Release Date: December 18, 2013
Jerry Newman, SUNY Distinguished Teaching Professor Emeritus in the Organization and Human Resources Department, was honored with an Author of the Year award for the article, “Employment Branding at McDonald's: Leveraging Rewards for Positive Outcomes,” published in the March 2012 issue of Workspan magazine.
The article was co-authored by McDonald’s executives Richard Floersch, executive vice president and chief human resources officer, and Mike Balaka, director of global human resources design. Floersch is a School of Management alumnus who received his bachelor’s and master’s degrees in 1980.
Read the full story below, reproduced with permission from WorldatWork, which outlines several worldwide initiatives McDonald’s launched to improve its employment brand.
Employment Branding at McDonalds: Leveraging Rewards for Positive Outcomes
By Jerry M. Newman, State University of NY at Buffalo, and Richard Floersch and Mike Balaka, McDonald’s
Decentralized worldwide initiatives improved the perception of working for McDonald’s
Companies work hard to build a positive brand image for their products and, by extension, for the firm as a whole. While there are whole literatures on branding from the product market side, there is a dearth of information on the labor market side. When we say “Hey, that’s a good company to work for,” we’re adding to the lore of a firm’s employment brand. How do employees, potential employees and others view a firm’s employment function?
Any company that is viewed as a good place to work can be expected to have more applicants for existing vacancies, and fewer employees seeking to leave. Both are positive outcomes: a larger selection pool means better chances to find the right match for a job, and fewer turnovers mean lower associated transition costs. Clearly there are positive consequences from having a favorable employment brand.
What does a positive employment brand look like? Judging from the “Best Companies surveys” for 2010-2011 (Aon Hewitt, Best Employer’s Study and survey by Great Place to Work Institute — the latter being the world’s largest annual workplace survey) and the descriptions of what employees like (compiled from the surveys and internal McDonald’s research during the employment branding process), the term “best” centers on rewards that companies offer in the employment exchange. In the 2010 book Compensation, authors George Milkovich and Jerry Newman describe these rewards as falling into 13 categories:
When McDonald’s asked its employees if they were satisfied with the rewards in the job (i.e., that McDonald’s was an employer they wanted to remain with), 80 percent gave a positive response.
When McDonald’s asked the same question of consumers (i.e., potential employees), the responses were significantly less positive: only 30 percent to 40 percent of respondents viewed the perceived work environment positively. Certainly the inclusion of the term
“McJob” — defined as a low-paying, dead-end job — in the 2003 Merriam Webster dictionary crystallized this perceptual problem.
To improve its employment brand image, to make sure people outside of McDonald’s understood why employees viewed working at McDonald’s as a positive experience, the company set out on a worldwide effort to identify the rewards that made a positive difference for employees. This would then be followed by a communications effort to explain the “difference makers” to nonemployees. These two steps are at the heart of McDonald’s employment branding process.
McDonald’s surveyed more than 9,000 employees in 57 countries in three phases. In phase one, it asked employees what they loved most about McDonald’s. Initial findings from phase one were based on 13 world markets. Phases two and three extended this research to 44 more markets and validated the findings from phase one.
The company found that its competitive advantage focused on three rewards that were branded as the 3 F’s:
Following identification of rewards, McDonald’s built a communications strategy targeted at potential employees. The message was simple: The 3 F’s are difference makers that translate into job satisfaction for McDonald’s employees. The company needed to figure out how to communicate this.
The first step for McDonald’s was to get buy-in from corporate executives/managers and owner/operators of its more than 33,000 stores worldwide. Through a series of formal presentations, Webcasts and written messages, McDonald’s communications followed a standard cascade approach: first to senior management and the functional leaders through presentations at executive meetings, then to the franchisees at the biennial Worldwide Convention via speeches and information provided at the people booth and in memos to employees.
These discussions focused on providing examples of how the employee value proposition would come to life in individual restaurants. This combined strategy allowed McDonald’s to engage stakeholders and begin leveraging the voice of employees as their biggest brand advocate. A key feature of this communication process was McDonald’s decision to decentralize the messages by geographic market.
Besides standard employee engagement practices, such as regular employee social events, employee focus groups and feedback sessions, McDonald’s has a number of family-friend programs. One global initiative is the Family and Friends Nights where friends and family of employees are invited behind the scenes in restaurants to get a better understanding of what it’s like to work at McDonald’s.
Flexible scheduling also allows employees to attend important family and friend social events outside of work. Every other year McDonald’s holds a worldwide singing competition called Voice of McDonald’s that showcases the talents of crews and managers across the globe. In 2011 local contests were held in 72 countries with more than 20,000 employees competing to win spots in the global final.
Local initiatives (decentralized to celebrate cultural differences):
McDonald’s was the first restaurant organization to open a full-time training center, known as Hamburger University. Fifty years later, McDonald’s now has Hamburger University facilities in the United States, Japan, UK, Australia, Germany, Brazil and China. More than 275,000 owner-operators and managers have graduated worldwide. McDonald’s also helps build generalized skills for careers anywhere.
Although evidence is at best anecdotal, employment branding at McDonald’s may be gaining traction. McDonald’s was ranked No. 8 on the Best Multinational Companies to Work For list by the Great Place to Work Institute in 2011.
A second signal comes from McDonald’s first U.S. National Hiring Day. In April 2011 McDonald’s pledged to hire at least 50,000 employees in one day. More than 1 million people applied and 62,000 were hired.
And as a final possible indicator of the impact from employment branding, globally McDonald’s recently reported turnover in the 60 percent to 70 percent range, with many markets trending less than one-half their average from five years ago.
This in comparison to industry averages well over 125 percent in recent years. The employment branding process helped McDonald’s identify rewards that make a difference — rewards that are recognized as strengths by McDonald’s employees and that influence decisions to stay with the company.
Perhaps of even greater importance, identifying the brand strengths allows McDonald’s to leverage this knowledge. It can now focus recruitment ads and employment interviews on brand strengths that previously were unknown by potential applicants.
And in those critical first weeks of employment, when turnover is the greatest, this message continues to be highlighted. Employment branding has clarified the message that will maximize chances of conveying the answer to one very important question: Why should I work at McDonald’s?
Editor’s Note The following trademarks are owned by McDonald’s Corp. and its affiliates: McDonald’s, McJob, OurLounge, McPassport, Hamburger University and English Under the Arches.
Jerry M. Newman is distinguished teaching professor at the University at Buffalo School of Management in Buffalo, N.Y.
Richard Floersch is executive vice president and chief human resources officer at McDonald’s in Oak Brook, Ill.
Mike Balaka is director of global human resources design at McDonald’s in Oak Brook, Ill.