The report brings about the discussion of performance measurement and management in the contemporary organisations through multiple perspectives. Every organisation aims to attain the predetermined goals and objectives through the formulation and implementation of appropriate strategies in the long term. Thus, it is important for every organisation to evaluate the performance to assess the effectiveness of applied strategies in the organisation. Organisational performance consists of the actual output or results of the organisation, in order to measure them against the intended standards of output. Performance management includes the activities, which ensures that the goals of the organisation are being met consistently (Epstein, 2018).
A strategic and goal-oriented approach used to assess and increase the effectiveness of the company by, enhancing performance and efficiency of the people working in the organisation. The company is a fast food restaurant, providing food services to the customers around the world. McDonalds sells hamburgers, cheeseburgers and others. At first, the report will mention about the organisational performance of McDonalds, using various tools to measure the performance, which will facilitate in identifying the factors or areas of improvement in the company. Recommendations will be given in respect to the company for the improvement to be made in the organisation to attain objectives and higher the level of performance (Janssen et al., 2018).
Performance management in McDonalds
McDonalds is a UK based company, founded in the year 1940, restaurant managed and operated by Richard and Maurice McDonalds. The company has rechristened their business as a hamburger stand, and now as a franchise serving number of customers worldwide. Performance management system is an internal organisational system, which helps organisation to manage their employees work performance. McDonalds performance management system describes, that it identifies people as the backbone of their organisation McDonalds has recognised that the employees will do well or increase their effectiveness when they feel motivated and positive with their job and work environment (Dubey et al., 2017).
In McDonalds employees does not only become the part of their recruitment or training programme, but the organisation also provides a culture of cooperation, coordination, flexibility, opportunity, and equality. These factors lead to the increased performance of the organisation in the long-term. The company has introduced a performance development system (PDS), in order to drive high performance culture; the system designed to align the goals of the individual employees with organisational objectives. McDonalds serves the purpose of managing or assessing the performance of the organisation, by catering to the various stakeholders, as they contribute to the overall performance of the company (Martin et al., 2016).
Stakeholders refer to the individuals or the groups, which influences and influenced by the organisational practices or objectives. The individuals or groups include customers, employees, suppliers, government, local community, and shareholders. Company identifies employees as the major stakeholder in the organisation, therefore McDonalds provides rewards to the employees for their work contribution. Employees are rewarded based on their performance and commitment to achieve goals and objectives of the company (Shields, 2015). In McDonalds, the process of performance management is conducted by the development of IPP (Individual Performance Plan),
stating that managers work with employees to create plan by aligning their goals with targets of organisation. Employees an essential and responsible aspect to meet predetermined objectives; therefore, an Individual Development Plan is thus designed. IDP focuses on the job scopes of the employees, and their leadership competencies, which will help them to acquire their desired future position, thereby benefits and enhances the performance of the organisation. The company ensures their employees job-satisfaction by providing them interesting wages or salary according to their skills, abilities, and qualifications (Maxwell et al., 2015).
Holistic view of decision-making and organisational performance
McDonalds ensures that the decision-making in the organisation, affects the organisational performance in the long-term. Decision-making at McDonalds is strategic to various stakeholders, fulfilling their expectations and goals in the organisation. The operation management decisions at the company plans, organises, their resources in an appropriate manner leading to consistency, and satisfaction of employees, as well as customers. In this way, strategic decision-making leads to higher organisational performance of McDonalds, in the fast food chains around the globe (Kane et al., 2015).
An important concept of performance appraisal has identified and highly valued in McDonalds. Performance appraisal refers to the process of evaluation of the performance levels of each employee working in the organisation. McDonalds carries out activities of performance review twice a year. On the Job evaluation is the method used by the company
which reviews or assesses the performance of employees after every 6 months. Performance appraisal in the organisation serves two types of needs, one is for their employees who work in the organisation, and second is for the company itself. Thus, considering all the facts it increases performance of employees, leading to enhanced organisational performance, McDonalds has certain objectives. The company conducts performance appraisal to provide feedback to the employees and improve their performance (Lowe and Wilson, 2017).
Determining training needs of the employees is another objective as it helps identify and overcome skill deficiency to meet the objectives. In addition, employee performance appraisal validates the selection techniques, and human resource policies to meet the requirements of federal equal employment to the employees. The company motivates and enhance the morale of their employees to increase their productivity and ability to work hard and attain the predetermined targets.
In addition, McDonalds provides employees career opportunities, which increase their motivation to work in the organisation, and contribute to organisational performance. Considering the above fact that staffs is important to operations performed in the organisation, McDonalds provide them a healthy working environment, inspires them to sustain for a longer-period in the organisation, thus it enhances the organisational performance (Taticchi et al., 2015).
After performance management, the company focuses on the performance management of their customers, as they are amongst the priority stakeholders. McDonalds assures their customers good value products and high quality services. The main aim of the company is to satisfy their customers, through their services offered around the world. For their customers, the company provides a feedback system through which customers share their experiences of the services offered to them (Boyland and Christiansen, 2015).
