Management of Change: Mc Donald’s
Executive Summary:
This report focuses on the current employment condition in McDonald’s. McDonald’s restaurants serve nearly 54 million customers each day. There are 120 countries and Territories with McDonald’s in the world. McDonald’s is a multi-billion dollar business that symbolizes both globalization and the American way of life. The company is often the target of criticisms especially when it comes to corporate ethics and the employment condition. In this report we found out that The corporation is still implementing the original system laid down by the McDonald brothers and then ‘fine tuned’ by Ray Kroc. The company remains faithful to it’s original system and try to avoid changes. McDonald’s standardized it’s product range, manufacturing processes and management practices, regardless of cultural differences across societies. This strategy, often called ‘McDonaldization” by the company’s critics has been an object of criticism and concern up until now. This report suggests changes in the management practices and the employment condition in the company. Many workers are complaining about the standardization in management practices. The company also uses routinization as an employment strategy. A strategy that is more beneficial to the company than to the workers. This report suggests that the company allow the employees to voice out their feeling about the company and encourage them to participate in the decision-making. This report also suggest that the company provide more benefits and implement fair labor practices.
Company Background and General Issues:
The McDonald’s Corporation is the largest food service operation in the world in terms of system-wide sales. At the beginning of 2000, it was operating more than 25,000 restaurants in 116 countries. A modest estimate of its current worldwide workforce would be around 1.5 million people, and 10 million people are estimated to have worked for the corporation since it was formed. More than one in ten Americans are reckoned to have got their first job at McDonald’s, and it has now taken over from the US Army as having America’s largest job-training programme ( 1997). It is an incredibly successful multinational and is expanding at a breath-taking rate. It plans to open between 2,500 and 3,200 new restaurants every year, the equivalent of one restaurant every 3 hours. If this rate of expansion is achieved, the corporation will have more than doubled in size to well over 50,000 restaurants by 2010. Part of this rapid expansion may also be aided by developments in technology. Two British companies claim the world record for the construction of a fifty-seat McDonald’s restaurant in Peterborough, which was completed in 1 day and was open for business 48 hours after the site work was completed (1999). McDonald’s shares are said to be the best-performing consumer stock on Wall Street. According to the McDonald’s web site, in 1965 when McDonald’s went public, 100 shares cost ,250. On 31 December 1998, some 33 years later, those same shares adjusted for stock splits were worth more than .8 billion. The corporation is described as being about the globalising of culture and belief systems and as the most important institution of our time.
Environment and Drivers of Change:
Company Hierarchy:
The hierarchy in McDonald’s restaurants in all the countries in this study appears to be remarkably similar; where differences do exist, they appear to have a minimal impact on the corporation’s basic American operating system. The majority of employees are called the ‘crew’, and in fact, this term appears to have been universally accepted; we have yet to find a country where this term is not in use. According to (1995), “the term ‘crew’ was apparently used by the brothers right from the beginning of their ‘Speedee Service System’ in 1948, when they trained their twelve-man ‘crew’ to work like a crack drill team” (p.16). The only flexibility in this system seems to be a few alterations in the menu, the addition of McSpaghetti noodles in the Philippines, teriyaki burgers in Japan and McLaks salmon rolls in Norway. The success of the corporation is undisputed, but the results of this success have also brought McDonald’s a good deal of criticism from all quarters. (1993), in his book The McDonaldization of Society, suggests that McDonald’s represents the paradigm case for an increasingly ‘rational’ society. Ritzer suggests that McDonald’s epitomises the relentless drive towards a less human society, one centred on ‘efficiency’, ‘calculability’, ‘predictability’ and ‘control’. I seek to propose the following:
People: Improve the morale of the employees. I propose to change the working conditions of the company’s employee and make some changes in the system in order to ensure productivity and contentment among the employees. In McDonald’s many employees are complaining about the system and the management’s treatment. These issues made worldwide concern and the company’s reputation, production and the quality of products and service are affected. There are even reports of “physical sabotage” committed by discontented employees against the company.
It has been reported that although there are rules and tight procedures for everything and managers usually working alongside closely monitor the work, workers do sometimes find short cuts. The research revealed that in several countries workers sometimes cheat on the system. They find short cuts when the restaurant is busy and when working within the system cannot cope with demand. In the UK, some employees were referred to as ‘cowboys’; these workers would find short cuts in exactly the same way as assembly line workers in other industries in order to create some porosity in an otherwise hectic schedule. In addition, some workers have reported more deviant forms of behaviour, which might be akin to physical sabotage (1971). One example was what some young male employees called ‘sweating competitions’. The hot kitchen conditions were used to see who could sweat the most over the products, apparently as a way of relieving the frustration or boredom or as a way of seeking revenge on unpopular managers or the customer. Nor is this the only example; one worker reported that he purposely did not wash his hands after a visit to the toilet, whereas others would apply their nasal fluid onto the products as a way of getting back at customers and managers. I propose that the company allow the workers to make unions that will protect the welfare and safety of the employees. The company should come up with fair and reasonable regulations regarding labor unions.
