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McDonald’s Organizational Culture and Its Elements

Introduction

Organizational culture refers to the “values and behaviors that contribute to the unique social and psychological environment of an organization” (Cameron & Quinn 2011, p. 13). It encompasses the expectations, values, and experiences that promote cohesion and achievement of organizational goals (Flamholtz & Randle 2011, p. 32). Generally, companies illustrate their organizational cultures through their methods of conducting business, staff management, providing customer service, and building relationships with the community.

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Organizational culture is important because it influences various performance measures such as product quality, customer service, employee satisfaction, and profitability. It is against this backdrop that this paper analyzes McDonald’s organizational culture. The paper will begin with a description of the organization and its culture. This will be followed by the identification of the company’s goals and how organizational culture supports their achievement.

McDonald’s Corporation

McDonald’s is “the largest food service retailer in the world” (McDonald 2013). The company was founded over 60 years ago in the US as a small restaurant. It has achieved a remarkable performance in the last six decades, thereby becoming one of the most successful companies in the fast-food industry. By 2012, the company had “34,480 restaurants in 119 countries in Europe, Africa, Asia, the Middle East, and Latin America” (McDonald’s 2013).

The company’s main products include “French Fries, Big Mac, Quarter Pound, and Chicken McNuggets” (McDonald’s 2013). In 2012, the company’s sales totaled $24 billion. Additionally, McDonald’s realized a net income of $4.9 billion in 2012 (McDonald’s 2013). This remarkable achievement is mainly attributed to the company’s strategic direction, as well as, the talent and commitment of its over 80,000 employees (McDonald’s 2013). The company’s strategic direction is based on a business model that aligns its operations to the activities of its franchisees and suppliers. This helps the company to improve its profitability by providing customer-focused services.

McDonald’s Organizational Culture

Commitment to Employees

McDonald’s culture of commitment to employees is characterized by the development of trust, respect, and collaboration between the management and the workforce (McDonald’s 2013). This culture promotes close relationships between the employees and their bosses. The company shows its commitment to the employees by helping them to achieve their career and other personal development goals. In this regard, the company trains its employees on various business functions at Hamburger University. Additionally, the company provides flexible work schedules that enable the employees to achieve work-life balance. The company also provides adequate performance-based remuneration to enable its employees to achieve their financial goals.

According to Hofstede’s cultural dimension model, McDonald’s commitment to staff development suggests that it promotes a masculine culture where personal achievement is very important (Jones 2002, p. 78). For instance, the training and monetary rewards provided by the company enable the employees to achieve goals that are important to them such as financial stability and advancing their careers.

According to the seven dimensions of culture model, the company’s commitment to employees shows that it promotes achievement rather than ascription (Jeffs 2008, p. 67). Specifically, the staff development initiatives motivate the employees to focus on earned success rather than ascriptions such as job titles. According to Denison’s culture model, commitment to employees is important in achieving the company’s mission.

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In particular, the training programs enable the employees to understand the company’s strategic direction and intent, as well as, to internalize its vision. The performance-based remuneration system, on the other hand, motivates the employees to achieve the company’s goals and objectives. According to Denison’s model, the development of staff capability facilitates the creation of a sense of ownership and responsibility (Griffin & Moorhead 2010, p 89). The resulting improvement in staff commitment enables employees to develop a psychological contract with the company by identifying with its mission and vision.

The Process Culture

McDonald’s employs a simplistic, but very effective approach to operations management. This involves “standardizing products and processes; maintaining strict control on the quality of services and food, and enhancing cost-efficiency by employing young workers” (Schroder & McEachern 2005, pp. 212-224). McDonald’s culture emphasizes the importance of the system (the company, franchisees, and suppliers) over personal interests.

Thus, the company has organized work in terms of simplistic steps that improve the overall efficiency of the system. Moreover, the company’s norms are determined by its values, rules, and practices rather than the beliefs of individual employees (McDonald’s 2013). This has resulted in a command and control system in which decision-making is centralized. For instance, a majority of the employees are below 25 years and lack experience. Thus, they hardly participate in decision-making processes.

According to Hofstede’s model, the centralization of decision-making processes indicates that McDonald’s culture is characterized by high power distance (Flamholtz & Randle 2011, p. 91). This means that the distribution of power in the company is skewed towards the management. Moreover, the use of strict rules and procedures indicates that the company’s culture is characterized by high uncertainty avoidance index. According to Hofstede’s model, communities with high uncertainty avoidance scores use rules and clear guidelines to avoid ambiguity and mistakes (Flamholtz & Randle 2011, p. 92).

