McDonalds Company: Human Resource’ Functions

Introduction

Today’s business environment is changing fast. People in any organization are not understood now as overhead cost which should be cut down, rather they are being understood as profitable investment with the proviso that they are pleased by approachable and bring into line HR practices. The contemporary theory of business management gives priority to the management of people and talks about challenging issues related to it in this competitive environment (People are Strategic…What about HRM, 2012).

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The above mentioned view needs a new lookout about what is the role of HR in an organization. What are the forces shaping HR agenda in the organization? So this report is going to discuss about the role of an HR in an organization, his agenda, organization’s business and HR strategies and the effectiveness of such strategies within the organization.

McDonalds Fast Food Company has been chosen as an example of an organization for this report and this report will further discuss the HR agenda within this organization and it will elaborate other above mentioned points as well. Before discussing about the particular organization’ HR strategies, the concept of HRM is expounded to make the whole idea clearer.

The Concept of HRM

Human Resource Management is based on the philosophy of people management which believes that workforce is exclusively important for the growth of any organization. An organization achieves benefits by using its people effectively, portraying their expertise and being resourcefulness to meet objectives. The aim of the HRM is to recruit skillful, flexible and committed people. It focuses on recognizing their efforts and rewarding them on that basis and emphasizes on developing key competencies. The HRM model highlights:

  • The requirement of searching innovative ideas of working
  • The main role of managers in stimulating change
  • Handling workers as individuals instead of treating them as a pan of collective work force
  • Encouraging the workers to accept their management as their ‘Priers’ instead of understanding them as their opponents (Human Resources Management systems, n.d.).

Introduction of the Organization

McDonalds was established in 1955 in the USA and it started its business with one restaurant. It has been growing too fast since then and now it has its stores worldwide.

HRM Practices in McDonalds

HRM planning is based on the objectives of the company. The aim of the HR is to look for skill full and talented workforce without creating any differences on the basis of gender, marital status, race, color, nationality, ethnic origin etc since it believes that such kinds of differences do not give safe and secure working environment.

McDonald’s corporation look for the people who are fun loving and can deliver fast since it depends on its employees in the restaurant who can provide fast friendly and courteous service to its customers. Its service crew works hard to achieve the goals.

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The benefits for the employees are: MAC Card, competitive packages, wages increase, McDiect shares, uniform, life insurance, haircut discounts, McDonald’s training programs, flexible hours, paid vacation, stock purchase plan and bonus scheme. As an HR is responsible for looking for the caliber people for any company, he has to perform many tasks for this from doing the recruitment process to the training of the candidates. The same is applicable with the HR agenda in McDonalds.

The HR is responsible for various activities related to HR Management as job analysis, human resource planning, recruitment, development, performance appraisal and compensation (Human Resources Management systems, n.d.).

Recruitment and Selection Process

The recruitment and selection procedure is not very easy in McDonalds. For recruiting people, an application form and CV are the main documents. Applications go through organized interviews in which job related questions are asked. A candidate has to go through different types of employment tests, like, personality tests, job related knowledge tests.

The Job Structure

The employees of McDonald’s have been divided in three categories: the franchise owners, the corporate staff and the workers. There are approximately 50-60 employees in a local McDonald’s restaurant. The ratio is generally 65% male and 35%female in the company. The age range is between less than 30 to 50 years.

The crew members are generally placed at the entry level position and they are large in number. Majority of them are part time workers. Their salary is not much. In the hierarchy, swing managers are placed at the first managerial position though their salary is a bit higher than the crew members. Each McDonald restaurant has a manager.

Training

McDonald’s emphasizes upon training and development of each employee. The training of an employee at McDonald is extremely organized. It reasonably gives money and time for training activities to be organized for its employees. After presenting the orientation on the company, the training starts with in an hour. Each restaurant is equipped with a video player and it has a training room. Everything is shown on the video from how to make a big Mao to a shake. It goes step by step and covers all the minute details of the operation.

Performance Evaluation in McDonalds

The performance evaluation is not only based on the criteria like employees’ honesty and dependability but also the evaluation is done to check employee’s behavior, punctuality, meeting with results of productivity and sales figures. After performing a successful role as a crew trainer, he is promoted to swing manager after that the person is eligible for the Management Development Program.

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The first step is to complete Basic Operation Course, which goes on for many months. This course contains fundamental restaurant opinions. The Basic Management Course gives guidance on leadership, crew acknowledgment and time management. The students get t training on crew staffing and maintenance in the Intermediate Operations Course. They also learn about leadership and decision making. The final stage of this whole course is called Regional Equipment Course.

After being assistant manager, the crew member can attend Hamburger University, which is company’s training center for management personnel. This course improves communication, interpersonal and human relations skills.

