McDonald's high Employee Turnover Rate
In a perfect world it would be best for any organization to have employees who love their jobs, enjoy working with their co-workers, are happy with the salary, willing to work hard for their managers and never leave the organization. However, in the real world employees do leave either because they want more money, hate the work environment, hate their co-workers, want a change or because their spouse gets a dream job in another state (Sharma, 2008). Many organizations nowadays face ‘high attrition rate' or turnover mainly due to a highly competitive market. Staff attrition or turnover has been cited as one of the primary concerns facing organizations and businessesinanyindustry.Staff attrition or turnover relates to those who leaveanorganizationduetoresignation,terminationandretirement. According to the latest CIPD survey (CIPD, 2007), the annual employee turnover rate in the UK was at 18.1 percent. The report also found that the annual turnover levels differed considerably from one industry to the other industry, with the highest average rates being 22.6 percent and these were found in private sector organizations and, within this sector, the hotels, catering and leisure industry reports rates of turnover at 10 percent higher than the average for the sector of 32.6 percent. High turnover rates creates particular pressures for the HR department, which is primarily responsible for replacing those who leave, but also for line managers who face disruptiontoproductionandservicestandards. This is the necessary result of having to induct new employees, who are usually less experienced and productive compared to those whom they replace. It takes some time for the new recruits to perform at their optimum levels. This results in the organization failing to meet its objectives, reduction in productivity and higher costs. It is therefore important for HR managers to measure staff attrition, monitor its impact and take appropriate action to minimizeitseffects(Banfield&Kay,2008).
Globalization has led to the rapid expansion of multinational fast food companies e.g. McDonalds and KFC. Even at this present time of global economic recession, these fast food companies are growing and generating profits. The customers, who were eating out at a high profile restaurant, are now looking for something reasonable and affordable. McDonalds is offering good hygienic food at a reasonable price to these customers and are benefitting from this global economic downturn. This has lead to a fierce competition between these fast food companies and each of them is trying to give the best quality product and service to its customers. In a company like McDonalds, giving a quick and high quality customer service is essential for its success. However many of the McDonalds restaurants are experiencing high employee turnover which could affect the overall productivity and profitability of the respective McDonalds restaurants. One of the senior executives at McDonalds put the chain's annual employee turnover at nearly 44 percent. According to the chief human resource officer of McDonald's Mr. Floersch the managerial turnover was at 20% globally while that of the crew members averaged between 80 percent and 90 percent. This however, varied from country to country (The Wall Street Journal, 2008). In this research, the researcher would like to investigate the main reasons for experienced employees leaving the organization i.e. McDonald's and what sort of challenges the managers face due to the high turnover. The researcher would also like to find out any retention strategies adopted by the HR department to curb the high turnover rate. For this, the researcher decided to choose few selectedrestaurantsinLondon.
1.2 TheOverall Aim
The researcher's main aim in this study is to find out the main reasons for high employee turnover at McDonalds, the way it affects the managers and the organization,andstepstakentoretainemployees.
1.3 Research Objectives
The researcher in this research would like to find out the main reasons for having high turnover rate in McDonalds and the challenges that the managers face and also how they can curb the rate of staff turnover.The researcher also intendstostudythefollowing:
- To find out the main causes of high employee turnover
- To find out the various retention strategies adopted by McDonalds in order toretainemployees.
- To find out the various challenges faced by managers due to employee turnover.
2.0 Background-Company Overview
McDonalds has 31,000 restaurants in 116 countries and is one of the biggest family restaurants in the world. The first restaurant in UK was opened during 1974 in Woolwich High Street and the first franchised restaurant opened in 1986. In UK there are now 1,190 restaurants employing more than 70,000 people, of which 51% is operated by franchisees. McDonald's main vision is to give the family the best experience, something that they will never forget and would want to come back to. They achieve this through its people they employ. McDonalds realizes that its employees can only perform well when they are given the right working environment and for this, they strive to provide various rewards and benefits which would suit each and every individual working in the organization. McDonalds is one of the largest global brands and it offers a culture of flexibility, opportunity, equality and diversity. It has one of the most diverse cultures within the UK (McDonald's, 2009).
2.1 Recruitment at McDonald's
McDonalds policy is to hire those ‘Crew Members' who can bring a smile to the workplace. This brings in positive energy and creates a good friendly atmosphere. The recruitment procedure for a ‘Crew Member' is a two-step process. First the applicant needs to apply online and if successful, the second step will be to invite the candidate to a restaurant for On job evaluation (OJE) and interview. The on job evaluation helps evaluate the candidate's customer service skills and his ability to keep up with the high energy environment. This will last for 15 minutes after which the candidate will be interviewed by the Business Manager for another 15 minutes. Once the crew members are hired, they will attend a welcome meeting which will be conducted at their chosen restaurant or the recruitment centre. The welcome meeting involves viewing a DVD which gives important information about the company and also gives the manager an opportunity to interact with the new recruits. They also attend a compulsory online Health & safety and Food safety test when they start working(McDonald's,2009).
McDonalds also recruit ‘Trainee Business Managers' who need to display some strong leadership skills. In this, McDonalds makes sure that the candidate is right for the job. A candidate applying for this position has to go through four-step selection process. The first stage is the initial screening process, this helps in ensuring that the candidate meets the basic criteria for selection. If successful, the next step is an online personality questionnaire that the candidate will have to complete. This ensures if the candidate has the desired attributes to be working in McDonald's environment. The next step is a restaurant based ‘On Job Evaluation' or OJE. In this the candidate works for the entire day in order to find out what it's really like to work in a McDonald's restaurant. The final step of the process is an interview with the Senior Manageroftherestaurant(McDonald's,2009).
2.2 Training in McDonald's
McDonalds success depends on its well trained crew and managers who maintain company standards of providing high quality, good service and cleanliness at each of its restaurants. McDonald's has a company policy to provide career opportunities that will allow employees to grow and meet their full potential. They have included career development programmes for crew and operations management which will allow them to progress to a senior management position. The company believes in promoting people on theirmerit.The crew members are trained by the Crew Trainers and they learn the skills necessary to run each of the workstations in the restaurant, from the front counter to the grill area. They are also trained on how to take deliveries and store the frozen food into the chiller, this is then further used in cooking and making the necessary burgers. Major part of this training is floor based and this helps the crew members learn faster and are also able to retain the information provided. After the initial training period the crew members are monitored by the use of ‘observation check lists' (OCRs) on an ongoing basis. The observation checklist is a score sheet that marks all aspects of work in the restaurant. The ratings derived from these checklists goes towards their performance appraisal. The restaurants do promote the good performers to management positions where they will have the responsibility to runs shifts within the restaurant. For this, training is given to crew members in areas such as Customer Care, First Aid, Taste of Quality and Food & Restaurant Safety. On successful completion of the management entrance exam, the employees will attend a training course provided by the Training Department before they start working in management position (McDonald's, 2009).
2.3 Retention Strategies of McDonald's
McDonalds provides high levels of training to its employees working in various positions at the restaurants. This helps in reducing staff turnover and lowers the turnover costs. Employees that perform well are given recognition by awarding them with ‘Employee of the month'. It provides medical insurance and offers health care. McDonalds now gives quarterly bonus to its crew and manager's instead of yearly bonus, this was a step taken towards motivating it's employees. The organization gives five weeks holiday per annum and they are going to increase that to six weeks from April 2009. Computerized English language classes are conducted; this can be enjoyed by the crew members between shifts (The Wall Street Journal, 2008). In 2009, McDonald's aims to provide Apprenticeships to up to 6000 of its 72,000 UK workforce and later will be increased to 10,000 from 2010. This will give the staff an opportunity to gain valuable and nationally recognized qualification that is equivalent to five GCSE grade A*-C. McDonald's senses the importance of investing in their staff says the Senior Vice President David Fairhurst of McDonald's UK. This has been done purely to retain the existing staff and also to attract new ones towards working for McDonald's, which, is aglobalbrandname(McDonald'sLatestNews,2009).
This section of the study points out the various theories that are relevant to the topic chosen. It starts with the HR and then focuses on employee turnover and the impact it has on the organization. It also speaks about the various ways an organization can adopt to reduce the employee turnover.
