Strategic HRM: Comparing KFC and Burger King's Performance

This report provides a comparative analysis of the strategic human resource management (HRM) practices of KFC and Burger King. It delves into their respective people management philosophies, examining how each company motivates employees and manages customer relationships. The report explores the HR strategies employed by both organizations, including recruitment, selection, training, and performance appraisal. Furthermore, it evaluates the impact of these HRM approaches on the overall organizational performance of KFC and Burger King, considering factors such as price-earnings ratios, revenue per employee, and profit per employee. The analysis highlights the significance of HRM in driving business success within the fast-food industry, with specific examples like expatriate policies and generic competitive strategies. The report concludes by summarizing the key findings and offering insights into the effectiveness of each company's HRM strategies.

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Contents
Introduction................................................................................................................................1
KFC............................................................................................................................................1
People management philosophies..............................................................................................1
Strategies....................................................................................................................................2
Burger King................................................................................................................................3
People management philosophies..............................................................................................3
Strategies....................................................................................................................................4
Organisation’s performance.......................................................................................................5
P: E Ratios..............................................................................................................................5
Revenue per employee...........................................................................................................6
Profit per employee................................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8
Bibliography.............................................................................................................................10

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Introduction
In this report, KFC and Burger King are selected to compare overall contribution of people
resource for organisation’s performance and success. KFC is an American fast food
restaurant chain which is specialised in fried chicken. It is a subsidiary company of Yum!
Brands (KFC, 2018). It was founded in 1930 by Harland Sanders. Burger King represents one
of the largest food chains of world. The annual revenue of company is more than $2 billion.
The company has over 12,000 restaurants which cover 50 states and 73 different countries.
The people 21management philosophies and strategies of both organisations have been
discussed. Further the performances of organisations have been calculated and commented in
terms of price earnings ratio, revenue per employee and profit per employee.
KFC
Until 1991, KFC was known as Kentucky Fried Chicken. As per KFC, 2018 there are over
20, 500 outlets in more than 125 countries around the world (KFC, 2018). Wang and Cai
(2017) agrees that the largest unit of company is in China which comprises more than 1,600
restaurants. The internalisation of people resource management at KFC has improved scope
of traditional HRM. It can be identified as the application of individuals to attain
organisational objectives. One of the significant functions of HRM system is staffing. The
organisation should have the appropriate number of employees with suitable expertise to do
definite job at certain time. There are various important features such as planning,
recruitment, selection and training. These features should be met to ensure companies are
always productive. Every position should be analysed before posting it’s skills. KFC is
productive only because the hired persons have a specific job description. The HRM is a part
of firm’s internal environment. The internal environment is the factor which affects human
resources and is inside boundaries of a firm (Sheehan, 2014). HR is very important when it
comes to hiring. The company reviews human resource requirement to ensure number of
employees required because failure may result in lack of employees required for proper skills
(Wang & Cai, 2017).
People management philosophies
Understanding customer relationships:

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The consumer philosophy of KFC focuses on the way customers relate to company. It
includes transactional, relationship and mixed marketing philosophies. The transactional
marketing includes the expensive purchases which are made by customers rarely. The
relationship marketing concentrates on less expensive and regular purchased items. It
considers merchandise cost, employee performance and terms between customers and
company. KFC makes use of more relationship marketing (Jackson, Schuler & Jiang, 2014).
Motivating employees:
The motivational philosophies concentrate on the approaches to inspire employees to
improve their performance. It does not concentrate on improving personal accountability for
their work and work towards the whole success of their companies. This philosophy seeks to
develop work environment which sponsors strong employee driven morals. According to the
goal work philosophy of KFC employees are given high standards and knowledge to reach
these goals (Jackson, Schuler & Jiang, 2014). The employees can improve their performance
and can work to achieve goals.
The steps of HR planning process
Recruitment: The recruitment of KFC is made on the request of store manager. The manger
report a request of needs and HR department plans for new recruitment such as internal
recruitment, advertisement, newspapers and more.
Selection: After approval of recruitment plan by Head of Department, it goes through a
selection process. All the CVs are selected on the basis of requirement. The skill, level of
knowledge and background is matched with the requirement.
Competent employees: The competent employees pass first two steps. These are the
employees who can do the job based on what they already experience.
Orientation: In this step employees are introduced to the company. It is a short course of
internal understanding. It is where the company makes sure that new comers know who they
are working with and what is the environment.

