Assignment: Theory Into Practice
McDonald's UK
During the 1990s negative impressions about employment at the McDonald's restaurant chain 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 GenerationX written by the Canadianwriter Douglas Coupland, where it is defined as a low-pay, low-dignity, low-benefit, 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 forthe first time, definedas 'an unstimulating, low-paid job with few prospects, especially one created by the expansion of the servicesector'.
The McDonald's UK operation tended to suffer from negative connotations about its employment practices more than was the case in most of the other countries where thecompany operates. This is partlybecause food servicework in general tends to be accordedless prestige in the UK than is the case elsewhere in the world and partlybecause of the extraordinary growththat McDonald's enjoyedin the country during the 1980s and 1990s whenthe 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 up their restaurants, leading to the adoption of inconsistent approaches. They often struggled to recruit and retain effective employees, and were not always particularly choosey when deciding who to hire. This led to the development of the widely held view that anybodycould get a job 'flippingburgers' at their local McDonald's just by turningup 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', 77% 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 pathsthat were providedfor 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 livedreality for a good majorityof people workingin the company's 1,200 UK 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'. Staff turnover was also runningat very high levels in 2004. The annual rate had reachedover 80%, while the ninety-day turnover rate (i.e. the proportion of new startersleaving before they have completedthree months' service) was running at 24.5%. It appeared that poor hiring decisions were being made too often andthat 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 surveythus showed that, although the company had plenty of scope to improve its HR operations, its poor reputation as an employerin the UK was by no means at all justified. The definition of the term 'McJob' was a thoroughly unfair characterisation of the experience of working in the company'sUK outlets.
The companyaddressed these issuesin a variety of ways, investing substantial sums in initiatives that were designedto improve retentionand engagement, while also radicallyaltering the company'sreputation as an employer:
1) 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.
2) A discount scheme was set up whichcould save employees many hundreds of pounds on a range of retailed products, on holidays and driving lesson.
3) More flexible working initiatives were launched includingfamily and friends contracts which allowed groupsof people to decide for themselves who would work which shift.
4) A range of employee involvement initiatives was introduced enabling, for example, staff to play a role in determining uniform styles.
5) Additional investment was put into the organization of social events for staff, often revolvingaround raising money for charities.
Managers at McDonald's in the UK are generally very happy with the impact that their 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 thosestating 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 37.9% in 2010. The ninety-day turnover rate, a measure of the number of new staff leaving within the first three months, stood at 24.5% in 2004, reflecting the tendency for people to have false expectations about what their jobs would involve and the number of unsuitable people that managers were hiring.By 2010 this had fallento just 2.4%.
Task
a) What other factors, aside from the introduction of these HR initiatives, might explain the striking reductionin staff turnoverlevels that McDonald's achieved between 2004 and 2010?
b) What other sorts of initiative mightthe company considerintroducing in the future to further increaselevels of employeeengagement and retention?
c) What wider businessadvantages might accrueto the company as a result of its successin improving its reputation as an employer?