Human Resource Management

Executive summary

The Human Resources function has evolved to take a central place in the administration of small to large service-oriented organisations.  In services industries like restaurants, it is the responsibility of the managers to ensure that staff provides excellent service to its customers for business growth and success. To achieve this objective, managers are increasingly undertaking human resource practices to build a competent and committed workforce from hiring level to training initiatives and for performance management. The report aims to identify and discuss the three key human resource management (HRM) practices such as performance appraisal, training and development and reward and recognition programs employed by the McDonald management. The report also analyses the strength of the HRM function that is contributing to the global success of McDonald’s brand. Based on the analysis, the recommendation is made to further strengthen the HRM function in McDonald’s.

Company Description

Mc Donald’s is a leading and well-accepted fast-food restaurant chain operating in the food and beverage industry. It is an American-based business which initiated as a barbecue restaurant in the year 1940 by Richard and Maurice McDonald in California. In the present day, the business successfully operates as a quick service fast food restaurant model in around 120 nations with over 39,000 retail stores. The customised menu for different geographical regions and culture focus on the assorted burger, breakfast items, chicken items, fish items, desserts and side snacks like French fries, salads and wraps along with beverages like soft drinks and shakes.  The vision of the company is to provide the best experience for quick-service restaurants in terms of excellent food quality, customer service, customer value and hygiene. The giant fast-food chain goal is to provide healthy alternatives food approaches and to sustain its goodwill in the market. The value proposition of McDonald’s focuses on quality and service aspects to add value to products.  In 2016, the revenue accounted for US$ 24.622 billion as shown in the below figure (Statistics, 2017).

Figure 1 McDonalds- Global Revenue

The success of the company is due to consistency in its customer services and food quality that has helped the customer to remain loyal. This indicated that human resources in managing the various aspects of the fast-food operator business and sustaining its position as a quick-service restaurant play a central role in the business success of McDonald’s.

However, in recent years the company has become a top recruiter providing employment to more than 1.5 million employees in its franchise business. The company has a fully functioning Human Resource department with well-defined HR policies and roles clarity from senior managers and department managers to cook food department, customer service staff and crew trainers (Cheng et al., 2011). Each role contributes to the overall efficient functioning and success of the quick-service restaurant chains in globally competitive markets.  It can be noted that a committed workforce of crew member staff forms the most important asset in McDonald’s.

Identification of key HRM practices and comparison to best practice

The managers at McDonald’s have a strong commitment towards the human resources practices that incorporates a culture of liberal advantages and policies such as flexible work arrangements,  employee empowerment, etc. that are in interest in employee welfare. The key HRM practices identified in the company are training and development, performance appraisal and reward & recognition.

Training and Development –

This HR function plays a vital role to keep the staff knowledge and skill updated specifically to the role and job. This is done to help the staff especially crew members in performing the business operations and provide good customer service in an effective and efficient manner. The company emphasise providing continuous training to its crew members to provide high customer service to achieve customer satisfaction and loyalty (Andreani et al., 2012). The staff training program initiates from the initial hiring process, the selected candidate are provided intensive induction training which gives information about the company history and milestones through DVD presentation. The newly hired employee is oriented about the work culture, policies and about food and health safety practices followed in McDonald’s. The purpose of this of-the job training is to familiarise the vision, mission and goals of the company and to ensure that the new employee goal is well aligned with the company. Off-the-job training method takes place in the company premises and franchisee restaurant premises in a separate meeting room. This method employs video presentations and lectures where the restaurant manager informs about the work policies and the company in general. Moreover, to train the crew staff or operation work, the company make use of on-the-job training methods such as coaching, apprenticeship and job rotation. This training method trains the staff during work with actual equipment in its allocated restaurant/workplace. For the existing staff and crew members, the training purpose is for succession planning and to assist the employee in transition from its current role/position to a higher job designation with additional responsibilities. This includes leadership training to take up the higher roles and carer development. The competitor of McDonald’s such as Burger King is recognised for leadership development and excellence in workforce human resource practices in the quick-service restaurant industry (Mohsin and Lengler, 2015). The training program in the company focuses on management development programs for leadership development and knowledge management. Burger King Corp. was renowned among the 100-plus organisations to track and detail its human capital intelligence on a monthly basis. However, HRM practices in KFC focuses on the on-the-job training method and training designs are based on competence training and other training programs for employee retention strategies and hourly staff retention. The training program at McDonald’s also includes team building and conflict management to keep the staff focussed on achieving the business short and long term objectives. It can be said that the training function in McDonald is result-oriented and the development is a future-oriented process that focuses on the attainment of both personal career and business goals.

