A winning order

by 02 Apr 2009

McDonald’s Australia is one of Australia’s largest and most successful employers. Craig Donaldson speaks with the company’s MD and head of HR about how they work together and details its recipe for business success

McDonald’s is one of Australia’s largest employ ers, with about 75,000 people employed by the company and its franchisees across the country. The first McDonald’s restaurant opened in Aus tralia in the western suburbs of Sydney in 1971, and there are now 781 McDonald’s restaurants across Aus tralia, serving 1.45 million customers every day.

Maintaining standards

McDonald’s has a unique business model in that 549 of its restaurants are franchise-owned and operated while 232 are company-owned and run. Most franchisees enter into a 20-year agreement with McDonald’s, and many own and operate more than one restaurant. To ensure consistency of brand, service and other processes across all restaurants, McDonald’s has put a number of unique measures in place.

“All restaurants are evaluated in exactly the same way,” says Catriona Noble, managing director of McDonald’s Australia.

“We have a very strict process called McOpCo where, over an 18-month review for a licensee or a 12-month review for a company-owned restaurant, we assess them against a set of substantial criteria. If they don’t pass in any one area, there has to be a follow-up visit within 30 days. All that essentially adds up to whether or not the owner/operator or store manager is meeting the require ments of their job.”

McDonald’s employs a network of operations staff (called internal consultants) whose role is to monitor and assist restaurants in meeting criteria. Each one of these staff members operates within a geographic area in which they visit 25 to 30 restaurants (unannounced) regularly.

For franchises, McDonald’s will provide systems and support and the owner/operators are responsible for deliv ery and execution. However, for company-owned restau rants, the consultants play a significantly different role because each restaurant manager works for the company and HR is centrally managed. As a result, consultants have only between five and seven company-owned restaurants within their area to service.

“They have to have the time to actually train, coach, give feedback and do performance evaluations,” Noble says. “They also have to help the restaurant managers train and coach the rest of the management team as well. So it’s quite a different role when it comes to the HR strategy.”

Maintaining culture

While systems and processes are relatively straightforward when it comes to consistent standards, nurturing and maintaining a consistent organisational culture across the 781 McDonald’s restaurants is more of a challenge.

Frank McManus, SVP and director of people resources for McDonald’s Australia, says that the company has a unique culture which is underpinned by five key organisational strategies: people, products, place, price, and promotion.

“It’s hard to define our culture, but the focus on people is very important. Franchisees know that by investing in their people, this will lead to better-run operations, better qual ity, service and cleanliness and a better return on their investment. It’s not a difficult task to sell the importance of people,” he says.

Having such a high proportion of young people work ing at McDonald’s Australia – which is considerably dif ferent to the workforces of McDonald’s in the US or Europe – has a significant impact on the fabric of McDon ald’s Australia’s organisational culture, according to McManus. “The young people that come into McDon ald’s like the team spirit, and this helps attract and retain them,” he says.


McDonald’s Australia is a Registered Training Organisa tion and has an annual training budget of more than $40 million a year.

Much of this is invested in training frontline staff, and because a lot of young people start their working lives with McDonald’s, Noble says this helps establish protocols that will stay with staff members for the rest of their working lives.

“While they may not want to pursue a career here, McDonald’s helps in establishing great work practices, disciplines and learning skills that are going to be valu able in any organisation,” she says.

“They learn the really basic things, such as under standing employer expectations and delivering upon those, through to more specific skills such as customer service, leadership and communication. If you look at employees that have come out of McDonald’s, they’re generally sought after because when you put their basic training and skills together with formal qualifications, schooling or university qualifications, that makes them pretty valuable.”

About 70 per cent of staff are high school students between the ages of 14 and 18 years, while 80 per cent of restaurant managers bean as McDonald’s crew. A testa ment to the effectiveness of McDonald’s training is that more than 30 per cent of its senior executives started their working lives as crew.

“There are not many organisations that can demon strate over the past 30 years that they have had three managing directors who started as 15-year-old crew mem bers,” says McManus.

“Because our systems are so strong, it motivates our young crew to aspire to take on more responsibility. Our approach to training and development is like building blocks. It’s not unusual to find a 14-year-old become a coach or trainer themselves 12 months down the track so they can pass on their skills.”

In a recent national crew opinion survey, 92 per cent of staff agreed that they received the training and information required to do a good job and 84 per cent of crew said that they have had opportunities at work to learn new skills.

