People are important assets for any organization. Therefore, the recognition of the value of people in an organization prompts organizations to invest in human capital management through human resources management (HRM). The chief objective of investing in human resource capital management encompasses “responsibly attracting, developing, and managing a firm’s biggest asset, viz. people” (Bowles & Gintis 2007, p.75).
The value of service delivery within any organization depends on the extent of the employees’ motivation as they deliver services to clients. In the fast food industry, employees are the closest persons to the customers. Hence, it is crucial for the fast food industry organizations’ management teams to ensure that employees remain motivated by appropriately handling various situations that may lead to low self-esteem and poor attitude in at the workplace.
Investment in human capital is particularly significant in an organization whose success is driven by the capacity to change various operational approaches to meet new changes in the business environment (Sveiby 2007). By considering the varying importance of people, who are also driven by multiple motivators and various diversity factors that influence their performance, the concept of capital management attracts different scholarly views in the manner in which people need to be managed in a bid to realize optimal output from them.
Based on these arguments, this paper presents an investigation report based on scholarly contention that people are the most important sources of an organization’s competitive advantage. After introspection of various HRM issues encountered at the McDonald’s, the paper shifts to offering recommendations on how the organization can resolve the challenges effectively in the bid to build an incredibly motivated workforce.
Background to the organization’s HR functions
The McDonald’s stands out as one of the biggest global fast food retailer offering fasts foods in more than119 customers all over the globe. The McDonald’s restaurants and franchises, which stand at about 33, 500 in number, continue to grow as the organization penetrates new markets in Asia. This immense success of McDonald’s is attributed to a number of factors among them being incredible emphasis on engagement of consumers, appropriate leadership that fits the business of the organization, and exceptional investment of the organizational resources in brand management.
The franchise business model of the company has managed to ensure that the products and services offered at the franchises are consistent with the services offered at the company-owned restaurants. Success of MacDonald’s in a dynamic fast food industry has also been contributed by organizational strategy of utilizing people as the most important resource to enhance its competitive advantage. The value for people in enhancing the growth of McDonald’s has seen the company invest in HRM strategies for enhancing employees’ retention and career growth.
Most workers (75 percent) at McDonald’s are subordinates and are lowly paid. These workers are also employed on part time basis. Each MacDonald’s restaurant has one Restaurant Manager under which there are Assistant Managers and Swing Managers down the hierarchy. The company has corporate headquarters and forty regional offices in which the corporate personnel categories of employees work.
Having been successful in its services and acquiring outstanding capacity to satisfy customers’ needs, MacDonald’s has remarkably retained its glory in the fast food production ranking. However, human resource issues such as retention of employees, enhancing their motivations, and concerns of poor remuneration coupled with concerns of the organization to pursue bureaucratic business models, which hinder freedom for employees’ unionization, remain critical for the future growth of the company.
Teamwork responsibility and individual accountability of the MacDonald’s HR has yielded the registered growth of the organization, but not without challenges. Diverse global culture, unhealthy foods, and anti-American attitude have affected the company’s performance negatively. From the paradigms of HR, loser mentality of employees towards their employer has had a direct demerit on the effectiveness of the MacDonald’s HR. The greatest challenge posed to the HR management had been to influence and transform the mentality of the public from that of a loser to that of employees of a prolific corporate performance. Due to different cultural backgrounds, issues of tastes and pitting against MacDonald’s have emerged.
The company’s strategy seeks to raise its output coupled with the revenues through the utilization of people as the main source of competitive advantage. In this effort, the MacDonald’s HR focuses on building a common organizational culture recognizing the importance of people in enhancing its productivity. However, this strategy faces challenges articulated to many complains raised by employees including the company’s strong opposition to unionization and complains of low wages within the company own stores and franchises. This aspect leads to low motivation and reduced job satisfaction.
Identification and evaluation of the major external contexts affecting the organization
Organizations’ success in the global platforms depends on their ability to manage the differences amongst the workforces effectively. For McDonald’s, this ability comprises a major external factor affecting the success of HR in the execution of its mandates. An immense challenge related to this issue comprises the struggles of the managers to ensure the availability of not only the right employees at the right places and at the right time, but also focusing on improving the human resource. Amid the many ways of accomplishing this goal, central challenges are on the creation of motivated and empowered work teams.
Hales and Klidas (1998) studied the significance of empowerment as a component of human resource management challenges. The authors argue that empowerment addresses most enduring problems in human resource by enhancing cooperation among various employees coupled with compliance (Hales & Klidas 1998). In this context, empowerment as a human resource task helps managers to function as catalysts, facilitators, developers of people, and more importantly, coaches of people. In a globalised organization and in an organization employing people from diverse backgrounds like McDonald’s, these tasks of human resource are even more challenging, especially by considering that the organization advocates for bureaucratic management approach to HR.
