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INTERNATIONAL HRM

CASE STUDY ON MCDONALD’S

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Contents

Introduction ................................................................................................................................ 3

Analysis of the International Human Resource Strategies of McDonald’s ........................... 3

Appropriate level of fit between overall international human resource strategies in global

context with that of McDonald’s ............................................................................................ 6

Conclusion ................................................................................................................................. 9

REFERENCE ........................................................................................................................... 10

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Introduction

Human resource management (HRM) is an universal concept in terms of processes, policies

and strategies. The term HRM progressively replaced personnel management. Developing

and managing human resources is a challenging task for the organizations, specifically for the

international organizations (Janatifar, et al., 2014). HRM have theoretical as well as practical

importance for managing labour force. Active and high skilled workforce is essential for the

organizations to achieve competitive advantages. This paper critically examines the human

resource practices of McDonald’s and also discuss the suitable level of fit between the

overall international human resourcing strategy of McDonald’s and a broad international

context in which it functions.

Analysis of the International Human Resource Strategies of McDonald’s

Due to the high presence of globalisation, cultural differences and competition in

international business, importance of international human resource management (IHRM) also

enhances. As per Harzing and Pinnington (2014), IHRM is a key determinant of failure or

success in global business. IHRM consist of broad range of HRM activities than domestic

HRM and it is effective for solving the HR issues related to staffs belonging to more than one

nationality. Main IHRM practices include repatriation, global staffing, performance

management in global assignments, pre-departure training for global assignments,

compensation issues in international assignments, etc (Briscoe, Schuler and Tarique, 2012).

According to Janatifar, et al. (2014), recruitment and selection, assessment of employee

performance, planning, training, etc are the main characteristics of IHRM. IHRM aid the line

managers by providing adequate suggestions and guidelines about employee performance

evaluation, training, recruitment, etc. varied strategies are used by the firms for recruiting,

training and evaluating employee performance and it makes the company unique from others.

McDonald’s is a leading and largest international fast food retailer with over 30000

restaurants in more than 121 countries. Unique global infrastructure, advanced operational

systems, high quality food, experienced management, outstanding brand recognition, efficient

human resources, etc helps McDonald’s to capitalize on international opportunities

(Weinstein, 2012). To become the best employer in the world is one of the main global

strategies of McDonald’s and the company believed that satisfaction of internal customers is

essential for satisfying its external customers. Thus the company gives high priority for HRM

practices to satisfy its employees.

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In the opinion of Weinstein (2012), employees are one of the main factors influencing the

success of McDonald’s. McDonald’s only prefers individuals, who can feel, think and

express themselves and ready to learn and teach and hence grow. The growth of employees

indicates the company’s growth. McDonald’s hire people with or without experience and

provide effective training to improve their performance and skills. Thorough in-house

training offered by McDonald’s aid the inexperience people to adjust with the distinct

organizational culture. The company recruit people without any nationality, colour, gender,

race and regional discriminations. Only merits of the people are considered as a criterion for

selection (McDonald’s, 2013). Both internal and external recruitment are conduct by

McDonald’s for staffs’ selection. Job posting is the source of internal recruitment whereas

sources of external recruitment includes walk-ins, internship programs, ads on print media,

web sites, etc. Applicant screening, W-I-S (written test), initial interview, reference checks

and final interview are the selection procedures (Silberman, 2013).

As Silberman (2013), McDonald’s offers training and career paths for crew members to

managers to id them to progress. Most of the training programs of McDonald’s focus on

improving the functional operations skills needed for the on-the-job performance in the

restaurant. Moreover, company also provide training for improving the fundamental

workplace skills like work ethics, customer services, communications, teamwork, time

management, etc. Staffs often start at the crew member level and after the completion of

training and learning certain skills, they get opportunity to obtain higher job position up to

restaurant management positions (McDonald’s, 2013).

McDonald’s (2016a) noted that, through McDonald’s Hamburg University, the company

provides training for its staffs, managers and franchisees. This university offers training in

cleanliness, service, food safety, quality, restaurant procedures and other business and

restaurant management topics. The McDonald’s employees at Hamburg University receive

training in 22 languages to provide effective services to customers in different parts of the

globe. McDonald’s also conducted leadership development programs for motivating the

staffs to develop as a leader. For the world-class leadership development, McDonald’s

leaders get training from the Jim Skinner Institute of Leadership (McDonald’s, 2016b).

