image PROBLEMS WITH MCDONALDS BY GRONDA MORIN

85 mcdonalds wages

All of the recent business news have been reporting that McDonald’s profits are down 21%. In response, their CEO, Don Thompson has recently resigned before he could be fired. McDonalds will be replacing him with another insider. They have tried introducing new items to the menu, and various media campaign roll outs. All their efforts have been a bust.

It is my contention that McDonalds which has a strong policy of promoting from within needs some outside experts to help them face their culture issues. Without facing the pain of undergoing some major changes in their culture, no matter what they do, they will lose market share. This non constructive, stagnant culture is reflected by some of their management decisions. For instance, in 1999, Chipotles was a subsidiary of McDonalds and by 2002, McDonalds owned about 90% of Chipotles stock. By 2006, Chipotles CEO, Steve Ellis completely separated his organization from McDonalds due to cultural differences. When McDonalds sold out from Chipotles, they pocketed about 1.5 million dollars which is now worth about 13 billion dollars in 2015. The CEO Steve Ellis’ goals of sustainability, purchasing high quality products and non GMO products whenever possible, better treatment of employees were not compatible with McDonald’s priorities and management style.

color-louvre-mcd-webThe McDonalds restaurants are operated by Franchise owners but they   are heavily monitored by McDonalds executives in order to insure compliance. However, these executives allow the Franchise owners wide latitude as to how to manage their employees.

This cultural  unhealthy work environment is exemplified by the firings of several long term, Black employees, mostly in the South Boston, Virginia area, this past year. Several were fired together with the reason given, that they did not fit the profile. When these workers contacted executives at the corporate offices, they received no support. Consequently, these employees and others are filing suit against McDonalds for their unfair employment practices and this action has been covered in the business news outlets such as The Washington Post. This news is the cherry on top of other negative news including McDonalds dismal earnings for 2014 and the scandal of them purchasing expired KFC chicken from a China vendor.

MCDONALDS LABOR DISPUTE

What opened the door to allow these fired workers to file suit against the corporate offices as well as the franchise owner, is  a new 2014 ruling by the National Labor Relations Board. As  per the 7/30/14 NY Times article, titled, “Labor Ruling on McDonald’s Has Business Worried,” the author, Steven Greenhouse writes the following:

“After a federal agency’s decision that McDonald’s is jointly liable for the employment actions of its franchise operators, businesses across the United States were puzzling over the decision’s potential reach. Many feared that they, too, might fall under that broad umbrella.

Industry trade groups reacted angrily to the decision by the general counsel of the agency, the National Labor Relations Board, quickly signaling their intention to ask the federal courts to overturn it. At the same time, business executives began exploring how to respond to the agency’s move — whether their companies should distance themselves more from their franchised operations to avoid being swept under the new ruling or perhaps take a more hands-on role.

8 comments

    • Grazie mille!!! As always, thank you for your support. I wrote the blog to make sure you had access to the links. I had already blogged this under “Nutty Consumer’s Worldview” and I had thrashed this one before I figured out it had already been reblogged and so I reinstated it. I never did figure out how to send you the links to where it would not break up.

    • Thank you for your kind comments. Normally I blog business news under “Nutty Consumer’s Worldview’.” I was trying to send Jueseppi B. some links via this blog. I had thrashed it before I figured out it had already been reblogged, and so I quickly reinstated it. You are right that this posting is far off subject.

  1. Sounds like the way they treat their employees matches the crappy quality of their food! We all have try to make conscious choices about where we shop and eat….

    • Your are right in that we have choices. We now have Chipotle, Panera Bread, Burger Monger and other fast food choices. McDonalds management would rather blame their employees than look in the mirror and adjust to the times. Their bottom line cost culture and their hands off approach regarding how the franchise owners treat their employees is coming back to hurt them financially.

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