Employer Profile: McDonald’s

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Love it or hate it, there is no ignoring the McDonald’s brand. Since the foundations for the McDonald’s Corporation were laid in the US in 1948, more than 28,000 restaurants have been opened worldwide, of which at least 1,000 are in the UK.

In recent years, however, the fast-food chain has endured a flurry of negative publicity amid obesity lawsuits in the US and the release of works such as Morgan Spurlock’s film, Supersize Me, and Eric Schlosser’s book Fast food nation: what the all-American meal is doing to the world.

Increasing concerns among consumers about nutrition and healthy living along with rising competition from the numerous coffee chains, and other fast-food brands such as Subway, have also put pressure on profits in some territories, particularly in the UK, prompting the company to revamp its outlets, introduce healthier menu options and overhaul its advertising. In October, it reported higher margins across the business and global comparable sales at their highest quarterly level for two years at 5.8%, for the quarter ended September 30.

McDonald’s image as an employer has also undergone a makeover. Just a few years ago, the stereotypical image of a McDonald’s employee was of a burger flipper paid close to the minimum wage. The launch of its ‘not bad for a McJob’ campaign in Spring 2006 was intended to overturn this, by publicising pay and perks for a range of positions. Posters depicting a restaurant manager alongside details of the £45,000 salary that can typically be earned after a period of service in the role, for example, were just one small part of this. For the first time, McDonald’s signage in London’s Piccadilly Circus was also used to promote the company as an employer, rather than, as a consumer brand.

Neal Blackshire, benefits and compensation manager, explains that the company’s existing benefits are considered to be a strong enough draw to bolster McDonald’s image as an employer. “It’s a highly-competitive environment out there. We need to be listening to our customers and taking notice of what they have to say, and ensuring we remain relevant.

“The benefits and reward that we have enabled my colleagues in the reputation team to go out and do the whole ‘Not bad for a McJob’ campaign. That is certainly something that, from a reputation point of view, we needed to do. That’s enabled us to tell people or remind them about the things that were in place. It was about the benefits being of sufficient quantity or quality to support that message. Certainly, we made no changes of substance,” he adds.

Promoting details about the working environment at McDonald’s along with its pay and benefits package also helps the company to attract staff. But as each restaurant recruits its crew on a local basis, the full impact of the ‘Not bad for a McJob’ campaign on the numbers of job applicants to the company has been difficult to quantify. One area where the company has never been short of applicants is the management training scheme. Blackshire explains: “We get far more applications than we have vacancies on our management training scheme, but that’s something that we’ve had for a number of years. We’ve been in the Times’Top 100 graduate employers [list] for the last six years.”

Paul Clark, managing director of Jardine Lloyd Thompson Benefit Solutions, says that the type of package offered by McDonald’s is relatively unusual in the restaurant industry. “As an industry as a whole, [these] tend to be on the rarer side. There’s a great deal of competition in this area. Benefits tend to be more a case of ‘what do you want to buy’ rather than ‘what do we want to give you’.”

The benefits that staff receive typically depend upon their position in the company. Although all receive broadly similar perks, exactly what staff are eligible for and the terms of their package, will be calculated according to whether they are an hourly-paid employee or are on an annual salary. The latter group primarily consists of restaurant management and head office staff.

Eligibility for the company’s private medical insurance scheme is just one instance in which the two groups receive a different entitlement. Hourly-paid employees, for example, receive free private medical cover after three years’ service, whereas most salaried staff do not have to serve for a qualifying period before receiving the perk. The latter group can also opt to extend cover to their spouses, civil partners and children.

Clark adds that most employers in this area offer very little healthcare provision above statutory sick pay. “I haven’t seen a lot of healthcare offered due to the potential for quite high claims,” he explains.

A key part of all of McDonald’s packages, however, is the voluntary benefits scheme known as the Employee discount card, adds Blackshire. “I imagine every large organisation now has some sort of voluntary benefits programme. It’s moved from [being] a competitive advantage to being another one of those things. We have a couple of methods of feedback as to what [staff] like and what they don’t so we can make changes accordingly, and it’s grown. The first time we did it about eight years ago, we had three external offers on it and we now have over 70 with four or five new offers [added] twice a year. We’ve built a website for it so we can make changes to, and add, offers more quickly,” he explains.

At the heart of any of McDonald’s benefits initiatives are four key values, which underpin its employment strategy. These comprise: energising environment, improvement opportunities, continuous learning and flexibility. Collectively termed the employee value proposition when the list was drawn up approximately 18 months ago, each factor is considered to be a strength of McDonald’s that could be used as a measure to judge its activities against.

“It’s playing to our strengths, it’s what was there in the first place, it’s realistic, and it just supports and reinforces the existing benefits. There are limited time and resources for everything these days in every business. The last thing you want to do is commit time, money and effort to something that isn’t actually going to assist you in helping to make employees’ working lives better, more enjoyable and more fun,” says Blackshire.

McDonald’s childcare voucher scheme, which was introduced in April this year, for example, is deemed to have ticked the flexibility box for employees.

Also meeting this criteria is the company’s family contract policy, which hit the headlines when it was introduced earlier this year. This enables family members working for the same branch of McDonald’s to swap shifts with one another. Following an initial pilot scheme, this initiative is now due to roll out more widely next year.