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Training: In the training step the company offers three step training to employees. The
training is based on different level and department of employees. It can be technical skill,
interpersonal skill and problem solving.
Performance appraisal: The performance of each individual is evaluated after some period of
working. It is to evaluate work performance of each individual in order to achieve objective
personnel decisions. The performance methods are written essays, multi person comparisons,
graphic rating scales and more.
Career development: Earlier organisations used to develop careers now days individuals
develop careers.
Compensation and benefits: It is a system developed to change nature of work or workplace
in order to make people interested and motivated. The compensation benefits include basic
wages, wages or salary add-ons, incentive, benefits and service.
Strategies
Expatriate policy of KFC
KFC employs this policy in order to establish restaurants which can be suitable to the culture
of any country. The familiarity of company with culture is an advantage which helps to
penetrate country. Briscoe and Schuler (2004) believe that KFC employed first generation
Chinese American to return to China to launch Chicken restaurants. The employees at KFC
undertake several trainings at different stages before getting promotion. The general
managers employed should have attained proper training and experience from the company.
Vahid (2007) agrees that franchise is popular strategy used for the growth of business sector.
The franchise companies have to undertake courses at Yum as per agreement. The migrants
and colonists have the opportunity to unite with the culture of KFC and their own culture to
suit the taste of clients (Vahid, 2007).
Training and orientation of company
KFC focuses on training and learning of it’s staffs and managers in 30,000 restaurants
worldwide. KFC has advanced extensive training programs for all the front line people. The
management trainings provided by company deals with the issues such as sexual harassment,
hiring practices and conflict resolution (Tracey, 2014).The company focuses on the notion

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that people need to delight with respect. The same training is provided to mangers and are
required to attend meetings held at Louisville. Sikora and Ferris (2014) believe that front line
mangers take responsibility to provide training to employees by using training manuals and
product guides (Sikora & Ferris, 2014).
Benefits the company derived
The company has developed a support culture to train and motivate general managers with
substantial reward programs to motivate them to lead team in different branches across
nations. The company supports franchise manger from advertising to training of employees.
It leads to success career with the company. The diversification of company has enhanced the
scope of traditional HRM. The HR specialists not only manage people of home country but
also manage people of other countries. It includes the staff and workforces within that
country. The HRM might have problem when they have the best local staff but they do not
sufficient awareness of foreign culture. The output is also affected when the human
management is not compatible (Sutha & Chitra, 2016).
Burger King
Burger King is specialised in offering sandwich, chicken tenders, fries, salads, breakfast
items and desserts. The first Burger King was established in 1954 in Miami. 90% of it’s
restaurants are independent franchises. The philosophy of Burger King is to choose the food
and it innovates. The goal of the company is to individualize customer’s order and provide
the fastest service (Kramar, 2014).
People management philosophies
The people management philosophies forms business, goals and oversee all parts of
company. The philosophies direct each feature of business.
Working towards maximum efficiency
This tactic of Burger King focuses on how it’s business should be organised, division of
labour between management and employees. The organisational philosophy focuses on how
work of business should be allocated to ensure maximum efficiency. It also specifies a clear
chain of accountability. For instance, the bureaucratic management style divides

