The four control standards the team chose to explore in regard to McDonald’s are performance, performance vs. standards, corrective action, and reinforce successes. The team will compare and contrast these control mechanisms, and determine the effectiveness of each. The team will also examine the positive and negative reactions to the use of these controls.
“A standard is an expected performance for a given goal or target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance is assessed” (Bateman, 2009, p. 576). Performance standards relate directly to the success of the company. McDonald’s has set standards for customer service, and customer satisfaction. The standards are communicated to the employees by the store manager and training manager. Management sets attainable goals to motivate employee performance; he or she communicates these goals clearly, and revaluates these goals.
Companies should evaluate the performance of employees and management to ensure the goals of the company are achieved. In the past McDonald’s evaluated their own-operators on a regular basis until the mid-1990s. McDonald’s discontinued evaluation that resulted in lower customer satisfaction. McDonald’s reinstated performance evaluations in 2001 to improve customer satisfaction. Today regional managers inspect and evaluate franchises on a regular basis. Forms with standard operation procedures enhance the evaluation process, and this information is input in McDonald’s database for further review. Today’s managers can input the evaluation from his or her company PDA.
Performance vs. Standards
“The managerial principle of exception states, which control is enhanced by concentrating on the exceptions to, or significant deviation from, the expected result or standard (Bateman, 2009, p. 578). Companies compare the performance of employees by evaluating how well the employee followed the standards or guidelines set by the company.
Corrective Action and Reinforce Successes
During the work process errors happen and managers should address these problems with his or her employees. Errors happen but managers also see the success of employees meeting or exceeding company goals. Companies should reward employees who meet or exceed the goals of the company.
Compare and Contrast
McDonald’s main goal is to develop sustainability. The leaders of McDonald’s have set standards of financial growth, customer service, product quality and safety, and corporate responsibility and conduct to achieve this main goal. Considering McDonald’s dominance in the fast-food industry, it is safe to say they have been successful at achieving their performance standards. McDonald’s has been a success because management takes immense care in measuring their performance, comparing their performance to their standards, and taking corrective action to get their performance on the right track. Management analyzes many reports to measure the company’s performance, such as customer satisfaction surveys, the annual report and corporate responsibility report, and performance audits.
Management also observes their operation to measure performance. From analyzing these performance reports and audits, management can compare performance to their standards, past performance, and goals. For instance, the six-year summary in the 2011 Annual Report shows McDonald’s earned nearly three billion dollars in total revenue growth between 2010 and 2011 (McDonald’s, 2011). By comparing performance, management can identify deviations from their standards and goals and make corrections.
Initiatives such as Employee Value Proposition, Leadership Development Framework and healthier menu items are examples of corrective action taken to improve performance (McDonald’s, 2009, pgs. 6 -7). McDonald’s management can execute these four performance controls successfully by having the drive to improve, building a culture of values, and constantly working toward sustainability (McDonald’s, 2009, pg. 5). McDonald’s worldwide success for many decades adds credence to management’s effectiveness in executing all four performance controls.
The four control standards the team chose to explore in regard to McDonald’s work well together, as is evident by the success of the company. The fast-food industry is hard to be successful in unless the company has the right combination of plans and controls. McDonald’s is a leader in this field because the company uses just the right amount of each.
The McDonald’s control standards do not act well together unless there are people who make the standards work together. There have been times when some of the control standards have been in need of further guidance. During such times corporate management has had to change some of the ways the controls work. This is to ensure McDonald’s operates to the best of its abilities for effectiveness.
Examine Positive and Negative Reactions
From examining McDonald’s awards and recognition, it appears McDonald’s has received a very positive reaction to how they use these controls. Such awards include Fortune Magazine’s 2012 number 11 “Most Admired Company in the World,” Forbes Magazine 2010 “Most Admired Companies,” 2010 “Corporate Award” from the Executive Leadership Council (McDonald’s, 2012). Internally, McDonald’s has received positive reaction or at least buy-in, considering their performance and employer awards, to their performance controls, more than likely from their efforts in taking care of their people. McDonald’s has implemented leadership development and employee value proposition programs, and diversity and inclusion and social responsibility initiatives that have promoted employee satisfaction and trust in the company (McDonald’s, 2012).
Also their business relationship model between their employees, suppliers, and owner/operators has developed strong communication throughout its operation. Although McDonald’s has been widely successful, they have also failed from time to time. In 2001, University of Michigan rated McDonald’s as one of the poorest-performing retailers from a year-long customer satisfaction study (Zuber, 2001, P. 1). More recently, ConsumerAffairs.com holds hundreds of consumer complaints of McDonald’s service, showing that even a successful giant like McDonald’s still has room for improvement.
Controls Affect on Functions
The four control standards the team chose to explore are performance, performance vs. standards, and corrective action, and reinforce successes. These controls affect the four functions of management in numerous ways. Pakhare (2011), ” Effective and efficient management leads to success, which is the attainment of objectives and goals, that an organization sets for itself. Of course, for achieving the ultimate goal, management needs to work creatively in problem solving and execute all the four functions” (Para. 1-12). Since we have a basic understanding of these functions we can see clearly how they are in direct relationship to the control standards we have chosen.
With each control standard we see how they closely work with each function. This particular formula is commonplace in many organizations on a global level. The analysis shows that McDonald’s has a good plan of control mechanisms in place, and good functions of management to support the corporation. This has been a key factor of the corporation’s long success in a business where many do not last long. The company has many beneficial areas to back up why they are one of the world’s favorite places to eat and probably will continue to be as successful for many years to come.
McDonalds. (2011). 2011 Annual Report. Retrieved from http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/Investors/Investors%202012/2011%20Annual%20Report%20Final.pdf McDonalds. (2012). Awards and Recognition. Retrieved from http://www.aboutmcdonalds.com/mcd/our_company/awards_and_recognition.html McDonalds. (2012). Our Company. Retrieved from http://www.aboutmcdonalds.com/mcd/our_company/mcdonalds_system.html McDonalds. (2009). Worldwide Corporate Responsibility Online Report: The values we bring to the table. Retrieved from http://www.mcdonalds.at/presse/maps/McDCSR.pdf Pakhare, J. (2011). Management Concepts – The Four Functions of Management. Retrieved from http://www.buzzle.com/articles/management-concepts-the-four-functions-of-management.html Zuber, A. (2001). McD restructures to beef up performance. Retrieved from
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