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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. 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

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  1. University of Illinois – Institute Of Labor And Industrial Relations Rich Floersch & Don Crosby April 4, 2008

  2. Agenda • Business Overview/History • Revitalization Program/Plan to Win • HR Plan to Win • Strategic Frameworks • Bringing Frameworks to Life • Q&A

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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”

  8. Our Roadmap

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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!

  15. 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

  16. 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

  17. Bringing the Frameworks to Life

  18. 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

  19. 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

  20. 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

  21. Bringing the Frameworks to Life • Employment Experience • Australia - MeTime • U.K. - Our Lounge • Latin America - McLand • U.S. - Hiring to Win • France - Recruitment Centers

  22. 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

  23. 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

  24. Questions and Answers

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