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
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.
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,”
“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
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.