Moreover, McDonalds provides customers offers, membership cards, discounts on food items, and services that increases customer attractiveness towards the company’s services. Employees adopted a customer-oriented methodology to increase the satisfaction level in the customers, by enhancing quality, service, and cleanliness of the services provided to the customers. In McDonalds, the managers identifies that better the performance of a food item, higher will be the demand thus; it affects the performance of organisation, by increasing their sales and profits (Kirkpatrick et al., 2014).
Considering all the relevant factors for the performance management in McDonalds, it has found that company enhances performance through serving needs or expectations of the community. The CSR activities conducted by the company aims to cater different aspects of the environment or economy. Supporting local communities, as the company, claims to improve the standard of living of children and their families through the support of McDonald’s charities. The company serves the members of community by providing them education and physical activity (Konwar et al., 2017).
Several other CSR activities of the company include the education and empowerment of the workers. From a survey conducted in the recent years, 83% of the managers of the McDonalds restaurants have stated that it is the best place to work. The university of McDonalds hamburger established with 7 campuses around the world, provides training for McDonalds managers, franchises, managers, and the employees.
The company assures, their suppliers comply with the labour and human rights, by following the Supplier code of conduct. The code clarifies about the requirements of the company about issues in relation to the human rights, environmental management, workplace environment, and business integrity. However, issues of governmental influence on the working of McDonalds, such as the government is trying to control few fast food sectors due to the increased concern of the health issues (Xu, 2014). Thus, it is essential that managers work in compliance with guidelines or code of conduct to ensure employee safety at the workplace. It fulfils responsibility towards employee health and safety, environmental concerns, and several other issues in their organisation. Thus, catering to all the issues, company aims to achieve higher organisational performance with the long-term sustainability through different perspectives (Green, Brown, and Ohri-Vachaspati, 2015).
Performance measurement
Performance measurement and management are the relative terms in context to assess and acquire an understanding of the performance of an individual, or organisation. There are few methods of measuring performance in organisation in the long term. McDonalds is committed to providing the high quality food and the fulfilling or superior services to their customers at a great value (Akkermans and Van Oorschot, 2018). Thus, the company measures the performance of their employees to assess about their effectiveness in the organisation. The methods of performance measurement include balanced score card, and benchmarking. In addition, the company uses quality cost conformance model, which offers the managers at the organisation with some key performance metrics (Konwar et al., 2017).
The approach to measure the organisational performance, in the McDonalds is one of the most effective approaches. Kaplan, and Norton identified balanced score card, as the performance metric which is used in the organisation, to identify and improve various internal functions and their outcomes in organisation. Balanced score card states that financial ratios do not measure the performance of the operations of company, rather they just provide information about the past performance (Ward, 2015).
Therefore, McDonalds has identified that the factors which are vital to the future progress and growth of the company such as customer satisfaction and loyalty, employee engagement or participation, decision-making ability of the company and acquiring competitive edge over other competitors such as Burger king, KFC, Subway and others in the industry. There are four perspectives, should be concerned by the managers at the company to understand the significance of performance measurement and management in the organisation (SANYAL, 2018).
The four perspectives, i.e. the customer’s perspectives, the internal business perspectives, the financial perspective, and the innovation learning perspectives. Customer’s perspectives, it states that managers are aware about the taste and preference of their customers. The company must learn in future to identify how consumers perceive their operations, methodologies used in their products and services. McDonalds is recognised for hamburgers, and the other food items served to their customers, therefore the company aims at satisfying taste of their customers. However, a recent drop in the rating of the company in terms of customer satisfaction in the last year, which must be improved (McDonald, and Wilson, 2016).
The financial perspectives, describes about the company’s cash flows, financial ratios, increased sales and the return on the capital employed by the owners of McDonalds. The company is gabbling up the market share of the economy, which states about the performance measurement of the organisation in financial terms. The pricing power and increasing scale of fast food eaters helped the company to capture market and earn profits. The financial perspective in case of McDonalds is useful to the shareholders as they expect a higher return on their investment and an enhanced income from the company (Maxwell et al., 2015).
The internal business perspectives in context to McDonalds refer to those operations and activities, which enables them to satisfy their customer needs and expectations. Thus, job-design, inventory management, and supply chain, management activities of McDonalds are some of the aspects, which enhance the performance levels of the company in the longer period (Weinstein, 2016).
The future or innovation learning perspective is the last perspective, states that McDonalds, is called as ‘Fast Company’. The future perspective describes about the measures, which considers speed and efficiency for the changes in their operations introducing a new product, or reflecting about the technology leadership goals. In-restaurant experience, taking food home, customised food anywhere. Kid’s gadget, food safety and quality standards, being green, and events undertaken by McDonalds are some of the examples of innovation, enhanced the organisational performance of the company. Thus, the company works to create an innovative culture leading to higher performance and success (Jacobs, Chase, and Lummus, 2014).
Benchmarking
McDonalds operates with an objective to reach at the level of maturity where the organisation achieves a leading position, by facilitating benchmarking standards, integrated into their processes. Benchmarking refers to the systematic process to measure one’s performance in relation to recognised leaders to determine the best practices, when adopted leads to the superior performance of the organisation. Internal benchmarking, the organisations set benchmarks or standards against their own projects. External benchmarking, it is done with respect to any other organisation, as the organisation seeks projects from other companies.
McDonalds uses the approach of benchmarking to assess or compare their products, services against their major competitors, Burger king, Subway, Starbucks. Benchmarking empowers McDonalds to run real-time, majorly focusing on external benchmarking. External benchmarking is appropriate method, McDonalds is able to assess and become aware about, the concepts, methods, and tools used by other companies. However, there is a disadvantage, as it limits sharing of information with their competitors (Hua and Lee, 2014).
Key performance objective
The key performance objectives of the company will be discussed, after analysing the performance measurement of McDonalds, now the objectives of the company are to be determined to know about the competitiveness in the industry. Performance objectives define what is acceptable performance on the job is, and which is not acceptable in the organisation. The objectives of high quality, speed, dependability (being on time), flexibility (being able to change the methods and practices), and cost which must be productive are the bases of key performance objective.
In simple terms, McDonalds gives attention to the main objectives or motive to serve good food and provide value, ensuring attainment of customer preference leading to maximum customer satisfaction. The key performance objectives of an organisation help to acquire competitive edge over other firms in the market (Kok, and McDonald, 2017).
External and Internal benefits
The above diagram discusses about the key performance objectives of the company McDonalds, operating as one of the famous fast food chain.
Quality: On specification products and services
Speed: short-delivery and lead time
McDonalds has been the most popular brand in the fast food restaurant industry, amongst other food chains. Thus, the company has some of the strong competitors in the market such as KFC, Burger King, Pizza Hut, and others. It has been also found that all these companies which pose a threat to the competitiveness of McDonalds, have a good brand image, remarkable market share, and so on. Thus, McDonalds will need to plan to attain competitive position in the market through effective business strategies in the future (Archer, Nunn and de Bere, 2017).
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Strengths · The company has successfully rolled out with the new items such as Coffee, smoothies, and other products. · McDonalds has the consistency of the food in the market. · Brand equity-worldwide, as the company has been recognised in the restaurant industry, with the wide audience reach. · The food safety guidelines are strictly followed by McDonalds (Yao et al., 2018). |
Weakness · Weak product development. · Training costs are increasing due to the staff turnover at higher rates. · The company is less focused on the organic foods. · Quality concerns due to the franchised operations. |
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Opportunities |
Threats |
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· International expansion is one of the greatest opportunities for the company. · Being more responsive towards the social changes, by bringing innovation in terms of the healthier options. · The company has the advantage to expand and move into more enticing beverages in the coming years (Wamba et al., 2015). · Use of CRM database, to market their products to the target customers more accurately. |
· Marketing strategies used by McDonalds, which entices small children to the adults, are one of the major threat. · Shift towards the healthy diet by the customers, as the consumers are becoming more health-conscious. · Fluctuations in the foreign exchange rates, reduces economies of scale. · Higher competition, and the recession in the economy affecting the retail sales. |
Recommendations
McDonalds must take an advantage on their competitors in the market by working on their strengths, and the available opportunities in the fast food industry. Therefore, it is recommended that company should utilise their organisational resources to enhance the nutritional value provided to their customers. The company faced number of issues in the market, which includes the challenges faced in the environment. Thus, the main areas of improvement relates in the terms of requirement of service differentiation, personnel differentiation, as the company still lacks in the staff well-trained or well-equipped with the modern technologies. The company must implement the use of social and digital media in their marketing, and the product augmentation is one of the aspect where the company such as food on demand and delivery on time to the customers.
McDonalds must develop a plan to identify effectiveness and test the implication of their activities or method of production. First, the company must identify the factors, which affects the performance of the organisation. Issues such as packaging waste issue, increased temperature of the beverages served to their customers, Global warming affecting the seafood and agriculture. The company must aim to develop a method or effective strategies to improve these issues. Investing in the research and supporting suppliers to adopt profitable practices is one of the solutions. Adaptation of the agroforestry by the company or food suppliers may provide positivity to the environment. Further, to reduce the packaging waste, the company can focus on using reusable containers, and giving incentive to the customers, and providing them with their own cups can be the two options for McDonalds.
Conclusion
To conclude the above discussion it has been analysed that McDonalds, is a very well established organisation. The success of the company is extensively based on the extensive research on the internal and external analysis of the business environment. The report has included the aspects of performance measurement and management for the company. Performance management is an important concept to evaluate the performance of any organisation. Discussing about the analysis of Performance measurement in the organisations, qualitative analysis has used as an analytical approach for the assessment of organisational performance. Using tools of measurement, the strengths, and the opportunities of the company identified, stated that McDonalds mainly focused upon enhancing the quality and the value of their products or services to the customers around the world.
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