Human Resources Case Studies Flashcards
McDonald’s - Strategic Role of Human Resources
McDonald’s directly employs approximately 200 000 people; however, accounting for employees under franchisees, the figure rises to 2 million
Since 95% of McDonald’s restaurant are under the ownership of franchises, a coherent, company-wide approach towards human resource is difficult
A McDonald’s booklet called Standards of Business Conduct – The Promise of the Golden Arches sets out the standards and expectations of employees
McDonald’s - outsourcing
McDonald’s Australia has outsourced workplace health and safety requirements to SafetyWorks to help comply with workplace health and safety requirements
Although McDonald’s Australia is a Registered Training Organisation (RTO), training staff is regularly outsourced to third parties
Workstar developed and implemented an online platform to assist new employees for their first day at work
Locally, individual McDonald’s franchises can outsource functions such as payroll to third parties, such as Abcom
Drake Workwise offers confidential counseling services for McDonald’s employees
McDonald’s - Stakeholders – employers, employees, employer associations, unions, government organisations, society
McDonald’s employs 7% of restaurant and cafe workers
Spending AUD 1.5 billion annually on wages
In October 2021, McDonald’s Australia announced a recruitment drive, seeking to add 11 000 individuals to the workforce
McDonald’s Australia is a member of The Franchise Council of Australia (FCA), who represent franchisors, franchisees, and suppliers
McDonald’s Australia is a member of the Australian Industry Group (AiG), an employer association promoting members’ views
McDonald’s employees belong to Shop, Distributive & Allied Employees’ Association (SDA) and the Retail and Fast Food Workers Union (RAFFWU)
During the COVID-19 pandemic, the Federal Government implemented he JobKeeper package, which enabled businesses who experienced an 30+% decline in revenue to access $750 per week for eligible employees – McDonald’s franchisees were entitled to such privileges
Responsible Student Employment Policy restricts the working hours of school students
McDonald’s - Legal - the current legal framework
Employees at McDonald’s Australia worked under the McDonald’s Australia Enterprise Agreement 2013; however, in 2019, the Retail and Fast Food Workers Union (RAFFWU) took the case to FWC, winning the case and McDonald’s employees to be employed under the Fast Food Industry Award, making the McDonald’s Australia Enterprise Agreement 2013 obsolete
The Lost Time Injury Frequency Rate (LTIFR) is a metric of hours lost to injury per million worked hours. The goal is to have less than 8.5 hours lost per million
McDonald’s has a partnership with Job Centre Australia, running a program called Golden Opportunities which aims to place job seekers with a disability into employment with McDonald’s
McDonald’s employs a Chief Diversity, Equity and Inclusion Officer who oversees worldwide efforts to make the business a diverse and fair workplace
In 2021, McDonad’s reiterated goals in relation to diversity as follows:
- By the end of 2025 McDonald’s expects to increase representation of historically underrepresented groups in leadership roles (Senior Director and above) located in the US to 35%
- By the end of 2025 McDonald’s expects to increase representation of women in leadership roles globally (Senior Director and above) to 45%
- McDonald’s has an overall goal to reach gender parity globally in leadership roles (Senior Director and above) by the end of 2030
In recent years, McDonald’s has faced lawsuits alleging sexual harassment and racial discrimination, particularly in the USA and Brazil
McDonald’s has also suffered allegations that it discriminates against older employees
McDonald’s - economic
The COVID-19 pandemic caused a global economic downturn, sending Australia into a recession
In the USA, businesses are currently facing the Great Resignation, causing McDonald’s to struggle with recruitment
McDonald’s - technological
McDonald’s employees use Metime or myJob – online platforms for rostering, paying, and training
The human resources has been influenced by technology, reducing staff numbers and/or work hours
- Self-service kiosks and mobile ordering apps
- Self-filling drink machines
- Voice recognition for Drive-Thrus
McDonald’s - social - changing work patterns, living standards
- 62% of all McDonald’s restaurants are open 24/7 (data from pre-covid)
Work hours are more flexible - McDonald’s offers eighteen weeks paid parental leave for company employees
- Parents are offered discounted child care and designated breast-feeding rooms
