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Diploma in Business
Unit Number and Title
Unit 21 Strategic Human Resources Management
The organisation that is being used in the case study is Mc Donald’s. It is the global fast food chain operating in 120 countries with more than 36,000 outlets. The mode of operation is franchisees, own managed outlets or affiliate which serve nearly 68 million customers regularly. The organisation was founded in the year 1948 by Maurice Mc Donald and Richard Mc Donald as a barbecue but later they came as a hamburger restaurant. The head quarter of Mc Donald’s is situated in Oak Brook, Illinois. The ambition of Mc Donald’s used to give the enhanced value in the terms of food quality, taste and availability. At the top the organisation is headed by the Chairman along with the Chief Executive officer and Chief Operating officer. Under their leadership the departments are classified in to corporate affairs, marketing, operation, finance etc. Human resources are given prime importance by providing opportunities to grow, training programmes, rewarding the achievements, office development etc. The HR policy of Mc Donald’s focuses their strategy of motivation in the employees by creating a balance between work and life. Paid vacation, sick leaves, anniversary splash, sabbatical programs, short Fridays are being provided for increasing the satisfaction level of the employees of Mc Donald’s.
The selected organization for the concerned case study is Mc Donald’s which is operating in the hospitality sector particularly catering in the fast food chain across the globe. Good food, Good people and Good neighbour are the objective of Mc Donald’s. In this sector the level of competition is very high where the organization is directly competing with the global brands like Burger King, Sub way, KFC, Taco Bell etc. and also from the regional fast food chains. In this perspective the internal and external environment is needed to be identified and analysed for determining the level of influence in the decision making process of the organisation.
The external environment can be analysed by conducting the PEST analysis in the following way:
Political (P):Political factor factors comprises of the political situation, Government’s motives, stability associated with the administration etc. Based on the political situation, the majority of the people gave their opinion for the separation from European Union for establishing a self identity in the name of Brexit. There are certain regulations formed by the members of EU in respect of competition, marketing approach, different regulations for the organisations operating in UK. This will influence the operation of Mc Donald’s in UK by formulating new practices as per the administration of Brexit. Apart from that the legislations like Equality Act 2010 declares the restriction in the discrimination at the workplace (Craig and Campbell, 2012). The practices like flexibility is approved by the Government where the organisation must provide flexible working hours if an employee works for 26 weeks in that organisation etc.
Economical (E):Hospitality sector as whole is contributing nearly 2.44 million jobs in a direct way and 1.2 million jobs through multiplier effect. 34 billion pounds nearly generated in the form of taxes to the Government which is significant and positive towards the economy. The inflation rate also decreases from 0.5% to 0.2% which will increase the buying power of the people in UK. The operating cost will increase due to the change in the VAT rate that is 20%. The Government initiatives like vocational training and placement activities of the colleges are increasing the opportunities to work with the organisations operating in the hospitality sector (Guay, 2015).
Social (S):Social factors are the main concerns for Mc Donald’s regarding the health matters associated with the foods. The increase in the obesity disease is creating awareness in the mind of the consumers about the consumptions of the fast foods. More over the movie Super size highlight the issues in consuming the fast foods from Mc Donald’s. In this critical situation the management of Mc Donald’s have invest in the areas of branding which signifies the joy and fun in consuming the fast food from Mc Donald’s.
Technological (T):With the globalisation, the advancement in the technology can be evidence. The use of the internet has increased which is nearly 90% in UK. The use of the social media and tech savvy application in the outlets of Mc Donald’s can be observed. The videos related to the preparations of the menus in the kitchen or installing the smart kiosk in the outlet will facilitate the consumers while purchasing the meals from Mc Donald’s and also increase the association of the brand.
In order to analyse critically, the legal framework or the political factors will involve modifications in the organisational process. For example flexibility in the employment will be applicable for the employees who have worked more than 26 weeks in Mc Donald’s. In this case the approval of the management to the employees will be critical. The employee who will not get an approval at the first phase can be de-motivated which will reflect in the level of productivity. More jobs opportunities in Mc Donald’s will increase the expenditure based on the training and recruiting. Moreover the increase in the rate of VAT can shows a negative impact in the operating expenses. The strategy to fulfil the vacant place at the right time is needs which can be done only through Human Resources Planning. The awareness of the people regarding the health issues with the fast foods and also the increase in the consumption of the organic foods will bring barriers for Mc Donald’s. For that strong branding by displaying the health part is needed to boost the confidence level of the people. Advancement of the technology will need competent workforce and for that selection is needed to be done perfectly for the sake of matching the requirements. In case of internal environment, the following contents will help to assess critically:
Employees: The management of Mc Donald’s focus their strategy of motivation in the employees by creating a balance between work and life. Paid vacation, sick leaves, anniversary splash, sabbatical programs, short Fridays are being provided for increasing the satisfaction of the employees (Mc Donald’s, 2016). These facilities are provided to increase the engagement of the employees in the organisation. In order to assess critically, the employees are working in the organisation for getting a return in the terms of remuneration and growth opportunities. Thus the growth opportunities are needed to be highlighted in order to address the reasons for the employees working at Mc Donald’s.
Cash flows:The cash flow in the terms of operating activities at Mc Donald’s in the year 2015 to 2016 was around 6.54 Billion US dollars which has decreased from 6.73 billion US dollars. Improvements are evidenced in the net financing cash flow which stands around 735.3 million dollars which was 4.62 billion dollars in negative (Market Watch, 2015). From the scenario it is clear that operating expenses have increased due to the high cost related to the external environment but the financing activities are improved which can be set of with the operating activities.
