Case 1

McDonald's Restaurant is one of the biggest names in the world of hospitality. It also could
not survive a disaster like the COVID-19. Strategically managing Human resources became a
problem for them. Business slowed down and McDonald's structure could not afford a sales decline
at all. It becomes difficult for them to achieve their strategic objectives.
After downsizing, the number of employees decreased but another problem started to arise
that it is normal for sales to go up and down in uncertain economic situation. When sales increase,
employees have to work overtime, and in order to increase sales, the company has to lower prices
for customers. This affected the revenue of the company and due to low revenue the employees
could not be paid proper overtime. This has led to a crisis at the McDonald's Human Resources.
McDonald's hired our company Galaxy Human Resources to address this issue, and we made some
recommendations to the board of directors.
Employee compensation structure and overtime are the two HRM areas that suffer the most
and lead to low performance in two HRM functions, e.g. Employee Encouragement and
compensation management. Compensation paid to employees is a basic building block of
employee’s motivation and further this motivation has a pivotal rule to achieve strategic objectives
of the firm.
Lower level employees of the MacDonald’s’ are directly related to customers. If they don’t
have enough motivation then I think sales operation can never gain consistency at all time high.
As a service oriented firm MacDonald’s have to take seriously criticism on lower level
employees by customers. MacDonald’s’ have to take step to develop motivation for employees.
Motivation will develop in the light of following motivational theories
 Maslow’s hierarchy of needs

 Herzberg’s two-factor theory

 Vroom’s expectancy theory

 Adam’s equity theory

 Skinner’s reinforcement theory

Compensation and benefits for employees are big motivators to work. The lure of results forces
anyone to work. According to another theory, employees work with compensation in mind.

McDonald's board of directors should take a review of its human resources management
policies, order its human resources department to arrange maximum compensation for employees
and pay them overtime.
 Taking care of the basic necessities of life of the employees and getting them out of the worries
of the basic necessities of life and focusing their attention on work will also be a great achievement
in itself. McDonald's board of directors has to do all this for its own survival and revival.
It is a common observation that good HR policies play a pivotal role in shaping the public
image of any organization. The company takes its benefits not only in the form of word of mouth.
On the contrary, when employees are free from the tension of their basic needs, they will work
hard and thus improve the quality of service of the organization which will help in customer
attention and retention. Some long-term changes will have to be made in the policies so that they
can be revived in the changing market situation after an epidemic like COVID-19.
As mentioned earlier, McDonald's Corporation owns only 15% of the outlets. The other 85%
are run by their franchise partners, now the problem is that since the franchise partners have
relatively little investment, they compromise on HR policies for their meager profits. Keep the
number of employees to a minimum. They are not compensated for taking overtime from an
employee. Due to which the motivation of the employees becomes less and less, sometimes these
people even go against the state laws regarding HR management. As a result, there are fines
imposed by state agencies and McDonald's reputation is tarnished along with the fines.
McDonald's Board of Directors will have to pay special attention to the issues with its franchise
holders in this regard. (Online, 2017)

Bibliography
Online, A. M., 2017. Human Resources Management, International Business, Organizational Behavior.
[Online]
Available at: http://www.academicmentoronline.com/2017/06/human-resource-management-issues-
mcdonalds/#:~:text=Employee%20Compensation%20and%20Allegations%20Regarding,employee%20m
otivation%20and%20change%20management.
[Accessed 12 Feb 2021].

References
Online, A. M., 2017. Human Resources Management, International Business, Organizational Behavior.
[Online]
Available at: http://www.academicmentoronline.com/2017/06/human-resource-management-issues-
mcdonalds/#:~:text=Employee%20Compensation%20and%20Allegations%20Regarding,employee%20m
otivation%20and%20change%20management.
[Accessed 12 Feb 2021].