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2019 McDonald’s Summary Intro About/brief history “Whole concept was based on speed, lower prices and volume” More than 37,000 outlets in more than 120 countries 92% is owned by franchises → They want to change to 95% franchises and 5% company June 2018, estimated market value US$132 billion Australia: More than 900 stores - 80% franchises Operations Role Strategic Role Cost Leadership: McD sells 75 hamburgers per sec. Large turnover the economies of scales plays a competitive advantage over competitors Company invested money for operations training program to ensure efficiency and reduce overall costs Influences Globalistion (refers to the ability of nations to trade with one another) Allowed to transfer capital, labour and intellectual property to stores Globalisation has had a significant impact on the operations & management In 2018 → McD was the 11th most valuable brand McD 2017 Annual report shows $91 billion in sales → Meaning successful in adapting to the global conditions Technology Drive efficiency and reduce long term operation costs Tech advancements influence and re-shape McD operations Eg. Partnership with UberEats and Menulog, allows customers to order online and have their food delivered at their home McD has also an online ordering app, which allows customers to place order before they arrive Also included: Use of LEDs (reduces energy consumption), automatic drink dispensers, digital menu boards, digital customer notifications Quality Expectations In 2011, McD didn’t meet Aus “sophisticated coffee palate” → dissatisfaction of blend & consistency → McCafe introduced 2018 → Introduced fresh beef patties instead of frozen (pro: taste better con: take longer to cook) - 90% customer satisfaction & 90% repurchase intent Quality Expectation McDonalds Quality of inputs Supplier, franchises and employees work together = safe, quality

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Page 1: 2019 McDonald’s Summary

2019 McDonald’s Summary Intro About/brief history

“Whole concept was based on speed, lower prices and volume” More than 37,000 outlets in more than 120 countries 92% is owned by franchises → They want to change to 95% franchises and 5%

company June 2018, estimated market value US$132 billion Australia:

More than 900 stores - 80% franchises

Operations Role Strategic Role Cost Leadership:

McD sells 75 hamburgers per sec. Large turnover the economies of scales plays a competitive advantage over

competitors Company invested money for operations training program to ensure efficiency and

reduce overall costs

Influences Globalistion (refers to the ability of nations to trade with one another)

Allowed to transfer capital, labour and intellectual property to stores Globalisation has had a significant impact on the operations & management In 2018 → McD was the 11th most valuable brand McD 2017 Annual report shows $91 billion in sales → Meaning successful in

adapting to the global conditions

Technology

Drive efficiency and reduce long term operation costs Tech advancements influence and re-shape McD operations Eg. Partnership with UberEats and Menulog, allows customers to order online and

have their food delivered at their home McD has also an online ordering app, which allows customers to place order before

they arrive Also included: Use of LEDs (reduces energy consumption), automatic drink

dispensers, digital menu boards, digital customer notifications

Quality Expectations

In 2011, McD didn’t meet Aus “sophisticated coffee palate” → dissatisfaction of blend & consistency → McCafe introduced

2018 → Introduced fresh beef patties instead of frozen (pro: taste better con: take longer to cook) - 90% customer satisfaction & 90% repurchase intent

Quality Expectation McDonalds

Quality of inputs Supplier, franchises and employees work together = safe, quality

Page 2: 2019 McDonald’s Summary

Greater freshness demanded = changes made w/ diff. Ingredients eg. removing artificial preservatives in chicken nuggets & beef burgers

Durability of good + reliability of service

Sophiscates supply chain and inventory management Rare out of stock ( usually issues or high demand)

Fit for purpose Needs to meet standards of Food Safety Act 1991

Cost-Based Competition

McD dominates Western Europe Rising operational costs (input, transport, labour) → Focus on cost minimisation to

maximise profits

Government policies

McD global = variety of gov policies and rules US. Calorie Count + others (inspections and results publically available) Australia New Zealand Food Standards Code (ANZFSC) -> reduce food additiatives,

improve safety by labelling Safety Plan by Hazard Analysis Critical Control Point (HACCP) = monitor & control

inputs

Legal Regulations- Australia McD

Local: Located in commercial zones set by local councils - also impact opening/ closing hours and outdoor facilities