Performance appraisal –

The process of performance appraisal in McDonald’s starts with setting performance standards by managers that are informed to employees during the induction training session. The actual performance is measured and compared with set performance criteria.  This function in the company serves the purpose to inform and evaluate the current performance and providing corrective action to the staff to improve future performance. In McDonald’s, the staff members are given directions related to food arrangement, food safety, kitchen management, taking orders, teamwork and courteous service behaviour. The appraisal method used is a rating scale for evaluating employee performance. This method focuses on employee traits and contributions such as quality and has a rating for each trait as performance values (Debnath et al., 2015). Another method employed by the company is a critical incident method which is useful to evaluate employee failure or success in specific situations in the course of employment. The manager takes note of such incidence and considers them while rating the performance (Qureshi and Hassan, 2013). This method helps the company to evaluate employees actual behaviour on the job. The performance appraisal method employed in the company also stresses the feedback mechanism from the managers, co-workers and customers to identify factors affecting the workplace performance and to find the reason behind staff poor performance. The assessment of each employee is relying on the individual work performance and feedback. Some performance criteria laid by the senior managers are individual quality and behavioural aspects like honesty, punctuality, productivity, and reliability. The company follows a formal performance appraisal two times each year. In KFC, a multi-source assessment known as 360-degree performance appraisal is being employed by the managers (Hossain and Hossain, 2012). This method collects feedback from different stakeholders on various performance dimensions to evaluate how each employee performs the given task and assigned job role.

Reward & Recognition –

The reward system is to boost the morale of the crew members, retain talented employees and encourage the staff to continue to achieve high work performance through scaling efficiency. Motivation describes the individual behaviour to remain committed and concerned about work Motivation strategies are used by the company to make the work more appealing and to account for employee behaviour towards achieving the goal. The Motivational Model highlights the process of individual needs and expectations that impact employee behaviour/action towards the fulfilment of personal and organisational goals (French, 2011). Hence, managers in McDonald’s makes a continuous effort to keep the crew staff members and other employees motivated to keep a culture of high service and employee contribute in fulfilling the company goals and vision. Under the process theory of motivation theory, reinforcement theory highlights that managers are likely to enhance staff performance through rewards policy to generate a desirable behaviour (Petri and Govern, 2012). The company tries to follow the principle of positive reinforcement to improve employee performance and work productivity and retain skilled staff through performance bonuses and recognition for hard work and high performance. Maslow Hierarchy Theory of motivation also reflects on the individual needs to enhance its motivation by fulfilling its needs of hierarchy starting from psychological needs as basic needs for security and safety, love, esteem and self-respect and self-actualization. The consideration of the Maslow hierarchy needs will be useful for the managers to gain a better understanding of the basic needs of employees especially for recognition for an effort/new role or assigned duty (Kaur, 2013). The company rewards the employee through performance bonuses, promotions and recognition strategies.

According to Kim and Ahn, (2017), rewards offer a tangible form of acknowledgement of good performance and are considered to provide indirect motivation. The specific purpose of recognition practice is to recognise the efforts of the staff and reward high performing staff and provide recognition among the team and department. The company has well-defined recognition programs to distinguish strong performers. The company recognise the top 1 per cent of the employees from the corporate and regional office with the President Award and the top teams identified at the global level receive the Circle of Excellence Award for making a contribution towards attaining the company vision (Qureshi and Hassan, 2013). The reward and recognition system at KFC follows a performance-based salary and quarterly performance bonuses for managers (Hossain and Hossain, 2012). The company recognises the outlets based on high customer service in its annual champion club. It can be observed that KFC and McDonalds have a recognition culture to motivate high performers and teams.

 Analysis of overall strength of McDonald HRM function

The human resource management of McDonald’s is very effective for the employees. It provides the enhancement to the employee’s towered the achievement of the organizational goals. The HRM provides the strategic and logical way to the company that is the most valued asset and helps to get the organizational success. On the other hand, the HR managers of the company think about the fulfilment of individual needs to make them loyal to the enterprise, and they consider each employee as an invaluable asset of the company. According to the, HR department of McDonald’s, human resource is a process of keeping the effective balance between the employer and employees to make strong belief in the company. McDonald’s HRM practices involve the recruitment and selection process of the employee to provide the best quality employees for their company. This process helps to provide the opportunity of emplacement of the people in an organization (Bardoel, et al., 2014). HRM of McDonald’s design the job for new employees to describes all duties and responsibilities of the work. Job designing is useful for the HR department to restrict irrelevant applications in the recruitment process.

