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University of Illinois – Institute Of Labor And Industrial Relations

Discover the history of McDonald's, from its standardized business model in the 1970s to its struggles in the 1990s. Learn about the revitalization plan that transformed McDonald's into a global success and the HR strategies that supported this transformation.

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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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