Critically evaluate the approach McDonald’s has taken to addressing the HR problems it faced across the organisation.

Case Study: McDonald’s UK
During the 1990s negative impressions about employment at the McDonald’s were
fuelled in the UK, as elsewhere, by the growth in usage of the term ‘McJob’ as a generic label for low-status occupations. The term first appeared in 1991 in the bestselling novel Generation X written by the Canadian author Douglas Coupland, where it is defined as a ‘low-pay, low-dignity, no-future job in the service sector’.

In 2003, much to the irritation of the company, the term ‘McJob’ appeared in the Oxford English Dictionary for the first time, defined as ‘an unstimulating, low-paid job with few prospects, especially one created by the expansion of the service sector’.

The McDonalds’s UK operation tended to suffer from negative connotations about its
employment practices more than was the case in most other countries where the
company operates. This is partly because food service work in general tends to be
accorded less prestige in the UK than is the case elsewhere in the world and partly
because of the extraordinary growth that McDonald’s enjoyed in the country during
the 1980s and 1990s when the company opened between 50 and 100 new restaurants
each year.

This mass expansion was accompanied by limited central direction as far as
employment practices were concerned. Local managers and franchisees were given
responsibility for staffing their restaurants, leading to the adoption of inconsistent
approaches and practices.

They often struggled to recruit and retain effective employees, and were not always particularly choosy when deciding who to hire. This led to the development of the widely held view that anybody could get a job ‘flipping burgers’ at their local McDonald’s just by turning up and asking for a job.

McDonald’s UK responded by carrying out a staff attitude survey which found that the
popular characterisation of its jobs was by no means accurate. In 2004, 74% of the
company’s employees reported being satisfied with their jobs and happy to
‘recommend working at McDonald’s to a friend’. Seventy-seven per cent stated that
they were committed to their work, while 86% were happy with the training and skills
development opportunities they were given.

Staff were particularly positive about the flexibility that their jobs gave them to juggle work and home responsibilities, the career paths that were provided for them to follow and the enjoyment they got from working as a member of a team. The definition accorded to the term ‘McJob’ was not therefore a fair or correct reflection of the lived reality for a good majority of people working in the company’s restaurants.

However, the survey also revealed that staff were generally dissatisfied with their pay
and that only 60% agreed with the statement ‘I am proud to work at McDonald’s’.

Labour turnover was also running at very high levels in 2004. The annual rate had
reached 80%, while the 99-day turnover rate (the proportion of new starting leaving
before they have completed three months’ service) was running at 24.5%. It appeared
that poor hiring decisions were being made too often and that the company was not
effectively managing the expectations of new starters about exactly what their jobs
would involve on a day-to-day basis.

The 2004 staff attitude survey thus showed that, although the company had plenty of scope to improve its HR operations, its poor reputation as an employer in the UK was by no means at all justified. The definition of the term ‘McJob’ was an unfair characterisation of the experience of working in thecompany’s UK outlets.

The company addressed these issues in a variety of ways, investing substantial sums
in initiatives designed to improve retention and engagement, while also radically
altering the company’s reputation as an employer:

A state-of-the-art corporate development centre was established offering
highly flexible training programmes and the opportunity for staff to gain a
range of qualifications up to degree level. Management development was the
major priority.

A discount scheme was set up which could save employees many hundreds of
pounds on a range of retailed products, on holidays and driving lessons.

More flexible working initiatives were launched including family and friends
contracts, which allowed groups of people to decide for themselves who would
work which shift.

A range of employee involvement initiatives were introduced enabling, for
example, staff to play a role in determining uniform styles.

Additional investment was put into the organisation of social events for staff,
often revolving around raising money for charities.

Managers at McDonald’s in the UK have been generally very happy with the impact
that these initiatives have had. Between 2004 and 2010 the percentage of staff stating
in surveys that they were committed to the company increased from 77% to 88%, while the percentage of those stating that they are proud to work for McDonald’s went up from 60% to 84%.

Increased staff satisfaction was also reflected in the figures for employee turnover. The crude annual rate for staff working in McDonald’s restaurants declined from 80.2% in 2004 to 27.9% in 2010. The ninety-nine day turnover rate
declined from 24.5% in 2004 to just 2.4% in 2010.

QUESTIONS AND TIPS

1. Critically evaluate the approach McDonald’s has taken to addressing the HR
problems it faced across the organisation.

2. What future HR challenges can you foresee, and what recommendations would
you make for addressing these? What other initiatives might the company consider introducing to further increase levels of employee engagement and
retention?

Given the emphasis in this module is on the practical application of theory within the HRM
arena, it is important that your assignment clearly draws on relevant theories and models in
analysing the case study. The lectures and seminars, together with the textbooks and
additional reading provided for the module will constitute a good starting point, but you must
also read more widely around your chosen subject. The marking criteria for the assignment is
provided on Moodle. You need to pay attention to:
1. A well-written, well-presented, clearly structured and well-argued piece of work.
2. The demonstration that you have understood and applied relevant theories in your answer.
3. Evidence that you have read and understood the case study.
4. Critical analysis and insight; in other words, it is important not to just describe your views,
but rather you need to weigh up one argument against another, using academic sources,
and then come to a considered view based on the available evidence.
5. Evidence that you have read and understood a range of academic journal articles. It is not
enough to rely solely on textbooks for your assignment. We are expecting you to conduct
independent research to find relevant articles. You will find some on the CB9046 Moodle
site that will be a useful start, but you are expected to go beyond the resources already
provided to you.
Hints and Tips:
When researching and planning this assignment ask yourself the following questions:
◦ What is your interpretation of the question?
◦ Which theoretical frameworks are you drawing on?
◦ What have you identified as the ‘key challenges’?
3
◦ What approaches to & methods of employee engagement, employee retention
and change management have you identified in the McDonald’s case study? How
have you related these to the literature?

◦ What is your proposed structure of your argument? Is it clear & logical?

◦ What are your recommendations?

◦ What supporting evidence – theoretical & practical i.e. supporting sources/references

◦ How does this map to the marking criteria for this assignment?

Question 1:

As a starting point, you will need to identify the HR problems that McDonald’s UK
faced. Briefly outline these in your answer.

Remember to be CRITICAL – the case study only reports on data up to 2010 & this should be reflected in your answer.

You need to CRITICALLY EVALUATE their approach to resolving these HR problems
using relevant theory and research to support your arguments. To do this you will need to think about the following:

o What were the strengths of their approach?

o What were the weaknesses of their approach?

o It is ESSENTIAL that you map the approach that McDonald’s UK took to the changing HRM to the relevant theories & models in the literature.

Question 2:

In this question you are required to PREDICT future HRM challenges for McDonald’s
UK.

You should make between 2-3 predications based on your knowledge of HRM
learnt during the module.

The recommendations you make need to be based on
relevant theory i.e. you use the theory and evidence to justify both the predictions and your recommendations.

A Simple Report Structure

1. Introduction:

o Comment on the subject & the treatment proposed. Define any
key terms.

2. Main body/development:

o Main points/arguments + supporting evidence from theory, research and benchmarking examples, in a sensible order e.g. each paragraph should be ‘Pretty Damn Excellent’:

✓ Point of argument being made

✓ Discussion around the relevance of this point of argument to the question

✓ Evidence to support and justify the point of argument made

3. Conclusion:

o Summary of the argument so far and/or clear statement of
conclusion

Last Completed Projects