3.1Human Resource Management
Human resource management (HRM) is a strategic and coherent approach to the management of an organization's most valued assets. The people working in HRM put individual efforts and also work together collectively in order to achieve its objectives. Their main goal is to help the organization achieve their goals and targets through people. HRM is concerned with choosing human capital that meets the organizations requirements and to develop their capabilities so that the work is done effectively (Armstrong, 2006). Recently there has been a growing importance of HRM; this is due to the fierce competition from overseas economies. In the twenty-first century if an organization wants to have a competitive advantage, it would have to effectively manage the organization's human resource. This would also enable the organization to maintain high performance consistently over a long term. In today's market the managers recognize the growing importance of recruiting, selecting, training and developing, rewarding and compensation the employees. However, individuals that work with human resource matters face a multitude of challenges such as the ever constant changing workforce, the government regulations and technological revolution. Furthermore, globalization has made organizations of all sizes to think about cutting costs and improving productivity (Mondy, 2008). It is therefore, important that the HRM and the other departments within the organization work closely together in order to achieve the organizational goals and objectives and to competelocallyandinternationally(Sims,2002).
3.2 Human Resource Development (HRD)
Human Resource Development is a title which represents the latest evolutionary stage in the long tradition of training, educating, and developing people for the purpose of contributing towards the achievement of individual, organizationalandsocietalobjectives(Wilson,2005).The fundamental aim of strategic HRD is to enhance resource capability in accordance with the belief that the human capital of an organization is a major source of competitive advantage. It is therefore about ensuring that the right quality people are available to meet present and future needs. HRD policies are closely associated with that aspect of HRM that is concerned with investing in people anddevelopingtheorganization'shumancapital. Human Resource Development is important for organizations because it is the people whose innovative ideas, their quality at work and their hunger for continuous improvement that is needed in order to compete in today's modern and high competitive business world and these won't come from machines (Swart et al, 2005). The development of human resource will always be an ongoing process and a vital ingredient for the success of an organization.
3.3 Employee Turnover
Employee attrition or turnover can be explained as the number of people who leave employment over a specified period due to retirement, death, redundancy, dismissal, transfer or resignation (Secord, 2003). According to Muller-Camen et al (2008) turnover is the number of people who leave the organization at a given time period. Most organizations would like to reduce their turnover rates, especially when it comes to the good performers who have benefitted from the companies training programs. Some organizations measure their turnover rates on a monthly basis, whereas some do it on a yearly basis. A limited amount turnover is positive for organizations as a poor performer could be replaced by a more productive one. Also, it creates an opportunity for promotion or career development when an experienced staff leaves an organization. However, high turnover could affect thequality of product and service that is offered to the customers (Baum, 2006) e.g. in case of McDonalds if an experienced staff leaves and a new staff is recruited in the kitchen section, the quality of making the burgers will be affected. It is important for any organization to stem the staff attrition rate as finding a replacement could incur heavy costs for the organization. Some of these costs include recruitment, administration and selection costs. The managers will have to recruit new employees which will incur cost to the organization and also to cover up for the loss, the other employees working in the department would be under pressure to meet the company targets. In a highly competitive marketthisneedstobeavoidedbythemanagers. In order to avoid high attrition rate, it is essential for HR managers to try and retain its existingemployees.
3.4 Cause of Employee Turnover
There are various employee turnover causes. For example, one of the biggest employee turnover causes is an ill tempered manager. Employees don't like to work with those managers who are always being negative to them, shouting at them and blaming them for something which wasn't their fault. The employees don't want to work for a manager who is not well organized in his work. Employees find it extremely difficult to work with managers who have attitude and are not easily approachable when they face problems, such managers often find it difficult toretain theirstaff. Sometimes managers in order to maximize profits for the organization try to cut costs by making an employee work more so that they don't have to recruit another staff. Another main cause of employee turnover is less pay to the employees. Many employees leave an organization due to not being paid enough by the management. Employees want that they are respected for their efforts in form of good pay and good benefits. It is therefore important for organizations to treat their employees as human beings and respect their feelings and opinions. When an employee feels that they are not being looked after by their employer, they get affected mentally as frustration creeps in and this forces them to leave the organization. Also, less pay and no benefits results in lack of motivation and job satisfaction. Another reason that causes employee turnover is an employee interaction with other employees. If an employee is not comfortable with their co-workers they often tend to leave the organization. They don't really get along with the workplace and this affects their performance and productivity. Employee turnover also occurs when they are not rewarded for their hard work. If an employee performs really well at work, he/she expects that the employer would recognize the efforts put in. However, this does not happen oftentotheemployee(EmployeeTurnoverCalculatorBlog,2008).
3.5 Types of Employee Turnover
There are two types of turnover: Voluntary and Involuntary. Voluntary turnover is sub-divided into avoidable and unavoidable turnover. Avoidable turnover is that which an organization can prevent from occurring such as increasing the employee pay or by giving him new job assignment. Unavoidable turnover is when an employee quits and the organization could not have prevented, such as people withdrawing through retirement or returning back to school or university. Other examples of unavoidable turnover is when an employee quits in pursuit of a new career, health problems which forces an employee to take up a different type of job or perhapswhenanemployeeleavesthecountry. Involuntary turnover can be split into discharge and downsizing types. Discharge turnover occurs when an individual has been asked to leave the organization. This could be due to job performance problems wherein an employee does not perform well over a period of time even after adequate training is given to the employee or could be for not being discipline at work e.g. coming late at work or misbehaving with colleagues. Downsizing turnover is targeted at a group of employees by an organization, it occurs as a part of organizational restructuring or cost-reduction program to improve organizational effectiveness and increase shareholder value. This reduction could be permanent or temporary due to a plant or site closing or relocation. The reduction in workforce also occurs at the time or mergers and acquisitions(Heneman&Judge,2006).
3.6 Cost as aresult of Employee Turnover
The most important factor of high employee turnover that affects any organization is the cost. These costs can further be divided into the recruitment costs, training costs, lost productivity costs, new hire costs and lost sales costs (Pilbeam & Corbridge, 2006). Recruitment costs are usually in the form of advertisements. The organization also incurs cost as they have to pay the recruitment agency, and also for posting advertisements on the internet. The training costs include cost of departmental training, cost of the person(s) who conduct the training and cost of various training materials. There are lost productivity costs as the new trained employee would only contribute at 25% productivity level for the first 2-4 weeks and cost of mistakes the new employee makes during his induction period. The new hire costs include putting the person on the payroll, establish computer and security passwords and identification cards, telephone hookups and cost of establishing email accounts. The lost sales costs or lost revenue which is calculated by multiplying the number of weeks the position is vacant by the averageweeklyrevenueperemployee.Despite the costs of high employee turnover being so significant it is overlooked and rarely calculated. Few organizations, 7 per cent of those surveyed, calculate the more extensive costs of turnover (CIPD, 2004a). When these organizations were asked why they don't calculate these costs, over half of them gave the reason that the organization did not require the information, while a third stated that calculating the various costs was just too time consumingforthem.
According to Risher & Stopper (2002) for an organization cost of replacement can sometimes account to around 2.5 times the annual salary of an existing employee. Such costs are rarely identified by the accounting department of an organization. Therefore, in order to avoid such turnover costs, organizations mustformasuccessfulretentionstrategyovertime.
3.7 Customer Satisfaction and Customer Retention
According to Hill (2006) recently many organizations whether it be a small one or a large one, they have increasingly come to understand that it is important for them to maintain customer satisfaction. Nowadays the organizations have realized the fact that retaining existing customers is easier and less costly than finding some new ones. Today's businesses are so competitive that in order to gain or win new customers, organizations have to invest a lot of money. Organizations have started to realize that there is a strong link between customer satisfaction, customer retention and profitability. For many organizations in the hospitality and service industry customer satisfaction will be the topmost priority in order to be successful. Meeting the various needs of the customers and satisfying them has become the key operational goal for many organizations. Customers would only be satisfied when the organizations product or service is good enough to meet their requirements and therefore this needs to be measured by the organization. In the words of Argenti (2002) in order to measure the overall success of any given product or service one needs to find out how often do the customers buy that same product or service. A customer buying the same product repeatedly would mean that he/she is satisfied with that product. If one can put it in simple terms, a company can make regular profits if customers show a long term commitment to their product or service. The reason why organizations can make profits from long-term and loyal customers is because they don't have to invest huge sums in attracting the new customers through the means of advertisements and promotions. Therefore, if a company after acquiring a new customer manages to keep them in the long-run, it's investment on acquiring will pay off. E.g. If McDonald's want to stay competitive in the fast food industry it needs to make sure that their customers are always satisfied with the food and also the customer service. This is essential for retaining customers and would also add value to the company,thereby increasing the company profits.
