University of Illinois – Institute Of Labor And Industrial Relations Rich Floersch & Don Crosby April 4, 2008
Agenda n Business Overview/History n Revitalization Program/Plan to Win n HR Plan to Win n Strategic Frameworks n Bringing Frameworks to Life n Q&A 2
The History of Mc. Donald’s 1970 s Standardized Business Model • U. S. Focus • Common Operating Platform and Menu Late 1950 s -1960 s • Ray Kroc buys Mc. Donald’s business • Franchising Opportunities Abound & HU Introduced • IPO 1965 – 13 Stock Splits Since 1966 1955 • Leverage Franchisee Ideas 1970 1960 3
The History of Mc. Donald’s 2002 & 2003 Sweeping Organizational Changes 1990 s Business Environment Changed Mc. Donald’s Stalled • Cover of Business. Week “Hamburger Hell” • Took Our Eyes Off Our Fries • Opened Too Many Restaurants • Staff Reductions • Stock Price Drops to $11 (high $49) • Distracted By Other Brands • CEO Change • Call to Action Plan to Win 1980 s & 1990 s Explosive Growth • International Expansion/ 118 markets • Darling of Wall Street • Creation of Ronald Mc. Donald House 1980 1990 2000 4
Revitalization of Mc. Donald’s n Better, not bigger n More relevant to consumers n Singular focus on customers’ experience and core business – our restaurants n Global business plan to improve alignment and focus …Mc. Donald’s Plan to Win n 5 Ps (People, Product, Place, Promotion and Price) n People and customer experience is central to new strategy 5
Mc. Donald’s Today 2003 -2008 Mc. Donald’s Revitalization • 58 months consecutive comp sales increases • Stock price reaches all-time high of $63 • CEO tragedies • 2007 Marketwatch CEO of the Year • Food and beverage focus 2008 2003 6
People Challenges: 2003 n Relationship-driven = High-performance culture n Rewards programs confusing with little pay for performance n Lack of transparency in performance/development discussions n Little or no formalized leadership development focus or succession planning protocols n Mc. Job label driven by loss in employment value proposition and not “Telling Our Story” 7
Our Roadmap 8
Restaurants n Restaurant people strategy n Strengthened selection system n Unique people programs n Metrics tie people practices to store success n Focus on HU training n Employment value proposition n U. S. People Migration Strategy n Respectful workplace training 9
Total Rewards n Compensation n Pay for performance n Tied to business results - Plan to Win measures n Benefits n High value to employees n Lead industry n Development n Hamburger University n Succession planning n Accelerated development programs 10
Total Compensation n New approach to Compensation n Packaged so employees understand the value of their total compensation n Total Compensation = Pay + Incentives + Retirement Savings + Health and Insurance Benefits + More n Provide benefits, resources and tools to help employees and families lead healthier lives n Creating programs that differentiate us in the industry n Branding total compensation programs 11
Talent Management Culture n One of CEOs top three priorities n Accelerated development programs n Directors (Americas, Europe, Asia Pacific) n VPs and higher (Global) n Succession Planning Template n Formalized reviews n Premium on conversation, not forms n Fortune/Hewitt Recognition: Top Company for Leaders n #14 Globally n #11 North America n #6 China 12
Talent Management Culture Career Tools Ø Complete your internal Profile Ø Prepare for an interview Ø Leadership Position Profiles Development Resources Job Transitions Development Planning Ø Internal development curriculum Ø On-boarding & Assimilation Support Ø 360 Feedback Ø University programs Ø Ops Fast Track Information and Templates Ø IDP Templates Ø Self-study books, articles Ø Job transition support Ø Exec. coaching Accelerated Development Programs 13 Ø IDP Support Ø Development resources aligned w/ competencies
Mc. Donald’s Means Opportunity n 67, 000 managers worldwide started as crew n 1, 200 U. S. Owner/Operators started as crew n 40% of our Top 50 executives started in the restaurants n Life skills training n First Job for Carl Lewis, Jay Leno, Sharon Stone and more! 14
Employment Image n Voice of Mc. Donald’s n Global restaurant employee singing contest n 3, 600 entries from 53 countries n Public online voting n Finalists perform at ’ 08 Worldwide convention n Grand Prize of $25, 000! n Beijing Olympic Champion Crew n More than 100 crew n The best of the best n 30 countries represented n Once-in-a-lifetime experience n Crew work in our restaurants and experience the Olympic games 15
Employment Value Proposition: Telling Our Story n 29 countries received great place to work recognition n 2006/2007 winners include Russia France Singapore Belgium India Puerto Rico Canada U. K. n Latin America Hong Kong Effectively telling our opportunity story n Extensive media coverage — Leadership development — Opportunity — Minority investing — Training 16
Bringing the Frameworks to Life Rich Floersch CHRO Global Talent Management Total Compensation Labor Relations Global Diversity Don Crosby SVP International HR Steve Russell SVP U. S. HR Shaun Ruming VP HR APMEA Cecile Staner VP HR Europe Cesar Martinez VP HR LA Len Jillard VP HR Canada Australian Based in Singapore 33 Markets Belgian Based in London 41 Markets Mexican Based in Oak Brook 22 Markets Canadian Based in Toronto 3 Regions 17
Bringing the Frameworks to Life n Communication Strategies n HR Leadership Team n Major Market Meeting n Global HR Meeting n Webcasts/Best Practice Sharing n Global HR Website n Market visits 18
Bringing the Frameworks to Life n Performance management n Global PDS system n Distribution guideline (20/70/10) n Talent management n Talent Plan Frameworks n Global Leadership Staffing Process n Leadership Development Programs 19
Bringing the Frameworks to Life n Global People Metrics n 90 -day Crew Turnover n Management Stability n Reputation Index n HU Certified Managers n Global Commitment Survey n Consistent across 118 markets n At least 1 x per year n Restaurant and staff 20
Bringing the Frameworks to Life n Employment Experience n Australia - Me. Time n U. K. - Our Lounge n Latin America - Mc. Land n U. S. - Hiring to Win n France - Recruitment Centers 21
Bringing the Frameworks to Life n Rewards n Global Annual Incentive Program design n Competitive positioning policy n Singular executive compensation program (top 200) n Strong recognition programs —President’s Award —Restaurant Manager Award —Circle of Excellence 22
Bringing the Frameworks to Life n Mc. Donald’s Formula n Strategic frameworks developed with AOW input led by centers of expertise ie. talent, rewards, metrics and performance management n Decentralized, empowered environment - scale big ideas n Common unifying values n Partnership with franchisees n Passion for the brand 23
Questions and Answers 24
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