State: Workplace Health and Safety Act 2011 NSW - Safe enviro for workers Fed: Regulates Aus enterprise agreements - More than 4 hours work are entitled to

paid drink breaks, and more than 5, 30 min meal break Australia Consumer Law 2010 (CTH) - Fair trading and consumer protection which is

administered by the ACCC

Environmental Sustainability

Reduce Energy Use: 2014, placed more energy efficient equipment = saved $14.2 million US Use of LED saved energy by 50% - 70% Use energy efficient air conditioning, lighting, solar panels

Reduce Water Use Use rainwater tanks, installation of time flow taps - slows the flow of water

and switched the water Packaging

Reduce waste to reduce operational costs Signatory to Australian Packaging Covenant = promote recycling McD packaging are renewable = reduce 30% waste over 10 years

Transport and Distribution Use fewer miles to use less fuel - with alternative use of fuel

Corporate Social Responsibility

Triple Bottom Line = People, Planet, Profit Sustainable Supply Chain

Collab with suppliers → quality products - holistic approach Economic Responsibility

McD Aus tries to use Australian Products and manufacturers Animal Health and Welfare

1997 McD affect rearing and slaughtering animals

Page 3: 2019 McDonald’s Summary

Cage free eggs

Process Inputs

Transformed Resources (Material and Info) Material: Physical inputs for products Info: Internally/ Externally gathered eg. customer feedback and analysis of sales

Customer satisfaction → Shift in operations to be healthier in order to remain competitive

Transforming Resources (Human Resources and Facilities) Human Resources

109, 000 employees with each staff member with specific role Front Counter - Greet people and take orders - Face of McD - slowly replaced

with self serve kiosk Host - Assist with kiosk and place menu on their table Kitchen Crew - Cook food

Facilities Cooking equipment, communications and cash register, cleaning, building

etc. Affect efficiency and costs Upgrade facilities in order to sustain growth and more sophisticated

Transformation Process

Influence of 4 Vs

Influence McD

Volume Quantity of item= essential inventory management is flexible to consumer demand

2012 - 1.7 million customers visit McDonalds per day = large volume Customer demand may be seasonal for some products eg. icy and soft

serve Maintain short lead times

Variety Variety, now consumers can customise eg. additional breakfast, sauces, desserts

Variation Influenced by external factors eg. recession, → staff, inventory management

Visibility Customer (feedback) via online or call, direct contact Home delivery + Stores = High visibility

Sequence and Scheduling Strict routine of assembly of item eg. Big Mac (sequencing) Scheduling - manage time of making ingredients and customers receive product

within a timely manner eg. each product as a lead time which it has to be delivered in → greater efficiency

Tech, task design and process layout Tech = MyMaccas App, Improved drive-thru

Page 4: 2019 McDonald’s Summary

Task Design = Job description - staff need to know role for smooth flow, time allocated tasks

Process Layout Organised layout = promotes work flow & easy access Test kitchen - to try new processes and products

Monitoring, controlling and improvement McD managers review lead times, Drive-thru wait times, inventory turn-over, wastage

and cost analysis → shortfall = action

Outputs

Customer service + Product Engaging customer service → brand loyalty

Strategies - Executes vision of Marketing, within budgets set by finance with support of HR Performance Objectives Quality

Consistency & dependability Wastage and costs reduced Need to emphasise quality of raw materials eg. patty and vegetables

Speed To maintain flow → time allocated eg. 11 sec toast bun, 20 seconds to assemble Process layout assist with speed, logical placement Complexity of menu items - adding to wait time Alterations to Drive-thru to increase capacity of cars

Flexibility + Customisation Standardised → Customised Create your taste menu - kiosk

Cost Large costs - need to minimise Increase wage and salaries → lead to increase in cost for outputs Kiosk reduces the need of labour & minimises human error

ND/ SD

Innovate and maintain products Create your taste/ gourmet creations Putting extra costs on the customer Differentiate from customers eg. Children’s birthdays parties, play areas, free wi-fi

