By Lawrence J. Gitman, Carl McDaniel
principles and practices
principles and practices
Philip C. Grant
Vantage Press, 1984 - 160 pages
How McDonald’s tracks morale at the front line
A successful engagement effort should result in happier customers Mark Blundell
Mark Blundell started work in McDonald’s in 1985 and has gained experience working at all levels in the retail arm of the business. He has recently become head of HR Operations within the organization.
Like most retail organizations, McDonald’s is well aware that a drop in engagement at the front line is likely to have an impact on customer service. So the company has a number of initiatives in place to motivate employees and build loyalty. Here, Mark Blundell describes the approach used to monitor the impact of its engagement efforts.
Following my presentation at Melcrum’s Annual Employee Engagement conference in London in May 2007, I was asked many questions about the way we measure the impact of the recent employee engagement initiatives at McDonald’s. In broad terms, we use three categories of measurement: employee surveys, third-party review and operational outcomes.
The McDonald’s “Your Viewpoint” survey is a long-term tracking study of employee opinion. It’s been conducted on a global scale for many years with ORC International, who provide an independent assessment of the results in every country in which we operate. A UK participation rate of 83 percent in 2006 demonstrates that it’s something everyone in the business takes very seriously. The data is analyzed and cut to mirror the structure of our organization in terms of job “families” (e.g., hourly-paid restaurant staff, restaurant management, office staff, etc.) and geographically, from national level right down to the level of the individual restaurant.
The survey consists of 50 statements which cover five recognized drivers of commitment. Employees respond to these statements with a simple “agree”, “neutral” or “disagree”. In 2006 the results from our UK hourly-paid employees were as follows: •Development and personal growth: 85 percent agree.
•Resources to get the job done: 82 percent agree.
•Values and leadership behaviors: 84 percent agree.
•Competitive pay and benefits: 77 percent agree.
•Respect and recognition: 80 percent agree.
Although these results aren’t perfect they are, I think, better than many people assume McDonald’s would achieve.
We also regularly open our doors to those who would like to undertake a serious, objective study of our business and in recent years have welcomed Investors in People, the Work Foundation and the Great Places to Work Institute among others. Last year we gave Professor Adrian Furnham of University College London unrestricted access to our managers and crew to study the impact of working at McDonald’s on our employees. Regarding employee engagement he concluded the following: “Overall, McDonald’s staff felt good about themselves, experienced strong job satisfaction and had exceptionally high engagement levels. Indeed, nearly every staff member interviewed could be counted as engaged, whereas the typical figure is substantially lower.”
The McDonald’s business model is a simple People-Profit chain: engaged people delivering quality products and great service in a clean environment create loyal customers. Customer loyalty, in turn, drives sales and profitability. If we’re succeeding in engaging our employees we should be seeing a measurable impact in our mystery-shopper surveys. These assess quality, service and cleanliness in our restaurants – results of which are fed into a “People Scorecard”, which details annual performance data for the last five years, alongside quarterly data and targets for the current year.
In addition, the People Scorecard presents snapshot data of staff perceptions and, as an inverse measure of customer satisfaction, information about complaints we’ve received. This data can also be analyzed by every manager in our business to clearly see how employee engagement influences our overall performance.
Data that makes a difference
By knowing which managers are creating a great place for their employees to work, we’re able to celebrate and reward individual excellence. And by knowing which restaurants are achieving the best mystery shopper results we can reward the whole team too.
On the other hand, where performance isn’t what it should be, the depth of the data means that we can focus on the areas of a particular store that need support without condemning everything that’s happening there. So, any intervention we make can be positive, supportive and evidence-based rather than being critical, demoralizing and subjectively judgmental.
Again, McDonald’s isn’t perfect, but we believe that by gathering and analyzing engagement data from a range of sources, we’re able to pinpoint exactly where our imperfections can be found. This article is from Strategic Communication Management June/July 2007
By Lauren Young
updated 1/6/2009 11:40:15 AM ET
Inside the McDonald's off Interstate 270 in suburban St. Louis, manager Sadie Travis is hustling. Amid the beeping and buzzing of fry timers, Travis at any given moment is voiding orders at the register, handing out cups for drinks, wiping trays, or stuffing toys into Happy Meal boxes. If only the fast-food titan could get more people like her to run its 6,700 company-owned restaurants. While an average McDonald's grosses $2.2 million a year, seasoned managers who motivate employees and keep customers coming back can add more than $200,000 to that total. "Restaurant managers are in the most important position in our company," says Richard Floersch, McDonald's chief human resources officer. Yet despite generous salaries — up to $62,000 plus bonus and company car, say insiders — turnover is a constant concern in an industry that typically sees 43 percent of its staff leave each year. To stanch the bleeding of valuable talent, McDonald's in 2004 began offering a rich retirement savings perk. Employees who put 5 percent of their salary in the company 401(k) receive a company match of as much as 11 percent, turbocharging their savings right off the bat. To make sure employees take advantage of the program, McDonald's has made enrollment automatic. And to ease the pain of automatically deferring 1 percent of pay, the company gave managers a one-time, 1 percent salary increase. But persuading prized employees that the benefit is reason enough to stay with McDonald's for the long term is an ongoing challenge. Skepticism about investing runs especially high among African Americans, who make up 15 percent of the company's manager pool. Research shows that blacks, in the aggregate, are reluctant to save. According to a 2008 study by Ariel Investments and Charles Schwab, blacks save an average of $169 a month for retirement, while comparable whites (in terms of household income) contribute about $249 a month. Race and ethnicity trump gender — and even salary — in the factors that predict whether a person will save for retirement. Preparing for the future