- Employees have the option to gain an additional 4 weeks leave annually by reducing their pay
- In the US, a major campaign called Fight for $15 calls for the minimum wage to be set at USD 15 per hour - McDonald’s individually has raised the wages of jobs and employees
McDonald’s - ethnics and corporate social responsibility
McDonald’s is globally recognised as a leader in employing a diverse workforce
71% of staff are employed on a causal basis
McDonald’s Australia has a Responsible Student Employment Policy
McDonald’s has a supplier Code of Conduct that states that all suppliers must not employ anyone younger than 14 years of age
McDonald’s continued paying all 62 000 employees in Russia when the stores were closed in early 2022 as a result of the Russian invasion of Ukraine; commitment to ethics is further visible when McDonald’s sold all 800+ stores in Russia at a cut-rate; as part of the terms of the sale, the new owner guaranteed that all existing staff members would keep their jobs of at least two years
McDonald’s - acquisition
McDonald’s United States uses a centralised approach to staff acquisition with potential applicants submitting details through one central website
McHire is a recruiting platform that gathers preliminary information about potential employees
AI has been incorporated into the process
McDonald’s - development
McDonald’s Australia spends AUD 40 million annually on training
Prior to the first shift at McDonald’s, employees must complete an induction program both in-store and online via the Metime portal
McDonald’s Australia has a clearly-defined pathway of progression for employees, supported by structured on-the-job training
Hamburger University - 8 campuses around the world
Since the inception of Hamburger University in 1961, it has trained more than 350 000 employees and franchises worldwide in 5 day courses
McDonald’s - maintenance
McDonald’s runs reward programs that follow a pay-for-performance philosophy including cash and share bonuses, recognition programs, and company cars
Australian employees can access myBENEFITS offering discounts for over 350 retailers
The Enjoyment Index is a short survey of 12 questions for employees to provide feedback to management biannually
McDonald’s - separation
McDonald’s Australia reported that its annual staff turnover is 42% for crew and 20% for management - significantly better than industry
McDonald’s conducts anonymous exit surveys
McDonald’s - leadership style
- Complaints have been made over corporate management decisions – increasing store rent, running promotions, and changing menu items
- McDonald’s maintains that the business works closely with franchisee
Ronald McDonald was an idea from a franchisee
- McDonald’s hierarchical structure is very structured with a defined chain of command, consistent with autocratic leadership
- This autocratic leadership style allows for consistency and uniformity
McDonald’s - job design - general or specific tasks
McDonald’s employees have specific tasks with little or no scope for change
The task-oriented job design is a contemporary example of Taylor’s scientific “one best way” which allows for consistency, efficiency, and uniformity
McDonald’s - Recruitment – internal or external, general or specific skills
- McDonald’s employees tend to start as crew members and are recruited externally
- A central application process makes the recruitment process efficient and streamlined for local managers, and consistent online screening of applicants can help ensure that new recruits fit McDonald’s requirements
Managers have more specific skills
McDonald’s also recruit for corporate jobs directly from the external environment
McDonald’s - Training and Development – current or future skills
Potential franchisees must undergo extensive training and development and in Australia, the minimum time for this training and development is nine months full-time, unpaid
McDonald’s is a Registered Training Organisation (RTO)
Hamburger University
McDonald’s - performance management - developmental or administrative
McDonald’s employees are subject to performance reviews to assess their progress and set future training and development goals
McDonald’s uses the 360 degree feedback method – where team members are rated from all angles
McDonald’s - Rewards – monetary and non-monetary, individual or group, performance pay
McDonald’s corporate employees may be eligible for company cars, healthcare services, discounted child care, fitness memberships, and flexible work arrangements
90% of the McDonald’s CEO’s, Chris Kempczinski, annual income consists of performance pay
McDonald’s - global - costs, skills, supply
The Macca’s Prospectus for employment applicants states employees can “access other exciting opportunities such as working internationally”
