The McDonald’s Study Case HRM 532 July 25th, 2012 Abstract McDonalds declared its first profit lost in the history of its outstanding performance in the fourth quarter of 2002. This led the company to investigate the key components which caused this to happen. Upon review the company realized there was a need to improve its Talent Management to align with the company’s business goals and strategies. This process was needed to achieve long term growth and success for the company. This case study gives an overview of the initiatives that McDonalds implemented to strengthen the company.
It discusses how and why the changes were made; how they were implemented; and the impact it had on the business future success. Outline the Talent Management program that led to success for the company. McDonald’s first step to achieve success was to redesign their performance development system for all their positions within the company. The current system based performance against annual objectives without evaluating how these results were achieved. This caused a fallacious measure of the employees success all having excellent or above average reviews while the company was becoming insolvent.
Performance drivers were introduced to determine how their accomplishments were achieved and to also change the culture of “entitlement” that McDonald’s organization was facing. It introduced the four point rating and a new compensation incentive. A revised assessment of the candidates’ potential was also introduced that were based on specific abilities which then allowed no more than 25% of their managers in a year to be eligible to be “ready now” or “ready for the future. This new design was introduced into all the countries allowing each country to make changes to fit their market as long as these changes stayed within the “plan to win” framework (Carter, 2010). McDonalds then introduced a stringent and transparent Talent Review Process for all officer level positions. This developed their leadership talents to align with new global business challenges. Presidents from each division around the world met to discuss their leadership capabilities, diversity in their divisions, and the extent of their talents.
A template of questions was created based on their answers and then compiled into a review. The purpose of these reviews was to make sure the executives execute their organizational strategies over the next three years and how they were accomplished. A development system was to be put in place in their organizations to promote advancement of executive talent and create development for new employees emphasizing on diversity and talent (Intagliata, 2001).
McDonald designed The Leadership at McDonalds Program to create new and innovative ideas changing the participants’ thought process to incorporate a global approach and to become more effective at retaining top talent. The program focused on developing high potential talent to become future leaders and with their progression improve performance to acquire an accelerated business result. Group and individual sessions were held which focused on their assessments and driving results as individuals and leaders. Lamp online was introduced as a support tool to track their accomplishments towards the business goals.
Due to such success McDonald’s created “Americas Lamp” which included their other global regions (Intagliata, 2001). The McDonalds’ Leadership Institute was created in 2006 is an online resource center that focused on Director level employees, which provided special development support, learning seminars and training for their development. Developmental programs for non-high potential leaders such as executive coaching, leadership curriculum were also created and held in this resource center (Carter, 2010).
Lastly, the Global Leadership Development Program was also created in 2006 to focus on the company’s highest officers and Directors. It includes participants from eleven different countries with efforts to enhance their development (Carter, 2010). Identify strengths of the program and how they led to goal accomplishment. A major strength which McDonalds achieved was changing their culture of entitlement by the implementation of the new performance development system. This allowed creativity and new ideas and mplified performance dissimilarity. The difference in evaluating employees now allowed the top 20% of their performers to be rewarded for their contribution to the company. It also decreased the ratings of 50% of McDonald’s managers due to the previous fallacious measures of the employee’s success. McDonald kept the process simple and very effective by also getting input from their global organization before completing the performance development system causing consistency within the organization (Intagliata, 2001).
To achieve continued success McDonalds focused on its employees and customers. Under the “plan to win” concept which are goals and measures based on important drivers of the customer experience such as people, price,product,place and promotion they aligned the company strategy to its employees by using customer service and experience levels as performance indicators. This focused on the commitment to quality, service, cleanliness and value. McDonalds for many years focused on promotion from within.
It challenges its managers to create great working environments to encourage the employees to excel in their performance for their advancement and to make McDonalds “everyone’s favorite place to eat. ” The implementation of these goals resulted in employee promotions and customer loyalty and expectations (Carter, 2010). Due to the Talent Reviews there was increased personal accountability of talent management at an executive level within their own markets. The managers were now aware of the strength and weaknesses of the talent gap and were now better prepared to replace talent due to advancement. McDonalds currently has a sabbatical program that is a competitive differentiator,” says Rich Floresch, Executive Vice president and Chief Human Resource Officer at McDonalds. The sabbatical program allows employees after 10 years of employment to take 8 weeks off. The program has increased employee engagement and allows employees to fill temporary positions to showcase their talents. Floresch explains, “How this development opportunity gives the employee confidence that they can do the job and also provides talent management pieces that benefit McDonalds, not just the employee. (Hartley, 2006, 1) Due to the talent reviews the mangers and organization after partnering with HR could now identify when to remove poor performers. Specific steps were now in place to fill replacement gaps and focus on development. The Global Executive Process was created from this talent review process. This caused more cross organizational progression and better selection of candidates. A global awareness as well as transparency was now achieved in the organization (Carter, 2010).