In the context of the seven dimensions of culture model, McDonald’s has a typical universalists culture where rules, laws, and values define the relationships among individuals (Witcher & Chau 2010, p. 113). According to Denison’s model, the process of culture can be viewed as a means of achieving consistency. Generally, the rules and values enable employees to develop a common perspective that facilitates agreement, coordination, and integration. This leads to consistency in various processes and product/ service quality.

Commitment to Customers

The company’s customer-focused culture is based on four factors namely, value, safety, quality, and cleanliness (McDonald’s 2013). The company improves its customer experience by providing fast services that are free from errors. This strategy is supported by the company’s simple decision-making process that enables the employees and managers to respond immediately to customers’ needs.

The company enhances process and product quality by maintaining control over its supply chain, operating well-maintained facilities, and keeping the restaurants clean (McDonald’s 2013). In most countries, the company incorporates the ideas of its employees and customers in its product and process development decisions (Khan & Khan 2011, pp. 27-29). For instance, it adapts its menu and restaurants’ interior designs to the tastes of each market.

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Accepting new ideas implies that the company promotes a long-term orientation culture. According to Hofstede’s model, communities with high long-term orientation tend to accept new ideas from anyone to achieve innovation and progress (Griffin & Moorhead 2011, p. 117). According to the seven dimensions of culture model, the strategies adopted by the company to meet customers’ expectations suggest that it employs a typical internal direction culture. A community whose culture supports internal direction focuses on manipulating its environment to achieve its objectives (Jeffs 2008, 84).

This explains McDonald’s belief that it has to control its internal environment by aligning its processes and services to the needs of the market. Recognizing the ideas of employees also shows that the company’s culture supports individualism. In the context of Denison’s model, McDonald’s commitment to customers can be viewed as a means of achieving adaptability to respond to market needs effectively.

Commitment to Sustainability

Sustainability is an integral aspect of McDonald’s organizational culture. The company focuses on the sustainable provision of food services to avert resistance from the communities that it serves. To elucidate, McDonald’s is one of the major producers of wastes that pollute the environment (Peterson 2005, pp. 8-11). The wastes result from the company’s extensive use of non-biodegradable packaging materials such as plastics. In this regard, the company’s training programs focus on encouraging employees to internalize the culture of promoting sustainability in every business process (McDonald’s 2013).

This includes reducing the number of packaging materials used by the company and improving energy efficiency. The company also improves the welfare of its customers by providing financial resources to support the prevention and treatment of lifestyle-related diseases such as obesity.

According to the seven dimensions of culture model, the company’s commitment to sustainability is essentially a communitarian culture. Communitarianism emphasizes the importance of the group over the individual (Jones 2002, p. 97). This explains the company’s belief that the wellbeing of the community influences the achievement of its goals. Specifically, the company believes that it cannot exist without the community members who support it through the purchase of its products and supply of raw foodstuffs. In this regard, the company provides socio-economic support to the community members in exchange for their loyalty.

Critique of Organizational Culture Theories

Hofstede’s cultural dimension model sheds light on the types of culture that are likely to shape the behavior of employees in different countries. However, the application of the model is limited due to several reasons. To begin with, the cultural traits identified by the model are not likely to exist in every organization in a particular country. Specifically, no evidence supports the model’s claim that employees from a given country have the same culture.

Contrary to Hofstede’s model, most organizations have multiple cultures that are continuously evolving (Jones 2002, p. 102). Consequently, it is unrealistic to perceive national or organizational culture in terms of two contrasting positions such as masculinity versus femininity. In reality, cultural traits such as individualism and collectivism often coexist in organizations.

Denison’s cultural model is considered to be effective due to its focus on the behaviors that lead to high performance. In particular, the usefulness of the model is clearly illustrated by its ability to link various aspects of culture to organizational performance (Jeffs 2008, p. 91).

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However, the model fails to highlight the importance of the beliefs and values of individual employees in the workplace. Undoubtedly, organizational culture and performance are not only shaped by mission, consistency, involvement, and adaptability. The “personalities, values, and beliefs of individual employees often shape organizational culture” (Jeffs 2008, p. 92). Thus, they have to be considered when developing an organizational culture that supports high performance.

