Business Report: Analysing HR Issues and Challenges at McDonald's

This business report delves into the human resource challenges faced by McDonald's, a leading fast-food chain. The report, divided into two parts, first identifies key HR issues such as employee compensation problems, overtime abuse, and their impact on operational quality and employee morale. It then explores the responsibilities of the HRM function in addressing these challenges, emphasizing the importance of motivation theories like Maslow's Hierarchy and Herzberg's Two-Factor Theory to improve employee satisfaction and productivity. Part B compares McDonald's with Subway, analyzing their respective HR practices, particularly in relation to employee compensation and turnover rates. The report suggests the application of HR theories and models to address these issues, aiming to enhance employee motivation and overall organizational success. This report is available on Desklib.

Business Focus Report

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
HR Issues or Challenges in McDonald’s................................................................................3
Responsibility of HRM Function in resolving the issues and challenges..............................4
PART B............................................................................................................................................6
Benchmark McDonald’s with other Organisation by undertaking research which links both
HR Theory..............................................................................................................................6
Research and Findings............................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Human resource are the people having skills and knowledge of specific field and make up
the workforce of Company, Industry, business sector or economy. Generally in Organisation a
human resource department is created to manage its human resource known as Employees. The
Human resource department helps in increasing the employee productivity and protecting the
business from any problem which may arise within Workforce. They play various roles and
responsibilities including interviewing, organising employee files, compliance with labour law
and employment standards, and administration of staff member benefits (Alzola, 2018). The
Functions of HR are recruitment & selection, performance management, learning &
development, succession planning, compensation & benefits, human resource information
systems and HR data & analytics. Human resource management also faces many issues and
problem in Organisation which they have to solve for running the business activities smoothly.
The issues can be finding the right talent, software issues, get employees engaged with benefit
package, deal with difficult employees and deal with bad boss (Doll, 2018). This is a business
report which is divided into two parts Part A and Part B. The Part A consist the organisation with
contemporary issues and challenges is identified and the responsibility of HRM functions is
explained in solving the issues and challenges. Part B includes the comparison of two companies
by undertaking research which links both HR theory and models. As, McDonald’s is facing a HR
issues in their Organisation so, this report explain the issues and challenges which is faced by
McDonald’s.
PART A
HR Issues or Challenges in McDonald’s
McDonald’s is one of the leading fast food chains in the World which was founded in 1940
by Richard and Maurice Donald. They opened their first outlet in San Bernardino. The Company
mainly operate their business through the franchise Model by providing licensing of its brand to
the franchises. McDonald’s target multiple customers segments including business executives,
children, youth and families. In McDonald’s Human resource department plays an important role
as company directly interact with people and provide food and services to them. The
Organisation puts a lot of their emphasis on recruiting, proper handling and training of
employees. As, McDonald’s is a restaurant business their operational and strategic concern is

related to human resource management (Hamdoun, Jabbour and Othman, 2018). The Staff
Members of McDonald’s are categorised into three groups which is corporate staff, franchise
workers and restaurant workers. Corporate staff and restaurant workers are directly trained,
recruited and paid by Company but franchise workers are hired by franchises, even though
McDonald’s provide required training to them. The Organisation is facing a major HR issue and
challenges which is related to Employee Compensation and overtime abuse. In HRM functions,
McDonald’s is facing a challenge in employee motivation and change management.
For motivating employees, compensation plays an important role as money is the primary
tool for the happiness of Staff members. The low compensation can reduce the performance and
productivity of workers which can create an impact on the Organisation. The Low wages create a
problem for McDonald’s, staff member of Company is dissatisfied with the compensation and
also employee turnover rate is increasing. This issue creates a problem for McDonald’s and
creates an impact on its operational quality and even company is facing a challenge of disruption
in the efficiency of Operations (Heavin and Power, 2018). The Organisation relies on the cheaper
items which they offer to customers they think that this strategy will help in increasing growth
and dominancy in Industry. The items which are highly popular keep its consumers returning to
the Outlet. The Company keep their price low and pay wage rates which are on par or higher
then stipulated hour. Due to the problem of lower wage rate, workers are going to file a suit
against the Company. In law suit staff members filed that organisation is underpaying and
resorting to various wage rate practices. The employees filed lawsuits alleging that McDonald’s
was conducting various wage theft practices such as asking them to purchase the company’s
uniform with their own money, forcing workers to clock out but continue working and asking
them to wait for the people to increase before they can clock in. The number of employees who
make filed the lawsuit is less due to which it become impossible to raise the voice as for taking
the action employees required thousands of people to join the legal action (Khodzhaevich,
Davlyatovich and Yuldashevich, 2019).
Responsibility of HRM Function in resolving the issues and challenges
Human Resource management plays various roles and responsibility in Organisation, they
participate in planning and development, helps employees in career assistance, serves as a leader
of change, advocate for workers, provide support for domestic violence victims and ensure that
no cyber bullying at workplace. As the problem of McDonald’s are related to the overtime abuse