Management-Employee Relations: Create an environment that allows exchange of ideas and participation between the management and the workforce I also propose to implement co-determination and participation of employees in decision making on issues regarding the restaurant. Co-determination and participation as I perceive it will improve the connection between communication and consultation with the workforce and with increased worker commitment, job satisfaction, motivation and reduced resistance to change. The company must find solutions to these issues that are mostly workforce related. I believe that not only the employees will benefit in these changes but also the company. I believe that if the company focuses more on the employees’ condition, listen to their complaints and suggestions, and try to improve; there will be an increase in productivity and quality. The employees must have a voice in influencing the employment condition.
Sources of Resistance:
Work Force: Most employees are not interested in creating changes that will be beneficial to them like creating unions and collective bargaining. Most of the employees are part time workers so it is difficult to reach all employees and unionized them. Some employees resist change because they do not see the potential benefits of unionization as worth their time. While many are complaining about the employment system in Mc Donald’s, majority of the employees resist change because they do not plan to stay in the company for a long time. They see change as a waste of time.
Management: The management resists change because they insist on the effectivity of the current system. They resist change in the employment condition because they see it as a waste of time and money. They believe that the current condition is effective in terms of productivity and uniformity of the products. Employers insist routinization to the workers. It is clear that the company’s employment strategy to use the lowest-cost labor available, to keep turnover within acceptable limits by providing workers with recognition and fun working environment rather than increased compensation, and to minimize the number of workers on any given shift.
Style of Leadership:
The section on fast-food work in the United States, where most of McDonald’s Chains around the world patterned their systems, demonstrates that the industry relies on low-paid, part-time workers whose tasks have been rigidly standardized. It can be noted that while Mc Donald’s are trying to localized their restaurants worldwide, the only changes happen more in the products and not in the system and procedures. The working environment of all Mc Donald’s all over the world is the same with their American counterpart. I think it is because the company is American owned. Globalization aided its expansion but the company remained American in terms of employment and production system and regulations. The employment system in the fast food industry generates extraordinary rates of labour turnover, presenting a formidable obstacle to unionization, especially in combination with industry decentralization and determined employer opposition. Extreme routinization, which affects customers and managers as well as workers, supports the industry’s low-wage, low-commitment employment strategy. In recent years, tight labor markets have made it harder for fast-food employers to find and retain qualified workers, yet, there is little evidence of a marked increase in fast-food workers’ compensation or power. The American fast-food industry was built on the promise of low prices. Profitability therefore depends in large part on keeping labor and other operating costs down. Low wages, minimal benefits, tight staffing, and efforts to intensify labor are the predictable results of strong competitive pressure in a legal and cultural setting that grants employers remarkable discretion. Most fast food chains use routinization of work as their strategy to run their business. They hire young part time workers with limited experience and make them perform limited number of tasks according to instructions provided by management. This sort of standardization has a variety of benefits for employers. It increases managerial control over the operation and cuts wage costs by eliminating the need to hire skilled workers. The simplified jobs can be learned quickly, making employers less dependent on experienced workers. Routinization is especially advantageous to fast-food companies because of its capacity to promote uniformity of outcomes. At McDonald’s, workers are instructed in the precise arm motion to use when salting a batch of fries. Moreover, since the jobs of many fast-food workers involve serving the public, their appearance, words, and facial expressions are also subject to managerial oversight and control. Customers are promised an enjoyable experience as well as a particular quality of food, and fast-food companies try to ensure that such experiences will be reliably produced by standardizing the interactions between customers and workers even as they encourage workers to inject a touch of ‘personal’ service through eye contact, smiles, and friendly delivery of scripted lines ( 1993). The extreme standardization of work is key to numerous features of the fast-food industry. It justifies low wages and benefits. Young, inexperienced people, who are competent to perform the simplified jobs, are especially likely to be able to accept-or have no choice but to settle for-these low rewards. The youth of the workforce and the low wages and benefits contribute to high labor turnover.
The leadership style in Mc Donald’s is more beneficial to the people who hold power. The workers, mostly part-timers, are not given the same benefits as the regular employees. Many issues need to be addressed but the focus of this report is to improve the employment condition of the workers in Mc Donald’s. I think the company needs to change the style of leadership and allow the employees to voice out their feelings about the company.
Conclusion:
Mc Donald’s is the epitome of Globalization. It has expanded all globally at a breath-taking rate providing employment to a lot of people. Yet there are issues and concerns that arise. One of this is the company’s rules and regulations on employment and the current work practices inside the company. The change program regarding the company’s employment policies aims to enhance the condition of the workers. It also seeks to provide fair labor practice and benefits to the workers. It also aims to boost the morale of the workers by giving them voice and allowing them to actively participate in the decision-making. The safety and welfare of the employees must also be protected. The company should provide the employees with more benefits, insurance, wage increase and opportunities for growth.
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