Supply Chain Management

Reduce logistics costs by utilising local suppliers

Outsourcing

Key functions eg. Management of IT, Logistics Outsourcing makes a mistake - bad for reputation for business eg. Shanghai Husi

Food had contaminated food which impacted McD, than they changed their suppliers

Technology

Efficient, accurate, reduce labour costs, minimise waste

Inventory

Accurate forecasting of demand = 10% food binned - unnecessary → started making food to order

Page 5: 2019 McDonald’s Summary

Accurate inventory control = Previously McD managers were responsible for ordering stock - resulted in over/under stock

McD UK - Now implemented Restaurant Supply Planning System - improved inventory

Quality Management

Quality Control - McD checks the quality of raw inputs and levels of bacteria Quality Assurance - Strict set of rules of standards and safety procedures, which is

based on HACCP

Global Factors Research & Development (R&D) → Innovate, improve products, processes and

service R&D on external factors - Customer needs, general economic needs and competitive

behaviour

Marketing Role Strategic

Eg. McD 2017 Annual Report - Raise consumer awareness of enhanced convenience of delivery and expand the options to engage with the brand

Production, Selling and Marketing Approaches Sales → Marketing approach (customer centric)

Types of Market - Individual Consumption Influences Factors influencing customer choice

Psychological Foodie with healthy food McD change to include more healthy options

Economic 2017 McD Annual Report - Substantially affected by the economic cycle -

Recession proof Government

ANZFSC - nutrition info available Sociocultural

Variety of social and cultural backgrounds Extra value meals & Loose change menu

Consumer Laws

Labelling - Australia ANZFSC Food Act 2003 NSW & Food Regulation Act 2015 NSW Display ingredients, nutritional and allergy

Advertising Spam Act 2003 CTH prohibits unsolicited messages that advertises or

promotes a business or goods McD breach when they had a send to friend link to send to other people ACCC → ACL 2010 CTH - prevents unethical or misleading advertising

Ethical Considerations

Advertising to children

Page 6: 2019 McDonald’s Summary

McLibel Case UK -> Exploiting children with ads by focusing on the premium (toy) rather than the product

Fast-foods contributing towards obesity McD - using healthier ingredients, reducing sodium content in the sliced

cheese Fries can be replaced with salad

Processes Situational Analysis - SWOT, Product Life Cycle

Diverse income stream Global brand Highly detailed growth plan Market share International lead markets

Lack of central control Poor operating

performances

Innovation Anticipate and respond to changing consumer

preferences

Negative publicity Interruptions with supply

chain Food safety breaches Competition Increase in wage costs

In 2014 - major drop in profits - consumers wanted a healthier lifestyle All day breakfast menu - earned boost with profits Market Research

Collection of customer preferences 2005 - McD Aus - Interview with 35 people and over 2,500 phone calls → salt

reductions and launch of seared chicken in salad and burgers. More transparency of food there eating McDVoice.com, is a satisfaction survey - data about the store, food and staff → used

to fix weaknesses

Establish Marketing Objectives

Growth plan (market share): 1. Retain existing customers 2. Regain lost customers 3. Converting casual customers

Identifying Target markets

Globally, 68 million people per day McD Uk - Families & Busy workers - Happy meal, play equipment Developing into Asia with more restaurants Each country - different demographic/ geography - different wants

Developing Marketing strategies 2017 McD global plan: Enhance digital capabilities Redefine customer convenience through delivery Elevate customer experience i.e convenience, personalised and enjoyable visit

Page 7: 2019 McDonald’s Summary

Implementation, Monitoring and Controlling Monitoring and controlling Gourmet Creations, Create your own taste, mymaccas

ordering app

Strategies (39 - 46) Market Segmentation, Product/ Service Differentiation and Positioning M.S

Demographic → Happy Meal toys (kids) and coffee and table service (older customers)

Psychographic → Development of healthier options Geographic → Suit local taste eg. Australia - Aussie BBQ Angus, Peru - Mexican

Salad, US - Bacon Clubhouse Burger Positioning

Super Size me - Negative publicity - High sodium and fatty foods Re- position - Eat Smart, Be active (involved in the campaign)

Products - Goods and/ or Services Branding → More people recognises the ‘golden arches’ than the christian cross -

shows effectiveness of global campaigns Packaging → Protect the food, reinforce info the company wants the consumers to

know, also promotes branding Price inc. Pricing methods

Loss Leader → Loose change menu - Promote to buy loose change item with a more expensive item

Price Points → Value ladder with different varying levels of affordability eg. Loose Change and Gourmet creations, with additional costs for a more deluxe meal.