Human resource management of the company offers the reward for the employees to motivate them. The rewards are also helping to improve the performance of the employee and provide success to the organization. The HRM of the company plays a vital role in the development of the guidelines and procedures for the success of the company. All the guidelines and procedures are helpful for the employees to manage the internal duties with customer satisfaction (Boehm, et al., 2014). According to the different literature, the effective human resource of the company is supporting to get the competitive advantage in the industry. McDonald’s is using an effective strategy for the human resource management of the company that is very helpful to resolve the problems of its employees. In this strategy, the company tries to understand the problems of their employee and try to solve complain without hurting others to increase the performance of the employee. In the words of Cogin and Williamson (2014), HRM also functions on the improvement among the employees by providing the best training by attracting customers to get the success of the business.

McDonald’s provides several specific training to the employees for attracting the customer by the behaviour of the employees. The company focuses on every employee in training to develop operational skills and to gain knowledge about customer behaviour. This training is also supportive for the employee to develop the ability of progress in the carrier. The training can also motivate the employee to be perfect in the role and improve the performance of the work. In the view of Al-Mobaideen, et al., (2013) the managerial function facilitates planning, organizing, directing and controlling for the effective human resource in the organization. The managerial function of McDonald’s has the strength of proper management where all the employees are selected for the specific task with the quality. The management of the company tries to verify the performance of the employees and control them effectively for a successful outcome. The employees are properly directed by the human resources management in an organization to activate and motivate them.

The operative function of the HRM provides the facility of recruitment, selection, job analysis, job design, performance appraisal, training & development, wage & salary administration, employee welfare, maintenance, and record of personnel. In the same concern of this Sparrow, et al., (2015) in this function, the human resource department contains the responsibility of managing the human resource by the use of strategies and techniques. The HRM of McDonald’s is successfully worked on the operative functions to achieve the organizational goal through the performance of the employees. In addition to this, the HR of the company is also working on the employee-related information such as recording, maintaining and retrieving the data. Similarly, the labour relation is very important for the HRM in the company to interact with the organizational employees that represent the trade union. The human resource management of McDonald’s has also included the advisory function to advise the employee on HR matters. By the use of this function, the HR manager can describe the program, policies, and procedures to the employees. In addition, the human resource manager also advises the departmental manager about the several needs of the human resource management (Sparrow, et al., 2015).

McDonald’s is using the high-performance culture strategy in the HRM to measure the performance of the employees. This strategy of McDonald’s makes it the market leader in the fast-food industry. In support of this strategy Erden, (2013) the employees are preformed highly at the workplace for achieving the organizational task to get success. In the high-performance strategy, McDonald’s develop the skills of the employees and provide them creative ideas for the good performance of the company in the market. McDonald’s uses the rating and initiated to use performance appraisal strategy for this high performance of the employees and evaluate them 360 degrees similar to KFC. McDonald’s uses the performance appraisal process twice a year, where each employee of the particular job is evaluated to determine the performance.

McDonald’s is achieved success by the best use of the human resource skills and qualities in the product to become the leader of the fast food industry. To achieve this success, McDonald’s used human resources by providing them effective training of production and distribution of the product. The human resource management of the company achieved the target of successful performance in the market by offering effective training for customer satisfaction (Jones and Nisbet, 2011). Moreover, the strategic framework of the company has effectiveness in the commitment by the employee to customer. McDonald established a strong talent for the employees and provided an effective employment experiment to treat the problems of the employees. McDonald’s provides an image to the employees according to their talents by rewarding them with strong pay and performance culture.

Recommendations

From the above analysis, it is understood that the increasing workload being felt by the employees and lack of monetary benefits/rewards are major concerns that are leading to employee dissatisfaction. It is suggested that the company can provide benefits through a defined contribution benefit plan to all its staff members such as a well-defined policy for employee stock ownership. This kind of compensation plan will make employees feel more valuable assets to the company.  The company can also provide financial rewards that will provide financial recognition to its high achievement employee or for acquiring a certain level of competency in the job. The rewards in terms of financial benefit can enhance the level of motivation to improve performance, enhance skills or acquire more competencies as per job requirements to achieve personal development goals and business priorities (Werner and DeSimone, 2011). It is suggested that the company should invest in time and effort to understand the employee needs to get better returns in its future business service operations.

Conclusion

The HRM practices in McDonald’s have a central focus on its employee as an asset of the quick-service restaurant. It can be summarised that the human resource management practices such as performance appraisal, training and development in McDonald’s are dealing effectively with the employee dimension in its management. However, it was analysed that the company needs to provide a better compensation management plan for its employee to deal with the issue of employee dissatisfaction. From the discussion of key HRM practices in McDonald’s, it can be understood that the human resource approach in the company is focusing on employee personal development along with the business goals.

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