3.8 Employee Retention
Retention includes all those activities that an employer does to encourage qualified and highly-skilled and productive employees to continue working for the organization (Jackson et al, 2009). Staff retention is about attracting and keeping good-quality employees, while accepting that some of them will leave the organization. However, the managers should ensure that when these employees leave, it won't affect the organization's productivity to a large extent (Bloisi, 2007). Retaining a productive employee is of considerable importance to the company's HR professional. The CIPD (2004) report intro HR trends and indicators reported that 31.7 percent of employers face difficulty with retaining its employees. Large organizations find it even moredifficulttoretaintheirworkers.According to Browell (2003) an organization can benefit a lot from retaining the existing staff, some of them include: reduction in recruitment costs and selection and training of new staff, it keeps skills and knowledge within the organization, helps improve performance, productivity and profitability, it helps in building customer loyalty and satisfaction, and lastly, it could help increase the sales volume of the organization thereby making them competitive in the market.
Organizations should consider the following elements which would help in retaining employees: Job previews - employees should be given a more realistic job preview when they are being recruited. Care should be taken not to give them high expectations that cannot be met. Improve management style - one of the main reasons employees leave the organization is due to dissatisfaction with their managers. Organizations that would like to improve retention should take measures to improve their managers' people management skills. Career development and Progression - organizations should give their employees ample of opportunities to develop their skills. This can be done by introducing mentoring scheme, encouraging multi-skilling, improving career development opportunities and investing in succession planning (CIPD, 2008). Flexibility - organizations should be flexible towards employees working hours and times. If employees are forced to work hours which is not convenient for them, they will look for jobs elsewhere. Treat people equally and fairly - to improve retention organizations should make sure not to discriminate against employees. If they are unfair towards them it will result in voluntary resignations. Every employee that belongs to a team should be treated equally by the managers. Improve pay and benefits - Many employees leave due to less pay and no benefits. A simple pay rise could be a useful strategy for organizations to retain their employees. Organizations should make sure that they match the market rates or better it when it comes to good performingemployees(Muller-Camenetal,2008).
In today's global competitive market organizations are under constant pressure to perform well and stay competitive and in order to achieve that, they need to recruit the right people for the right job. Recruitment is a very costly process as a lot of resources go into it. If the organization recruits wrong people it could cost to the organization huge sums and also loss of valuable time. Therefore it is important for the recruitment process to be fair, reliable and valid (Armstrong, 2001). According to Bratton and Gold (2003) an organization should setup such a recruitment process, which will help in generating a pool of talented and skilled workers who are capable for employment in an organization. Recruitment involves searching and hiring qualified people for the organization and consider them when filling job openings. The recruitment process should be consistent, taking into considerationtheorganization'sstrategy,visionandvalues.
There are different sources an organization can use for recruiting: the first being the internal labor market and this could be the company's current employees. A good way for recruiting employees from within is through posting announcements in a company newsletter. According to the CIPD recruitment survey (2004a) 84 percent of UK organizations surveyed looked for applicants from within the organization. They did so by using internal email or intranet (69 percent), notice and bulletin boards (68 percent), team meetings (18 percent), staff newsletter or magazines (14 percent), and by memos, circulars and approaching directly. The second source would be the external labor market and this could be reached via electronic media and also referrals from current employees (Jackson et al, 2009). However, the success rate of these sources is not equal and may vary e.g. employee referrals may yield better quality applicants than through newspaperadvertisements.
It is important for any organization to monitor its recruitment process as this will help reduce the talented and knowledgeable employees from leaving the organization. For any organization the recruitment process is the very first stage of retention. It is therefore important for an organization to monitor the recruitment practice as it will help in finding the right candidate for the job. In the long term this will also help the organization to reduce the turnover levels.
The primary reason that organizations train their new employees is to increase the level of the knowledge, skills and abilities that they possess. It can be used as one of the ways to retain its existing employees, as training will give them an opportunity to develop new skills and gain knowledge. The amount of training given to the employees has a positive influence on the organizations revenue and overall profitability. Managers should therefore keep a watchful eye on the organizations goals and strategies while conducting training programmes (Snell & Bohlander, 2007). Training is also described as a planned process which enables to change the attitudes of people; it helps a person to gain some knowledge and develop the skills through various activities which helps the person to achieve effective performance. Training an employee at work is important as the employee will be able to meet the requirements of the organization in the present and in the future (Beardwell et al 2004). Training is the systematic process of altering the behavior of employees in a direction that will achieve organizational goals. Training is related to present job skills and abilities. It has a current orientation and helps employee's master specific skills and abilities needed to be successful (Ivancevich,2007). There are two generally accepted methods of training: one of them is called on-the-job training and the other is called off-the-job training. On-the-job training is probably the most widely used method of training and it usually takes place at the workplace. Off-the-job training usually takes place in a location which is outside of the workplace and is normally more expensive than the on-the-job training (Mullins,2005). In on-the-job training an experience worker trains the newly recruited employee. E.g. in McDonald's trainees acquire skills such as running a machine, making of a burger by observing the experienced worker. OJT is also used for top level management, there are ‘assistants' who train and develop the future managers. Some other forms of OJT include apprenticeships and self-directed learning. The advantage of OJT is that it can be customized according to the experiences and abilities of the trainees. Off-the-job training provides group based learning opportunities which is conducted at a site which is away from the workplace. Off-the-job training is conducted in an off-site training classroom close to the workplace or in a corporate or private facility. Off-the-job training is usually expensive as it requires a lot of travelling and maybe used by large organizations. Training classrooms, vestibule training setups and specially constructed training laboratories are some of the sites used for off-the-jobtraining(Jacobs,2003).
In an organization training could also be used to change the culture within the organization. It can be used as an important tool by the organization to improve the overall effectiveness, especially in today's world where the marketishighlycompetitive. An organization can take up two approaches on training: a systematic training and just-in-time training. In a systematic approach, training must be designed, planned and then implemented appropriately in order to meet the needs of the organization. The training is given by those people who know exactly how to train the employees. Once the training has been provided, it is carefully monitored in order to measure the effectiveness of the training. Just-in-time training is usually delivered at a time when the activity is just about to take place. This training will be based upon the requirements, priorities and plans of the employees. Just-in-time training aims to ensure that whatever is taught to the employees, the same should be implemented at the current work situation (Reynolds, 2004).
3.11 Job Satisfaction
In order to retain talented and highly skilled employees, organizations should make sure that they are satisfied with their jobs. Those employees who are satisfied with their jobs won't leave the organization and would not look for alternative employment. Job satisfaction usually takes place when employees have been appraised for their hard work. Employees who are satisfied are always in a good mood and in a pleasing state of mind (Colquitt et al, 2009). A person's job satisfaction is a set of attitudes toward work. There are many employees who would rate job satisfaction over and above job security or higher pay. An organization that has employees who are satisfied will experiencelessemployeeabsenteeismaswell(Lussier,2008).
The above model shows that in order for an employee to achieve job satisfaction, he needs to have good pay and job security, a good working culture and be comfortable with his co-workers, he needs to be happy with his supervisor, he needs promotion for his hard work and lastly, he needs to be happy with the job. If all these expectations are met, an employee will be satisfiedandwouldbeproductiveinhiswork. It is important for the management to give autonomy to those talented employees in their job functions and involve them in decision making thereby making them feel that they are an important part of the organization. Employees who are productive always enjoy working for an organization that has a good pleasant working condition and they do not look elsewhere. In addition, updating the employees through training and development helps keep them updated on their current job role and at the same time they learn new skills which could be a good way to improve employee job satisfaction(Sigler,1999).