Higher price the better quality, which can also improve the branding Price Bundling → Package for a lower price than purchase individually eg. McValue

and Family Boxes Promotion

Advertising → Promote the brand, Masstige (mass advertising), Tv ad campaign, celebrity endorsement with Mindy Kaling - 4 million views within a week

Relationship Marketing → Loyalty cards, mymaccas app, signing in - free wifi, exclusive offers, encourages to provide feedback

Publicity → Good: article - McD all day breakfast a hit - shares hit record high, More

elegant image Bad: Super size me and McLibel case

Sales Promotion → Monopoly Promotion Place/ Distribution Distribution channels → Producer - retailer - customer Channel choice → Selective distribution channel. Third parties have also increased the sales and size of distribution. Uber Eats w/ McD has grown from 200 to 7000 stores Global Markets Global Branding → Golden arches - logo. Also affiliated with olympics games to further expand brand image Standardisation → Uses the benefits of economies of scale, also consistency within all the stores Customisation → Recognises different culture tastes. Local modifications eg. Inclusion of beer in France, Germany and Portugal. Finance Role Strategic Role

Page 8: 2019 McDonald’s Summary

Increase profits Increasing debt equity

Objective of Finance Profitability - Increase profits - Aim for mid 40s% from 20% (Gross profit) Growth - Increase sales and store numbers Efficiency - Increase efficiency - Reduce administration & interest expenses Liquidity - Increase cash available Solvency - Continue returning cash to shareholders

Influences Internal Source of Finance

Retained Profits - For buybacks and dividends External Source of Finance

Short & Medium Term Overdraft - US $2.5 billion Commercial Bills - Commercial papers to the public

Long term Mortgage - Equipment & Machinery, only very limited property Leasing - Leasing lands and buildings Unsecured notes / Debentures are used

Equity Debt increasing and equity decreasing

Financial Institutions

Range of banks and finance companies

Government Institutions Minimum wage employees Different taxation system ASIC → Enforce Corporations Act 2001, underneath McDonald’s Australia Holdings

Limited, creates reports Company taxation → Different rates on profits, avoid company tax

Global Market Economic Outlook →

2017 Annual Report - Substantially influenced by economic fluctuations Recession proof Lower economic - Cheap food eg. Loose Change Menu Seen as a luxury - decrease sales

Availability of Funds → Low interest rates globally Relatively easy access More debt finance

Interest Rates → Low interest rates (anywhere from 0.3% - 5.4% p.a More debt

Processes Planning and Implementing Assessing Financial Needs and Budgets → Budget for renovation for restaurants Using Record Systems → Standard bookkeeping and accounting. Point of Sale system - info on roster staff, sales food, assembling food. Monitor store sales levels. Managing Financial Risks →

Page 9: 2019 McDonald’s Summary

Interest Rates Swap - Amount of interest payable on loans, variable interest rate Foreincy currency forwards - Lock in exchange rate and avoid risks from changing

economic fluctuations Cross -currency swaps

Implementing Financial Controls → Assessed externally audit - for assurance purposes Debt Financing →

Disadvantages: Within time frame and variable interest rates Expense of interest

Advantages: Cheap form of finance with low interest rates Payments are tax deductible More flexible, with the large sums obtained in a short period of time

Equity Financing → Disadvantages:

Can be more expensive than debt equity Advantages:

Returning cash to business, to not pay dividend Expansion of projects

Matching the terms and source of finance to the business purpose → McD owns or leases the land for franchisee

Monitoring and Controlling

Cash flow statement, income statement and a balance sheet Analysis of the report

Financial Ratios (McD vs Yum!) Liquidity (Current ratio) (A:L) McDonalds Yum!