The seven dimensions of culture model are important because it enables organizations to link their culture to management behavior. This can help in shaping the behavior of managers to achieve a particular performance outcome (Jeffs 2008, 109). However, the model fails to establish a link between various aspects of culture and organizational performance. Besides, the model is based on the unrealistic assumption that organizational culture often consists of two contrasting elements such as specific and diffuse.

McDonald’s Goals

McDonald’s mission is to “be customers’ favorite place and way to eat” (McDonald’s 2013). This mission statement suggests that the company’s goal is to become the best provider of food services in the industry. In this regard, the company has developed a strategic plan to help it achieve its mission. The strategic plan focuses on the achievement of five goals, which include the following. First, the company aims at attracting and retaining the best talent in the industry (McDonald’s 2013). This enables the company to achieve both process and product innovation to become the best. Second, the company aims at providing the best food and customer service in the industry (McDonald’s 2013). Specifically, the management of the company intends to create a strong brand image that is known for quality, consistency, and safety.

Third, improving customer experience by creating the best restaurant ambiance is also an important goal for the company (McDonald’s 2013). McDonald’s expects to create locally relevant customer experience by locating its restaurants in the most convenient places and to decorate them according to the local tastes and preferences. Fourth, McDonald’s aims at pricing its products competitively to gain market share (McDonald’s 2013). Finally, the company intends to improve its competitiveness through relevant promotional activities such as public relations and customer loyalty programs (McDonald’s 2013).

Financially, the company has three goals that it pursues in each financial year. The first goal is to improve its annual sales by 3% to 5% (McDonald’s 2013). The second goal is to realize an annual increase in operating income by 6% to 7% (McDonald’s 2013). Finally, the company expects to maintain its “return on incremental invested capital (ROIIC) in the high teens” (McDonald’s 2013).

Supportiveness of the Organizational Culture

The company’s culture of commitment to employees supports the achievement of the following goals. First, it enables the company to attract and retain the best talent in the market. McDonald’s is known for its efforts to support young people by providing flexible job opportunities and helping them to achieve their personal goals. Consequently, most fresh graduates opt to work for McDonald’s rather than other firms in the industry.

The culture also enables the company to retain its employees (Simpsons 2007, pp. 23-26). Second, commitment to employees enables the company to achieve its desired product and service quality. Specifically, the training programs equip the employees with the skills that they require to prepare the best food and to offer excellent customer service (Simpsons 2007, pp. 23-26). Finally, commitment to employees facilitates the achievement of financial goals. Staff development initiatives are likely to improve employee motivation. As a result, productivity in terms of the amount of food produced and the number of customers served per restaurant will increase significantly (Simpsons 2007, pp. 23-26). Thus, the company is likely to achieve its goal of increasing sales by at least 3% annually.

The process culture facilitates the achievement of the following goals. To begin with, it enables the company to improve the quality of its products and customer experience. The process culture ensures consistency in food production, customer service, and the ambiance of the restaurants (Adams 2009, pp. 31-34). Consequently, the quality of the company’s services improves. Also, breaking down work into simple steps encourages high productivity and eliminates the chances of making mistakes among employees. The standardization achieved through the process culture facilitates the achievement of the net income and ROIIC targets.

According to Katsioloudes (2006, p. 214), standardization improves financial performance by creating economies of scale in production and cost efficiencies. Undoubtedly, an increase in production coupled with a reduction in operating costs will increase the company’s annual net income and ROIIC. Furthermore, the cost efficiencies achieved through the process culture will enable the company to realize its goal of selling its products at competitive prices.

Despite its benefits, the process culture is unsupportive in the following ways. To begin with, standardization results in too much routine. This leads to boredom and discourages innovation. Boredom will negatively affect staff motivation, thereby reducing productivity (Jeffs 2008, p. 256). This will minimize the chances of achieving financial goals. Low innovation, on the other hand, will limit the company’s ability to realize its goal of providing high-quality services. This risk is exacerbated by the fact that the process culture limits the participation of the company’s junior employees in decision-making processes. Thus, the company is likely to miss the opportunity to obtain brilliant ideas from its employees who make important observations by interacting directly with customers.

Commitment to customers facilitates the achievement of product and financial goals. The culture of improving commitment to customers enables the company to channel its resources towards meeting market needs. This involves conducting marketing research to identify customers’ needs. The insights gained through the researches enable the company to provide products that meet customers’ expectations in terms of quality, packaging, and pricing (Vignali 2001, pp. 1-12).