Rich Floersch, the chief human resources officer at McDonalds believes there are three crucial elements to maintaining a successful business: making sure you have the right talent, creating the right work environment for your employees, and energizing crews and managers through good rewards and recognition” (How I got here: Rich Floersch of McDonald’s, 2012, para 2).

Consequently, McDonald’s HR strategy seems to be to enhance the motivation and commitment of the employees, creating the right work environment for its employees and valuing their talent by giving rewards and recognition.

SWOT Analysis of McDonalds

Like any other organization McDonald’s also needs to imply different business strategies to survive amidst the overcrowded fast food business world. It is obligatory to incorporate different tools to assess the potency, flaws, prospects and pressures relative to any business. SWOT analysis and PESTEL analysis are such strategic planning tools used by different organizations for examining their strengths, weaknesses, opportunities and threats and other factors influencing the business. It can guide the human resource departments in relation with the performance assessment of the organization, can help in setting future goals, and can prove beneficial in developing action plans for the growth of the organization (Nester-Harper, 2013).

The SWOT Analysis of McDonalds

The SWOT Analysis of McDonalds reveals the potency of the company and tremendous prospects in future. It also points out the factors that may hamper its growth or may leave the company in a precarious state in future if not dealt with adequately.

Strengths

The increasingly huge number of outlets has made McDonalds the second largest outlet operator in the world.

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This fast food restaurant chain is spread over more than hundred countries and serves millions of consumers per day. It is evident that the company is a leader in the fast food restaurant chain in the world and has a significant percentage of world sales.

The brand recognition of McDonalds is worth $40 billion. McDonalds invests a significant amount on its brand’s advertising.

The company strategically invests finances in the marketing, promotion and branding of its products. Activities like inviting celebrities for promoting their products are planned for reinforcing the promotional programs.

McDonald’s strategy to locate restaurants covering almost every locality and class in different countries brings in good results for the company. Strength of McDonald’s fast food restaurant chain is its adaptability to the diverse cultures of different countries. Integrating the local tastes of the particular place makes its products more popular among the local consumers.

McDonald’s strategy to offer only the famous brands along with its products like Dannon Yogurt and Coca Cola etc helps in promoting and maintaining the brand image of the company. McDonald’s business targets the young children while planning its promotional strategies. Different advertisements involving kids, playgrounds for them and toys with meals definitely make McDonald’s products more popular among the kids (Jurevicius, 2012).

Weaknesses

McDonalds offers mainly fast food. With growing consciousness regarding health and dietary habits, people are avoiding fast food as it is considered unhealthy. The negative effects on people’s health like obesity and malnutrition in young children have tremendous effects on the popularity of McDonald’s products among health conscious people. The menu comprises mainly of ‘not so healthy meals and drinks’ that do not provide any nutritional advantage to the human body. Hence, these products are strongly opposed by the organizations fighting obesity and other malnutrition.

Moreover, McDonald’s offers low salaries to its employees resulting in their low performance and swift changes in job. A large number of employees quitting the job and new employees joining in affects the training cost considerably and consequently add to the overall cost of McDonald’s. Besides these flaws, McDonald’s does not have any specific features to offer in relation to its fast foods. The market has fast food restaurants in abundance and McDonalds’s is unable to differentiate itself from them with respect to special innovative features.

Opportunities

Despite the weaknesses, there are still some opportunities present for McDonalds to strengthen its position in the world market. These can prove beneficial in getting over the shortcomings in the existing design of the company. McDonalds can benefit by introducing healthier food in its menu. Moreover, initiating home delivery of food can prove beneficial in increasing the number of customers and connecting with them.

McDonald’s has adopted measures like redesigning its logo and restaurant design and has been working on the launch of innovative practices for the past few years that are supposed to increase its popularity among people. Further, introducing restaurants in different forms like McCafe, Mc Stop and McExpress to meet the changing requirements of the customers is going to bring in profits for the company (Jurevicius, 2012).

Threats

McDonald’s has to prove its worth in the overcrowded market of fast food restaurants that has mushroomed over past few years. Growing consciousness about healthy food and attempts made by government as well as other organizations fighting obesity are taking the customers away from McDonald’s. Local restaurants offering fast food with more acquainted taste and less amount is a real threat for McDonald’s in different countries. Further, appreciation of dollar against other currencies affects the profit heavily. McDonald’s has to deal with many lawsuits off and on that consume lots of money and time. Such conditions are dangerous for progress of the company (Jurevicius, 2012).

