Reward Management Strategies At McDonald’s: Challenges And Solutions

What is Reward Management?

Question:

Identify the Forms and Structures of Executive Reward of McDonalds.

McDonalds is one of the most recognised and renowned global fast food chain which serves high quality hamburger across the world with its enormous number of fast food chains. There are almost more than fifty eight million customers who are served on a daily basis by the food offered by McDonalds. The restaurant chains of McDonalds are run through franchise in almost the big regions of the globe. The key activity of the company is to have increased number of franchises and the major revenue is attained from the fess paid by the franchisees, royalties and rent as well as also from the overall sales acquired. The revenue of the company is increasing with an upsurge rate and the major role in the snowballing and rapid success is the competent and skilled employees of McDonalds. There are around 375,000 employees who9ch are offered an employment opportunity by the company in various parts of the world (McDonalds, 2017). The essay will have its focus on the existing reward management systems and practices of McDonalds, the challenges faced by the organisation and the reward management strategy to have a motivated and supportive workforce.

Reward management can be understood as implementation and formulation of the policies and the strategies which objects to reward the individuals in a consistent, equitable and fairer manner in respect with the organisational values. Reward management comprises of controlling and evaluating the compensation as well as remuneration and various other benefits offered to the organisational employees. The primary aim of reward management is to create and effectively implement an appropriate reward structure for any organisation (Lindop, 2009). The organisational reward structure comprises of number of factors such as executive reward and pay, team reward, minimum wage, total reward, payroll administration, salary administration, practices and policies and pay of the employees. For implementing a successful reward management program in the organisations, there is a well structured and effective reward system which is required to be introduced in the organisation so that the contribution and the efforts of the organisational employees in the attainment of the organisational goals and objectives can be acknowledged (Terera and Ngirande, 2014).

The reward system is primarily concerned with rewarding of the organisational potential employees who are deserving and competent. Such employees are rewarded by the means of a reward system in a fair and equitable manner so that they can remain motivated and have strong organisational commitment (Shields, et al., 2015). The organisational reward system is regarded as an efficient tool which is used by the human resource department of the organisations at the time of managing the performances and the productivity of the organisational employees. McDonalds is well-known for its strong and effective reward management programs, strategies and systems. There are number of characteristics and aspect of the reward management system of McDonalds which shows the efficiency of the reward management practices of McDonalds. The one of the key aspects is the robust salary packages offered by the company (Sparrow, 2013).

McDonald’s Reward Management System

It has been evaluated that McDonalds is globally famous and one of the best and favoured workplace where the individuals are keen to work at. The major reason behind this is the robust policies and programs and proficient reward management strategies and practices for the reward and recognition of the organisational employees. The effective and efficient salary packages offered but McDonalds is the incentive that influences maximum of the workplace employees to have string organisational commitment and engagement with the company (Hill, Jones and Schilling, 2014). There are also a number of studies that presents that McDonalds is at of the most leading companies in the fast food industry in respect with practicing a number of proficient reward management and welfare programs and policies (Lawler, 2000). McDonalds offer the most favourable reward and recognition plans and reward schemes to the employees and implement a number of reward management programs for the effective implementation of the same. The reward management system of McDonalds includes a number of aspects that support in increasing the motivation and commitment of the employees in the organisation. The company made it mandatory that there must an effective alignment and integration of the organisational polices and the reward management strategies (Crawford, 2015).

In the field of reward and recognition and the development of the workforce, there are number of initiatives taken by McDonalds and for the efforts, the organisation won the Employee Benefits Award in the year 2012. This shows the significance and potentialities of the existing rewards management and reward system of the organisation. The reward system of McDonalds is based upon a particular notion i.e. “Pay for Performance”. According to this reward system, the organisational workers are offered with adequate opportunities to have high pays, incentives and improved results (Bustamam, Teng and Abdullah, 2014). As per this system, the workforce is also offered with a fixed basic pay which is for their daily work and it is comparatively high in respect with the salaries offered by various other organisations.  McDonalds have a robust and sound reward system that comprises of a number of benefits too for the organisational employees. The employees are offered with incentives and perks on the basis of their overall annual review of the performances. There are offered LTI stock to the employees i.e. the Long Term Incentives as a part of the reward management system so that the employees remain in the organisation for a longer time period (Crawford, 2015).