2015 2016 2017 2015 2016 2017

3.26: 1 1.4: 1 1.85: 1 0.55: 1 1.08: 1 1.65: 1

2015 - Increasing cash for capital return program Gearing (D:E) McDonalds Yum!

2015 2015

4.35: 1 7.38: 1

Both negative equity Profitability (GP) (GP:S) McDonalds Yum!

2015 2016 2017 2015 2016 2017

66% 68% 68% 69% 70% 69%

GP = Sales - COGS McD is lower than Yum!

Page 10: 2019 McDonald’s Summary

Profitability (NP) McDonalds Yum!

2015 2016 2017 2015 2016 2017

15% 17% 18% 16% 17% 17%

Limitations of Financial Report Capitalising Expenses Development costs of properties are capitalised Buildings are seen as an asset Valuing Assets - Goodwill McD Aus has approx $409 million in goodwill in 2017 McD purchases back a franchise, the amount they pay is over and above tangible and intangible worth. Limitations:

Are they paying too much Is the goodwill figure relevant after years of purchase

Timing Issues

Management makes a statement that they are no events after the date Additional safeguard: Make sure disclose any significant issues before reports are

published Another issue is the amount of assets and the rate of depreciation (straight line) -

problem is that straight-line may not reflect economic reality - meaning could overstate actual profits

Ethical Issues of the Financial Reports

McD managers can earn extra payment based on performance or shares as a bonus Deferring or capitalising expenses - seen as extra profit Another Eg. McD franchisees pay McD a percentage of gross sales for royalties and

rent, This may incentives to make false financial statements, to reduce fees payable.

Strategies Cash Flow Management (CFM)

Customers pay cash or card Either paid directly to the company or paid to the franchisee on a monthly basis Cash flow strategies:

Returning cash to shareholders by dividends or buybacks Increase spending on capital infrastructure Decreasing the number of company stores and increase franchisees, thus

generating cash from initial sale, royalties and rent 2017: McD generate US $5.5 billion from operations

Page 11: 2019 McDonald’s Summary

Working Capital Management (WCM) Assets: Cash

Franchisees have to pay royalties or rent → they must report previous month sales by 11 am on the first day by next month, and then royalty must be paid full on the 10th day

Helps maintain significant cash flow

Receivables

Tight control over receivables Late payment of rent or royalties, may come with high interest - helps control largest

receivables

Inventory

Too little stock = customers are frustrated (sales reduced) & too much stock (storage and wastage issues)

Relies on external suppliers for inventory McD has started only making the hamburger when ordered - helped with wastage

and costs Uses Manugistics = places necessary orders with suppliers Uses FIFO

Liabilities: Payables or other loans

It takes 25.4 days to pay its accounts

Overdrafts

McD has a US $2.5 billion overdraft and pays 0.07% p.a, which equals to US $1.75 million per year

Strategies: Leasing

Primarily related to property Approx 12,262 restaurants in 2017, and also has built a further US $12.5 billion worth

of buildings on land. Allows with rapid expansion without large initial capital outlay Cash can be retained

Sales and Lease Back

McD services a large income from the property it leases Some properties are selling the leases, then leasing back to reach the full market

value

Profitability Management (PM) Costs Controls Fixed and Variable costs

Fixed: Not directly linked to sales - council rates, insurance premiums etc Variable: Directly linked to sales - royalty fees payable eg. foods, packaging, drinks Mixed: Wages, electricity, water etc.