However, due to the structure of McDonald’s there is some variation in benefits between those offered to staff in restaurants that are company-owned and those working in its franchises. Franchised branches are entrenched in McDonald’s history, having played a key role in establishing the McDonald’s Corporation in the US. Although the majority of UK restaurants are company-owned, there are some franchises.

While employees in these franchised outlets are managed separately, the UK parent company is happy to offer the benefits it provides to its own staff to be taken up by franchisees if they wish wherever possible. In some cases, however, the nature of the perk means that this is not always possible.

“Our healthcare [scheme] is a good example. We have a healthcare trust for our company restaurants but because there’s not a company link and [franchises] are separate businesses they can’t participate in the trust. What we’ve done is work to set up a separate mirror arrangement, although it can’t be a trust, for the franchise community. There are three franchisees who have been voted by their community to look after the scheme on their behalf, so we assist [them] and liaise with them to ensure the scheme runs as smoothly as ours does. If a franchisee is running three or four restaurants, they’re not going to have the time or resources to put in some of the benefits plans that we have,” explains Blackshire.

To ensure its benefits package and employment strategy is valued by employees, McDonald’s provides a number of channels which staff can use to ask questions, and provide feedback about what they would or wouldn’t like to see. These include an annual staff survey, regular meetings where employees are given the opportunity to ask questions, and an email address for its chief executive officer Steve Easterbrook, who will reply personally.

Its latest scheme, titled ‘How about?’, introduced in September 2006, is intended to encourage staff to submit ideas about improving any aspect of the business. For every suggestion that is taken forward for serious consideration, employees receive a £25 voucher, while those whose idea is subsequently taken up will be awarded with a more substantial amount based on the usefulness and profitability of the concept.

Blackshire explains that there is a valid business reason behind the company’s emphasis on staff feedback. “Our employees and our customers are the basis of everything we do. There’s no point doing something unless it’s good for our customers, and we wouldn’t have customers if we didn’t look after our employees.”

Career profile

Neal Blackshire began his career with McDonald’s as a restaurant crew member while still at school. Some 23 years later, he has progressed to the position of benefits and compensation manager, a role that he has held for the past six years. “I worked in operations for 12 years. I was working part time while I was studying for A-Levels and my degree. I decided having done a degree in accounting and finance, that I didn’t want to be an accountant after all [so] joined the management scheme,” he explains. After managing several London-based restaurants, and a stint as an area manager in the region, Blackshire joined the company’s HR team, initially on secondment. “Originally it was a two-to-three year secondment, but I was asked to stay on. I’ve filled a mix of generalist HR and benefits-related roles. It was very much a case of to move on within operations, it was deemed a good idea to have experience on the opposite side of the fence, supporting the restaurants more remotely than as an area manager,” he says.

What are the benefits?

20 days as standard for office-based staff, with 25 days as standard for employees working in restaurant operations. An extra weeks holiday after three year’s service.

Private medical insurance for hourly-paid staff after three years’ service, and salaried employees as standard. Some junior levels may be subject to a six-month qualifying period. Income protection available through the company’s pension scheme. After six months’ absence, staff receive 60% of salary for five years, then a lump sum payment is made. Dental and optical care are available through the voluntary benefits scheme.

Company cars
Restaurant managers after six months’ service and senior positions are offered the choice of a company car or cash alternative. Of the 1,200 eligible staff, 450 opt for cars, while 750 take cash.

Stakeholder pension scheme for all staff. DB scheme closed to new members in 2001. Tiers of employer contributions of staff on annual salaries, depending on age and length of service.

Family-friendly policies
Family contracts, which enable family †members working for the same branch to swap shifts. Part-time working for managers. Flexible rota system.

McDonald’s at a glance

The first McDonald’s outlet was a limited-menu, self-service drive-in opened by Richard and Maurice McDonald in California in 1948. In 1954, they granted exclusive US franchising rights to businessman Ray Kroc, who founded the McDonald’s Corporation. He opened his first McDonald’s restaurant in Des Plaines, Illinois in 1955.

Nineteen years later, in 1974, the first McDonald’s opened in the UK in Woolwich, London. Today, the number in the UK has grown to approximately 1,200 restaurants.

Globally, McDonald’s operates more than 28,000 restaurants across more than 119 countries. In recent years, the business has undergone several changes in a bid to update both its image and menu following negative publicity, and falling profits in some areas, Following Morgan Spurlock’s documentary Supersize Me, it removed the option of supersizing products form its menu. It has also introduced items such as salads, sandwiches and fruit to help position itself as a healthier option. In October, the firm reported an improvement in profit margins and its highest quarterly level of global comparable sales in two years, for the quarter ended 30 September.

Employee case study

Shanta Rajapakse is a shift manager at McDonald’s Alperton branch. During the course of each shift, he is responsible for all customer, employee, service and quality issues that may arise.

Rajapakse particularly values the private medical insurance (PMI) that all employees receive after three years’ service. Up until this time, hourly-paid employees can take advantage of discounted rates for PMI. However, he acknowledges that not all staff initially recognise the value of the perk. “They don’t realise in the beginning, but they realise later on. A few months ago, I was [also] able to get dental cover,” he explains.

Rajapakse also values the wide variety of discounted products available through the company’s voluntary benefits scheme. “It covers our whole lives,” he says. He recently took advantage of its offer at Fitness First gyms, where staff receive discounted monthly rates and do not have to pay the usual joining fee.