The McDonald s Corporation: Human Resources Case

Transcription

1 The McDonald s Corporation: Human Resources Case This case was prepared for the JDC Central Business Case Competition Questions about this case can be sent to info@jdccentral.ca. The situation described in this case is based on a real event and key identifying details have been disguised. JDC Central holds the copyright for this case and the case cannot be reproduced without express permission. To order copies or inquire about permission to reproduce this case, please contact The Canadian Association of Business Students at info@cabsonline.ca. Introduction The McDonald s Corporation is a global leader in food service retailing with over 32,000 major restaurants spread in over 117 countries and an employee base of over 60 million people. At the business to business level, the McDonald s Corporation has won countless awards for its recruitment, training, and benefits programs; however within the general population and particularly in the United Kingdom, the derogatory term McJobs has increasingly been associated with the food retailing giant. The term, as it was originally coined by Douglas Coupland in his book Generation X, is essentially defined as a lowbenefit, low dignity, low prestige and low pay that did not present any meaningful future job in the specific service sector in which it operated. McDonald s United Kingdom, led by the head of human resources, Thomas Blake, has assembled a team of store owners to come together to examine whether the working environment and recruitment process may be at the heart of the issue. Blake speculates that this perception could be due to a variety of factors, including the company s reputation as an outlet for jobs for young people, or perhaps there is a culture issue within their restaurants.

2 Regardless of the reasons, the negative perception of McDonald s as an employer has led to massive turnover rates and recruitment challenges. Given the huge cost associated with recruiting and training new employees, it is imperative that the group of owners find the root cause of the problem. They have made a step in the right direction by forming the group to face the issue together, but where to start? The problems and opportunities within this fast food giant are endless. Recruitment History and Challenges In 2008, McDonald s United Kingdom changed its operations by introducing contractual employment terms that ran in concurrence with its proprietary terms. Under the contractual terms, employees could apply to work on an hourly basis. Subsequently, the organization experienced a burgeoning number of applicants, mainly young adults and students drawn from the local market of United Kingdom. The number of job applicants soon superseded 300,000 per year prompting the organization to review its recruitment strategies in order to effectively process the increasingly larger pool of applications. The ideal solution to be implemented had to meet the minimum of effectively screening applicants and collecting their Resumes (Curriculum Vitae in the United Kingdom) for further processing. Given the overwhelming number of applicants, McDonald s United Kingdom definitely needed to switch from paper to something electronic. In addition, the new strategy had to exhibit significant cost savings in regard to storage time, it had to incorporate a standardized system of recruiting across the entire company, and it had to simplify the process required in the application process. The bidding process to design the new system was a tedious one. Given that McDonald s United Kingdom is a retailing giant, it seemed like every systems designer in the country was involved! In the end, Peoplefluent, an IT Savvy Recruitment company led by Peter Wolf, won the bid. Wolf offered an efficient and user-friendly system for potential candidates who visit McDonald s career page powered through the McDonald s website. The online component of the new application allowed for a much smoother

3 recruitment process. Individual stores could now post for specific jobs, but could also screen the database for candidates that might fill their needs. A candidate could also fill out an applicant profile to be added to a pool of candidates so the Thomas Blake, head of human resources, could find them without posting a job in the first place. Aggregating recruitment efforts in one place across the entire United Kingdom also offered significant cost savings to individual stores in terms of advertising and promotion. The application process included the option of selecting which stores the candidate would be willing to work, allowing for a single application to be made for multiple locations. The application also included embedded psychometrics to determine whether the candidate would be a good fit within the McDonald s culture, as well as a scheduling application to inform the stores Human Resources teams whether a potential candidate was available when needed. The applications were stored and sent to the stores for processing by integrating a High Volume RMS solution. These new systems allowed a store owner to quickly search the database on selective hiring criteria to choose only those candidates worth interviewing. The system truly did revolutionize the application process at McDonald s United Kingdom. Peoplefluent also helped in the preparation for the interview process by scanning resumes and screening applicants before the interview. The system also included a scheduling application that allowed the candidates selected for an interview to view the time slots available and sign up for a time that suited them. The scheduling app also included a unique feature that would ensure the most highly rated candidates would be exposed to a recurring and predictable interview schedule. This process not only saved on the time required to scan and screen applicants individually, but also was much more accurate with regard to finding the skills and qualities McDonald s United Kingdom was looking for and made scheduling a breeze. This process saved a lot of billable time and effort, and ultimately led to a net reduction in recruitment costs of over 500,000 per year. It is without a doubt that the new recruitment system was successful in doing what it was designed to do. It successfully streamlined the application process, making it easier for