Challenges Faced by McDonald’s

There are various other arguments and discussions which explain the significance of reward management and reward system in the success of the companies in context with the chosen organisation, McDonalds and its existing reward system, strategies and management. It has been analysed and evaluated that McDonalds have such reward system which influences as well as recognize the efforts of the potential and efficient employees. The company offers a two primary rewards to the employees, the first award is the President’s Award. As per this reward program, from the overall employees and the efficient workers, the supreme one percent out of all is acknowledged and is rewarded for their potential as well as competent performances and efforts (Crawford, 2015). The second significant strategy or reward system is the circle of Excellence Awards as the reward offered to the employees for acknowledging them for their continuous contribution in the successful attainment of the organisational goals and aims (Hansen, Smith and Hansen, 2002). There are also various other schemes, strategies and reward programs for the benefit of the employees such as the car program. The competent and potential performers of the organisation are offered with incentives such as additional benefit of a car which they can use both for the personal as well as the office work. McDonalds itself bear the various expenses associated with the car including repair, maintenance as well as insurance and it is a kind of incentive under the efficient and strong reward system of the company (Armstrong and Taylor, 2014).

There are number of challenges which had also been faced by McDonald in respect with the reward management such as first of all the challenge at the time of designing the reward system and management, there was an issue regarding the achievement of the external competitiveness and internal equity (Lawler, 1995). There are a number of issues in respect with the internal equities as the more tenured and experienced employees aimed at achieving more benefits from the reward system in comparison with the newly recruited employees and thus a number of challenges took place in respect with the designing of the reward system at McDonalds. The second challenges which occurred at the time of designing of the reward system and reward management at McDonald was responding towards a fragmented pay market and maintaining a reasonable coherent structure of the pay offered to the employees. There is a key challenge of promoting teamwork while rewarding the individuals so that there can be maintained equity and fairness. There is also a need to have consistency in the reward management processes in the fast and ever-changing situations in the organisations. Thus all these issues and challenges were faced by McDonalds while managing the reward and the reward system in the organisation (Johnstone, Ackers and Wilkinson, 2010).

Overcoming the Challenges: Strategies and Solutions

To overcome the challenges and to have better and robust reward system in the organisation and increased motivation of the employees, there is a need to have an effective reward strategy. In the development and implementation of a reward strategy there is a vital role of the reward practitioner skills and competence both in the institutional as well as the workplace settings in respect with the negotiation of rewards and the reward designing. The reward practitioner skills play a vital role as the skills and the competence of the reward practitioner only ensure the successful implementation of the strategy and designing of the strategy (Heery, 2009). The reward practitioner ensures that the reward program or the reward strategy does not only emphasis upon the benefit of the employees but also have a consideration in respect with the organisational culture, business strategy, available budget and the fairness aspects in the implementation of the strategy. It is also a role of the reward practitioner to have effective reward negotiation which means that there is strong negotiation while designing the reward program so that there can be effective organisational policies so that there are no further issues and challenges take place at the time of rewarding the employees (Waring and Burgess, 2011).

The new reward management strategy which will be implementing by McDonalds will be prioritizing the effective program delivery.  As per this strategy, there is differentiating the employee reward programs as well as strategies which are based upon the performances of the employees (Howard, Turban and Hurley, 2016). The key aim of the strategy is to attract the talented and competent employees and have aspects which can help in retaining them in the organisation for a longer time period. The strategy will also focus to have strong communication about the rewards and recognition to the employees as well as equip the organisational managers with efficient resources, training and tools for engaging the employees and the teams in an effective manner (Armstrong and Brown, 2006). This strategy will help in developing an improved level of integration between the business strategies and the reward system as well as also help in overcoming the various challenges faced at the time of implementing reward system and designing reward management approaches (Wood and Wall, 2007).

Conclusion

From the overall analysis and evaluation of the essay, it so concluded that there is a vital need of effective reward system and reward management in the organisations to have improved outcomes and enhanced employee motivation. The organisations need string reward plan and system to reward the employees for making them stay in the organization for longer time frame and to boost their morale to work with increased level of commitment. The effective reward and recognition not only help in increasing eth retention rate of the employees but also help in achieving more competitive benefits. McDonalds is one of the globally recognized company which offers strong and efficient reward programs for the employees that not only enhances the engagement of the employees but develop the company as one of the most favoured workplace. The report concludes that there are number of issues which are faced by the organisations at the time of implementing the reward system but with an effective reward management strategy these issues could be resolved and have enhanced engagement of the employees through increased level of motivation. Thus, it can be concluded that there must be use of skilled and competent reward practitioner while designing the reward system and having successful reward and recognition strategies for increased retention of the employees and enhanced global recognition

References

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