Why don't blacks save more? The reasons are complex, but the underlying theme is cultural. "African Americans are distrustful of the financial system because it has excluded them for generations," says Andrés Tapia, chief diversity officer at Hewitt Associates, the benefits-consulting giant. Hewitt's research shows that African Americans consistently put home ownership and college ahead of retirement goals. Owning a home and educating children become a huge priority, explains Tapia, "if you are the first person in your family to do it." Preparing for the future can also be controversial in the black community. "If your mama lives with you — and others in your extended community are struggling to get by — putting aside money that you can't touch for the next 15 to 20 years feels selfish and inappropriate," Tapia says. Indeed, for many blacks, retirement is more a dream than a priority. The Ariel-Schwab survey found that African Americans under the age of 50 are nearly twice as likely as comparable whites to say they want to retire by 60, but they are half as likely to cite retirement as their most important savings goal. Adding to the skepticism, the great market meltdown of 2008 showed that even the most carefully crafted retirement plans can be ruined by forces beyond a person's control. "This is a big setback that will affect all people," says Mellody Hobson, president of Ariel, the largest African American-run money manager. "In our community, which has had less exposure to the market, people are especially nervous" about investing. Such reticence has made McDonald's efforts to sell its perk to employees all the more difficult. Generous inducements to save
Few employers offer 401(k) plans as lavish as the one at McDonald's. In fact, many companies have been cutting back on their matching contributions in recent months as the recession deepens. McDonald's corporate match is especially extravagant at lower levels of saving: employees who put just 1 percent of their salary in the plan get $3 for every $1 they invest. (Most companies won't even match a contribution until an employee puts in at least 3 percent.) McDonald's then makes a dollar-for-dollar match on the next 4 percent. After that there's a potential profit-sharing match of up to 4 percent. All told, workers who save 5 percent of their pay can see the total swell to 16 percent. But corporate 401(k) plans aren't an if-you-build-it-they-will-come kind of benefit. Companies can send out pamphlets, but the burden of persuading employees that the plans are worthwhile ultimately falls on people like Kenny Sanders, who heads human resources for the "Heartland" region of McDonald's, overseeing 76 company-owned stores. Like Travis, Sanders, 44, started working at McDonald's in St. Louis when he was a teenager. Over the past 28 years he has risen through the ranks beyond store manager to corporate management. McDonald's crew members don't sit in front of computers all day, leaving little opportunity to check 401(k) balances or make tweaks to asset allocation plans at work. So Sanders spends much of his time out in the field talking to employees about their financial future. "My goal is to get people to understand that this is more than a job. You can put away a nice nest egg for you and your family, depending on how long you stay at this company," Sanders says. Looking beyond paycheck to paycheck
Sanders' main goal is to keep people like Travis, who oversees one of the St. Louis area's most profitable McDonald's restaurants, interested in saving. Everything Travis knows about building a nest egg she learned at McDonald's — most of it gleaned during the four years since the retirement program began. "Before that, I didn't realize that putting money in the bank and saving for retirement is not the same thing," she says. "It's a real eye-opener to learn that McDonald's will match what you put in," Travis says. "It helps relieve a lot of stress." Sanders was the first person Travis turned to for investment advice when she looked at her September retirement account statement and saw that her balance was down almost $11,000 for the year. Sanders recalls assuring her. "You lose a little here, and then you gain a little there." Saving for the future has been a luxury that Travis, 47, could not afford until recently. For most of her life the divorced mother of two "was just making ends meet," she says. Travis had her son, Lamar, at 20. Her daughter, Latisha, came along when she was 29. Buying a home, paying for braces, helping her elderly parents with living expenses — all those things derailed her plans to save for the future. "I know you have to have a security blanket, but I was living paycheck to paycheck when I had my first baby," Travis says. That's why Travis connects so well with Ebony Henderson, a second assistant manager at the same McDonald's, who gave birth to a boy named Jeremiyah in August and has a toddler son named Quian Jr. "We each had babies young," Travis says. "But I'm not about collecting money from the state. I'm a person who wants to make money and keep stability. That's how Ebony seems to me." When Henderson, 26, joined McDonald's at age 15 to earn money for school supplies and clothes, she never thought it would be a serious career path. Today she eyes the golden rung of store manager and plans to start the interview process this month. "I'm doing good now, but I want to be where Sadie's at in the future," says Henderson, whose tinted hair matches her red cable-knit sweater. "I don't want to be working all my life with nothing to show for it." Despite the market downturn, Travis says she remains on track for retirement. She's confident she'll be able to leave the work force in 10 to 15 years with a $200,000 nest egg. "I don't want to shoot for a million," she says. "I don't want to be greedy." Others aren't so sure about the future. Since the stock market began to unravel last fall, Sanders says, more than 100 employees have asked him for investment guidance, often brandishing their retirement account statements. "I'm not an adviser, so I can't really tell them what to do," Sanders says. He looks over statements to make sure employees are well diversified and usually recommends the financial advisory services McDonald's offers to employees. "But I always say that staying the course is the right thing for me," he says. Amid the market turmoil, it's more important than ever for Sanders to reach out to workers. After all, he says, "What's good for employees is good for McDonald's."