McDonald’s becomes healthier

Essay question:

Recently, McDonald’s has decided to reposition themselves as offering healthier food in cafe style surroundings. What implications do you think this change will have on employees? In order to answer this question you should focus on one or two core themes (such as motivation, identity etc) covered in the course.

Since 1940s McDonald’s has expanded worldwide becoming the most successful fast-food supplier with the main competitors having sales three times smaller. The company has traditionally based its activities on four main factors: quality, service, cleanliness and value inside a framework of rationalised mass production and marketing (McDonaldization) (Botterill and Kline, 2007).

Fierce criticism arose during the ‘90s with the company being under siege on several issues. These included: serving in dirty restaurants unhealthy food which supposedly favoured obesity and cardiovascular diseases; environmental damage caused by inappropriate food cooking and packaging; breaking youth labour codes, discouraging unionization and applying a low pay policy to unmotivated staff (Strategic Decisions, 2007). Further damage to the company’s image was caused in 2004 by Morgan Spurlock, with the movie “Supersize Me”, where he showed how he gained 11kgs and got ill after one month of eating McDonald’s food (Movie Database).

By then, the company had reached its lowest point, with the share value falling and experiencing it’s first quarterly loss since 1954 (Green, 2006).
To retain the worried customers and to gain new breed of customers, in 2003 McDonald’s designed a re-imaging recovery strategy called “Plan to win”, implemented readily through the “Forever Young” initiative (Wollam, 2006).

The global corporate re-branding process was designed to provide modernised and more comfortable interiors (premises) to the customers, but most importantly of all new healthier menu items with better food cooking and packaging. In addition, to compete against the popular coffee shops such as Starbucks, the concept of McCafè was introduced, implementing another option to the menu and attracting new customers such as young professionals.

Improved working conditions and better industrial relations have been encouraged by the company with initiatives to motivate the employees and boost their pride and confidence. In this way McDonald’s has challenged the concept of McJob, coined by D. Coupland to signify a “low-pay, low-prestige, low-dignity, low-benefit, no future job in the service sector”(Anon.2009).

The purpose of this essay is to outline the positive role played by the re-branding process in the improvement of organizational behaviour of McDonald’s employees and which motivational theories can apply to the given topic.

Refurbishing in a cafè-style the existing restaurants, either directly or through the franchisees, has given the customers the chance to eat in a healthy, smart and multifunctional place. The very modern design intends to create an inviting environment for both customers and employees, according to the guidelines outlined by the Vice President of the company, John Miologos, who inspired the overall idea of the re-shaping – “Think ipod: clean lines, simplicity” (Business Week, 2006).

The traditional red and yellow plastic chairs and roofs have been replaced by better- looking sofas, wood tables and brand new plasma screen TVs. The materials used in the restaurant are mainly brick and wood and the predominant colours are terracotta, olive green and yellow (Wollam, 2006). Technology has played a major role in the re-branding process, as the customers can surf the internet on their laptop (Wi-Fi is now provided in the restaurants for free) or watch a TV show while eating (Green, 2006).

The style of the new restaurants gives an impression of elegance and comfort customers-oriented (Davies, 2007), being divided in different areas (dining area, grab and go zone and flexible section) with different music for each zone.

McCafè is an area inside McDonald’s restaurants, organised with its own functional characteristics, where the customers can enjoy a premium coffee and drinks at an affordable price, in addition to the meal.

The group has also introduced new trendy uniforms, as many employees are young and looking stylish and smart at the workplace plays an important role for them (Braithwaite, 2008).

McDonald’s has revamped the menus by adding, to a traditional burger and fries meal, healthier food such as premium salads, grilled veggie, freshly made sandwiches, apple slices and skim milk, especially designed for women and children.

Customers are now expecting a much higher standard of service and customer care since they associate the redesigning of the restaurants with better trained staff.
The modernization of the premises and the introduction of many items in the menus have added a significant workload to employees, thus increasing the complexity of their tasks, with a need for more specific training programmes and better work prospects for a future employment. The employees are paid a base pay with incentives linked to their performances; furthermore the company offers long-term incentives to the members of staff that have worked in McDonald’s for a long time showing sustained working performance (McDonald’s, 2009b).