and employee compensation, it creates a huge impact on operational standards, service quality
and employee morale. The reputation of Company also decreases as people will not prefer
products of organisation which don’t have ethical practices towards its workers and Society. The
Human resource department must solve these issues so that McDonald’s reputation remains
strong in Market (Mcllvaine, 2019). They should look out the criticism which is raised by
workers and try to solve it, as the performance of staff members determines the success of
Organisation. The Human resource management has a responsibility to solve the issues and
challenges which they are facing due to employee compensation and overtime abuse. Staff
members get motivated when they get highly paid according to their skills and workload
(Latukha, Lisina and Panibratov, 2019). So, it is important to motivate the workers, there are
various theories of motivation which deals with motivation level of employees. To motivate their
workers McDonald’s can use these theories as it helps in encouraging and motivating so that
employees can give their best outcomes in achieving goals and objectives of Company.
The Motivation theories which McDonald’s can use are Maslow’s Hierarchy Theory,
Herzberg’s two factor theory, Vroom’s expectancy theory and many other theories which firm
can use to increase motivation among workers. The Human resource manager must develop a
better compensation structure for their staff member so that they can give their productive
outcomes to Company. The best way through which McDonald’s can satisfied their employees is
to come up with an attractive wage structure that pays workers a good mark up over the
minimum wages. So, it is important to solve out the issues and problems of employees as it
creates a negative impact on the Company. McDonald’s also face a problem of Overtime Abuse
even though they don’t operate most of the outlets, the problem is raised by its franchise
partners, it creates an impact on its performance and reputation. Human resource management
must look out to solve this issue and find the ways to prevent from overtime abuse. The
Company must frame policies and put a condition to its franchises related to overtime practices.
The employees working hour must be monitored and noted as it helps to put a stop to the
overtime related abuses. The Organisation must install and implement the new system in which
where workers can check in and check out, it will be monitored by Human resource department
of McDonald’s. With the help of this unique monitoring system, company can make its
franchises to prevent from resorting to overtime abuses. When McDonald’s control on employee

abuse, they can increase the motivation level of employees, satisfaction of consumers and
reputation of the Organisation.
PART B
Benchmark McDonald’s with other Organisation by undertaking research which links both HR
Theory
Subway is the American fast food restaurant that sells salads, personal pizzas and
submarine sandwiches. To improve the customer experience company offer topping choices by
allowing people to choose which topping they want on their meal. Subway is one of the fastest
growing franchises in the World (Taylor, 2018). The Organisation is founded in August, 1965 at
Bridgeport, Connecticut, US. Subway focuses on its product quality which they are offering too
customers which increases the reputation of the Company. As, people prefer products of Firm
which gives best quality product with affordable price (Macke and Genari, 2019). The
advertisement of Subway says that they can help in reducing the weight of people and get
healthier food. The Sandwiches of company is unique and fresh which attracts more and more
customers towards the outlet. The Organisation uses the concept of Expectancy theory in their
Human resource management practices, as this theory tells about the law in the process of
external goals driving people. The theory was founded in 1930’s by two psychologist, they both
experiment of human and animals. By conducting the experiment they get to know that human
beings and animals have a purpose, they both expect fancy things and avoid the unpleasant
things (Turker, 2018). Subway also faces many Human resource issue and challenges from
which they deal every day.
The human resource department of Organisation must solve the conflicts and issues of
employees as it create a great impact on the brand image and value. The Company is dealing
with growing pain from past years, the sale of firm also gets reduced and even they are facing
public relation issue with legal troubles. Subway has closed its several outlets from the past few
years. Due to which they are paying their employees low compensation which increases the
turnover rate of workers. The Organisation is dedicated towards managing their performance in
Market (Sowa, 2020). For managing the performance of Company, human resource management
plays an important role and select the candidate who can contribute their best in achieving its
goals and objectives.