Page 12: 2019 McDonald’s Summary

Variable and mixed expenses can be problematic. Royalty and rental percentage are written into contracts and can’t be changed. Inventory system will assist with lowering the wastage of foods and inputs, lowering variable costs. Also a varying number of staff will lower the variable costs of wage costs. Fixed costs are difficult to change, unless with negotiation Revenue Controls Turning to 95% franchisees, creating more stable revenue streams, as there is less risk of operating their own stores. However, total revenue actually decreases Global Financial Management (GFM) Exchange Rates

McD held US $12.4 billion, which is approx 42% of long term debt Exchange Rates Hedging/ Derivatives (H/D)

Forward exchange rate contracts, options, cross currency swaps Based by locking future exchange rates, helps smooth the impact of currency

fluctuations

Interest Rates

Uses interest rate swaps Avg. 3.3% p.a and currently has 89% of debt fixed Uses Hedges, turning fixed interest into variable interest

Human resources Role Strategic Role

Directly employs 235,000 people Approx 1.9 million people who work for McD 106,000 people in Australia Employees face with 68 million customers each day Standards of Business Conduct - The promise of the golden arches - Sets out

expectations the business has for employees

Outsourcing

Build capacity, capability and reduce costs McD outsource SafetyWork to help comply workplace health and safety requirement,

ensures stores meet legal requirement McD also uses WorkStar, who developed an online platform, which assists in getting

new employees for the first day at work. WorkStar also provides some training courses Advantage = specialist expertise

Influences Stakeholders

Employers: Directly employ staff or are employed locally as franchisee. Account towards 7% of cafe and restaurant workers.

Employees: Young employees influence the management of HR. Clear training pathways and restrict working hours for employees who are still at school.

Employer Association: Part of the Franchise Council of Aus. (FCA). FCA represents the franchisors, franchisees and suppliers. Also a part of the Australian Industry Group (AIG), promoting member views, they prevented businesses having to pay higher penalty rates on the weekend.

Page 13: 2019 McDonald’s Summary

Trade Unions: Minor impact. Shop, Distributive Allied Employees Association (SDA), negotiated an enterprise agreement for all McD workers in Australia. They allowed:

Guaranteed minimum 10 hours per week Emergency services leave Study leave Double payment as compensation if meal break is missed Annual wage increase between 3.5% - 4.5%

Government: Australian Taxation Office (ATO): Collects GST and income tax, and tax from

wages of employees Fair Work Ombudsman (FWO) + Fair Work Commission (FWC): Ensure

employees are being treated fairly in accordance with the law. FWC approved the SDA enterprise agreement.

Australian Skills Quality Authority (ASQA): Approving training courses State gov.: Collect payroll tax, administer WH +S legislation. Fed Gov.: ATO, ASIC, Fair Work, ASQA - implement policies

Society: Societal expectations, Responsible Student employment policy

Legal Employment contract

Fair Work Act 2009 CTH -> Workplace awards and agreements BOOT test for SDA enterprise agreement Contract - injured party can sue for negligence eg. Employee was injured by falling

stack of boxes loaded with fried, court awarded AU $325,000

Workers Health & Safety + Workers Compensation

Mandates accidents and unsafe work practices must be reported promptly Measurement of workplace injuries is through Lost Time Injury Frequency Rate

(LTIFR) Audited by NSW Work Cover, which McD has received favourable results

Anti-Discrimination + Equal Employment Opportunity

McD employs a Chief Diversity Officer 70% of McD employees are either women or from an ethnic background Programs seek to employ people with disability Use multiple programs to diversified workforce free from discrimination

Economic

HR management is highly influenced by the economic conditions Staff can be made redundant

Technological

Employees use Metime - to show rostering, pay and training Helps with effective communication with each employee Technology in their operations - reduce staff or frees up staff to do other things

Social - Changing Work Patterns and Living Standards

Operating at 24 hours or extended hours Significant change to the 9 to 5 hours Tries to recognise and cater for individual needs At corporate headquarters: Allows for 18 weeks paid for parental leave, offers

discounted childcare and designated breast-feeding rooms

Page 14: 2019 McDonald’s Summary

Gives flexibility and choice by the option of reduced pay, to take off an additional 4 weeks off

Ethics and Corporate Social Responsibility

2015, concerns about McD using zero-time contract on casual employees- tied down with no guaranteed work hours for a week

Little employees were in trade unions, this created power imbalance → McD created confidential channels with employees to resolve the issues

McD also facilitates a range of separate employment networks inc. for women, young professionals, working parents, Hispanic and African American workers

