PROBLEM-SOLVING APPLICATION CASE (PSAC)
Improving Customer Satisfaction at McDonald's McDonald's performed well throughout most of the economic downturn by sticking to its strategy of rolling out a steady stream of new menu items at a range of prices-from inexpensive snack wraps to more costly fruit smoothies-intended to appeal to more consumers. It also remodeled and tidied up many of its 14,000 US restaurants. However, satisfying customers with speedy and friendly service was a persistent challenge. The bad news about customer satisfaction became a companywide focus in March 2013 during a webcast with franchise owners. (Approximately 90% of McDonald's restaurants are owned by franchisees.) McDonald's executives noted that 1 in 5 customer complaints was related to friendliness issues and that the problem was "increasing." A slide from Steve Levigne, vice president of business research for McDonald's USA, stated ominously: "Service is broken." The top complaint was "rude or unprofessional employees"; complaints and speed of service had "increased significantly over the past six months"; and some customers even found the service "chaotic." The news was soon picked up in the business press. McDonald's First Response. In the webcast, McDonald's asked franchisees to hire more employees and provide better training to deal with complaints. McDonald's, for its part, began to roll out a new system for taking orders, new software to better manage the workload and number of employees on the line, and a structure that provides managers more direct responsibility for specific areas of operation (e.g., the kitchen or customer service).69 Admitting Its Mistakes. McDonald's has acknowledged its role in creating service challenges due to its aggressive expansion of the menu. "Jeff Stratton, president of McDonald's USA, said the chain introduced several new products and limited-time offers this year to give customers more variety," reported The Wall Street Journal. It quoted Stratton as admitting, "The pace of product introduction in my opinion: too fast."70 The PR Battle. McDonald's made its effort to deal with such problems part of its PR strategy. "The company's response could serve as a case study in using customer criticism as a basis for a brand-building PR campaign," writes Richard Brownwell, a content manager for the PRNews website.71 Brownwell praises the company for listening to its customers, then further improving communications with a new feedback system, and being open and candid about its troubles. That openness was evident during the webcast wherein the company shared many steps it was willing to take to address customer satisfaction. For example, the company changed its 2014 business plan to invest in better food prep tables and improve training. Work in Process. McDonald's has further to go. Late in 2013 QSR Magazine, which routinely reports on the average speed of service of various fast-food chains, found McDonald's average service time not only lagged its competitors, but it was the slowest reported over the 18 years that QSR has kept track.72 Moreover, early in 2014 the company apologized further when the CEO, Don Thompson, admitted, "We've lost some of our customer relevance." Thompson announced other likely adjustments to the menu, including customized burgers and a stronger emphasis on breakfast.73 Employee Wages. Although McDonald's has been open on most topics, it has not talked much about one factor that may be affecting service-employee compensation. Articles and critics in the business press connect poor 2 service to the high rate of turnover, which they connect to low pay. McDonald's does not publicly report its turnover rates, but fast-food restaurants typically run an average annual turnover rate of 60%.74 Taken together, this suggests that when unhappy customers are added to low pay, McDonald's may be experiencing even higher rates.
Apply the 3-Stop Problem-Solving Approach to OB Use the Integrative Framework in Figure 6.5 along the journey through all 3-Stop to help identify inputs, processes, and outcomes relative to this case.
Stop 1: What is the problem?
o Use the Integrative Framework for Understanding and Applying OB to help identify the outcomes that are important in this case.
o Which of these outcomes are not being achieved in the case?
o Based on considering the above two questions, what is the most important problem in this case? ?
Stop 2: Use the Integrative Framework to identify the OB concepts or theories that help you to understand the problem in this case. o What person factors are most relevant?
o What environmental characteristics are most important to consider?
o Do you need to consider any processes? Which ones? o What concepts or theories discussed in this chapter are most relevant for solving the key problem in this case? ?
Stop 3: What are your recommendations for solving the problem?
o Review the material in the chapter that most pertains to your proposed solution and look for practical recommendations.
o Use any past OB knowledge or experience to generate recommendations.
o Outline your plan for solving the problem in this case.
Performance management practices
Citizenship behaviour/counterproductive behaviour
Group level/Team level
Group cohesion and conflict