The uniformity of McDonald’s means skills are transferable
McDonald’s - workplace disputes
- McDonald’s has clear employee grievance procedures set out in the Standards of Business Conduct – The Promise of the Golden Arches booklet
- Employees can discuss issues with supervisors or directly contact the company
- In recent years, the Fair Work Commission is the dispute resolution method of choice for both McDonald’s Australia (usually represent by employer group AiG) and employees (represented by unions)
McDonald’s - indicators
5% of Australia’s population has worked for McDonald’s
Data from surveys
- 95% of employees in Australia believe working at McDonald’s helped them succeed in life
- More than 80% of employees feel they’re receiving training that equips them for a career
- McDonald’s Australia was selected as an Employer of Choice in the Australian Business Awards for 4 consecutive years – 2018, 2019, 2020 and 2021
Apple - interdependence with other key business functions
- Collaboration between human resources and operations – lack of training of employees at Foxconn prior to the launch of the iPhone 5 resulted in replacement handset being built with the cost totalling USD 1.5 billion
- Collaboration between human resources and marketing – Apple retail employees need to be adequately trained in current marketing strategies
- Collaboration between human resources and finance – finance allocates budgets
Apple - outsourcing
- Foxconn is the largest electronics manufacturer in the world, producing 40% of all electronic goods
- Approximately 50% of Foxconn’s annual revenue is generated from the production of Apple products
- Media attention began in 2009 when an employee was reportedly beaten to death by factory guards after losing an iPhone prototype
- Foxconn factories are rife with suicides (attempts and successful), riots, and strikes
- In 2012, Apple commissioned an audit on the working conditions at Foxconn factories
- In 2013, the Fair Labor Association also commissioned an in-depth investigation into Foxconn factories
Apple - Stakeholders – employers, employees, employer associations, unions, government organisations, society
- In 2020, Apple had approximately 147 000 full time employees, an 7% increase
- Half of Apple’s full time employees were employed in the retail segment
- Apple Retail Workers Union (ARWU) was launched in 2011 to represent the interests of Apple Retail employees
- In October 2022, Apple retail workers in Australia went on strike to demand better pay and conditions
- Under Chinese law, workers are not allowed to join unions of their choice and unionisation is heavily regulated by the government
- Apple appointed the Fair Labor Association in early 2012 to audit Foxconn
Apple - legal - the current legal framework
Apple negates its responsibility for the working conditions in Foxconn by only being indirectly involved
Foxconn has breached Chinese labour laws, such as employing children under the legal minimum age and requiring employees to work more than the maximum allowed hours of overtime
Apple - economic
- Internal surveys have indicated a high level of dissatisfaction level within Apple’s employees
The growth of the Chinese economy has increased demand for workers - Apple allowed employees to work from home as a response to the pandemic
- In a petition letter, Apple employees asked the company to allow employees to work from home on a full time basis – Apple only agreed to let employees work from home 2 days a week with exceptions
Apple - technological
- The success of Apple is built on the growth of the market for technological products
- A Foxconn spokesperson stated “Automation will be key to keeping labour costs under control in the long-term… The company chairman Terry Gou has previously stated a goal of one million robots as a long term target”
- 6 plants across China that are already fully automated will be expanded and upgraded
- Foxconn has planned a large-scale rollout of cutting-edge robots and high-resolution 8K sensors to spot defects invisible to the human eye
Apple - Social – changing work patterns, living standards
- Foxconn appeals to Apple as the cost of labour is low
- China’s population of over 1 billion people offers flexibility and opportunities
- In 2021, Foxconn factories faced labour shortages, requiring the company to offer record high wages to meet production targets
- The labour shortage is a result of China’s social changes – according to The Wall Street Journal, fewer rural workers are leaving home and the workforce is increasingly ageing
Apple - Ethics and Corporate Social Responsibility
