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University of Illinois – Institute Of Labor And Industrial Relations. Rich Floersch & Don Crosby April 4, 2008. Agenda. Business Overview/History Revitalization Program/Plan to Win HR Plan to Win Strategic Frameworks Bringing Frameworks to Life Q&A. The History of McDonald’s.

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university of illinois institute of labor and industrial relations

University of Illinois – Institute Of Labor And Industrial Relations

Rich Floersch & Don Crosby

April 4, 2008

agenda
Agenda
  • Business Overview/History
  • Revitalization Program/Plan to Win
  • HR Plan to Win
  • Strategic Frameworks
  • Bringing Frameworks to Life
  • Q&A
the history of mcdonald s
The History of McDonald’s
  • 1970s Standardized Business Model
  • U.S. Focus
  • Common Operating Platform and Menu
  • Leverage Franchisee Ideas
  • Late 1950s -1960s
  • Ray Kroc buys McDonald’s business
  • Franchising Opportunities Abound & HU Introduced
  • IPO 1965 – 13 Stock Splits Since 1966

1970

1955

1960

the history of mcdonald s1
The History of McDonald’s

2002 & 2003 Sweeping Organizational Changes

1990s Business Environment Changed

McDonald’s Stalled

  • Cover of BusinessWeek “Hamburger Hell”
  • Staff Reductions
  • Stock Price Drops to $11 (high $49)
  • CEO Change
  • Call to Action Plan to Win
  • Took Our Eyes Off Our Fries
  • Opened Too Many Restaurants
  • Distracted By Other Brands
  • 1980s & 1990s Explosive Growth
  • International Expansion/ 118 markets
  • Darling of Wall Street
  • Creation of Ronald McDonald House

1980

1990

2000

revitalization of mcdonald s
Revitalization of McDonald’s
  • Better, not bigger
  • More relevant to consumers
  • Singular focus on customers’ experience and core business – our restaurants
  • Global business plan to improve alignment and focus …McDonald’s Plan to Win
  • 5 Ps (People, Product, Place, Promotion and Price)
  • People and customer experience is central to new strategy
mcdonald s today
McDonald’s Today
  • 2003-2008 McDonald’s Revitalization
  • 58 months consecutive comp sales increases
  • Stock price reaches all-time high of $63
  • CEO tragedies
  • 2007 Marketwatch CEO of the Year
  • Food and beverage focus

2008

2003

people challenges 2003
People Challenges: 2003
  • Relationship-driven = High-performance culture
  • Rewards programs confusing with little pay for performance
  • Lack of transparency in performance/development discussions
  • Little or no formalized leadership development focus or succession planning protocols
  • McJob label driven by loss in employment value proposition and not “Telling Our Story”
restaurants
Restaurants
  • Restaurant people strategy
  • Strengthened selection system
  • Unique people programs
  • Metrics tie people practices to store success
  • Focus on HU training
  • Employment value proposition
    • U.S. People Migration Strategy
  • Respectful workplace training
total rewards
Total Rewards
  • Compensation
    • Pay for performance
    • Tied to business results - Plan to Win measures
  • Benefits
    • High value to employees
    • Lead industry
  • Development
    • Hamburger University
    • Succession planning
    • Accelerated development programs
total compensation
Total Compensation
  • New approach to Compensation
    • Packaged so employees understand the value of their total compensation
  • Total Compensation = Pay + Incentives + Retirement Savings + Health and Insurance Benefits + More
  • Provide benefits, resources and tools to help employees and families lead healthier lives
  • Creating programs that differentiate us in the industry
  • Branding total compensation programs
talent management culture
Talent Management Culture
  • One of CEOs top three priorities
  • Accelerated development programs
    • Directors (Americas, Europe, Asia Pacific)
    • VPs and higher (Global)
  • Succession Planning Template
    • Formalized reviews
    • Premium on conversation, not forms
  • Fortune/Hewitt Recognition: Top Company for Leaders
    • #14 Globally
    • #11 North America
    • #6 China
slide13

Talent Management Culture

  • Development
  • Resources
  • Internal development curriculum
  • University programs
  • Self-study books, articles
  • Exec. coaching
  • Job Transitions
  • On-boarding & Assimilation Support
  • Ops Fast Track Information and Templates
  • Job transition support
  • Development
  • Planning
  • 360 Feedback
  • IDP Support
  • IDP Templates
  • Development resources aligned w/ competencies

Career Tools

  • Complete your internal Profile
  • Prepare for an interview
  • Leadership Position Profiles

Accelerated Development Programs

mcdonald s means opportunity
McDonald’s Means Opportunity
  • 67,000 managers worldwide started as crew
  • 1,200 U.S. Owner/Operators started as crew
  • 40% of our Top 50 executives started in the restaurants
  • Life skills training
    • First Job for Carl Lewis, Jay Leno, Sharon Stone and more!
employment image
Employment Image
  • Voice of McDonald’s
    • Global restaurant employee singing contest
    • 3,600 entries from 53 countries
    • Public online voting
    • Finalists perform at ’08 Worldwide convention
    • Grand Prize of $25,000!
  • Beijing Olympic Champion Crew
    • More than 100 crew
    • The best of the best
    • 30 countries represented
    • Once-in-a-lifetime experience
    • Crew work in our restaurants and experience the Olympic games
employment value proposition telling our story
Employment Value Proposition: Telling Our Story
  • 29 countries received great place to work recognition
    • 2006/2007 winners include

Russia France

Singapore Belgium

India Latin America

Puerto Rico Canada

U.K. Hong Kong

  • Effectively telling our opportunity story
  • Extensive media coverage
      • Leadership development
      • Opportunity
      • Minority investing
      • Training
bringing the frameworks to life1
Bringing the Frameworks to Life
  • Communication Strategies
    • HR Leadership Team
    • Major Market Meeting
    • Global HR Meeting
    • Webcasts/Best Practice Sharing
    • Global HR Website
    • Market visits
bringing the frameworks to life2
Bringing the Frameworks to Life
  • Performance management
    • Global PDS system
    • Distribution guideline (20/70/10)
  • Talent management
    • Talent Plan Frameworks
    • Global Leadership Staffing Process
    • Leadership Development Programs
bringing the frameworks to life3
Bringing the Frameworks to Life
  • Global People Metrics
    • 90-day Crew Turnover
    • Management Stability
    • Reputation Index
    • HU Certified Managers
  • Global Commitment Survey
    • Consistent across 118 markets
    • At least 1x per year
    • Restaurant and staff
bringing the frameworks to life4
Bringing the Frameworks to Life
  • Employment Experience
    • Australia - MeTime
    • U.K. - Our Lounge
    • Latin America - McLand
    • U.S. - Hiring to Win
    • France - Recruitment Centers
bringing the frameworks to life5
Bringing the Frameworks to Life
  • Rewards
    • Global Annual Incentive Program design
    • Competitive positioning policy
    • Singular executive compensation program (top 200)
    • Strong recognition programs
      • President’s Award
      • Restaurant Manager Award
      • Circle of Excellence
bringing the frameworks to life6
Bringing the Frameworks to Life
  • McDonald’s Formula
    • Strategic frameworks developed with AOW input led by centers of expertise ie. talent, rewards, metrics and performance management
    • Decentralized, empowered environment - scale big ideas
    • Common unifying values
    • Partnership with franchisees
    • Passion for the brand