The company follows very carefully the effort that employees put forth and how they perform. McDonald’s’ Management Development Program helps the managers to choose, among employees, the leaders of the stores to whom promotions are awarded. This program usually creates about 1,500 managers every year in the UK (Times 100).

McDonald’s believes that in order to implement the re-branding process in the most effective way, each employee should have a well-defined role. Therefore in each restaurant there are different positions, such as manager trainee, second assistant manager, first assistant manager, restaurant manager, operation consultant, training consultant, business consultant and HR consultant. The presence of so many roles offers the employees an easier opportunity for a promotion and a chance to achieve some degree of leadership according to their skills.

Every year the company organises an event where the best performing employees worldwide (1% of the total) are invited to attend the President’s Award ceremony in recognition of their merits. The company has developed reward programmes for its employees which offer medical plans, spending accounts, life insurance and insurance for short and long-term disabilities (McDonald’s, 2009a).In addition employees can either buy shares of McDonald’s at competitive prices or invest in a special fund called Mc$ave (McDonald’s, 2009c).

The company adopts a strong pay for performance philosophy that gives big relevance to the results that the employee achieves as either an individual or within the team framework. To retain and encourage the employees to share their problems, the managers have decided to create a dedicated intranet website. The data shows that the workers participate frequently, helping each other out with ideas and suggestions about the tasks they need to accomplish at work, the relationships with the managers and their general feelings about their job (Berta, 2009). This has been a very successful idea as it has offered the opportunity to 72,000 employees around the world to share their views without the fear of being controlled or punished by their managers.

After so many changes within the organization working at McDonalds’ is no longer associated with the belief of a low-pay, low-prestige job with few career prospects. This was also a consequence of the fact that the company has developed a successful strategy based on motivational theories that aim at building self-esteem and pride among the employees. They can develop new skills using updated machinery and enjoy a good amount of flexibility in working hours (EFA,2009). The “friends and family” programme, for example, gives the opportunity to members of the same family and friends working in the same premises to cover each other shifts.

One can tell that managers are trying to make working at McDonald’s as friendly as possible. Employer’s feedbacks are taken into consideration and managers are focusing on the areas of improvement in order to satisfy its workers. In addition, in order to support the employees directly, the company runs workshops and seminars. All these facts demonstrate that McDonald’s continues to care about its new image in order to gain more consumer trust and to prove its new reputation of healthier food provider and more ethical employer. The hard work put into the re-branding process has brought some positive changes into the image and the financial situation of the company. In addition, the percentage of employees that are happy and proud to work in has increased from 60% to 79% in 2008 and the number of people that leave the Company every year is at an all-time low (Anon, 2009).

McDonald’s nowadays applies some motivational managerial concepts in order to boost employees’ enthusiasm at the workplace.

Day by day managers apply extensive motivational theories in the tasks, such as recognizing the employees, acknowledging their performances and the contributions that they give to the company’s goals.

Taylor (1903) studied how the performances of the employees depend directly on the amount of the salary. The idea behind this theory is used in McDonald’s in the way that the managers tend to reward the employees with a base pay plus an incentive pay. This practise within the company is called Target Incentive Plan (TIP) that “links employees’ performance with the performance of the business they support and their individual performance” (McDonald’s, 2009b).

The company recognises its workers as its most important assets with clear goals and objectives to achieve, and a deep feeling of belonging. Employees are committed because they can expect support from the company in case of difficulties.

The reason why McDonald’s is developing such an enriching and employee-friendly environment, with a good salary and good benefits is because by doing so, the workers feel productive and meaningful, and most of all their professional needs are being satisfied. As a result employees tend to switch to different jobs much less than before, helping the company to save up on new employees’ training every year.

The re-branding of 2006 brought some new issues in the motivational approach of the company. According to Stajkovic’s et. Luthan’s contingency approach (2000) and Vroom’s expectancy theory (1964), the creation of new meals and new menus forced McDonald’s to create a different system of motivation for every department. These authors argue how different practises of management can have different effects depending on the individual and that these practises should be customised depending on the particular group the manager is working with. Understanding the needs of the single workers is therefore essential.