According to Jeffs (2008, p. 265), companies that can meet customers’ expectations often have high brand loyalty. This will enable McDonald’s to retain its customers and to achieve its sales goals. However, commitment to customers promotes adaptability, which in turn reduces the company’s ability to achieve standardization. Furthermore, a high level of adaptability is likely to have adverse effects on the company’s brand personality (Jones 2002, p. 281). Specifically, the company’s brand will not have consistent characteristics that customers can easily identify with. This will reduce the company’s ability to achieve its sales and net income goals (Jones 2002, p. 281).

Commitment to sustainability facilitates the achievement of financial and sales promotion targets. Strategies for ensuring sustainability such as reducing the use of non-biodegradable packaging materials enable the company to reduce its operating costs (McDonald 2013). This helps it to achieve its net income and ROICC goals. Corporate social responsibility activities such as creating awareness through public relations enable the company to promote its products in the community (McDonald 2013). For instance, the company publishes articles about obesity, which promote the consumption of its safe foods such as smoothies.

Conclusions and Recommendations

The organizational culture of McDonald’s is characterized by four major elements. These include a commitment to employees, the process culture, commitment to customers, and promoting sustainability. The company’s goal is to become the best provider of retail food services in the industry by achieving the goals of its strategic plans. The company’s financial goals include increasing annual sales, net income, and ROIIC. Generally, the elements of the company’s organizational culture highly support the achievement of its goals. However, the standardization created through the process culture prevents the achievement of the product and financial goals by discouraging innovation and reducing employee motivation.

Therefore, the company should consider the following recommendations to improve its organizational culture. First, the process of culture should be adapted to the needs of the employees and the business. In particular, task design should focus on improving employees’ engagement to prevent boredom. Moreover, junior employees should be allowed to participate in decision-making processes to facilitate innovation.

Second, the company should achieve an optimal balance between adaptation and consistency. This will enable the company to utilize its culture of commitment to customers by adapting its products to market needs without compromising the personality of its brand. Finally, the company should leverage its commitment to employees through increased investments in staff development. Apart from the training and career development programs, the company should introduce diversity and mentorship programs to realize the full potential of its workforce. Diversity programs will strengthen teamwork by enabling the employees to appreciate and to tolerate their cultural differences (Cameron & Quinn 2011, p. 239). Mentorship programs, on the other hand, will enable the employees to use their diverse cultural backgrounds to help the company to achieve its goals.

References

Adams, K 2009, McDonald’s and NPower Train to Retain: Companies Recognize Career Development is an Inclusive Business, Development and Learning in Organizations, vol. 22 no. 2, pp. 31-34.

Cameron, K & Quinn, R 2011, Diagnosing and Changing Organizational Culture, John Wiley and Sons, New York.

Flamholtz, E & Randle, Y 2011, Corporate Culture: The Ultimate Strategic Asset, Stanford University Press, Stanford.

Griffin, R & Moorhead, G 2011, Organizational Behavior, Sage Publishers, London.

Jeffs, C 2008, Strategic Management, McGraw-Hill, New York.

Jones, M 2002, Organizational Culture: Mapping the Terrain, Sage, London.

Katsioloudes, M 2006, Strategic Management, McGraw-Hill, New York.

Khan, A & Khan, R 2011, Informal Communication Style Benefits McDonald’s and Ford: The Way Ahead in an era of Social Networking, Human Resource Management International Digest, vol. 19 no. 7, pp. 27-29.

McDonald’s 2013, Annual Reports: FY2012. Web.

Peterson, J 2005, McDonald’s Jumps on the CSR Bandwagon, Strategic Direction, vol. 18 no. 9, pp. 8-11.

Schroder, M & McEachern, M 2005, Fast Food and Ethical Consumer Value: A Focus on McDonald’s and KFC, British Food Journal, vol. 107 no. 4, pp. 212-224.

Simpsons, P 2007, McDonald’s Serves Up better Customer Care, and Lower employee Turnover: Two-stage Training for More than 4,000 Staff, Human Resource Management International Digest, vol. 15 no. 1, pp. 23-26.

Vignali, C 2001, McDonald’s: Think Global, Act Local Marketing Mix, Strategic Direction, vol. 4 no. 2, pp. 1-12.

Witcher, B & Chau, V 2010, Strategic Management: Principles and Practice, John Wiley and Sons, New York.

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