Best employers can take a long-term view
Best Practice HRM is the idea that a particular bundle of HR practices has the potential to contribute to improved attitudes and behaviours, lower levels of absenteeism and labour turnover, and higher level of productivity, quality and customer service, ultimately generating higher organisational performance and profitability. (Marchington & Wilkinson, 2002) Components of best practice include employment security and internal promotion, selective hiring and firing, extensive training, learning and development, employee involvement and voice, high compensation upon organisational performance, reduction of status differentials, etc.
(Marchington & Wilkinson, 2002;Hughes & Julia M, 2002 International Journal Of Contemporary Hospitality Management Vol. 14 No. 5) The 40% of senior managers at McDonald’s have been promoted internally and not hired from outside directly. They started their career by working at the lowest level of the hierarchy that is as crewmembers in the kitchen of the restaurant. (www. bized. ac. uk) They conduct training, learning and development programmes regularly and extensively which is reflected in their HR activities. They also provide high level of employment security.
By implementing various HR activities, they’ve been successful in developing committed and competent workforce who delivers quality and customer satisfaction and this can be observed easily by the current market position of McDonald’s. On the contrary, the best practice model assumes that employers can take a long-term view of strategy. Practically, by personal experience, it is observed that the lowest level employees (who work in the kitchen and believed the ‘hub’ of the business) generally don’t have the perception of the organisation’s strategy.
Also, employee voice has not much to do with the organisation and its strategy. (The lowest level employee of ASDA, Wal-Mart Inc. , can make suggestion for the organisation, which is considered and discussed at senior management level. ) Further, reward system is totally appraisal based and not performance based. On the basis of above arguments, it can be said that McDonald’s has been practising many components of the best practice model but they’ve not implemented the full best practice model. Here, strategy reflects stages of organisational development i. e. start-up, growth, maturity and decline.
It relates human resource functions (recruitment and selection, compensation and benefits, employee training and development, employee relations) with business life cycle stages. Talking for McDonald’s, at least one new restaurant opens still today anywhere in the world (Headquarters, McDonald’s) and recruitment is all round the year. (HR department, McDonald’s) Training and development, as seen earlier, has been practised regularly and extensively. Best-fit model says that during growth, organisation recruit adequate numbers and practises effective management and organisational development.
(Marchington & Wilkinson, 2002) McDonald’s is controlling labour costs, maintaining labour peace and improving productivity, which matches the HR function during maturity of an organisation according to the model. It is difficult to say exactly which stage of business life cycle in McDonald’s is. But it can be said implicitly that they are mature but still growing at particular rate. Defenders are companies with a limited product line and the management focus on improving the efficiency of their existing operations.
HR practices in defenders include extensive and long-term focus, well defined career ladders, clear grading structures, employee share ownership, well-established HR function, etc. Prospectors are companies with fairly broad product lines that focus on product innovation and market opportunities. It has tight performance standards and expectations (Bratton and Gold, 1999) From the corporate strategy and issues of McDonald’s, it is seen that they are very keen on improving their efficiency (by extensive training and development) and always working to take the brand into new markets.
Therefore, it can be said that McDonald’s is classified as combination of defenders and prospectors. Michael Porter (1980;cited in Bratton and Gold, 1999) formulated a framework that describes three competitive strategies: low-cost leadership strategy, differentiation strategy, and focus strategy. In a differentiation strategy, managers try to distinguish their services and products -such as brand image or quality. In this way, value is added to the product and reflected in the product price. (Purcell, 1999 Human Resource Management Journal Vol.
9 No. 3) In literature, it is also said quality enhancement which includes sophisticated methods of recruitment and selection, comprehensive induction, focus on learning and development, benefits package, working closely with line manager, etc. (Lecture Notes,2004 Topic 2) McDonald’s has achieved its present position by distinguishing its brand and providing quality of food and service across the globe. They have their standard recruitment methods and policies, highly focussed training and learning, reward system for employee benefits.
HR function works very closely with line management, which can be derived from their HR strategy and activities. So, on the basis of above, it seems that they have been following differentiation strategy. Criticism of contingency theory is that it simplifies reality i. e. no one single feature dominates in the real world. Practically, it is difficult to integrate HR strategy with corporate strategy. In reality, it is very difficult to follow one model purely and totally. Some of the largest UK companies have been using several HR practices at the same time to complement and reinforce each other.
From the discussion above, it is very clear that McDonald’s has been successful so far because of the commitment to their brand, raising their own performance, their philosophy and autonomy provided. Also, it can be concluded that McDonald’s has implemented HR strategy and integrated it with the corporate strategy really well and have implemented some HR practices at the same time, which is reflected in their success. As McDonald’s operates in the food industry, which has to deal with quality and service, there are always chances of improvement.
From the analysis carried out here, following recommendations may be suggested to improve performance. As analysed, ‘people’ are the key resource for McDonald’s. It has been observed by personal experience that the lowest level employees (crew members working in the kitchen-most responsible persons in delivering the philosophy of McDonald’s-QSC&V) are not satisfied with pay and reward schemes. Also they are unhappy with appraisals as appraisals are majorly concerned with pay only. Talking in HR terms, McDonald’s can increase motivation and commitment of lowest level employees by improving their appraisal schemes.
This can be done by rewarding and appreciating employees regularly rather frequently (compared to present) on the basis of results of appraisals. Performance management is also good practice to increase motivation, commitment and satisfaction of the employees. (Armstrong M,2003) From the analysis, it is seen that there are bright chances of introducing performance management into the organisation. Initially, it can be implemented partly on experimental basis and depending upon the outcomes, McDonald’s can decide whether to continue it or not.