McDonald’s managers have also decided to change the aims and goals of the employees more often (about every 6 months), in order to make them develop flexibility and acquire new skills and abilities in diverse fields. This approach is derived from the goal setting theory of Bryan and Locke (1967), who argue that goals and performance objectives are achieved faster when they are clear and specific. When the goal is achieved, it must be moved forward, thus stimulating the employee to perform even better, putting forth the biggest effort. In this way, the worker becomes conscious of his/her capabilities and limits. This process is also defined as negative reinforcement.

Mayo ( ) argues that the social needs of the employees are satisfied by working and that to enhance productivity they should be motivated and feel part of group, like it is in McDonald’s case.

Another theory applied by McDonald’s managers is Maslow’s motivational theory (1989) of the hierarchy of needs, where the employee gradually satisfies first the physiological needs, then the safety needs (protection), the social needs (love), and finally one’s self-esteem and self-actualisation.

The way McDonald’s does it is by offering to the employees different bonuses and incentives that satisfy the workers’ needs giving them greater possibility for developing and career growth, hence self-actualisation.

One can see that the company’s policy is directly influenced by Maslow. However McGregor’s theory can be applied as well. McGregor (one of Maslow’s critics) wrote about Theory X and Y of management. Theory X, also called theory of carrot and sticks, is a negative view of the modern management practises and labour. The idea behind it is that good performances can be achieved just when the workers have fear of the managers and are being punished. Theory Y on the other hand seems the one applied by McDonald’s through a motivating and stimulating approach. The employees are able to develop their natural potential, since they feel the freedom of facing and solving difficult tasks.

In this respect the role of management is crucial to ensure that the workers become conscious of their potential and can direct and improve their own qualities whilst working. Therefore, the main goal of the managers is to provide the employees with the best possible environment. This is exactly what McDonald’s is doing with the “Forever Young” campaign, changing the restaurants inside and out, providing new technology to help employees acting efficiently and serve the customers in the best possible way.

McClelland (2003) argues that the need for power is fundamental in a manager’s personality as this leads to a better performance of the subordinates. The importance that McDonald’s gives to the managerial roles in every single restaurant is relevant to this theory as the company realizes that power is a good motivator for subordinates.

Moreover, Herzberg (2003) gives a similar interpretation, discussing the importance of hygiene factors and motivators as means to incentive employees.

The new strategy of McDonald’s is aimed to reinforce the motivators that in the past years were lacking. By providing employees with the best working conditions and a clear progression of roles, they are stimulated to perform better in order to impress their managers and gain a higher position. At the same time McDonald’s today provides the minimum level of hygiene factors such as interpersonal relations (blogs and forums for employees), an average salary that depends heavily on the performances and good working conditions in brand new restaurants.

Likert ( ) identified in his studies four different types of management, considered as four different stages. They are exploitative/authoritative, benevolent/authoritative, consultative and participative. It can be argued that, if in the past the company was between stage 1 and 2 for the level of contribution and attention that it was giving to the employees, today it positions itself between stage 3 and 4. These are indicated by the author as the most effective stages because they satisfy all human needs, thus enhancing the productivity of the workers.

Therefore, this is the best position to be in for McDonald’s, considering that their sales and profit depend mainly on the reputation of the brand within customers and media.

It can be summarised then that there is strong evidence that the new image of McDonald’s has influenced the way employees work and perceive their workplace. The implications of the re-branding process for the employees have been positive as the company has improved its reputation and is now considered a healthier food chain and a more ethical employer. There is no doubt that the majority of McDonald’s employees are happier now than before. They are motivated too, due to the fact that the salary has improved, as well as the quality standards and the working environment. Changing the menus, renovating the restaurant and re-training the employees could have been a very expensive and risky step for McDonald’s. Fortunately the skills in achieving economies of scale that the company has developed throughout its history have given to the corporation the opportunity to succeed in this complex task without serious consequences for its profitability.

Although many things have changed since 2006, and McDonald’s progressed from every point of view in the last couple of years, there is still a lot to improve and the road lying ahead for McDonald’s is still long and difficult. Nevertheless, the future seems to be bright for the food chain and no other company in the field can beat McDonald’s’ customer loyalty. People have always loved and will keep on loving the food provided by the “mighty” McDonald’s.

References

Berta,D. 2009. Brands say employees atwitter for social sites. Restaurant News [online] Available from: http://www.nrn.com/article.aspx?id=365982 (Accessed August 18th 2009).