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responsibility between managers and employees who work as subordinates under mangers
(Banfield, Kay & Royles, 2018).
Managing crisis
Burger King uses crisis management philosophy only when something goes wrong in the
company. It focuses on identifying potential dangers and planning for dangers. It also focuses
on responding dangers with a clear goal once it occurs. Cheung and Leung (2016) argues that
the organisation cannot enclose any unfavorable information. A careful assessment is done
by evaluating and suggesting methods for reducing impact of dangers in future (Cheung &
Leung, 2016). The company also provides crisis reaction strategies to response immediate
dangers once it is arisen. The crisis management allows a quick and effective response to
major issues and challenges (Brewster, Mayrhofer & Morley, 2016)
Strategies
The strategies to assess and compare overall contribution in organisation’s performance and
success are:
Generic and Intensive growth strategies
Burger King is one of the leading fast food restaurant chains. It applies generic strategy for
competitive advantage to link effectiveness with world. The intensive growth strategies has
major role in the global growth of firm. An appropriate arrangement and execution of generic
and intensive strategies can lead to substantial competitive advantage and growth. The
company’s generic strategy supports it’s competitive advantage which is based on cost, rating
and product features. The main aim of intensive growth strategies is to increase market share
(Sparrow & Otaye-Ebede, 2017).
Generic competitive strategy (Porter’s model)
The company uses two generic competitive advantages, cost leadership and broad
differentiation. Burger King’s general competitive advantage is cost leadership. It includes
reducing costs which leads to low prices. The company applies cost leadership through
standardization of process. It minimizes cost based on the economy of scale (Koutroumanis,
Alexakis & Dastoor, 2015). The financial objective is to reduce operating costs so that
products of the company can be offered at low prices.

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The company uses broad differentiation strategy as second general strategy for gaining
competitive advantage. It is based on Porter’s model and entails creating unique
characteristics to differentiate the business from competitive firms. The company make use of
generic competitive advantage by grilling of burger patties (Purce, 2014). The previous
slogan of company “Have it your way” and slogan at present “Be your way” represents
company’s differentiation by offering flexible option to customers. The option of free drink
refills is also accessible in many restaurants of Burger King. The strategic objective of the
company is to make use of differentiation for attracting customers in new markets. The
company especially makes use of it’s competitive strategy in the markets where major
competitors are already well-known.
Intensive growth strategies
Market penetration: The prime intensive growth of company is market penetration. The aim
of the strategy is to increase revenue from current customers where the company is already
operating. For instance, Burger King executes intensive growth strategy by establishing new
restaurants in current markets to increase it’s market share. According to Sparrow, Brewster
& Chung, 2016 Intensive growth strategies makes shift in global sourcing. The objective
behind this strategy is to expand franchise network of company (Reiche, Stahl, Mendenhall &
Oddou, 2016). The generic strategy of company also supports intensive strategy by
highlighting unique product features for making entry in market and expanding business.
Market development: It is secondary intensive growth strategy. To support growth of
business market development strategy involves making entry in new markets or aiming new
market sectors. For instance, Burger King uses this strategy by initiating new stores in foreign
countries where the company is not operating before (Lee, Hallak & Sardeshmukh, 2016).
This strategy has minor role because the company is already operating in markets around the
world. The objective of company is to grow by attracting new customers in new markets by
availing cheap prices. Thus the objective of this strategy stresses on low prices in the
marketing strategy of company. It can be supported through the cost leadership generic
strategy (Fey, Nayak, Wu & Zhou, 2016).
Product development: It is the least important intensive growth strategy of Burger King. This
strategy assists company to grow by launching new products. The company makes least use
of this strategy. For instance, Burger King launches products at low prices. Most of the
products of company remain on the menu for years. Edmondson and Harvey( 2017) believes

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that strategic objective behind this strategy is to grow business of company through product
innovation (Edmondson & Harvey, 2017). This strategy supports generic strategy of broad
differentiation by emphasising new products which are unique in comparison to competitive
firms.
Organisation’s performance
The performance of both organisations KFC and Burgers King can be evaluated by using
price earnings ratio, revenue per employee and profit per employee.
(Data Source: Yahoo finance, 2017)
P: E Ratios
Price earnings ratio is used for the evaluation measure of stock. It can be calculated by
dividing last sale price by average EPS (Earnings per Share). It can be viewed as number of
years taken by the company to get back the price paid for stock. It shows current investor
demand for shares of company. The P: E ratio is calculated by net income. It is complex to
non- repetitive earnings and capital structure. Investors may use price earnings ratio to
estimate profits. The P: E ratio is an indicator of market judgement about relationship
between company’s obligatory rate of return and it’s actual rate of return. A high price
earnings ratio shows increased demand because the analysts expect earnings growth in the
future. The price earnings ratio of KFC in 2017 is 22.15 times which indicates how many
times earnings investors are willing to pay for the share. As per Finance management, 2018
the P/E ratio shows positive future performance of company and investors’ willing is to pay
more for such shares (Finance management, 2018). The price earnings ratio of Burger King is