The development of The Leadership at McDonalds Program participated enormously in McDonald’s goal accomplishment and success. The program led to the increase of promotions and retaining top talent. As of mid 2006, 34% of the 104 graduates of LAMP derived from 34 different countries have been promoted (Intagliata, 2001). “We have a session every year where senior managers review with their peers who their replacement candidates are. Everyone knows who the replacement is and they have continuous discussions along the way” quotes Floersch (Hartley, 2002, 1).
It improved the diversity profile at the officer level with the participants being selected from different countries and also the creation of “America’s Lamp”. The candidates were exposed to new ideas from different peers, interacted with senior management and while participating in the Thunderbird Program gained self development for key leadership opportunities. This program also created its own brand identity and fairness within McDonalds. The different Lamp programs now established reflected brand identity creating an increase in candidates wanting to participate (Intagliata, 2001).
The strength of the McDonald’s Leadership Institute is to give exposure to leaders from anywhere in the world through its leadership portals and guides within the global community. It encourages individual assessments through challenging experiences and interaction with other global leaders to gain a competitive edge in the industry. The Global Leadership Development Program focuses on preparing Managing directors for global responsibilities and building rapport with peers as these leaders advance (Intagliata, 2001).
Describe opportunities for improvement in the talent Management process McDonald’s needs to identify what characteristics and attributes are being used to select an employee as a potential candidate for advancement. The senior manager would inquire about high performing employees within the organization and these candidates are nominated based on the criteria’s which were established such as performance reviews, goal aspirations, education history and other key attributes. The employee would then be assessed from tests, individual assessments and interviews collected by their immediate manager.
The senior manager would discuss the employee’s performance and decide if they are a good fit for the position. These identification steps would allow the candidate to be chosen for an accelerated development plan and given the opportunity to apply for the next leadership role when available (Silzer, 2010). Due to the growth of McDonalds, its technology infrastructure has become a major concern for the organization. McDonalds’ huge empire has made it hard for McDonalds to develop and maintain their Intranet to sustain everyone accessing their resources on their network .
To solve the problem they would need to redesign their Intranet system within the organization that will implement the content management system to maintain the information consistently and efficiently (Flair Interactive, 2006). During the redesigning process attention must be paid to language barriers, connection speeds, security and privacy acts, and anti-virus and firewall issues. These changes will allow the company to continue to grow globally, lead to profitability and create a competitive edge. Customer relationships will be more efficient due to knowing customers buying trend.
McDonalds can now accommodate the consumer’s needs while accumulating financial data to show the stability of the company (2010). Create at least two more effective approaches to meet the talent management challenges in the future Developing a Knowledge Retention and Transfer Strategy would be an effective approach to fill their skill gap. When an employee leaves they take valuable knowledge with them. It can be how they perform their job, knowledge about the culture, people, vendors, or clients, or how to achieve goals.
This strategy facilitates knowledge transfer from the recruitment phase of the candidate until they exit the company. The candidate has to know that knowledge sharing is a key performance measure and job requirement in the interviewing phase. During the orientation phase the candidate can meet senior managers to acquire knowledge about the company and build relationships. During the retention phase keeping the employee engaged is essential. Knowledge sharing can be attached to reward and recognition programs, career pathing, and cross-training.
During these phases the employee should have trained a successor before a notice is given. At the time of exit clear objectives should be given about what knowledge should be transferred holding the successor accountable for retrieving the knowledge. This would be successful because the new employee will become productive quicker. McDonalds can also provide mentorship programs using their skilled employees to mentor their younger employees. Retirees can relay information due to years of experience and tacit knowledge by sharing resources or networks.
They display attributes such as stronger work ethics, lower turnover rate, and higher skill levels. They can focus on developing the younger employees personally and professionally while creating a safe learning environment for feedback without them worrying about retaliation. They can teach them the importance of having these traits to maintain longevity and success within the organization. References Hartly, D. (2011). Serving Up Creative Talent Strategies. Retrieved from talentmgnt. com. Carter, M. G. (2010).
Best Practices in Talent Management. San Francisco: pfeiffer. Clem, D. (2011). Lansing Business Monthly Review. Retrieved from lansingbusinessmonthly. com. (Council for Adult and Experiential Learning, 2009). Retrieved from Compete. org James Intagliata, N. K. (2001). Enhancing the Talent Management System to Support McDonald’s Corporation’s Global Growth. Retrieved from alexcelgroup. com. Thinking Made Easy. (2010). Retrieved from iveythesis. typepad. com. Rob Silzer, B. D. (2010). Stratergy- Driven Talent Management. Jssey-Bass.