- Foxconn has been bombarded with allegations of unethical business practices, with the emphasis on underaged labour and a string of employee suicides
Apple’s Supplier Responsibility Progress Report revealed:
- “Ten Chinese factories that had hired workers under the age of 16 years, the minimum age for employment in China”
- Poor working conditions resulting in a string of suicides within Foxconn factories
As the poor working conditions are within Foxconn factories opposed to Apple’s facilities, Apple avoids blame as they are associated indirectly
Apple - development
Interviews conducted by The New York Times: “The one rule is to ask for permission before touching anyone’s iPhone”
In 2008, Apple recruited a former dean of the Yale School of Management to create Apple University, a manager-training program
Steve Jobs set the curriculum for Yale School of Management, including a course called “What Makes Apple Apple”
Apple - maintenance
- Apple established an initiative called “Blue Sky”, which allows a small group of staffers to spend a few weeks on a pet engineering project – sparking innovation and creativity
- Apple CEO, Tim Cook has signalled that he is open to letting employees take sabbaticals
- Apple lists its stock grants by monetary value as opposed to the quantity, making offers appear more generous
- Apple’s salaries are in line with other large technology companies
Apple - separation
- In 1997, in response to declining sales and profitability, Apple reduced its employees by 31%
- In 2004, Apple outsourced operations to partners in China, leading to the retrenchment of 348 employees in the USA with redundancy payments of USD 1.9 million
- In 2008, in response to the Global Financial Crisis, Apple reduced its full-time retail employees by 1 600
- In 2014, Apple acquired Beats Electronics for USD 3 billion, making 200 Beats employees redundant in overlapping positions
Apple - leadership style
Foxconn has been criticised for a leadership style autocratic in nature
Steve Jobs - visionary
Tim Cook - fosters cooperation
Apple - job design
- The members of Apple’s sales team are called specialists
- Apple is product-focused, varying the content of work and keeping work less tedious
- Foxconn has a high staff turnover
Apple - acquisition
Apple claims to be more interested in personality than technical knowledge of a candidate
According to a recruiter, in order to work in a Foxconn factory, “the minimum age requirement is 16, good health and some secondary school education”
Apple - recruitment - internal or external, general or specific skills
- Apple makes it clear the business desires hard-working and committed individuals
- Apple poaches employees from other retail stores by handing them a referral card stating “You’re amazing. We should talk.”
- Applicants are invited to attend a seminar held in a conference room at a hotel with individuals “3 minutes late” rejected
Apple - training and development - current or future skills
Foxconn’s training was inadequate, leading to a cost of USD 1.6 billion
As Apple is a technology company, the employees are required to be trained on the design and specifications of the new iPhones
Apple - performance management - developmental or administrative
Employees were judged on the number of accessories they can add to the sale of a core product; employees are being told to direct customers to buy accessories through the EasyPay system but those sales are credited to the store and not the employee, which in turn affects the worker’s job rating
Apple - Rewards – monetary and non-monetary, individual or group, performance pay
- In 2003, Apple released its Employee Stock Plan that permits the granting of incentive stock options, stock purchase rights, and performance-based awards
- By rewarding employees with stock, it further emphasises the efforts of employees directly contribute to the business’ success
Apple - Global – costs, skills, supply
- Apple could reduce the cost of production by outsourcing operations to partners, such as Foxconn
- Apple has adopted a “China-plus-one” strategy aiming to reduce its dependence on China where 90% of Apple products are current manufacturing
- Average wages in China has doubled in the past decade
Apple - indicators
- Apple’s corporate culture is shaped by a history of innovation
- The annual retention rate for individuals that work behind the Genius Bar is 90%, which is unheard-of in the retail industry
- The demands of Apple places Foxconn and its employees under intense pressure, resulting in high incidence of disputes, turnover and suicides
- 137 employees at an an Apple supplier were injured after they were ordered to use a poisonous chemical to clean iPhone screens
Foxconn employees regularly strike over the working conditions and pay