Botterine,J. and Kline S. 2007. From McLibel to McLettuce: childhood, spin and re-branding. Society and Business Review Vol.2 No.1

Braithwaite,T. 2008. Royal couturier hired in “McJob” rebranding. Financial Times. [online] Available from: http://us.ft.com/ftgateway/superpage.ft?news_id=fto042220082342410283&page=2 (Accessed August 18th 2009).

Bryan,J.F. and Locke,E. 1967. Goal-setting as means of increasing motivation. Cited in Miner,J. 2002. Organizational Behavior, Oxford University Press:USA

Business Week, 2006. McDonald’s wants a digital-age makeover. [online] Available from: http://moneycentral.msn.com/content/invest/extra/P150732.asp (Accessed August 18th 2009).

Davies,M. 2007. The McDonalds Refresh & Fast Food Chains [online] Available from: http://www.attitudedesign.co.uk/brand-review-the-mcdonalds-refresh-fast-food-chains/ (Accessed August 18th 2009).

EFA,2009. Innovation in flexible working. Employers Forum on Age Awards, Case Study [online] Available from: http://www.efa.org.uk/downloads/awards/mcdonald’s_flexible_working.pdf
(Accessed August 18th 2009).

Frauenheim,E. 2009. Staying the Course. Workforce Management, Vol. 88 Issue 6

Green,F. 2006. McMakeover . News from SignOnSanDiego.com [online] Available from: http://www.signonsandiego.com/news/business/20060318-9999-1b18mcdonald.html (Accessed August 18th 2009).

Herzberg,F. 2003. One more time: How do you motivate employees? Cited in Harvard Business Review on Motivating People, Boston MA : Harvard Business School Press.

Likert

Luthans, F. and Stajkovic,A. 2000. Provide recognition for performance improvement.
Cited in E. Locke, The Blackwell Handbook of Principles of Organizational Behaviour.

McChronicles, 2005. Forever Young. McDonald’s Brand Experience from the Customers’ point of view. [online] Available from: http://mcchronicles.blogspot.com/2005/09/forever-young.html (Accessed August 18th 2009).

Maslow, A. 1989. A theory of motivation. Cited in Leavitt,H. et al. , Reading in Managerial Psychology, 4th Edition p.p. 20-35, Chigaco: University of Chicago Press.

Mayo

McClelland, D. 2003. Power is a great motivator. Cited in Harvard Business Review on Motivating People, Boston MA : Harvard Business School Press.

McDonald’s, 2009a. McDonald’s Website.Your health and protection [online] Available from:http://www.aboutmcdonalds.com/mcd/careers/employee_benefits/health_and_protection.html (Accessed August 18th 2009).

McDonald’s, 2009b. McDonald’s Website. Your pay and rewards [online] Available from:http://www.aboutmcdonalds.com/mcd/careers/employee_benefits/pay_an_rewards.html (Accessed August 18th 2009)

McDonald’s, 2009c. McDonald’s Website. Investing in Your Future [online] Available from:http://www.aboutmcdonalds.com/mcd/careers/employee_benefits/investing_in_your_future.html (Accessed August 18th 2009).

McGregor, D. 1989. The human side of enterprise. Cited in Leavitt,H. et al. , Reading in Managerial Psychology, 4th Edition p.p. 20-35, Chigaco: University of Chicago Press.

Movie Database, 2004. Supersize Me Movie Details [online] Available from: http://www.imdb.com/title/tt0390521/ (Accessed August 18th 2009).

Strategic Decisions, 2007. McMishaps and McVictories Vol. 23 N° 8, Emerald Group Publishing Limited. [online] Available from: http://www.emeraldinsight.com/10.1108/02580540710759098 (Accessed August 18th 2009).

Taylor,F. 1903. Shop Management. Harper and Row: New York Cited in Miner,J. 2002. Organizational Behavior, Oxford University Press:USA

Times 100, McDonald’s: Recruiting, selecting and training for success. [online] Available from: http://www.thetimes100.co.uk/downloads/mcd/mcd_10_full.doc (Accessed August 18th 2009).

Vroom,V.H. 1964. Work and motivation. New York: Wiley.

Wollam, 2006. McDonald’s adds twist to the Golden Arches. Houston Business Journal. [online] Available from: http://www.bizjournals.com/houston/stories/2006/12/25/story4.html (Accessed August 18th 2009).