In the 21st century it is important for any manager to motivate its employees if the organization is to run successfully. As markets become more and more competitive, it is crucial to maximize the performance of the employees or workers in order to grow and maintain market position. There are many motivational theories that explain why people work and the amount of effort they will put in e.g. Abraham Maslow's hierarchy of needs theory. In this theory Maslow pointed out eight important needs, some of them include the need to know and also the need to understand, the aesthetic needs and also the need for transcendence. However, Maslow's hierarchy of needs is normallygiveninfivemainlevelsandthisisshowninFig.2.2
The first need is the Physiological needs which talks about satisfaction of hunger and thirst, sleep, sensory pleasures and arguably, sexual desire. The second need is Safety needs which includes safety and security, freedom from pain or threat of physical attack and having the necessary protection from danger. The third need is the Social needs and this includes being loved, sense of belonging in society and friendships. The fourth need is the Esteem needs which include self-respect and the esteem of others. It involves being recognized in society and having prestige and appreciation. The last one is the Self-actualization needs and is the development and realization of one's full potential (Mullins, 2008). Maslow explains that once the lower needs are met and one is satisfied, it no longer stays as a motivator for the human being. Only those needs that remain unsatisfied, act as a motivation for the person. An organization's top management should identify at what stage each individual employee is and act accordingly to motivate them. Managers who possess this knowledge can construct strategies and apply techniques that will get the best out of the employees. According to Porter, Smith & Fagg (2006) an employee needs to be motivated depending on the particular situations. A need is something that drives a person. An employee would behave differently to various stimuli.
There are also various other motivational theories such as McGregor's Theory X and Theory Y, where in Theory X the employees tend to be passive and disinvested unless controlled by their managers. Theory Y is based on the assumption that employees are not passive but capable and enthusiastic about taking responsibility. Most forward-looking organizations prefer Theory Y (Brody,2004).Other motivational theories include; McClelland's Need for achievement theory, the Herzberg's two factor theory and also the Vroom's expectancytheory.
3.13 Performance Appraisal
Performance appraisal is a central component of performance management in most organizations. The primary goal of many organizations to conduct a performance appraisal, is to improve individual and organizational performance. According to Mondy (2008) performance appraisal is a formal system of review and evaluation of individual or team task performance. In a Performance Appraisal the individual performance is evaluated based on the judgments and opinions of its subordinates, peers and supervisors. Sometimes, even the employees opinion and judgment itself is takenintoconsideration(Jacksonetal,2009).
In today's globally competitive marketplace managers need to do a performance appraisal as it will provide valuable feedback to the employees working in an organization. Organizations should set up performance standards which could be used as the base and then actual performance of the employees can be compared with them. Once these standards are set, they should be communicated to the employees by the management as this would give them a clear understanding of what is expected from them (Naukrihub, 2007). Fig 3.3 shows the process of performance appraisal that an organization shouldfollow.
Performance appraisal also helps managers identify training and development needs and justify termination for poorperformance. Having an effectiveperformanceappraisalhas been and will continue to be in the future, the topmost priority for management.
There are various performance appraisal methods that an organization can use, such as: graphic rating scales, critical incidents, behaviorally anchored rating scales and management by objectives (MBO). The graphic rating scales method is the most frequently used by organizations on key characteristics such as creativity, job knowledge, reliability and adaptability. These characteristics are rated on a scale of 1-10 where 1 represents poor performance and 10 represents outstanding performance. The behavioral anchored rating scale is similar to the graphic rating scale, except that BARS is more specific when it comes to rating. Critical incidents are descriptions made by supervisors and other qualified observers of the way staff behaves and are they effective or ineffective. Later the staff is rated in terms of contribution made towards the organization. The MBO method is used to guide individual staff performance and accountability. The staff and supervisors work together to develop ideas which will enable the staff to achieve the organizations missionandgoals(Brody,2004).
3.14 Reward Management
Reward management is concerned with the formulation and implementation of strategies and policies. It mainly deals with designing, implementing and maintaining proper reward systems, with the overall aim to meet the organizations and stakeholders needs. Their purpose is to reward everyone working within an organization fairly, equally and more regularly keeping in mindtheorganizationsvalue(Armstrong,2006). The design and management of reward systems is one of the most difficult HRM tasks for the general manager. According to McKenna & Beech (2008) the main purpose for any organization to have a reward system is to attract new employees and retain existing employees, which in return will enable the organization to achieve its objectives.
The various economic and social factors throw challenges for managing reward systems. Managers today have to improve the productivity and quality of their organization's products and services. At the same time they need to ensure that wage costs are controlled. A social factor such as employee expectations with regards to their pay also needs to be looked upon by the managers. Human resource managers today are pressurized as they have to achieve their organizations goals and at the same time meet the goals oftheiremployees(Bratton&Gold,2003). To retain the services of its employees and to maintain a high performance level, it is essential for an organization to motivate its workers so that they are committed towards their work. This can be achieved through a good management style, providing competitive compensation package and supportive culture (Armstrong & Brown,2006).
3.15 Career Development
Career Development provides a future orientation to HRD activities. Nowadays employees working in the organization need to adapt to various changes if they want to be successful in developing themselves and to gain a competitive advantage over the others. Career development can be explained as a lifelong series of activities which helps in contributing to a person's future career success. For organizations, career development is essential in order to develop and enrich the available human resources. Organizations assist employees in developing their career plans hoping that this would bring them close to the organization. Under such circumstances employees are less likely to quit their jobs. It boosts their morale and productivity, which would result in an increase in the organizations overall performance. The interest shown by the organization towards an employee's career development leaves a positive effect on that employee. An emphasis on career development would make employees view their jobs and their employers with a positive attitude (Sims, 2006). Lack of career development opportunities can result in frustration and the feeling of not being valued within the organization. Career development is usually seen at the centre of the psychological contract and this also binds the employee to the organization. For organizations career development for employees ensures that they develop the necessary skills to sustain a competitive advantage (Harrison, 2002). It ensures that people with good qualifications and experiences are available to the organization when needed. Career development benefits the employee as well as the employer and therefore needs to be considered carefully by both (Mondy, 2008).
3.16 Psychological Contract
Due to the evolving environmental pressures there has been a significant and fundamental change in the ‘psychological contract'. The contract states the various expectations that employees have about their job and what is it that they would get in return from the employer for doing the same. A psychological contract is a legal contract of employment which describes clearly the terms and conditions of employment, the remuneration and various other basic rules that govern the employment relationship. Currently we are witnessing an ongoing change in these psychological contracts (Torrington et al, 2005). In the present business environment employees have become increasingly mobile; they change their jobs for promotion, reward and job satisfaction. To retain the key employees, organizations need to give them developmentopportunities(Harrison,2002).
There are two perspectives to the psychological contract, the employees and the employer's or managers. Guest and Conway's (1997) carried out a research for the CIPD and suggested that from the employee's perspective the psychological contract consists of six parts: to be treated Fairly, to be treated equally and also consistently; Security of employment; Scope to demonstrate competence; Career expectations and the opportunity to develop skills; Involvement and influence; and Trust in the organization to keep its promises (Muller-Camen etal,2008). In today's turbulent climate there is an increased possibility of the psychological contract being violated or misinterpreted. The violation mostly occurs in matters such as training and development and compensation and promotion. Violation of the contract causes disillusionment, dissatisfaction and exit of the employees. The breach in the psychological contract usually happens either in the beginning when employee joins the company or after years of satisfactory service. By violating the contract the morale within the organization may get affected and this might affect the profitability of the organization. If the activities of the organization are perceived as being unjust or immoral, it may affect the reputation and the brand image of the organization(Mathew'sBlog,2008).
3.17 Exit Interviews
In order to reduce employee turnover HR managers must conduct an ‘Exit interview' of those leaving the organization. Employees leaving the organization are likely to be more honest than those who you currently employ. According to Kuretzky & Mackenzie (2003) Exit interviews should be conducted with all employees who leave the company, whether they are leaving voluntarily or involuntarily. The employees should not be forced but ratherbeencouraged as this would provide valuable information to the managers. According to Heneman & Judge (2006) Exit interviews are formally planned and conducted interviews with departing employees. Apart from finding out the reasons of employee's leaving the organization, exit interviews are also used to explain things such as rehiring rights, benefits and confidentiality agreements. It is important that exit interviews are conducted carefully. Departing employees are reluctant to complain about their manager as they will want to avoid burning bridges and don't want to jeopardize future references. In exit interviews employees might say that they are leaving for better pay but in reality they probably would be leaving for poor working conditions or interpersonal conflicts with the supervisors and coworkers. It can be argued that exit interviews, if used at all by an organization, should be conducted as soon as the resignation is confirmed and it should be conducted by an individual who will not have any role in writing futurejobreferences(Taylor,2005).