Processes Acquisition

Uses a centralised approach to staff acquisition - franchise stores may vary Potential applicants must submit details through one central website Prospective employees completes introductory quiz, resume, basic personal

information and available hours

Development

McD Aus $40 million annually on training Takes workforce development seriously New employees must complete an induction program Structured on-the-job training Crew trainers can receive completing a Certificate II in Retail Service to restaurant

managers obtaining an Advanced Diploma

Maintenance

Maintain staff, McDonalds run a ‘rewards program’ which follows pay for performance Includes cash and share bonuses, recognition programs, company cars 8 week paid break for a ten year service Employees are offered discounted childcare, food, gym memberships Aus → Also receive my BENEFITS

Separation

Mcd employees are often young employers = first job Significantly high staff turnover McD Aus is 42% for crew and 20% for management McD Aus also conducts an anonymous exit surveys of employees, this can help

management place strategies to improve HR

Strategies Leadership Style

Relies on uniformity & consistency between outlets Uses strict business guidelines, autocratic management Complaints have been made on corporate management decisions inc. store rent,

running promotions and changing menu items McD maintains invites franchisees to be involved in the decision making process eg.

Ronald McDonald was an idea from a franchisee Staff must follow strict operational instructions which limit participative management McD has a structured hierarchy, with crew members at bottom to store manager and

consultant at the top, this sets a chain of command

Job Design

Page 15: 2019 McDonald’s Summary

McD employees have specific tasks built into their job design with little or no scope for change

Task oriented job

Recruitment

Most employees start as crew members and are recruited externally A central application makes the recruitment process efficient and streamlined Consistent online screening of applicants Management positions are filled internally - who have specific skills and knowledge of

the business process - need to complete training

Training and Development

Training opportunities Potential candidates for becoming a franchisee need to train 9 months full time,

which goes unpaid Registered Training organisation (RTO), completes in house training to employees,

up to the level of Advanced Diploma Provides scholarships for some employees who are completing university studies McD believes in continuous training and improvement, and values progression and

development

Performance Management

UK McD are subject to biannual performance review to assess progress McD Aus annual performance and salary reviews Makes sure staff meets company and individual goals Crew members are encouraged with ‘pins’ (small badges) to signify an achieve Also rewards with awards such as ‘Crew member of the month’

Rewards - Monetary or Non-monetary, Indv. or Group, Performance Pay

Range of rewards Discounted foods and beverages (up to 50%), promotions, group and individual pay,

awards and prizes McD Aus - Top performing employees receive “Macca’s Enjoyment Bonus” - receive

granting of wishes https://www.youtube.com/watch?v=dYc_fvr-rFU Employees in corporate headquarters may receive company cars, healthcare

services, fitness memberships, may be offered profit-sharing plan

Global - Costs, Skills, Supply Employees may be able to work in different locations around the world, this allows

the employees skills to be transferable between countries Each new country and different employment laws, minimum wage rates and

availability of labour Differing in costs of labour eg. Lowest is employees in India receiving 50c per

hour(US) and in Denmark it is US $20 per hour

Workplace Disputes Resolution

Clear employee grievance procedures set out in Standards of Business Conduct Employees can discuss issues with direct supervisors (or other managers) or the

employee can directly contact the Global Compliance Office and report an issue -> may lead to mediation

McD Aus has a Workplace Relations Team, takes calls directly from employees who have unresolved issues

Page 16: 2019 McDonald’s Summary

McD also have trade unions and other legal institutions when necessary to negotiate employee pay and conditions

Effectiveness Indicators

Surveys conducted by external agencies from crew, managers and corporate staff Results:

83% of McD managers globally think its a great place to work 75% of managers feel favourable about the training 2014 - 7th in Norm America and 11th globally in the AON Hewitt Top

Companies for Leaders report 2013, 89% of crew members were satisfied with training to a good job 2016, McD UK was ranked 2nd by the Great Place to Work Institute in the

Best Workplaces list (for large organisations) 2016, McD UK Average crew member length has increased from 1.5 years to

2.5 years → Lowering staff turnover indicates a happier, more content workforce

McD Aus are improving workplace safety Analysis of these indicators, McD can judge the effectiveness of its human

resource management