A similar manager survey found that 76 per cent believed that there are future appealing career opportuni ties available within McDonald’s, while a further 85 per cent of managers agreed that they have access to the mate rials needed to support their development and 76 per cent believed that the person they report to supports their train ing and development.

Succession planning

McDonald’s Australia places a strong emphasis on bring ing crew up through the ranks and into leadership roles. Some 80 per cent of its restaurant managers started with McDonald’s as crew, and Noble says that it is impor tant that managers and leaders understand the basics of the business.

“Frank (McManus) has been with McDonald’s for close to 30 years while myself and our head of operations have both been here about 25 years,” she says.

“There has to be a deep understanding about the focus and purpose of the business, so we can sit down and have a conversation about high-level strategy, but connect that with the fact that our business is our crew people – it’s serving customers, it’s having a spotlessly clean dining room, it’s having fast drive-through services, it’s having that French fry hot and fresh.”

Noble says that the leadership team makes a signifi cant investment in succession planning within the organisation. “At our quarterly business reviews we spend a lot of time going through the various levels of people and what the succession plan for the business looks like. We have also upgraded our processes so that all of our reviews are done in a robust, current management system, so that with one click you can basically see who is ready now and who will be ready in the future at all levels,” she says.

This has been a particular focus for McManus, and he estimates that he spends 30 to 40 per cent of his time on executive development and talent management. “When it comes to talent management and round table discussions, which I facilitate and chair, we’re very open and honest about who we deem to be high potential.

“There’s a lot of sharing of feedback among the dif ferent leaders of the various key departments, and we have a culture that encourages one to speak up and be heard,” he says.

A great place to work

McDonald's Australiawas one of the winners in the Great Place to Work Institute's 2008 study of Best Companies to Work For in Australia.

McDonald's was recognised for instilling a strong recognition culture. In addition to a number of formal annual events, there is a strong culture of simply thanking and recognising employees who contribute to the company's success daily.

McDonald's has also implemented programs to promote a culture of recognising employees for the contribution they have made during a shift. In addition to a Crew Recognition Program, restaurants also recognise crew members of the month/quarter/year, the recipients of which are named in WRAPT, McDonald's monthly staff magazine and awarded a gift/discount card.

On a corporate level, McDonald's operates an outstanding achievers award program whereby officers of the company nominate employees who have delivered results above and beyond that expected, or contributed significantly to the business strategy. Each individual approved by the senior leadership group as a recipient wins a $500 gift voucher and is recognised in front of their peers at the bi-annual staff meeting.

In an effort to manage in a fair manner, McDonald's also works hard to be an organisation that has clear and transparent career pathways and has taken measures to ensure that this plan is communicated to all employees.

They have a structured approach to managing remuneration that: provides a more objective framework for making pay decisions; is transparent and provides a solid basis for explaining pay decisions to employees; provides equity between roles; and ensures that individuals have a clear understanding of their total package.

A global approach

Frank McManus, SVP and director of people resources for McDonald's Australia, says that he learns a lot from what McDonald's is practising in other parts of the world through an Asia-Pacific and global HR board. "We usually meet once a year, and there's a lot of sharing of best practice and knowledge within that group," he says.

"The UK has done an outstanding job when it comes to employment branding, and I've learnt a lot from David Fairhurst who heads up HR for McDonald's there. Canada does a good job when it comes to motivation and recognition tools, and I presented our talent management system as best practice to the top 10 countries in November of last year. This system would be considered world-best practice within the 119 countries where McDonald's is represented.

"McDonald's Australia would be leading the world now when it comes to growth, profit, retention, and we would lead the world when it comes to innovation from an HR point of view too," he says.

HR working with the business

There is a strong focus on communication at the senior level, with the senior leadership group comprised of six individuals from different functions of the business. This group meets on a regular basis, says Frank McManus, SVP and director of people resources for McDonald's Australia. "We have a very open-door policy process. It's nothing unusual just to walk in sit down in our office and discuss a people issue," he says.

There is also an overall leadership group comprised of about 13 people, who usually meet once a month. Every three months this group has a quarterly business review where they discuss what's happening in the business, according to McManus. From an HR perspective, he says operations plays a critical role in getting traction in the business. While HR can come up with the best programs and initiatives, McManus says these are pointless unless they are executed on the shop floor. "We need the buy-in from operations for anything we do. Operations is usually our partner at round table meetings in developing anything from an HR standpoint. We would get the buy-in from operations for HR's three-year strategic plan before we'd even go and start developing or executing it," he says.