3.18 Grievance Procedures
Employees want their managers to listen to them and take appropriate actions. This can be done by incorporating a ‘Grievance Procedure'. Many grievances are described as ‘damaged relationships' rather than individual and isolated acts. In most organizations employees leave because of difficulties faced at the working environment. They don't leave their jobs, they actually leave because of their managers or due to stress of working with certain co-workers (Banfield & Kay). Most employees do not raise the issues directly with their managers, as they feel that it could be contentious. Having a proper grievance procedure makes it clear to the employees that there is a course of action that they can take if they have a problem. It also helps the employer and the employee to resolve issues fairly and quickly (Bloisi, 2007). A proper grievance procedure provides a structure within which individuals can reasonably air their grievances and avoid the likelihood of managers dodging the issue when it is difficult. It avoids the risk of inconsistent ad hoc decisions, and the employees know at the outset that the matter will be heard (Torringtonetal,2008).
4.0 Research Methodology
While conducting a research, a researcher can have two kinds of approach, a phenomenologist or a positivist. Phenomenology for many writers has been quite useful as it covers various styles of conducting a research and it does not rely on measurements, statistics or anything which would be associated with the scientific method. It emphasizes on subjectivity, description, interpretation and agency. It deals with people's attitudes, feelings, emotions and perceptions. A Phenomenology is experienced directly and not through concepts and theories. The world as you see it today is quite complex, nothing is too easy to understand. A phenomenological approach allows a researcher to understand the complexities and get detailed information which would enable him to understand these complexities. Phenomenological research depends on in-depth interviews for data collection and analysis and does not call for any expensive equipment (Denscombe, 2007). Positivism stresses on objectivity rather than subjectivity. A positivist likes to see evidence which can be expressed in quantitative form as this makes it easy to measure and compare (McNeill & Chapman, 2005). A positivist researcher emphasizes on quantitative data which is collected and then analyzed through experiments, surveys and statistics. One of the key activities of a positivist research is counting. The tools that are used in a positivist approach are obtrusive and controlled. The data is gathered through quantitative techniques such as surveys, statistical records and structured observations (McNabb, 2004). In this research, the researcher will take a phenomenological approach while conductingthisresearch as information had to be gathered directly from the employeesandmanagers.
In any type of research there are two styles of reasoning, they are ‘Inductive' and ‘Deductive'. In Inductive research, the research begins by collecting specific data, which is then used to develop a general theory to account for that data. In inductive research, the researcher starts from the bottom of the research circle and then develops a theory at the top (Engel & Schutt, 2005). In an Inductive approach the research lies on the empirical verification of a general conclusion derivable from a finite number of observations. In Deductive research a specific expectation is deduced from a general theoretical premise which is then tested with data which has been collected for this purpose (Engel & Schutt, 2005). Deductive reasoning is based on the establishment of universal laws. These laws are essentially only hypothesis to be tested against the predictions of the laws. The researcher in this research willtaketheInductiveapproach.(Adamsetal,2007).
In a research there are two types of methodology used to collect information; they are quantitative and qualitative methods. The researcher will use both methods to collect data for this research. Quantitative methods are used to document subject attributes and are generally expressed in quantity, extent or strength. It guarantees objectivity, accuracy, validity and reliability. Their main purpose is to measure the variables which allow in making judgments and comparisons (Sarantakos, 2005). In Qualitative research the researcher describes the characteristics of people and events without making comparisons in terms of measurements or amounts. Qualitative research has a more naturalistic approach to its subject matter which means that a qualitative researcher likes to study things in their natural settings. It attempts to interpret phenomena in terms of the meanings people bring to them (Thomas, 2003). Qualitative methods give you the flexibility in structure and the designs are loose which allows you to capture the reality. It brings you in close contact with the respondents and context sensitivity (Sarantakos, 2005).
A researcher has two common sources to collect and analyze evidence; they are primary sources and secondary sources.The researcher will use both the primary and secondary sources while conducting this research. Primary data is a source of information that is already written by someone at a time when it was being investigated. For the researcher a primary source is an original material which gives the researcher raw evidence (Sapsford & Jupp). The advantages of having primary data are that it is an original data and a data which is collected directly from the population. However it has its own drawbacks as it is time consuming and the data collected is raw and large in volume. In this research Primary data will be collected in the form of structured interviews and through handing out of questionnaires. Few managers working in McDonalds will be interviewed and the employees will be given the questionnaire. Secondary sources on the other hand copy, interpret or judge material to be found in primary sources (Sapsford & Jupp). The advantages of secondary data are that it saves a lot of time as the data has already been collected by someone else and it saves cost as the data is either free or inexpensive. The disadvantages of secondary data are that the data collected maybe out of date and it may not be specific (Kerin et al, 2004). In this study, secondary data will be collected in the form of books, journals, newspapers and articles that are relevant to the research topic.
In this research it was essential to choose a sample size which was about 3-4 McDonalds restaurants in London. A sample is a small representation of the larger population. It is carefully selected in order to gain a reliable picture of the large population (Bouma & Ling, 2004).The researcher also took into consideration the Ethical issues at each and every stage of the research, starting from the design, collection and interpretation of the data. The researcher will be considerate and won't invade the respondent's privacy during interviewing. By participating in the research, the respondents should not fall into any kind of trouble. In order to conduct the interview a special venue was to be chosen and this would have proved expensive. Employee would have had to take out extra time to participate in the interview process. It was therefore decided by the researcher not to interview the employees. Instead, questionnaires will be given to the employees in order to find out the overall picture of recruitment, retention and main causes of employee turnover. According to Sarantakos (2005) questionnaires are diverse; they vary according to the way they are administered as well as according to their nature. Before handing over the questionnaire to the employees, a letter will be handed out to the restaurant explaining the purpose of conducting this research. This would enable the employees to decide whether they would like to participate in the research or not (Singleton & Straits, 2005). The importance of doing this is to get an increased response rate and address ethical concerns.
The researcher chose to interview the managers working in McDonalds. One manager from each store will be interviewed and the same will be conducted in a structured form i.e. the same set of questions will be asked to each of the managers. According to Punch (2005) in structured interviews each respondent is asked questions that are already framed with preset response categories. Each and every respondent is asked questions in the same order with little room for variation. The researcher understands the rigidity of structured interviews and is prepared for the same. While recording the answers derived from the interviews, the researcher will be careful not to manipulate or make judgments of its own while interpreting the data. Other methods of data collection were considered and rejected by the researcher. Qualitative method such as Focus Groups were not considered as it would require 2 people or even more to record whatever the employees had to say. It would have been difficult for one person to ask questions and at the same time record everything the employees had to say. Also, language would have been an issue since the employees working in the restaurants are from different countries and cultures. Hence, not everyone could understand and speak English fluently. Observational technique of collecting data relies heavily on the recall accuracy and the memory of the observer and his ability to record certain information that occurs so quickly it becomes harder to interpret with minimum error (Issel, 2009). Also, McDonald's restaurant gets busy with people and it can sometimes be hard to concentrate and observe each and every employee. This method was therefore not considered by the researcher.
Once the data has been collected through interviews and questionnaires it will then be analyzed. The quantitative data collected from questionnaire will be analyzed using statistics. Data will be analyzed with the help of graphs such as Histogram, pie-charts and frequency curve. The qualitative data through interviews will be analyzed in three main components. The data will first be reduced through editing, segmenting and summarizing. This will help reduce data without significant loss of information. The data will then be organized, compressed and assembled as qualitative data are typically bulky and dispersed. Once the data is reduced and organized, the researcher will draw theconclusions(Punch,2005).
4.1 Research Approach
The researcher handed out the questionnaire to 4 McDonalds restaurants in Central London. These stores were close to the underground stations and therefore were easy to access. None of the stores chosen were drive through, they were located in busy areas of London. Around 25 questionnaires were handed out to each of these stores and one week was given for the employees to fill up the questionnaires. One manager from each store was selected and around 30-45minutes was given to interview them. The researcher spoke to the manager explaining the purpose of this research and only then with their permission the interview was conducted. About two weeks was given for the interview purpose and 2 interviews were undertaken each week. After collecting the information from the interviews and questionnaires, some data which was irrelevant was declared as null or void and only the data that was relevant to the study was used for further analysis.
4.2 Research Constraints
The researcher while conducting this research faced some difficulties in getting the questionnaires filled by the employees. Many McDonald's stores in central London were approached but most of them didn't give the researcher the permission to carry out the survey. The managers of these stores thought that the results from the survey would reveal confidential matters and they didn't want this to be exposed to others. Since most of the stores were located in busy areas of London, the researcher had to wait patiently till the store got quieter, before things could be explained to the managers. Many copies of the questionnaires which were handed out to the stores that agreed to carry out the survey, some of them were either got spoilt or were lost and therefore more copies had to be given in order to get maximum feedback. There were some employees who didn't want to answer certain questions that they think by answering them would jeopardize their job. Some employees who were busy at work filled up the questionnaire quickly, thereby missing out on answering few questions. The response rate from the questionnaire was not so good and this posed difficulty for the researcher. The researcher also had some difficulty in conducting interview session with the managers. Even after taking an appointment date and time from the managers the researcher once at the store had to wait patiently until the managers were available to answer the questions asked. On some occasions during the interview session the managers had to leave in between to attend important calls or resolve certain issues pertaining to the store. This extended the interview time and some questions were half answered due to the disruptions. The researcher had to repeat the questions in order to get a complete response from the managers.
5.0 Data Analysis
The researcher in this study would be using both quantitative and qualitative methods. Once the data has been collected from the Questionnaire's which were handed over to the employees, the researcher would be using the help of statistics to analyze the quantitative data collected. Pictorial representations such as bar charts, pie charts, histograms and line graphs will be used by the researcher to analyze the data collected from questionnaire. The researcher therefore chose to make use of Microsoft Excel program to analyze them. This program had features such as the use of graphs and charts which will help interpret the data more accurately and without any difficulty to the researcher. Drawing the graphs manually would have been time consuming for the researcher and therefore using the software helped to represent the data quickly. This program was also quite useful in interpreting complex information which made it the best program for thisstudy. While using the Interview methodology, the researcher analyzed the data with the help of ‘coding'. Coding Since the information gathered from the interview was bulky coding helped in data reduction and also analytically categorized the data. The raw data was conceptualized into categories which created themes or concepts. Since the data collected was so descriptive, the researcher assigned labels to units that had meaning (Neuman, 2006). The researcher also recorded the data in the form of notes. These notes were made based on the reflections and thoughts of the researcher about the data collected. Data gathered from the interviews were also analyzed in the form of diagrams and charts as this helped the researcher in organizing ideas and systematically investigate relations in the data. Finally, the software program called MS Word was also used in order to analyze the data collected from the Interviews.
5.1 Findings and Analysis of the Questionnaire given to employees
The researcher gave 25 questionnaires to 4 chosen stores in London and got responses from 74 employees out of the 100 given which was a good response rate. In total they were asked 22 questions and each respondent answered to most of them. 20 questions were closed-ended wherein options were given to the employees to choose from. The remaining 2 questions were Open-ended ones wherein their opinions were asked. The data collected was then analyzed and represented using graphs and pie-charts and few were analyzed in textual form, these are explained below.
Q1.How long have you worked for McDonald's?
The researcher asked the employees since how long have they been working for McDonald's. About 39% of them mentioned less than six months and the remaining 61% of them had worked for more than six months. According to the researcher the significant factor was that only 27 out of the 74 employees have worked over a year which is over 35% of the total strength. This showed that most employees working for McDonalds were either newly recruited or have been working for around 3-9 months. This proved that not many manage to stick around for a longer period of time with the organization and that is why McDonalds faces high turnover. This consists of over 60% of the employees which is quite a significant figure accordingtotheresearcher.
Q2.What age group are you in?
The above graph displays the age group of the crew members in McDonald's. Majority of the employees questioned were between the age group of 18-30 years. This proves that most employees that work for McDonald's are young and are always on the look out for better opportunities. Only 8% of the employees were above 30 years of age. McDonald's targets young people as the job requires quick and accurate customer service. For McDonald's customer satisfaction (refer 3.7) is of utmost importance in order to compete with the others in the industry. They believe that a young staff would be more productive then someone who is old and not agile. They won't even have to pay them more as younger employees are paid less than the older one's in McDonald's.
Q3.Are you a student? If Yes,What are you studying?
The researcher after collecting the data from the questionnaire given to the employees found out that around 76% of them were students. This is purely because getting through McDonald's recruitment process is relatively easy for them. They take up the McDonald's job as part-time in order to meet their expenses while they are studying. This is one of the reasons why McDonald's experiences high turnover (refer 3.3) rate as most of their employees are students who after completing their studies leave in search for a job that suits their interests. Out of the 56 respondents who said they were studying around 52% of them where doing their degree courses either at a graduate level or a master's level. Some 32% of the students were currently doing diploma courses or some short professional courses. 11% of them were doing their A levels and the remaining 5% who doing their GCSE.
Q4.What is your current role with McDonald's?
The researcher found that out of the 74 employees, 48 of them were still crew members which accounts to about 65% and 8 of them were Trainee Crew Members. The number of respondents who were promoted to Training Squad was just 24%. They achieved this position with experience; and most of them hadworkedformorethanayear. This showed that not many employees were rewarded (refer 3.14) or were given the opportunity to grow within the organization.
Q5.How did you apply for your position?
The results for this questions showed that around 24% of the respondents knew someone who had or was working for the organization and so they applied after being informed by them. Around 29% of the respondents said that they applied after reading the advertisements in the newspaper. Some of them used the McDonald's online website and searched for the stores that had a vacancy for crew members. The remaining 47% of the respondents applied directly at the McDonald's store. They asked the store manager whether there was any vacancy available at the store and then applied there by submitting theirCurriculumVitae.
The researcher asked the crew members how they would rate the recruitment procedure of McDonald's. Around 60% of the employees mentioned that the recruitment procedure was okay and 32% of them said it was easy to go through. The remaining 8% mentioned that the recruitment (refer 3.9) procedure was complicated or hard. This proves that the McDonalds recruitment procedure is not as challenging as it should be. The Human Resource managers (refer 3.1) need to strengthen this in order to choose those candidates who would take the job seriously thereby improving their retentionrate.
Out of the 74 respondents around 68% of them said that they worked between 6-8hrs each day at work. 16% of them said they work between 8-10hrs and the remaining 16% worked more than 10 hours a day. Since 76% of the respondents were students they were only working part-time in McDonald's and hence majority mentioned 6-8 hours a day. The one's who mentioned 8-10hrs and over 10hrs were the non-students and therefore they could work full-time.
Q8. The researcher asked the employees whether they work the same number of hours every day. Around 77% of the respondents said that they don't work the same number of hours every week. The other 23% work fixed number of hours every week. The reason why majority of the employee's weekly hours varies is because most of them are students. They work fewer hours when they have their college or university exams and they work more during vacations or at times when they aren't pressurized with studies.
Q9. Do you work as part of a team? For this 100% of the respondents said that they do work as a part of a team. This is crucial in McDonald's as it relies on quick, accurate and quality service which can only be achieved by working together as a unit. Therefore if one of the experienced staff from among the team leaves the organization it affects the quality of customer service.
Q10. Is your work pattern flexible? Around 88% of the respondents said that their work patterns are flexible. If they want to work on certain days or shifts, McDonald's is quite flexible with it. The other 12% didn't agree to this and said that McDonald's is not flexible. This is one of the positives of working at McDonald's and one of the reasons why sometimes employees stick around a bitlongerthanusual.
Q11. Are you encouraged to take your own decisions? Around 61% of the respondents said that they are not encouraged to take their own decisions at work. The other 39% were encouraged to take their own decisions. These however were the one's who were promoted to Training Squad and Trainee Managers. As a training squad or a trainee manager they have to take prompt decisions,nooneencouragesthemtodoso.
Q12. Do you follow a set pattern of tasks? This question revealed that about 73% of the total respondents answered ‘Yes' that they do go through a set pattern of tasks everyday. The remaining 27% answered ‘No' they have to perform several tasks in a day at work. This showed that most employees were going through the same routine which can be boring for them and in the long run the employee would get frustrated and leave the organization leading to employee turnover. If this continued they could lack motivation (refer 3.12) and managers need to encourage them by giving them opportunitiestoperformvariousothertasks.
Q13. Have you been promoted? Around 57% of the respondents said ‘Yes' they have been promoted. The other 43% mentioned ‘No' they haven't been promoted. Out of the 42 respondents who did get promoted, most of it was a promotionintheformofpayriseratherthanposition.
The researcher found that around 45% of the respondents had not received enough training for their job, 20% were still being trained even though they already began working and the remaining 35% of them said that they received enough training from the management. This shows that McDonald's does not provide enough staff training (refer 3.10). Employees start working without being given sufficient amount of training. According to the researcher this is one of the reasons why employees leave the organization. The pressure of performing well without having enough training frustrates the employees and a frustrated employee would not stay longer and would leave the organization. It is therefore important for the Human Resource managers to develop (refer 3.2) the employees in order to have a competitive advantage.
Q15. The researcher asked the employees if they were career minded. Over 75% of the respondents said that they are career minded. This shows why it is important for McDonald's to provide career development (refer 3.15) opportunities to its employees. Nowadays, every employee wants to enhance their career skills in order to grow within an organization. An organization like McDonald's could retain their employees by providing them with such opportunities.
Q16. Are you ambitious with McDonald's? The researcher found that around 57% of the employees were not ambitious about working for McDonald's. This is because most of the employees were students and they said that after completing their studies they will look for a job in an industry of their interest. These are the employees most likely to leave the organization unless givenbetteropportunities.
Q17. Do you feel your pay is good for the role? The answer to this question revealed that 45 out of the 74 respondents were not satisfied about their pay and these were mostly the Crew Members. Most of the employees who were promoted to Training Squad were happy with their pay as they get a pay rise once promoted and this is more than the basic pay rate of £5.75/hr. According to the researcher not enough pay could be one of the causes of employee turnover(refer3.4).
Q18. Are you happy with your present role in McDonald's? The researcher found that 53% of the respondents were happy with the present role in McDonalds and the rest of them were dissatisfied. Amongst the employees who were happy most of them were either working as Training Squad or working as a Crew Member at the front counter. Crew Members do work in different areas such as front counter, the lobby and the kitchen. This showed that Job satisfaction (refer 3.11) is important for an employee and it helps themtoperformbetterintheirroles.
The response from this suggested that about 61% of them intend to stay for more than a year with McDonalds and the other 39% would leave within a year's time. The researcher after analyzing further understood that since most of the employees were students they chose to work with McDonald's till the time they finished their studies as McDonald's is flexible with the days and hours.
Q20. Has your service at McDonald's been recognized? The researcher found that 65% of the employees were been appreciated by their managers at McDonald's. This recognition was however in the form of encouragement e.g. at the end of the shift, managers would say ‘Good Job done' to those who performed well on that day. This recognition would work in the short run but in the long-run employees expect recognition in the form of pay rise.
In order to do a thorough analysis of the questionnaire, the researcher merged 2 to 3 questions in order to do a critical analysis of the findings. The researcher found out that those employees who were promoted to Training Squad were ambitious about working for McDonald's. This was because they were satisfied with their position and also their pay. This is one of the aspects of the Psychological Contract (refer 3.16). The employees who were performing different tasks at work everyday were the one's who said that they were happy about their present role in McDonald's. This is probably because they were enjoying new challenges every day and were learning different aspects of working at McDonald's. The researcher also found out that many employees were unhappy with their managers. Some of them mentioned that their manager's showed a lot of attitude and were rude to them. The managers were also not approachable in case they needed some assistance relating to work. Few others mentioned that their managers would shout at them if they haven't performed a particular task. The employees felt that manager's questioned their sincerity. Employees also wanted their managerstobepoliteandfriendliertothematwork.
The findings from the study therefore revealed that the main reasons employees leave the organization is due to the bad behaviour of their managers. They were not being paid enough hourly as most of them were on basic pay rate and some less than that. Lack of training before starting to work was also one of the reasons employees leave the organization. There weren't enough career development opportunities given to the employees which would enhance their skills. Since over 75% of the employees were career minded, not enough career opportunities lead to employee turnover. The employees were not encouraged to take their own decisions at work. Majority of the employees mentioned that they were performing the same activities everyday and were not given enough opportunities to learn various other tasksatworkandwerethereforeunhappy.
5.2 Findings and Analysis of the Interviews conducted
The researcher interviewed one manager from each store and in total interviewed 4 managers. The interview was a structured one whereby the same questions were asked to each of the managers. The interviews lasted roughly 30-40mins and the information gathered were analyzed as follows:
The researcher asked each of the managers the number of employees they recruit every year the responses given from each of the managers varied. Many of them said that the numbers depend on how many employees they needed and also on the number of employees that left the organization. They however, refused to give out the statistical data which could have helped the researcher to prove this. The researcher asked the managers how many employees leave the organization and the answers given by each of the managers averaged out to 30-40% of the employees. However, from the information gathered through questionnaire the researcher had found that only 36.5% of the employees were working for over a year which meant that 63.5% was the likely turnover rate. This showed that the managers were biased in their answers. The managers were asked what they do in order to motivate their employees. The managers said that they do employee performance appraisals (refer 3.13) quarterly in order to motivate the crew members. They also mentioned that they motivate their employees by word of mouth telling them how good a job they did today and would thank them for their hard work. The researcher also found that the managers would sometimes back their employees in order to motivate them perform better. E.g. when the store gets busy with a lot of customers walking in, the manager would back up their crew member working at the front counter in order to support the employee to take order quickly and more accurately. The managers mentioned that they would throw a competition amongst the crew members in order to motivate them. They would give them some gift voucher or a small cash payment to those who would sell the maximum number of apple pies or happy meals etc... This way the employees feel motivated and the team performance improves as more sales would be generated. Couple of managers said that they organize a party once in every 6 months and the others said once in every 3 months for the employees. This sort of get together bringstheteamtogetherandalsohelpsmotivatethemtoworkbetter.
The researcher asked the managers the various retention (refer 3.8) strategies adopted by McDonald's towards the employees. They said that McDonald's gives them free private health care benefits after they have exceeded 3 years of service. McDonald's also gives them performance related bonuses. Managers said that McDonald's give employee's discounts on various attractions in UK such as Alton Towers and Thorpe Park. McDonald's also gives discounts to employees on many short breaks and holidays. Couple of managers mentioned that in order to retain employees McDonald's provides the employees with externally recognized qualifications that can be achieved via online learning platforms. McDonald's also assigns e-tutors in order to assist those employees who are willing to learn various programs. The researcher found out from the managers that McDonald's is very flexible when it comes to shifts, days and hours of work for their employees. The employees can change their shifts and hours if they want to by consulting the managers. This works out really well as most of the employees are students and also for those who have families. This is one of the ways McDonald's retainstheiremployees. This helped answer the second research objective (refer1.3)oftheresearcher.
The researcher in the interview also asked the managers what were the challenges they faced due to employee turnover. All the 4 managers gave a common answer and i.e. when an experienced staff left the organization they had to sometimes cover up for the loss and work with the crew members in order to achieve the targets and also the customer service as any complaints would lead to customer dissatisfaction. One manager gave an example saying that if an experienced crew member working in the kitchen would leave the organization it affected the quality of the food made like the Burgers, chips etc... thereby getting complaints from the customers. Couple of managers said that their store gets inspected by the Gap Busters who are basically secret shoppers paid by McDonald's and their job is to make sure that the food given to the customers is fresh, the lobby area and toilets are clean and the customer is served quickly and accurately. It is a challenge for them to make sure everything in the store runs properly. They mentioned that therefore when there is high turnover especially in experienced staff, it becomes difficult for them to maintain high level of customer satisfaction. The researcher also found out from the managers that when there is high employee turnover and the store has to recruit new staff, the biggest challenge they face is to train those new employees and sometimes they are so busy that they don't get enough time to train them properly. This helped answer the thirdresearchobjective(refer1.3)oftheresearcher.
5.3 Conclusion of the Analysis
The researcher after analyzing the data both from the questionnaire and the interview, found that there were few areas wherein both employee and the manager agreed to and some other areas were contradicting. The questionnaire results showed that the majority of the employees mentioned that their work pattern was flexible and were happy about it and also the managers when they spoke mentioned that McDonald's retains their employees by being flexible towards their work hours. The researcher had asked the managers how they motivate their employees and they said by telling them how good a job they did and the same was told by the employees when the researcher asked them whether their service was recognized by their managers. The researcher found that manager's mentioned the turnover was on an average 30-40% however the findings from the questionnaire handed over by the employees revealed that the turnover was around 60%. This contradicted and proved that the managers were not really true about some of their answers given to the researcher. The managers were asked how they motivated their employees and they said that they would do quarterly appraisals of their employees in order to motivate them. However, the employees said that the managers would sometimes do their appraisals once in a year. These findings proved that either the manager's were lying or probably the employees didn't answer to the questions seriously. This posed difficulty on the part of the researcher to bring out the true picture and draw properconclusionsfromthefindings.
6.1 Researchers Recommendations to the organization (McDonalds)
McDonalds as an organization is well known brand all over the world. Making new improvements that would satisfy the employees would not be too much of a problem. However, the recommendations given by the researcher may or may not be implemented by McDonald's. These recommendationsareasfollows:
- The organization should have a strict recruitment process as it would result in having the right person for the job and would help reduce employee turnover. McDonald's should come out with Graduate Retention Schemes throughout their stores since most of their employees are students. These employees after completing their coursework will be looking for better job opportunities. A graduate retention scheme will help in retaining those employees who have performed well and are valuable assets to the company.
- McDonald's should hire more non-student workers as they are the one's who would stay longer in the company as compared to the students. Most students in McDonalds once they graduate look for jobs in their area of study andthereforeleavethecompany.
- McDonald's should give a pay increase to their crew members every six months depending on their performance. This will motivate the employees to stay longer in the company. McDonalds has a company policy with regards to salary for their staff. McDonald's pays crew members between the age group of 16-18 years around £4.35/hr and those between the age group of 18-21 years £4.80/hr which is below the basic pay rate in UK. They pay basic salary of £5.75 only to those employees who are atleast 22years of age and above. According to the researcher each and every employee between the age group of 16-21 years should get that minimum wage rate as all of them do the same amount of work and those who are over 22years of age should get minimum £6.50/hr which would be competitive. Company like Pret A Manger pays their employees a starting salary of £7/hr and some with experience get £8 an hour and more for a job role which is similar to McDonald's crew members. The researcher thinks that by making this change it will help reduce turnover andimproveretention.
- While interviewing the manager's the researcher found out that the employees who work in the overnight shift were being paid £0.50/hr extra only between 12am to 6am. This increase for the overnight shift is too little as working overnight can be very stressful and is also unhealthy for the employees. The researcher recommends that McDonald's should pay atleast £7.00-£8.00/hr to those who work for the overnight shift.
- McDonald's should give their employees more storage facility for their belongings as some of them recommended that to the researcher. Some of the employees mentioned that the lockers given to them were not safe enough as on some instances their valuables were lost or damaged. Also, the lockers were too small, not enough to store all their personal belongings.
- The company should have a more thorough recruitment procedure so that they can have the best candidates for the job. Candidates who have a decent work experience in a similar role or someone who has the right attitude should be recruited. Most of the employees said that the recruitment procedure was too easy and this needs to be worked on by McDonalds. The company should have a proper Grievance Procedure (refer 3.18) wherein employees who are unhappy about their managers, colleagues, etc... could communicate their grievances through a set procedure. This should be clearly mentioned to the employees so that they are aware of this option. It would give the employees some sort of assurance that their grievances will be heard by the management and some action would be undertaken.
- The researcher would recommend McDonald's to consult a market research company and ask them to conduct an annual research on their stores in order to find out if there are any internal problems between the management and the employees. If any problems are found McDonald's could act immediately in order to resolve the issues before they escalate any further.
6.2 Researchers Recommendations for the Managers
- The managers should motivate the employees more; this can be done by rewarding them for their good performance. The organization can give bonuses or incentives to those employees who manage to sell over £10,000 worthofburgers.Those employees who are working hard must be rewarded frequently by their managers. Their hard work should be recognized, this will make them feel important and part of a team, thereby motivating them to perform better and better. E.g. a crew member working at the till sells 20 chocolate muffins during the shift which is hard to achieve can be recognized for this achievement by putting it up on the notice board in the staff room for other'storead.
- The managers should do a performance appraisal of their employees more frequently, e.g. quarterly or even monthly if needed. This will give some valuable feedback to the employees and they would know how well they have performed so far and what is expected from them. A regular feedback likethiswillhelpreducestaffturnover.
- The managers should give some authority and more responsibility to those who have worked for more than six months as this will motivate them and will make them feel that they are being trusted. By giving more authority and responsibility the managers will come to know which of the crew members are using this chance given to them to the fullest and who has the potential of becomingamanagerinthefuture.
- There are several departments that a crew member can work at e.g. the front counter, the kitchen and the lobby area. The managers should train the employee in each area and monitor their performance closely. Training is essential in order to keep the employees motivated, it develops the skills and knowledge they possess which enables them to perform well in their roles. By doing this the managers will be able to judge as to in which area the employee is most productive and then place them permanently in that area of work. This would also result in more efficiency and profitability for that particular store. This will also help retain the employee as he/she will be happy to work forthatparticulardepartment.
- The managers should frequently communicate with their employees as this will give them valuable information. By talking to the employees the managers would know whether their employees are satisfied or dissatisfied with their jobs. The managers can also get some innovative ideas from their employees on work which could quicken the customer service, thereby increasing the sales from the food.
- The managers should consult with their employees before making their Rota for the week as many employees were unhappy with their work patterns and some were working more than 10hrs a day. Managers should ask the employees which days and what shifts suits them before they prepare the weekly schedule for them.
- There are several McDonald's stores in London that are open 24hrs a day and some open 24hrs during weekends. This means that many employees have to start their shifts as early as 5am. Managers should make sure that they choose only those employees who live nearby to work for the early morning shifts. Care should be taken that those working late evenings are not scheduled for the early mornings next day.
- It should be made compulsory for the managers to conduct Exit interviews (refer 3.17) of those employees leaving the organization. This will give them a lot of information as to why the employees leave the organization. Such information could benefit the managers in retaining the current employees thereby reducing the turnover rate among them.
In this research, the researcher wanted to find out the main reasons of high employee turnover, the various retention strategies adopted by McDonald's and also the various challenges faced by the managers due to high employee turnover. In order to find out the answers to these objectives the researcher chose 4 McDonalds store in London. The employees working at these stores were given Questionnaires and they were asked to answer them. The researcher also conducted interviews by choosing one manager from each store in order to find answers to the research objectives. It took couple of weeks for the researcher to gather the data from the questionnaires and the interviews. Once the data was collected the researcher analyzed the data and found valuable information which helped answer the research objectives. The researcher found out that the employees at McDonalds were not happy with the way managers behaved with them, less pay as compared to the amount of work done and lack of training facility were the main reasons why employees leave McDonald's. The researcher also found that most employees working for McDonald's were students and most of them worked part-time. What attracted them to work for McDonald's was the flexibility in the work pattern. They could choose which days they would want to work and how many hours they want to work each week. In order to meet their monthly expenses, this was the best job they could have. However, they were not really ambitious about working for McDonald's in the long run. The researcher also found out by interviewing the managers the various challenges they face due to high employee turnover and how McDonalds tries to retain their employees. After studying the feedback from employees through questionnaire and interviewing the managers, the researcher gave out some recommendations to McDonald's and also to the managers. In order to implement these recommendations successfully, McDonald's would have to make some investment and therefore the researcher felt that it was entirely at the discretion of McDonald's whether to take on board these recommendations. Even after having got the answers to the research objectives, the researcher is aware of the limitations of the information provided by the managers and the employees. These may or may not be true as the managers while interviewing would have been biased on their comments in order to hide the true picture. Also, the employees may have given positive answers in order to show that they were happy working for McDonald's. Therefore, the researcher felt that it would be in appropriate to draw firm conclusions about McDonald's in UK by just studying 4 stores in London. The researcher felt that if the same research was conducted in Manchester or Glasgow the study would have given a different output as the way managers behave in London would be different to those in Manchester or Glasgow. In the UK different regions have different cultures and therefore, every region would have their own methodology of running a business. The management and employee relations may not be the same everywhere. In order to measure the impact of employee turnover in McDonald's, the researcher would like to carry out similar study on other organizations like Pret A Manger, Costa, Subway etc... and then compare their results with McDonald's to conclude. However, after conducting this study, the researcher gained some valuable information about McDonald's as an organization.