1. University of Illinois – Institute Of Labor And Industrial Relations
Rich Floersch & Don Crosby
April 4, 2008

2. Agenda Business Overview/History Revitalization Program/Plan to Win
HR Plan to Win
Strategic Frameworks
Bringing Frameworks to Life
Q&A

3. The History of McDonald’s
1970s Standardized Business Model
U.S. Focus
Common Operating Platform and Menu
Leverage Franchisee Ideas
Late 1950s -1960s
Ray Kroc buys McDonald’s business
Franchising Opportunities Abound & HU Introduced
IPO 1965 – 13 Stock Splits Since 1966
1970
1955
1960

4. The History of McDonald’s
2002 & 2003 Sweeping Organizational Changes
1990s Business Environment Changed
McDonald’s Stalled
Cover of BusinessWeek “Hamburger Hell”
Staff Reductions
Stock Price Drops to $11 (high $49)
CEO Change
Call to Action Plan to Win
Took Our Eyes Off Our Fries
Opened Too Many Restaurants
Distracted By Other Brands
1980s & 1990s Explosive Growth
International Expansion/ 118 markets
Darling of Wall Street
Creation of Ronald McDonald House
1980
1990
2000

5. Revitalization of McDonald’s
Better, not bigger
More relevant to consumers
Singular focus on customers’ experience and core business – our restaurants
Global business plan to improve alignment and focus …McDonald’s Plan to Win
5 Ps (People, Product, Place, Promotion and Price)
People and customer experience is central to new strategy

6. McDonald’s Today 2003-2008 McDonald’s Revitalization
58 months consecutive comp sales increases
Stock price reaches all-time high of $63
CEO tragedies
2007 Marketwatch CEO of the Year
Food and beverage focus
2003
2008

7. People Challenges: 2003 Relationship-driven = High-performance culture
Rewards programs confusing with little pay for performance
Lack of transparency in performance/development discussions
Little or no formalized leadership development focus or succession planning protocols
McJob label driven by loss in employment value proposition and not “Telling Our Story”

8. Our Roadmap

9. Restaurants Restaurant people strategy Strengthened selection system
Unique people programs
Metrics tie people practices to store success
Focus on HU training
Employment value proposition
U.S. People Migration Strategy
Respectful workplace training

10. Total Rewards Compensation Benefits Development Pay for performance
Tied to business results - Plan to Win measures
Benefits
High value to employees
Lead industry
Development
Hamburger University
Succession planning
Accelerated development programs

11. Total Compensation New approach to Compensation
Packaged so employees understand the value of their total compensation
Total Compensation = Pay + Incentives + Retirement Savings + Health and Insurance Benefits + More
Provide benefits, resources and tools to help employees and families lead healthier lives
Creating programs that differentiate us in the industry
Branding total compensation programs

12. Talent Management Culture
One of CEOs top three priorities
Accelerated development programs
Directors (Americas, Europe, Asia Pacific)
VPs and higher (Global)
Succession Planning Template
Formalized reviews
Premium on conversation, not forms
Fortune/Hewitt Recognition: Top Company for Leaders
#14 Globally
#11 North America
#6 China

13. Accelerated Development Programs
Talent Management Culture
Career Tools
Complete your internal Profile
Prepare for an interview
Leadership Position Profiles
Development
Resources
Internal development curriculum
University programs
Self-study books, articles
Exec. coaching
Job Transitions
On-boarding & Assimilation Support
Ops Fast Track Information and Templates
Job transition support
Development
Planning
360 Feedback
IDP Support
IDP Templates
Development resources aligned w/ competencies
Accelerated Development Programs

14. McDonald’s Means Opportunity
67,000 managers worldwide started as crew
1,200 U.S. Owner/Operators started as crew
40% of our Top 50 executives started in the restaurants
Life skills training
First Job for Carl Lewis, Jay Leno, Sharon Stone and more!

15. Employment Image Voice of McDonald’s Beijing Olympic Champion Crew
Global restaurant employee singing contest
3,600 entries from 53 countries
Public online voting
Finalists perform at ’08 Worldwide convention
Grand Prize of $25,000!
Beijing Olympic Champion Crew
More than 100 crew
The best of the best
30 countries represented
Once-in-a-lifetime experience
Crew work in our restaurants and experience the Olympic games

16. Employment Value Proposition: Telling Our Story
29 countries received great place to work recognition
2006/2007 winners include
Russia France
Singapore Belgium
India Latin America
Puerto Rico Canada
U.K. Hong Kong
Effectively telling our opportunity story
Extensive media coverage
Leadership development
Opportunity
Minority investing
Training

17. Bringing the Frameworks to Life

18. Bringing the Frameworks to Life
Communication Strategies
HR Leadership Team
Major Market Meeting
Global HR Meeting
Webcasts/Best Practice Sharing
Global HR Website
Market visits

19. