Human Resource Management essay

• Literature Review

1.1 HRM in context

In such a situation, the role of HRM is crucial for the successful marketing performance of companies because today HRM affect the marketing position of companies (Keener, 1999, p.10). On the other hand, the development of HRM depends on the marketing strategy of the company and its organizational culture and structure (Clements, 2008, p.32). Nevertheless, today, companies cannot ignore HRM in their business development.

1.2 Strategic HRM

In actuality, HRM becomes strategically important for contemporary companies (Kotter, 2001, p.117). For instance, training of human resources increases the effectiveness of the organizational performance and improves professional skills of employees (Boxall and Purcell, 2003, p.167). Therefore, companies should incorporate strategic HRM in their marketing strategies.

1.3 High Performance Work System (HPWS) in reference to productivity

The HPWS is crucial for the successful HRM of companies operating today because they need to enhance the performance of employees and HPWS helps them to reach this strategic goal (Minehan, 1997, 168). HPWS allows the company to increase the productivity of employees without increasing the number of employees. However HPWS are often difficult to achieve and companies need to spend substantial resources and time to develop effective HPWS (Schuller, 1992, p. 28).

• Resourcing the Organisation

The employment of new professionals also needs additional training and substantial resources. In such a situation, effective HRM needs the availability of financial resources along with human resources. Many companies face difficulties with the maintenance of the balanced performance because of the shortage of financial or technical resources that they need for training of their employees (Hart, 2004, p.141). However, investments in HR contribute to the consistent improvement of the marketing performance (Wright and McMahan, 1992, p. 225).

1.5 Establishing a Performance Culture

The establishment of a performance culture is also important in terms of the effective HRM and successful marketing development. Any company needs to have a corporate culture, which normally stimulates positive marketing and organizational performance. Today, the performance culture is often crucial for the overall marketing success of the company (Clarke, 2000, p.16). However, many companies face difficulties while adopting their organizational culture to local cultural environment, especially in new markets, where they start operating (Peters, 2007, p. 201).

1.6 Managing the employment relationship

In the contemporary business environment, organizations often face the problem of internal conflicts and poor employees’ performance because of the poor management of employment relationships. Employment relationships are very complicated and companies should come prepared to conflicts between managers and employees or between employees as well as other problems that arise in the course of the employment relationships. In this regard, specialists (Peters, 2007, 164) recommend developing fair and transparent HRM policies which help to prevent the emergence of conflicts and misunderstanding between professionals employed within the organization. However, cases of unethical behavior of companies and conflicts between managers of companies and employees are still frequent (Dyer and Holder, 1998, p.241).

1.7 The Strategic Development Process of International perspectives (IHRM&IHRM Practices)

In actuality, the process of globalization contributes to the closer cooperation between countries and stimulates companies to expand their business internationally. However, the international market expansion raises the problem of the development of effective adaptation of the organizational culture and structure to international perspectives and contexts. Hence, international HRM emerges as one of the strategic directions in the development of HRM of companies operating internationally because they have to adapt their HRM to international environment (Notorantonio, 2006, p.30). On the other hand, such internationalization of business raises the problem of the maintenance of the corporate culture and standards (Minehan, 1998, p. 168).

• Reward Management

However, wherever employees work, they need and expect respective rewards for their work. Hence, the reward management comprises an integral part of the contemporary HRM. The reward management involves not only material rewards but also non-material ones, which often include the stimulation and motivation of employees through psychological stimulation (Schein, 1999, p.206). However, often companies focus on material rewards only, although such strategy can bring benefits in a short-run perspective solely (Henning, 2006, 14).

• Contemporary HRM

In fact, the contemporary HRM has a solid theoretical ground but is closely intertwined with practice. Companies may use different theoretical background, such as Maslow’s hierarchy needs or Ouchi’s management theories. Anyway, they should be able to adapt the theoretical framework to their specific organizational environment and corporate culture (Schein, 1999, 105). In addition, today, organizations operate in the multicultural environment. Moreover, they expand their markets and they have to come prepared in a new cultural environment. In such a way, they can improve their performance and HRM. However, the contemporary business environment is changeable and so is HRM and companies cannot always use theoretical framework effectively (Scott, 2007, p. 79).

• HR Skills

Taking into consideration contemporary requirements to HRM, organizations need to develop specific HR skills. In this regard, flexibility is one of the key skills that HR should have to perform successfully. In addition, HR should have well-developed professional skills and be able to learn. In fact, learning capability is one of the key factors of the successful progress of HRM today (Scott, 2007, p. 81). On the other hand, some specialists (Peters, 2007, p. 206) argue that companies should develop tolerance and cultural diversity along with flexibility as a part of their HRM.

• Evaluating the contribution HRM

HRM defines the effectiveness of the organizational performance and productivity of employees. HRM maintains stable employment relationships and forms organizational culture. In such a way, HRM contributes to the stable and successful development of contemporary organizations (Peters, 2007, p. 196). However, the stability of HRM is impossible, if HRM is not backed up with a strong marketing strategy (Notorantonio, 2006, p.30).

2 Discussion and analysis

2.1 Context of HRM

Today, the employer branding is one of the most important factors that defines the employer-employee relationship. At any rate, many employees are eager to work in a reliable company and the employer brand can help them to decide which company to choose from. On the other hand, the employer brand imposes the high responsibility on employees of McDonald’s because they have to maintain the positive brand image and corporate image at large. Hence, the close correlation between performance and engagement is obvious as employees perform successfully as they grow more and more engaged into the organizational culture and structure. At the same time, McDonald’s takes into consideration psychological contract since the company attempts to make new employees team members. As a new employee joins the company, he/she feels a part of a huge company and learns to work in a team.

2.2 Strategic HRM

2.2.1 McDonald’s strategic HRM approach

The strategic HRM approach of McDonald’s is changing and adopting to the changing business environment. The company keeps growing and the adaptation to the new business environment helps the company to develop effective HRP approaches. At the same time, the company uses the standardized approach its employees which changes respectively to the change in the business environment. The implementation of the HRM strategy often leads to different outcomes, compared to the expected outcomes, when the strategy was just developed. However, McDonald’s corporate standards help the company to preserve certain flexibility since employees are aware of the fact that they have to meet corporate standards to stay in the company. On the other hand, the company still lacks flexibility to allow employees to realize their full creative potential.

HR comprises an integral part of organizational strategy of McDonald’s. HRM strategy is the most effective when it fits best the organizational context. Taking into consideration the globalized context of McDonald’s the current HRM strategy is effective because the company has clear and simple standard, which employees should meet, regardless the country where they work. They work in McDonald’s and should respect its norms and standards.

2.2.2 Contribution to organization effectiveness

McDonald’s focuses on the use of the full potential of their employees’ skills and abilities, such as flexibility (Notorantonio, 2006, 30). The company is interested in the development of employees’ flexibility to provide services of the higher quality but, at the same time, McDonald’s flexibility is low.

At the same time, employees are driven not only by flexibility but also by other factors. Today, organizations attempt to keep their employees motivated and satisfied with their position and work that contributes to the higher productivity and effectiveness of work and, therefore, it contributes to the better organizational performance. In such a situation compensation methods and benefit programs may be crucial for employees and organizations, but it is important to understand the fact that compensation and financial stimuli are not the only factors that can have a positive impact on the organizational performance.

First of all, it should be said that compensation methods are primarily used to motivate employees work better. In this respect, it should be said that such motivation heavily relies on the idea of utility as the cornerstone of the utilitarianism. In other words, the motivation is defined by individual’s needs and interests, which are prior to all other factors that can motivate him/her. To put it more precisely, the utilitarian approach to the motivation stands on the ground that people are more likely to get motivated to do some actions, for instance, when they get some benefits from it and, on the contrary, the risk of losses or some harm that may be caused by these actions is an important factor that decreases considerably the motivation of an individual.

It should be pointed out that the utilitarian approach to the motivation heavily relies on the rationalism of an individual since, in terms of this theory, human actions are determined by their utility or profitability. This means that it is only a perspective of some benefits that can really motivate a person, but, on the other hand, such a utilitarian view implies that an individual should evaluate carefully all his/her action and motivation is also rationally justified and evaluated because it is on the basis of the racial judgment an individual can get either motivated or non-motivated to take an action. At first glance, such an approach seems to be logical and quite convincing, but, in actuality, it proves to be rather naïve because such a view on the motivation means that people are unable to spontaneous actions. In other words, the motivation is rather a rational act than a spontaneous or unplanned act.

In such a context, the use of financial compensation seems to be efficient. At the same time, different types of compensations may have different effects. For instance, skill-based pay implies that employees’ skills play the primary role in their benefits. Hence, they are motivated to train and improve their qualification, but, on the other hand, it does not ensure really effective and productive work because the quantity or productivity of work is not mirrored in benefit programs and compensations. The same trend may be traced in regard to the competence play. On the other hand, compensation and benefit programs cannot rely solely on the productivity of employees, the amount of products or services they create and provide for customers because it does not stimulate the professional development of employees.

In this respect, the variable pay seems to be the most balanced compensation and benefit program because it stimulates both professional development of employees along with high effectiveness and productivity of their work. As a result, employees are interested to work better and, what is more important, they are conscious of the fact that if they learn, train and improve their qualification they will have better career prospects and higher benefits.