McDonald’s (2016c) identified that, for improving the performance level of the employees,

McDonald’s also offers recognitions; rewards and compensation programs and which include

long-term incentives, recognition programs, company car program, incentive pay and base

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pay. McDonald’s (2016d) mentions that, McDonald’s also provide health and insurance

benefits like medical, dental, vision supplement plan, employee and dependent life insurance,

business travel accident insurance, etc. The company provide higher importance to maintain

work-life balance of the staffs and for this, McDonald’s offer 24 days paid holiday per

annum, personal and sick time, child care discount, flexible working hours, educational

assistance, and shopping discount program, etc (Choi, 2015).

Employee motivation is essential for the organizations to improve the performance level of

the staffs and thereby to improve the overall performance of the organization. Thus,

employee motivation is one of the key objectives of IHRM practices of every firm (Harzing

and Pinnington, 2014). Equity theory, Cognitive Evaluation Theory, Two Factor theory,

Maslow’s Hierarchy of Needs theory, etc are effective for analysing the strategies to be used

by the organization to motivate the employees. As per Briscoe, Schuler and Tarique (2012),

Two Factor Theory by Hertzberg is an effective theoretical model to analyse the elements

that motivate the labour force. As per the Two Factor Theory, attainment of hygiene factors

restricts employees’ job dissatisfaction level whereas attainment of motivational factors

increases satisfaction level of the employees.

Figure 1: Hertzberg’s Two Factor Theory

Source: Harzing and Pinnington (2014)

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In accordance with Two Factor Theory, McDonald’s adopt various motivational factors to

motivate and encourage its staffs. McDonald’s offers effective training and development

programs, leadership development programs, rewards and recognition programs, health and

insurance benefits, etc to its staffs for improving their satisfaction level (McDonald’s, 2013).

In this way, McDonald’s tries to ensure consistency in IHRM strategies through its

motivational strategies. However, Lobosco (2015) observed that, even though McDonald’s

take high effort to motivate and encourage its labour force, lack of accidental protection

measures in the workplace, poor wage, improper working condition, long working hours,

high work pressure, etc in McDonald’s create employee job dissatisfaction. Improvement in

working environment, reduction in work pressure and increment in salary/ wages, etc are

essential in McDonald’s to improve the satisfaction level and performance level of the

employees. This will aid the company to improve its overall performance.

Appropriate level of fit between overall international human resource strategies in

global context with that of McDonald’s

As observed by Ghanawi (2012) corporate bodies consider human resource practices as

pivotal for obtaining, utilizing and motivating employees for the accomplishment of

organizational goals and objectives. Boella and Goss-Turner (2013) mentions that , effective

human resource team are necessary for firms to develop and maintain perfect team of

workforce to face new challenges arising out from technologies, competition and knowledge.

McDonald’s is one of the leading fast food restaurants in UK. The firm has well established

HR policies that acquired success in global context. In the view of Rowley and Warner

(2013) the major competitors of McDonalds’s in fast food chain include KFC, Pizza Hut and

Burger King.

Truss, et al. (2013) observes that the main objective of HR practices in McDonald’s is to

build, support and utilize employees for achieving competitive advantage in fast food

industry by way of delivering quality products and services to customers. It has been

identified that the HR departments of McDonald’s is divided in to HR operations, training

and compensations and benefits units where HR operations of McDonald’s deals with

recruitment and selection process (Rowley and Warner, 2013). Likewise, the HR practices of

KFC; the main competitor of McDonald’s includes training and developmental programs,

compensation and benefits, employee empowerment programs etc (Arthur, 2012). As

observed by Boella and Goss-Turner (2013) McDonald’s has used various methods such as

advertising, career fairs and local job centers for hiring candidates right for the job roles, but

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on the other hand KFC adopted extremely different method for hiring candidates and it

comprises of both internal recruitment and external recruitment process (Caligiuri, Lepak and

Bonache, 2010). First preferences are given by KFC to employee referrals and word of mouth

and this creates fair relation between employees and management (Choi, 2015). McDonalds

during the time of interview utilizes interview guide for obtaining brief understanding about

how past behavior of applicants can influence future performance (McDonald’s, 2016a).