In today’s working environment, people are required to think more about how certain tasks are to be completed as opposed to engaging more in physical activities (Gomez-Mejia, Balkin & Cardy 2008). HR within McDonald’s engages in asking various simulation interrogatives purposed to unveil solutions of how people’s optimal mental work can be realized. This way, the HR strives to be more inclined to facilitation as opposed to decision making as theorized by literature on management work (Tengblad 2006).Unfortunately, facilitation constitutes major challenges at McDonald’s due to the bureaucratic nature of organizational managerial structures.
Acting as facilitators, HR managers have to establish various management approaches that suit the environmental conditions of an organization. When an organization encounters periods of rapid technological changes, when it needs innovations and creativity to create new products while not negating services, and periods of low motivations of the employees among other challenging situations, HR managers have no choice but to advocate for employees’ empowerment. This aspect calls for the incorporation of employees in the decision-making process even if it means erosion of the authoritative power of a manager allocated within a given hierarchical levels within the bureaucratic hierarchy of workforce management (Hales & Klidas 1998). In this context, the HR faces the challenges of making bold decisions for the benefit of the McDonald’s.
In their study on empowerment in ten five star hotels located in Amsterdam Hales and Klidas (1998) noted that empowerment through delegation is important. In this line of thought, Blalock (2005) argues, “Delegation is not enough in today’s knowledge-driven world to get work done through people” (p.237). This assertion is important since the modern managerial work environments have evolved to encompass more of problem solving tasks, decision making, and creative thinking tasks.
This argument perhaps complies precisely with the findings of various scholarly findings indicating that successful organizations in the globalization age needs to cast off traditional approaches of management, which emphasize more on HR management that is task oriented, mechanistic, and which focus more on controlling. Unfortunately, the McDonald’s uses this approach in management of HR issues.
Effecting control is achieved through various mechanisms. Talk (communication) comprises one of such mechanisms. Controlling is a means for making sure that tasks within an organization are accomplished through specified processes and methods. Therefore, it is a mechanism of making sure that tasks allocated to work groups and individuals are done in the HR manager’s way. Hence, it hinders employees from creating and innovating new ways of doing the same task in a manner that would save costs, but it opposes the HR manager’s approach. Management approaches, which emphasize on control, hinder information sharing, which is a major driving force for organizational success for a knowledge-based organization. McDonald’s is arguably an incredibly big culprit of these challenges since the managerial goal is normally to enhance compliance through bureaucratic control and monitoring structures.
The degree of integration of employees in management functions determines the productivity and the effectiveness of the HR managers (Watson 2001). One of the integration concerns is the degree to which managers permit employees to take part in the decision-making process in an effort to ensure that an organization gets things done through the human resource. This aspect gives the function of HR, within any organization, a multidisciplinary dimension to the extent that HR managers have to use perspectives of economics, sociology, information technology, managerial science and art, and psychology to ensure that all organizational variables are balanced. Integration of these disciplines in perspectives of HR management requires innovation and creativity input of employees coupled with the enhancement of two-way communication processes. Unfortunately, the bureaucratic systems of management at McDonald’s cannot allow this scenario to play out.
Sources of data, measurements, and interpretations
This investigation report paper draws data from literature on functions of HR within an organization coupled with how the HR roles enhance the success of an organization in a dynamic operational environment requiring the use of people as sources of competitive advantage. This qualitative data is then compared with the mechanism of operation at the McDonald’s human resource in the execution of its mandates. This comparison acts as a possible measure for the degree to which the McDonald’s human resources management operates in the context of the existing theoretical paradigms for operation of effective HR arm of an organization. The points of departures from the HR model for McDonald’s with this theoretical approaches to HR forms the basis for the recommendations made in this report.
In the bid to resolve the challenges encountered at the McDonald’s in its effort to build motivated workforce that is capable of delivering fast food service with both speed and quality, it is recommendable for the company’s HR to focus on the strategic mission of building team culture and investing heavily on human capital management. In the attempt to invest in effective human capital management approaches, Alan Erskine, a management consultant, argues that an organization without collaboration among IT, human resources, and operations management arms of an organization cannot implement human capital management (Erskine 2012).
According to Erskine (2012), human capital management entails the mechanisms for ensuring that organizational workforce remains motivated and productive in an effort to realize organizational goals. Human capital management can be defined as the “holistic approach to contracting and optimizing the time of employees” (Erskine 2012, p.12). From the basis of this definition, human capital management entails an essential component of achieving goals and objectives of an organization through people. Arguably, to realize organizational goals through people, it is important to make efforts to ensure that the recruited employees are retained within an organization.