4 Blake to find the people he needed to staff his operation at a much more effective cost. The system saved both time and money, which is exactly what McDonald s United Kingdom needed at the time. But did the system improve the company s reputation as an employer? The term McJobs has only become popular over the last 4 years; perhaps the new recruitment process is actually adding to the negative reputation of a career with McDonald s. Could it be possible that the system that has won awards for recruiting successful candidates could actually be driving the most highly rated candidates away? If that is the case, what can McDonalds United Kingdom do to reverse this perception? Retention and Turnover McDonald s United Kingdom s new application did streamline the process of finding and hiring new recruits, but the next major problem facing the organization is how to retain these new employees. McDonald s United Kingdom has an astounding turnover rate of 150% and staff retention issues at McDonald s United Kingdom are so bad that Blake is concerned that turnover is impacting organizational performance and affecting employee morale. Many of the store owners have reported that they hear the term McJob, in their restaurants on a daily basis from their staff and customers alike, and are certain that the perception of this derogatory term is at the center of the issue. The group of store owners urges Blake to invite the Director of Marketing and Communication, Thomas Scott, to join the team and come up with a marketing campaign to change the perception of the derogatory term, McJob. Blake is not convinced that it is the term itself that is the issue, but agrees that the term needs to be addressed. Scott mentions that the term will be difficult to reverse through marketing alone, as it has been entrenched in society s perception of the position. Although Blake has worked tirelessly in his position to improve the life of a McDonald s employee, perhaps there is some truth in the term that needs to be looked at. If the term is not a true definition of the job, then perhaps it will dissipate on its own. Blake worries that this will be a costly venture. It is true that McDonald s United Kingdom start at minimum wage (between 5.03 and 6.31, depending on the region, or $8 - $11 per hour), but increasing

5 that number for its store employees (numbering over 40,000) would cost McDonald s United Kingdom its financial security. Surely, if the company is struggling with managing an extreme number of applications, perhaps wage is not the issue. But if wage is not the issue, what is? Blake cannot see how a job at McDonald s could be seen as having no dignity or immediate future. In fact, previous research by Adrian Furnham, a renowned professor of psychology based at London University College, had indicated that young people at McDonald s had been positively transformed by their work conditions and that the transformation was exemplified by their improved communication skills, confidence and clarity in career prospects. Also, the McDonald s staff value proposition was developed in 2009 to ensure that McDonald s United Kingdom employees felt valued and cared for. The program focuses on three key pillars: People and Culture; Flexibility and Variety; and Development and Opportunity. It emphasizes an energizing work environment that is both flexible and includes opportunities for development and growth. The value proposition also seeks to develop a supportive working environment that is conducive to learning and mutual respect. New recruits learn the staff value proposition as part of the employee training program, and the proposition is posted for all to see in the employee area of every restaurant. Twice a year, employees sit down with their managers for a performance evaluation. Here, employees are welcome to voice their concerns and are given feedback on their performance. They are also asked questions on the quality of the work environment, how they feel their access to resources to be, and their overall satisfaction at work. The evaluation is held in the employee s file for the duration of their employment with McDonald s United Kingdom, and this data is the only formal feedback received from employees on how they perceive the work environment. It is difficult for Blake to get access to this information as it is recorded on paper and stored in each physical location, but the store owners ensure Blake that the reviews are mainly positive.

6 Further, there are plenty of opportunities for McDonald s employees. The training program was designed to ensure that McDonald s employees would be marketable to any other employer they would encounter, and as such is a very well rounded program that has won prestigious awards. Further, every store has two levels of management that is always looking for promising new managers. Ironically, staffing these positions has historically been difficult because of the turnover. Conclusion Blake is at a loss. He needs a cost effective way to improve moral and increase retention across the McDonald s United Kingdom stores. He needs a plan to find out what the root causes of his problem are and a plan to address them. Blake wonders whether there is a more efficient system for tracking employee feedback and implementing change. He wonders if there are other benefits that can be implemented to entice employees to stay at a low cost. Regardless of how they do it, it is essential that McDonald s United Kingdom gets its retention and turnover under control.