McDonald’s and Subway both are competitors of each other, they faces issues and
challenges related to human resource practices. The brands are reputed in Market so they both
have to take measures to solve the problems of employees in Organisation so that they can
remain successful in Market. Subway and McDonald’s is facing problem of employee
compensation and high turnover rate (Peters, 2018). For overcoming this problem both the
companies must implement HR theories and models through which they can solve the issues of
workers. The Organisations can use theories of motivation which helps in motivating people so
that they can contribute their best in achieving target. The Companies can use Maslow needs
Hierarchy They, Herzberg two factor theories and McClelland’s achievement theory of
Motivation. The Maslow’s needs of hierarchy theory consists five pyramids which includes
physiological needs, safety needs, social needs, esteem needs and self actualisation needs.
For motivating employees, firms must fulfil and satisfy these needs of employees so that
they can work comfortably and with proper dedication. Maslow’s theory is useful for both
employee’s development and workplace growth. The Starbucks and McDonald’s must identify
the needs of workers and find what will motivate them and create a strong relationship with staff
members and develop positive environment in Workplace. The Herzberg two factor theory states
there are two factors that help in maintain the standard of living of employees they are
motivating factors and hygiene factors. The theory emphasise on motivation which comes from
employees within themselves rather than identifying the external factors which can motivate
workers. McClelland’s achievement theory of motivation recognised three needs which can
motivate employees. The three needs are need for achievement, need for power and need for
affiliation. The theory helps in satisfying the employees so that they can remain in the company
for long run (Mayrhofer, Brewster and Farndale, 2018). According to this theory the employees
are given tasks according to their needs which help in motivating them. The Companies must
apply this theory as it helps in identifying needs of the workers first and then allotting them job
role according to their needs through which they get motivated.
Research and Findings
From the above information it is being found that for making business successful and
gaining competitive advantage in Market it is important to handle the employee’s issue and
problem, so that company can smoothly run their business activities. The human resource
management plays vital role in solving issues and problems of employees. They are responsible

to handle the problems of workers so that organisation can achieve its target and goals. It is
necessary to deal with the employees by understanding their problem and listened their opinions
and thoughts. The human resource manager doesn’t neglect or ignore the issues of workers as
create an impact on the performance and productivity of Firm and Staff member. When Human
resource management don’t listen the issues of workers they can also file a lawsuit against the
Enterprise which affects its reputation. The Human resource department must create a policies
and procedures that attract workers and motivate them so that they can give their productive
output to Organisation. It is the responsibility of human resource management to make their
employees feel happy and motivated with their work which helps in accomplishing the goals and
objectives of Company. The staff members can also get motivated when they get reward and
achievement for their performance and efforts for accomplishing the task. A positive
communication must be created between employer and employee so that they can share their
opinion and thoughts which matter most for the Organisation. It is necessary to make staff
members feel that firm cares about their future and provide them a right career path through
which they get successful in their life.
CONCLUSION
From the above information it is being concluded that for running the business efficiently
and effectively it is important to fulfil the needs and requirements of employees as if they are
satisfied, the company can succeed in Market and can gain competitive advantage from its
competitors. The responsibility of Organisation is to make their workers happy with their work
which can increase the performance and productivity of Staff and Firm. To motivate workers,
the firm must create a friendly working environment through which they can share their
problems and issues easily. The Organisation must know what are the needs and requirements of
their staff members and work on fulfilling it. It is the responsibility of Firm to make their
employees feel valuable and important part of Business so that they can also contribute their best
efforts in making business successful.

REFERENCES
Books and Journals
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Doll, J. L., 2018. Structured interviews: Developing interviewing skills in human resource
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decision support guide for managers. Journal of Decision Systems, 27(sup1), pp.38-45.
Khodzhaevich, A. K., Davlyatovich, K. S. and Yuldashevich, M. A., 2019. The role of the
international labor organization in the human resource management system. International
Journal of Innovative Technology and Exploring Engineering. 8(9). pp.169-175.
Latukha, M., Lisina, P. and Panibratov, Y., 2019. Developing sustainable competitive advantage
of a firm through human resource management practices: A competence-based
approach. Global Business and Economics Review.. 21(1). pp.96-119.
Macke, J. and Genari, D., 2019. Systematic literature review on sustainable human resource
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Mayrhofer, W., Brewster, C. and Farndale, E., 2018. Future avenues for comparative human
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Management. Edward Elgar Publishing.
Peters, B. G., 2018. Policy problems and policy design. Edward Elgar Publishing.
Sowa, J. E., 2020. Reinvigorating the spirit of strategic human resource management.
Turker, D., 2018. Social Responsibility and Human Resource Management. In Managing Social
Responsibility (pp. 131-144). Springer, Cham.
Online:
Taylor, K., 2018, 'Subway is dying' [Online] available through:
<businessinsider.in/finance/subway-is-dying-the-biggest-chain-in-the-world-is-being-
torn-apart-by-internal-battles-and-some-franchisees-say-there-needs-to-be-a-new-ceo/
articleshow/62572898.cms>
Mcllvaine, A., 2018, Why HR is at the Heart of McDonald’s New Golden Age [Online]
available through: < https://hrexecutive.com/why-hr-is-at-the-heart-of-mcdonalds-new-
golden-age/ >