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McDonald’s Corporation is the world’s largest chain of hamburger fast food restaurants which serves approximately 68 million customers on daily around 119 different countries and haves 30,000 restaurants worldwide. McDonald’s headquarter is in Oak Brook, Illinois, USA and company was started as a barbecue restaurant in 1940 by Richard and Maurice McDonald. In 1948, owners of the company reorganized the business to a hamburger stand and thereafter in 1955 businessman Ray Kroc joined the company as the first franchise agent. Ray Kroc purchased the chain from the McDonald brother and made it grow worldwide. (McDonald Corporation)
The corporation itself either operates a McDonald’s restaurant or by a franchisee. McDonald’s Corporation revenues are obtained from the rent, fees paid by the franchisees, royalties and the sales from the restaurants operated by McDonald’s Corporation. McDonald’s Corporation had annual revenues of $28.15 billion in the year 2013 whereas their profits were $5.6 billion. (Yahoo finance) McDonald’s product line includes selling hamburgers, cheeseburgers, french fries, chicken items, breakfast items, desserts, milkshakes and soft drinks. Due to changing consumer taste and to survive in this competitive and ever changing environment McDonald’s Corporation has added salads, wraps, fish, fruit and smoothies to its menu list. (McDonald Corporation)
PURPOSE OF MCDONALD’S CORPORATION:
The main purpose of McDonald’s Corporation is to serve fast food and to do everything that can be done to respect the customer and to have customer trust in their brand.
WHY I CHOSE MCDONALD’S CORPORATION:
Following are the reasons why I choose McDonald’s Corporation 1. McDonald’s Corporation is one the world largest and leading fast food chain 2. McDonald’s Corporation employs 1.8 billion people worldwide and they have one of the best HR practices 3. McDonald sells almost 75 hamburgers every second which attracts any HRM student to study their HR practices
BUSINESS MODEL OF MCDONALD’S CORPORATION:
McDonald earns its revenues from investing in properties, as a franchiser of a restaurant and as an operator of restaurants. Almost 80% of the company restaurants are operated by franchisees, which are bound to pay 4% of their revenue to McDonald, as well as the rent. In most of the cases, McDonald owns both the building and land which results in a stable flow of income making the franchisees bear most part of the risks. The remaining 15% of restaurants are owned and directly operated by McDonald. Considering the business model of other fast-food chains the business model of McDonald is different.
Other than franchisee fee and the marketing fees that are calculated as sales, McDonald do sometimes collect rents that are also considered as sales. Other than revenues generated from the franchise agreement, McDonald may also own or they can lease the property where McDonald’s franchises are located. According to the policy of McDonald, the business does not involve itself in making any direct sale of food or any other material to its franchisees but it organizes the food and materials required for the franchises through an approved third approved logistic operators. McDonald’s is also involved in identifying the locations, developing new products and quality.
HUMAN RESOURCE MANAGEMENT:
Human resource management is an approach by which company’s most valued assets (people) are managed. For any company to achieve success its human resource has to individually and collectively contribute and this can only be achieved through proper management. Proper management of company human resource not only help the company to achieve its objective, but they achieve it with greater efficiency. Human Resource Management helps the organization to achieve its desired goals and success by the help of its people. Human Resource Management, therefore, is utilized in the creation of decision on the plans of the organization. These plans are linked with employee relationships, recruitment, training and development, performance management and rewards for employees. Therefore, human resource strategies developed are to be in line with organization business plan to help the business to be successful.
MCDONALD’S HUMAN RESOURCE MANAGEMENT:
McDonald’s Corporation in order to achieve success and competitive advantage developed it human resource management strategy focused on four areas A) STRATEGIC HUMAN RESOURCES MANAGEMENT: McDonald’s human resource strategies and practices were synchronized to the company business strategy and thereafter the HR department helped to realized the business plan or strategy by forming it into company HR practices in relation of personal development and hiring. B) MANAGEMENT TRANSFORMATION AND CHANGE: One of the way HR function of McDonald helped organization to achieve competitive advantage is by identifying the changes required and thereafter implementing it. This strategy served as a catalyst for company successful growth.
C) EMPLOYEE MANAGEMENT: HR department tried to understand the problem which employees face daily and what are their needs and thereafter making an effort that their problems are solved and their needs were met. D) MANAGEMENT OF ORGANIZATION ADMINISTRATION: It was made sure by HR department that the process of employees hiring, training, evaluating, rewarding and promotion were designed in such a way that they were in line with the strategies of McDonald. In order to align these four focus area following things were done by McDonald 1. PERSONNEL STRUCTURE: As the business model of McDonald shows that it generates most of it revenues from franchising, therefore, there are three categories in their structure which are corporate staff, restaurant workers and franchisees.
The control staff which either operates from company headquarter or regional offices is responsible for controlling and managing the franchises to make sure that standards of McDonald are maintained and the products are delivered at time. Restaurant worker constitutes the biggest part of company structure. They are controlled through supervisors who report to assistant manager. Most of this staff works on part time basis and are paid on an hourly basis. Finally, the franchises that are managed by their owners but according to the standards set by McDonalds.
2. PERFORMANCE MANAGEMENT: In order to make sure that productivity is always high the HR department has put a process in order to know which staff is not working according to the desired expectations and what solution is to be implemented to bring that staff up to the required expectations. This is done by performance review of employee that can be done anytime or the interim performance review which is carried out after each six months. Based on these performances reviews it is decided which staff will get promoted which staff requires training so his performance can be increased. This way of management not only serves as motivation for employees, but it also creates a competitive environment among the staff which in turn helps the productivity of employees to increase.
3. MOTIVATION & REWARD: Since most of McDonald staff have low wages and are paid on an hourly basis which results in large staff turnover, therefore, company has to make sure that their staff is motivated and they keep them motivated by awarding staff with different reward schemes and other perquisites. This not only increases their motivation to work for McDonald but also helps them to increase their productivity
4. TRAINING: McDonald spends almost $10 million each year and trains approximately 55,000 employees to make sure that make sure that their employees have valuable skills that are needed. At first all new employees are given introduction about the company and thereafter staff trainers train them properly to make sure they develop all required necessary skills to work in the organization. It is made sure thereafter that these employees know how to use the latest foodservice equipment and they understand all McDonald’s operational procedures.
To make training much easier McDonald has published step-by-step manuals, video tapes and quality reference guides which explain each and every detail of the job process. Employees are also taught communication, interpersonal and organizational skills. This enables their employees to do their job at the best possible way and, therefore, they serve the customer with highest standards making McDonald’s customer service as one of the best in fast food supply companies.
5. MANAGEMENT DEVELOPMENT: McDonald has designed McDonald Development Program (MDP) to develop leadership skills within employees so they can be successful leaders. Various courses of this programme are held for employees of different level of management and for franchisees.
McDonalds now a day is one the fastest growing corporation and this is due to the reason of proper management of their human resources. This clearly shows that the corporation is on the right track and they have been able to keep the motivation levels of their employees high. This has been done by proper reward schemes for the employees based of their performances. Proper training is provided to the newcomer making it much easier for new employee to pick up and to get comfortable with the job quickly.
However, if McDonald’s Corporation continuously strives to further improve its HRM strategies then McDonald can continue to grow at much more faster pace. Hence it can be concluded the HRM strategies of McDonald’s Corporation is in line with their business model and growth strategies and this can be verified from their success up to this date.
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