Furthermore, today, the organization becomes delayed, while employees become of the paramount importance. However, McDonald’s fails to meet this trend since employees are still secondary to the corporation. The organizational culture dominates over employees’ cultural background. On the other hand, the structure of jobs is changing. McDonald’s has three groups of employees: restaurant workers, corporate staff, and franchise owners. All three groups raise a number of challenges for HRM of McDonald’s. The company has to integrate restaurant workers and help them to develop their professional skills. The corporate staff should be aware of needs of restaurant workers and meet those needs to improve employees’ performance. Franchise owners should meet corporate standards and improve their performance too.

In such a context, the recruitment becomes particularly important. Selection of employees by McDonald’s is grounded on the assessment of their potential and ability to develop their professional skills fast (Kotter, 2001, 116). Every person has a chance to succeed in McDonald’s, while in the course of work, some employees drop out, while others remain.

2.4 Performance culture

Today, McDonald’s operates in the diverse cultural environment, where employees may have different cultural background. Hence, the competence of HR managers is one of the key ways to manage human resources effectively because skills of HR managers and their competence help them to reach objectives of the company, which include the improvement of employees’ performance and organizational performance through the maintenance of the positive organizational culture.

In addition, the company offers compensation and pension plans to stimulate employees’ loyalty and prevent the staff turnover. At the moment, employees working in the company can count on the pension plan and compensations in case of their firing. Moreover, employees can count on partial or full health insurance coverage, while some employees may even count on the health insurance coverage plan which includes their family members.

2.5 Psychological contract

McDonald’s develops psychological contract with its employees through the creation of the specific corporate culture and team spirit. Employees joining the company feel being a part of a team and, simultaneously, a part of a huge organization. The integration of employees into the organizational culture and structure helps McDonald’s to improve their performance.

2.6 Strategic development

Competence of the learning organization is crucial. McDonald’s pays a lot of attention to training of its employees. The changing environment forces the company to introduce changes in its strategic development and enhance training of its employees. The company uses training as a tool of the improvement of employees’ and organizational performance making learning an integral part of work of all employees working in the organization.

2.7 International HRM

Today, McDonald’s develops international HRM since the globalization facilitates international business expansion of the company. The company’s standards of HRM facilitate its HRM and help employees to learn corporate standards fast. However, McDonald’s still attempts to adopt to specificities of local markets offering products adopted to the local cuisine. Hence, employees still need to learn local specificities and to be able to adopt to local specificities.

2.8 Reward management

Material rewards are very important for McDonald’s and dominate over non-material rewards. The company offers incentives and pension plans in terms of material rewards. The company offers compensation plans in case of firing of employees and pension plans in case of employees’ retirement. In addition, McDonald’s helps to cover health insurance of employees. In terms of non-material rewards, the company develops its corporate culture and breeds team spirit.

2.9 Employees’ health and well-being

The company provides its employees with full or partial coverage of their health care insurance. However, health and well-being policies of McDonald’s vary depending on the country, where the company operates, and local legislation. In addition, McDonald’s is considering dropping its health care spending and health insurance coverage for its employees is likely to decrease.

2.10 HR skills

HR skills should meet objectives. Flexibility is one of the key skills that are crucial in the contemporary business environment for McDonald’s and its HRM.

2.11 McDonald’s HRM today

Today, McDonald’s HRM is quite effective but steadily the company’s approach to HRM becomes rigid and the company needs more flexibility. As the company operates worldwide, its HRM has to adopt local norms and standards to become effective and to stimulate employees to work better.

3 Conclusion and recommendations

Thus, McDonald’s being one of the largest employers in the US and the world still faces some problems in its HRM. The company operates in the culturally diverse environment that raises the problem of its adaptation to the specific cultural environment, wherever the company operates. In addition, the company lacks flexibility in its HRM. Common corporate standards are good but they do not always work effectively, if they come into clashes with the cultural background of employees. Hence, the company needs to balance corporate standards and local specificities in its target markets.

In such a situation, it is possible to suggest some recommendations for McDonald’s to follow to improve its HRM and marketing performance. First, the company has to enhance flexibility because the company operates internationally and employs a large number of employees. Hence, McDonald’s cannot use standard approach to all employees worldwide. Instead, HRM of the company should become flexible and employees should be prior to corporate standards. Otherwise, the company will be unable to perform successfully.

In addition, the company has to develop cultural diversity and integrate cultural diversity into its HRM. As McDonald’s operates internationally, the company has to employ professionals with diverse cultural background. Hence, the company needs to take into consideration cultural diversity of its employees, while developing its HRM. Otherwise, the risk of conflicts and poor performance is inevitable.

Finally, the company has to adopt its HRM to local specificities. For instance, the company cannot use the same management style in Asia as it does in the US, for instance. Asian and American cultures are totally different. Hence, corporate standards should be changeable and flexible to meet local specificities and to allow McDonald’s to operate successfully in any market of the world.