was consistent since as far as the mid-70s when the company started an education program named “Managing the Changing Workforce”. Nowadays, the intercultural dialog and the exchange of cultural knowledge are going on via the Intercultural Learning Practice and the Intercultural Learning Lab, headed by the diversity education director (Hauser, 2013, par. 2-3).
McDonald’s has a well-developed reward system. A performance review is composed semi-annually; each half a year an employee can be evaluated if they fit the standards of satisfactory performance. If conversely, an employee fails to fit those standards, they are assisted on their way to improvement. There are four quality levels to define the performance: outstanding, excellent, good, and needs improvement. Incentives are also involved in this process. McDonald’s offers both cash-based and non-cash-based incentives. Among the cash-based ones are attendance allowance, annual allowance, medical allowance, and leave fair assistance. The non-cash-based ones include the crew of the year, the crew of the month, the branch of the year, access to gift certificates, and free food. Employees are able to receive rewards for good performance. Among the rewards, there is a 10% salary increase and a 20% increment provided at any time of the year (Shahi et al., 2014, n.p.).
McDonald’s is continuing to promote diversity. For instance, on October 15-16, the company will take part in the 10th anniversary 2015 National Diversity Women’s Business Leadership Conference in Lake Buena Vista, Florida. McDonald’s will be represented there by Patricia S. Harris, a woman of color, who is currently Global Chief Diversity Officer and Vice President for Global Community Engagement (“Patricia Harris,” 2015, p. 1). It is Harris who is responsible for the execution and evolution of the corporation’s inclusion and diversity program (“Patricia Harris,” 2015, p. 1). However, Harris herself rejects the word “program” related to the company’s inclusion and diversity strategy. “Program,” she says, has a start and finish, whereas diversity at McDonald’s is being promoted on a constant basis (Hauser, 2013, par. 1).
Additionally, she is the head of the team promoting community engagement. She is a member of many national organizations; for instance, she has founded and is a member of Women’s Foodservice Forum, has founded and used to be chair of the Multicultural Foodservice & Hospitality Alliance (“Patricia Harris,” 2015, p. 2-3). Harris is a recognized specialist, who was named among “Top 10 Diversity Champions in the Country” by Working Mother magazine (“Patricia Harris,” 2015, p. 3) and named “Woman of the Year” by the Roundtable for Women in Foodservice (“Patricia Harris,” 2015, p. 3); she has a serious number of awards as well (“Patricia Harris,” 2015, p. 3).
As a recognition of their efforts in promoting diversity, which brought success, the company received an HR Excellence Award in 2010 for best workplace diversity strategy (“HR Excellence Awards 2010,” 2010, par. 1). The judges were especially impressed by the program that was focused on involving elderly workers (“HR Excellence Awards 2010,” 2010, par. 3). A year later, McDonald’s Corporation received another HR Excellence Award, this time for an outstanding employee engagement strategy (“HR Excellence Awards 2011,” 2011, par. 1). According to HR Magazine, McDonald’s involved Lancaster University to confirm that business growth depends heavily on employee engagement, which the University did prove (“HR Excellence Awards 2011,” 2011, par. 3). In 2014, McDonald’s was voted for as an overall winner at Personnel Today Awards (Faragher, 2014, par. 1).
The participants were contesting in 22 categories. This was not the first time McDonald’s won this award; the previous time was in 2008 (Faragher, 2014, par. 4-5). McDonald’s was named among “Top 50 Places for Minorities to Work” by Fortune magazine (“Patricia Harris,” 2015, p. 3), included in Black Enterprise magazine’s list of “Top 40 Companies for Diversity” (“Patricia Harris,” 2015, p. 3), is one of the “Best Companies for Latinas,” according to Latina Style magazine (“Patricia Harris,” 2015, p. 3), and one of the “Top 25 Companies for Asians,” according to Asia Enterprise magazine (“Patricia Harris,” 2015, p. 3). The company has also received the “Disability Diversity Award” by Work Life Matters magazine (“Patricia Harris,” 2015, p. 3).
In conclusion, Mcdonald’s has demonstrated and is still showing a remarkable example of managing a diverse workforce. The company has developed a strong strategy of recruitment, selection, and training of the employees, considering their culture, gender, and other types of diversity, as well as it is efficiently using a business network to make the employees interconnect and share their knowledge. It has also created a system of rewards and incentives, which help to motivate effectively the employees and bring up their performance. The efforts of McDonald’s in the field of HR managers have been widely recognized in media, and the company has received numerous awards for creating a suitable environment for a diverse workforce.
Despite the fact that McDonald’s has brought its human resource level up to the high level, some recommendations can be made in dealing with weaknesses:
- On the internet, especially on social webs, there is a negative image of working at McDonald’s, which mainly exists in a form of jokes shared among college students about being employed and selling hamburgers after spending so many years studying. This image can repulse potential employees, so if an advertising campaign makes an attempt to abate these concerns, the company will probably get more young educated candidates for various job positions.
- Advertisement that is aimed at recruitment should address women and minorities more overtly in order to demonstrate to them that McDonald’s is a discrimination-free space and that potential candidates would receive proper treatment and would be trained according to a curriculum meant specifically for their race, age, or gender.
- Each person employed by McDonald’s should be placed on that exact chain of the production process where his or her talents would be most useful. HR specialists should find out whether each person is working in the right place.
Annual financials for McDonald’s Corp. (n.d.). Web.
Aswathappa, K., & Dash, S. (2007). International human resource management. New Delhi, India: Tata McGraw-Hill Education.
Dessler, G. (2013). Human resource management (13th ed.). Boston, MA: Pearson Education.
Faragher, J. (2014). McDonald’s voted overall winner at 2014 Personnel Today Awards. Personnel Today. Web.
Flagg, N. (2013). Human resources tips from the world’s biggest brand. Forefront magazine. Web.
Hauser, S.G. (2013). Honoring diversity the McDonald’s way. Workforce. Web.
HR Excellence Awards 2010: Best workplace diversity strategy – Winner: McDonald’s. (2010). Web.
HR Excellence Awards 2011 – Outstanding employee engagement strategy: McDonald’s. Web.
Inclusion & Diversity. (n.d.) Web.
Internal programs. (n.d.) Web.
Jamieson, D. (2015). Workers sue McDonald’s for discrimination, opening a new front in franchise fight. Huffington Post. Web.
Leadership. (n.d.). Web.
McDonald’s business overview. (n.d.). Web.
McDonald’s Corp. (n.d.). Web.
Our relationship with McDonald’s. (n.d.). Web.
Patricia Harris. (2015). Web.
Ruth, A. (2012). Which is the world’s biggest employer? BBC News. Web.
Shahi, M.N., Karishma, G.S., & Kaur, G. (2014). Human resource practices at McDonald’s. Web.
Singh, A. (2010). McDonald’s makes diversity about the bottom line. Forbes. Web.
Vignali, C. (2001). McDonald’s: “think global, act local” – the marketing mix. British Food Journal, 103(2), 97-111.
Woods, D. (2009). McDonald’s proves the benefits of an age-diverse workforce. HR Magazine. Web.