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22.74 times which is more than price earnings ratio of KFC. It reflects better financial
condition of Burger King. It leads to rise in market price of company. It also defines the
performance and growth of company (Cania, 2014). This ratio is useful in comparing
companies of same industry. Burger King’s P/E ratio is higher and investment of company is
also considered more risky than KFC.
Revenue per employee
Revenue per employee is also called Sales per employee. It evaluates the average revenue
created by each and every employee of company. It can be calculated by dividing revenue of
a firm by total number of it’s workers or employees (Shields, et. al. 2015). Usually the
number of employees keep on changing so average number of employees is used during the
period. It is a measure which reflects how competently a company is utilising it’s employees.
It shows positive sign when revenue per employee is high and find ways to embrace more
revenue out of each worker. A company compare it’s result with other company of same
industry to evaluate revenue per employee. The revenue per employee is affected by
employee turnover rate of company. Revenue per employee is an indicator of productivity of
employees of company. The revenue per employee of KFC in 2017 is $97.97 whereas
revenue per employee of Burger King is $738.08 which is actually very high. It shows better
result of Burger King. The higher revenue of Burger King shows it better.
Profit per employee
Profit per employee is also known as net income per employee. It is calculated by dividing
net income of company by number of it’s employees. This number shows efficiency of
company with it’s employees (Albrecht, Bakker, Gruman, Macey & Saks, 2015). Higher net
income per employee shows better performance of company. The profit per employee is net
income of company. Other than increasing productivity of employees, it can also be increased
by number of other factors such as using advance technology (Stone, Deadrick, Lukaszewski
& Johnson, 2015). The high turnover ratio of company can also decrease profit per employee
of company. It helps in increasing profits in accordance with the number of employees. It
also focuses on creation of value for talented people. Profit per employee of KFC in 2017 is
$22.33 whereas profit per employee of Burgers King is $106.65. The number of employees at
KFC is more that is 60,000 and employees of Burgers King are 6,200 which lead to more
profit per employee of Burgers King. The profit per employee of KFC is calculated by
dividing net profit of company that is 13, 40,000 by number of employees which is 60, 000. It

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brings out $22.33 profits per employee. The profit per employee of Burgers King results in
$106.65 which shows better results than KFC.
Conclusion
In the above report people management philosophies and strategies of both organisations
KFC and Burger King have been compared to assess overall contribution of the people
resource. These are the most admired companies listed in Google. The performance of
organisations has been compared by metrics such as P: E ratios, revenue per employee and
profit per employee. By making comparison of performances it has been evaluated that
Burger King is performing better than KFC. The price earnings ratio of Burger King is 22.74
times which is .59 times more than the P: E ratio of KFC. The revenue per employee of
Burger King is also high which is $738.08. The profit per employee of KFC is significantly
less that is $22.33 whereas profit per employee of Burger King is $106.65. Thus it can be
concluded that the performance of Burger King is far better than KFC in terms of not only
HRM but in terms of P:E ratio, revenue per employee and profit per employee also.

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Digital Age–Cases from Food Safety Disasters. Eurasian Journal of Business and
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Edmondson, A.C. and Harvey, J.F., 2017. Cross-boundary teaming for innovation:
Integrating research on teams and knowledge in organizations. Human Resource
Management Review.
Fey, C.F., Nayak, A.K., Wu, C. and Zhou, A.J., 2016. Internationalization strategies of
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