An attempt to retain people within an organization requires an organization to deal proactively and effectively with factors that may compel people to have turnover intents. Turnover intents are correlated with poor satisfaction of employees. Poor satisfaction leads to poor motivation and subsequently poor performance of employees in terms of service delivery and quality of products. The HR is the arm of an organization that handles the employees’ issues that affect their productivity. Hence, it is recommendable for the HR at the McDonald’s to seek ways of enhancing the productivity of employees. However, at this point, the question on the most appropriate strategies for enhancement of workforce motivation and satisfaction becomes important. In this context, the McDonald’s HR may consider two important theories for analysis as the drivers of employees’ motivation and satisfaction. These are McGregor’s theory X and theory Y.
Theory X proposes that people “are normally lazy and often avoid doing work” (Lorsch & Morse 2006, p.98). Consequently, HR managers within organizations should supervise their employees closely and ensure that they are in a position to control every activity executed by them. The theory advocates for a hierarchical structure of management of staff, which is meant to ensure direct control while leaving very little room for the delegation of responsibilities.
Indeed, according to Lorsch and Morse (2006), realizing organizational goals from the basis of this theory calls for managers to deploy coercive and threatening management techniques. However, arguably, applying this theory at the McDonald’s might lead to mistrust between employees and managers. Hence, it acts as a magnificent catalyst for turnover of the McDonald’s employees. Investigation of the operation of the McDonald HR management reveals that the organization has been deploying theory X, which has failed to yield the desired success levels in a dynamic business environment currently encountered at the McDonald’s.
Opposed to theory X, theory Y presumes that employees are essentially self-motivated, exercise personal control, and highly ambitious to get things done within an organization they work for (Lorsch & Morse 2006, p.101). The theory holds that employees enjoy their work particularly if it is physically and mentally satisfying. Such employees are great problems solvers. Managers inclined to this school of thought believe that people are ready to accept responsibilities and deploy self-control coupled with self-direction in a bid to ensure that they are in a position to achieve their organizations duties.
Given opportunities from the context of theory Y, people have the eagerness to do well (Lorsch & Morse 2006, p.102). Hence, satisfaction accompanied by doing well in a given job act as an enormous source of motivation, which also helps to foster employees retention within an organization. Considering the roles of theory Y in enhancing motivation of employees, HR managers have embraced it, while theory X has been challenged incredibly. Theory X continues to support management theoretical paradigms, which have been proved to have little impact on enhancing competitive advantage of an organization in the modern globalised and sophisticated organization (Lorsch & Morse 2006, p.104). In this regard, theory Y is appropriate in enhancing retention of employees at McDonald.
Although handling human resource issues from the contexts of theory Y is essential in enhancing the competitive advantage of the McDonald’s, it is recommendable for the company to change its managerial structures. The McDonald’s has bureaucratic organizational structure. The hierarchy of power in the organization reflects the remuneration differences. People having the highest salaries at the McDonald’s also turn out as the people who have more power to make organizational decisions.
Decision makers at the Mc Donald’s, mainly the directors, relay the decision to the associates who then relay the decision to managers, managers to the supervisors, and finally to the workers. The chain of command is incredibly important at the McDonald’s since they set particular ladder, which allows swift and efficient flow of information coupled with crucial decisions. The bureaucratic model enhances strict compliance of fixed methodologies of doing work in the effort to attain the preset goals efficiently. In this regard, in a bureaucratic organization, effectiveness is enhanced through the allocation of power to positions as opposed to persons.
Bureaucratic structures have high levels of impersonality. Unfortunately, using McGregor’s theory Y to enhance the success of an organization requires the incorporation of people in all hierarchical structures for the decision-making processes within an organization. Hence, the active involvement of people in enhancing growth of the McDonald’s calls for the alteration of bureaucratic structures and the embracement of the democratic structures so that freedom for unionization becomes an achievable pursuit. With the alteration of the structure, it also becomes possible to create an environment of two-way communication in a bid to enhance innovation and creativity of the McDonald’s employees, especially in the current operational environment requiring innovation of healthy fast food products.
Employees are the most important resources available to any organizational setting as they help in building an organization’s competitive advantage. However, this pursuit cannot materialize without the ingredients of workforce motivation and satisfaction in a bid to reduce turnover. This move saves an organization from encountering unnecessary training and development costs. Following the investigation of operation of the HR at the McDonald’s and comparing it with the effective strategies of HR management developed by literature on HRM, the McDonald’s needs to base its HR managerial approaches on McGregor’s theory Y.
This theory requires a breakdown of bureaucratic structures in approaches of management of employees to give room for creativity, innovation, two-way organizational communication, and allow involvement of people in the decision-making process coupled with reviewing the remuneration structures of employees based on their inputs to the organizational success. These strategies are proposed in the belief that they will enhance the levels of employees’ satisfaction and motivation and they can reduce both actual and intents of turnover at the McDonald’s.
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