Short, sharp and to the point

by 14 Apr 2009

Executive education programs expose groups of managers to targeted academic and practical management education. Teresa Russell discovers why, even in tough times, spending in this area of learning is under no threat at McDonald’s or Melbourne Water.

When times were good, spend ing on executive education and other learning and develop ment programs came under less scrutiny than they are likely to face today. In 2007, Bassi and McMurrer published research in the Harvard Business Review showing strong evidence that training expenditures served as a predictor of stock market returns for publicly traded companies.

“All else being equal, those companies that spend more on training (measured on a per capita basis) do better in the stock market in the subsequent year, than those companies that spend less,” they con cluded. Further research just published (using a small sample size) confirmed that this held true for American banks, even during the market turbulence of 2008.


McDonald’s Australia and its franchisees employ 75,000 people in 780 restaurants across the country. About 5000 of these employees are restaurant or company managers.

Despite the current recession, McDon ald’s continues to post strong results, cit ing menu and restaurant changes as well as convenience and value for money as key drivers of performance.

Vanessa Porter, McDonald’s director of training, learning and development, says that the company has undergone sig nificant cultural change in the last sven or eight years since Peter Bush took over as CEO. He was the first CEO to come from outside the organisation.

“Bushy has changed the culture from being an organisation that was very oper ationally driven to one that is now very much about choice for the customer,” says Porter, who joined McDonald’s just two and a half years ago.

Two-Tiered Education

Executive development through the com pany’s “Hamburger University” near Chicago has always been a part of the global curriculum, but this practice lim ited the candidates Australia could send each year. In 2007, McDonald’s partnered with Melbourne Business School and Mt Eliza (MBS) to create MAMO, an exec utive development program for depart ment or functional heads.

“We invited five of the 25 participants from our key suppliers and ensured a sup plier was a part of each project team,” explains Porter.

“In the first module, the suppliers were viewed somewhat as outsiders by the rest of the group, but by the end of the year, they understood our business and we understood theirs.”

MAMO has been run three times in the last two years. Modules last two to three days and cover the topics of self awareness and your impact on others; understanding strategic and team con texts; and building strategic momentum.

Participants are given a business problem and teams are allocated an MBS facilitator and a McDonald’s sen ior manager as a sponsor.

Just over five months ago, in 2008, 20 members of upper management partici pated in McDonald’s Velocity program, designed in partnership with MGSM.

Porter says this program was created to challenge people to think differently about their markets, their customers and McDonald’s. The program was divided into modules: learning to think differently; a diversity study tour to four different organisations in Australia; from concept to commitment; presenting with impact – “Treading the Floors” at NIDA; and proj ect presentations to the executive team.

The external organisations visited were NRMA Care Flight to study speed of response, Da Costa for distribution, Flight Centre for organisational culture and Apple for innovation.

Adding Value – and Measuring It

“Generic programs are not going to help our managers. They need specific programs that can be applied immediately to our busi ness,” says Porter, who adds that McDon ald’s chose the providers it did because they were able to demonstrate the added value that customised programs would bring, especially in the area of innovation.

“They understood our business and our needs,” she says.

Selection into the programs was made via the company’s talent management sys tem. There is already a waiting list for next year’s programs.

McDonald’s has a high retention rate – about 90 per cent of its corporate staff has risen through the ranks from its restaurants. Management turnover is about 10 per cent.

When measuring the value of the pro grams to McDonald’s, Porter cites a few statistics. “Forty percent of participants who completed either MAMO or Veloc ity have been promoted within the fol lowing 12-month period.

“The time-to-fill [ratio for] key lead ership positions has reduced and newly promoted managers are immediately effective in their new roles,” she says.

Courses are designed to end just before the planning cycle for the next year begins, so that group projects can be included (and budgeted for) in the next year or five-year plan.

“There is now an expectation [among management] that we will provide them with continuing education. We take learn ing very seriously and know we have to invest in the tough times as well as the good times,” concludes Porter.