Materials: The materials used in preparing the meals of Mc Donald’s are aligned with the quality and legal norms. 66 million litres of milk are sourced from UK for preparing the hot drinks. As per the certification of Rainforest Alliance the raw materials like coffee beans are used (Mc Donalds, 2016). Recycling of the materials is followed which include the napkins. The legal norms will increase the operating cost and for that placing the products in the mind of the customers needed effectively.
Structure:The structure of the organisation will define the flow of information and line of authority which will reduce the misunderstandings. At the top the organisation is headed by the Chairman along with the Chief Executive officer and Chief Operating officer. Under their leadership the departments are classified in to corporate affairs, marketing, operation, finance etc. (Mc Donald’s, 2011). This is a functional structure where the movement of the information will be slow due to the high content structure and the issues faced by the employees will be shadowed.
Mc Donald’s is a global fast food chain, who recognises the localisation factor, customer’s taste and preference, legal norms effectively with their efficient team of management functioning at each countries. They aim to provide healthy foods to the consumers and a secure environment to the employees by considering the cultural diversity in the workforce. The Human Resource department of Mc Donald’s is responsible to manage the areas related to the employees and productivity level. Strategic Human resource management is the area which aligns the Human resource policies and procedures towards competitive advantage. The existing Human resource policies and procedures at Mc Donald’s are as follows:
All this policies and procedures based on the HRM functions are adopted in order to increase the level of motivation and engagement of the employees at the workplace. On the other hand, Strategic Human Resource management will align the HR policies with the competitive advantage in order to increase the business turnover of the organisation. Different approaches and models are there which can give an edge to Mc Donald’s in the highly competitive market. As per Schuler and Jackson model the competitive advantage are associated with the employee’s role behaviour and HR policies in the following way:
Employee role behaviour
Low cost provider
The repetitive as well as predictable behaviour is expected from the employees.
The quantity related to the output is the main aim rather than the quality
The risk taking activity is much low (Huselid and Becker, 2010)
Clear and transparent job descriptions for avoiding the confusions and misunderstandings.
The job profiles and delegation of the duties are aligned with the specialisation and experience
Predictable behaviour and long term focus will be highlighted
Quality is the main focus rather than quantity
Business goals and objectives are given high priority which increases the commitment.
Job descriptions are explicit
The participation of the employees in the decision making process is high
Fair treatment towards the employees are given importance
Continuous training is given to the employees for achieving the differentiation
Creativity in the performance can be evidenced
Cooperation and coordination is high
Risk taking activities will be high
Quantity is the main priority (Harzing and Pinnington, 2010)
Sound interaction and flow of information is expected
Performance appraisals must be given priority to increase the productivity
Sound and favourable compensation structure should be designed.
Growth and development opportunities must be briefed to all the employees (Huselid and Becker, 2010)
The second model can be Dave Ulrich modelwhich combines the people and process towards operational strategic dimensions of the organisation. HRM function is divided into four categories which will support the organisation to achieve the competitive advantage by establishing high level of competency and efficiency in the organisation (Wright and McMahan, 2012).
The four categories are as follows:
The existing Human resource policies and procedures are inclined towards the Human relation approach where the emotions and motivation of the human being are mainly focused for increasing the productivity. On the other hand, the level of competition as well as social awareness of the people towards the fast food is also high which can influence the organisation’s business turnover negatively. On this perspective Strategic Human resource management approach can be adopted which can link the competitive advantage with the Human resource policies and practices. Integration of all the activities to enhance the productivity is missing from the existing policies and procedures at Mc Donald’s. The first model that is Schuler and Jackson model will divide the strategies based on the competition with the employee’s behaviour and HR policies for achieving the business targets. This will help the management to understand the employee’s motivation level regarding the competitive strategies. On the other hand the second model that is Dave Ulrich model will enhance the multi tasking skills of HRM department of the organisation to maximise the productivity and achievement of the competitive advantage (Wright and McMahan, 2012). Based on the feasibility and acceptability, the strategic human resource models must be consider to enhance the value proposition of Mc Donald’s towards the consumers across the globe.
While attracting and retaining the human resources in the organisation requires Talent Management approach which systematically declares the requirement by addressing the gap between the demand and supply of the workforce. In the UK market the business turnover of Mc Donald’s is impressive which shows an increase in the business turnover to 67.5m pound from 1.4bn pound due to the favourable economic conditions. The profit before tax is valued around 244.9m pound from 225m pound (Hellier, 2015). Apart from the economic conditions, the strategies of Mc Donald’s in UK which includes the quality service, differentiated service, workforce management are adopted. The workforce is the strategy implementers and the success of the strategies is dependable on them. It is the talents who can create a difference in the value addition process of the organisation and that difference can enhance the organisation towards the competitive advantage. Thus a positive and effective approach towards the attracting and retaining the talents are needed to be considered.
The strategies related to the attracting and retaining the talents are as follows:
There are also the barriers which can prevent the successful implementation of the strategies adopted towards attracting and retaining the talents. They are as follows:
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To conclude this report has given a detailed analysis of the HRM practices and policies by addressing the weakness and positive sides. The business environment influences the business decision making process significantly and for that analysis has been done to understand the extent to which the influence is there. Secondly the human relation approaches of Mc Donald’s needs to be integrated with the Strategic Human relation approach for achieving the competitive advantage. Lastly it is the effective talent management that can create a difference in the value addition process of the organisation. The motivated employee will definitely give productive performances for the employees.
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