PESTEL Analysis of McDonald’s

PESTEL analysis deals with the external factors influencing a business. It includes the political, social, technological, environmental and legal factors present in the environment in which a particular business operates. The PESTEL analysis of McDonald’s as a fast food restaurant chain presents the following points:

Political factors

McDonalds as an international brand in fast food restaurant chain has to abide by the laws and regulations of different countries they are running business in. If there are cases of infringement of employment laws and religious offenses, McDonald’s has to face lawsuits and litigations. With the constant expansion of the company, it is wise to deal with the appropriate authorities of government in these countries and to satisfy all the prerequisites for running the business.

Socio-Cultural factors

Cultural values and existing norms of a society and living style of people have a considerable influence on the company’s business. McDonald’s has kept the dining needs of the local people in consideration and provided appropriate options in their menu. Moreover, McDonald’s introduces a sensibly valued set of food for the respective markets.

McDonald is well versed with the needs of the respective market their business is flourishing in.

Consumer behavior is keenly observed and purchasing decisions are utilized appropriately to the maximum benefit of the company. This trait is evident in the quick stance taken in removing pork and mutton from India’s menu. Understanding consumer behavior and culture of the society helps significantly in the prospective performance of the company in the respective markets. It also helps in building a congenial customer relationship system.

Technological factors

McDonald’s uses internet as a marketing tool, which is a cost-effective and interactive way to find suppliers. Facebook and Google ads, association with websites like Snapdeal and Timesdeal, hoardings, banners and ads on television are used for marketing purpose. ‘Play spots’ and ‘toys in meals’ are the attractions used for target customers i.e. the kids. Further, endorsement through celebrities is also practiced as a marketing strategy. Inventory system and management of the company’s value chain fosters easy dealing with the vendors and suppliers pertaining to individual stores. Integrating technology in the operations is likely to add value to their products.

Environmental factors

Accusation of the environmental damage pertaining to the concerned countries may influence the operations of the company. McDonald’s adopts packaging that can be recycled. The company should look into the waste management system and try to avoid the use of non-biodegradable substances like Styrofoam coffers and plastic cups and earn customer’s loyalty by showing their awareness with respect to the environment.

Legal factors

McDonald’s is responsive to the legal concepts like tax duties, employment standards, and socio-cultural attributes of the respective countries.

McDonald’s is expected to protect its reliability and assurance by ensuring that the claimed materials and procedures are used in their products and the national food standards of the respective countries are met appropriately (Ibrahim, 2012).

McDonald’s incorporates both vertical and horizontal strategies in promoting its business. Vertical integration is very effective in acquiring a control over the company’s value chain and works as a key component in making corporate level strategies. Vertical integration can be pursued in many ways like backward integration, forward integration and balanced integration (Jurevicius, 2013).

McDonalds sticks to vertical integration mainly by opening its own farms and growing potatoes and beef. McDonald’s is engaged in backward vertical integration as it expands operations on the firms that produce supplements to McDonald’s products.

Horizontal integration refers to branching out the company to other platforms. This kind of integration aims at growing the company’s extent, lessen competition, boost their product demarcation and reach new marketplaces (Jurevicius, 2013).

McDonald’s has created Websites and Games to connect with people on different platforms

Conclusion

It is evident that McDonald’s is inclined to adopt all appropriate means and incorporate both vertical and horizontal strategies within the organization to reach the zenith of success in the fast food business all over the world.

McDonald’s international supply is influenced by the economic standing of the country they are operating in. The company has to bear the issues related with the economic environment of the particular countries. Besides this, fluctuations in the exchange rates also affect the profit rate of the company. Therefore, it is imperative to conduct a market research before launching the business. McDonald’s strategy in researching Indian economy and market trends before penetrating the Indian market has helped it in bearing the frequent shifting in the inflation rate and the fluctuations in the exchange rates.

McDonalds is following Best-fit model by adopting cost controlling activities. McDonalds has to organize a lot its service and quality. It has to work on its customer satisfaction, hygiene and its workforce that is responsible for the maintenance of its brand and for the growth of profitability. It is felt in the organization that without motivation, commitment and satisfaction of the employees it is very difficult to achieve goals.

Since the achievement of the goals fixed by the organization depends on its employees and employees are selected through a big screening process conducted by the HR, the role of HR seems to be very important in the organization. The HR agenda sets by him should meet with the objectives of McDonalds. For the growth and development of any organization the strategies planned by its HR should be every effective and McDonalds appears an example of it.

References

‘How I got here: Rich Floersch of McDonald’s’, 2012, Bloombergbusinessweek, Web.

Human Resources Management Systems, n.d., Web.

Jurevicius, O. 2012. SWOT analysis of McDonalds, Strategic Management Insight, Web.

Jurevicius, O. 2013, Vertical integration, Strategic Management Insight, Web.

Nester-Harper, M. 2013, SWOT Analysis for HR Practices. Chron, Web.

‘People are strategic…What about HRM?’, 2012., HR Agenda, Web.

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