Additionally, the company holds an approach that actively seeks for actual situations or

events rather than considering theoretical responses from candidates (McDonald’s, 2013).

This will benefits company to have talented employees adopting practical approach in their

job roles (Caligiuri, Lepak and Bonache, 2010). Moreover, the company after the selection of

employees provides welcome meeting for addressing company overview, rules and

regulation, company HR practices policies and procedures, safety training etc.

As per the observation of Sparrow (2010) KFC in its recruitment and selection process has

involved three tests which are prepared by experts in accordance with international level of

HR practices. IQ tests for staffs employed at support centre, Team Member Readiness

Inventory tests for assessing employee skills and Hiring champion’s inventory tests for

Assistant Restaurant Managers are the major three tests conducted by KFC during

recruitment and selection process (Caligiuri, Lepak and Bonache, 2010).

McDonald’s during its international expansion have brought similar changes to HR practices

and this is vital, since the behavior, attitude, and educational level and other demographical

segments of candidate’s changes with respect to country to country (McDonald’s, 2016b).

While analyzing the HR practices of KFC, it has been identified that the company has

followed same approach in its HR practices with no alternation while going global (Arthur,

2012).

The principle objective of KFC is to expand business globally and to provide quality, better

and fast products and services to customers (Sidhpuria, 2009). As opined by Caligiuri, Lepak

and Bonache (2010) for transforming this objective in practical, KFC has followed unique

approach in its HR practices which is successful at global level. Subsequently to consider

talented candidates from various geographical sections, the firm has consistently altered its

HR polices and also had taken increased attention to abide with laws in respective country.

As per the observation of Boella and Goss-Turner (2013) KFC have been contributing more

towards its training and developmental programs for improving the performances of

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employees in order to accomplish organizational goals and objectives. For measuring the

performance level of employees, KFC utilized the strategies such as 360 Degree feedback,

preparation of performance checklist, Balanced Score Card and other performance appraisal

methods, indicates Arthur (2012).

Additionally, KFC provided fair rewards, incentive packages and benefits to employees

based on their individual as well as group performances (Bratton, 2015). This has helped the

firm to obtain loyal as well as highly committed employees for enhancing the brand image

and reputation. KFC to its employees provided extensive training programs by utilizing

formal classroom, e-learning and on-the-job training practices (Arthur, 2012).

On the other hand, in tie up with Hamburger University, McDonald’s provided training

programs to employees for developing their skills along with career development programs

(McDonald’s, 2016a). Alternatively, the principle objective of McDonalds is to provide good

returns to shareholders through serving quality products and services to customers in

alignment with business ethics, mentions Harris and Short (2013). Therefore the HR

strategies adopted by McDonald’s well suits in the context of KFC.

As opined by Thomas and Lazarova (2013) customer satisfaction towards a company is

dependents up on the way employees provides products and services to them and this will

consequently aids organization to provide fair returns to shareholders. This hence highlights

that, enhancing the job satisfaction of employees is pivotal for firms to obtain higher

customer satisfaction. McDonald’s has adopted well defined HR practices to enhance

employee satisfaction, such as excellent training and developmental programs, reward

programs, incentives, motivation developmental programs etc (McDonald’s, 2016a). This

strategy will best fit with KFC, since the principle aim of firm is to expand globally by

enhancing employee satisfaction.

But at certain extent, McDonalds and KFC has followed distinct approach to manage

employees (Harris and Short, 2013). Though the major objective of KFC is to expand

globally, the firm has well maintained its HR strategies and focused more on targeting highly

talented employees to adapt with varied culture while going global. However, the major

objective of McDonalds is to provide fair returns to shareholders, therefore the firm has

maintained increased attention towards employee developmental programs for reaping long

lasting business benefits.

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Conclusion

Organizations consider effective HR practices as pivotal to obtain, create and utilize highly

talented employees for the accomplishment of organizational goals and objectives. In the

current report the researcher analyzed HR practices of McDonald’s and identified that the

firm has maintained consistency in its components of HR practices including selection and

recruitment, payment and rewards, training and development etc. Additionally, the report also

analyzed the fitness of HR practices of McDonald’s with global context where it operates as

well as with its major competitor KFC.

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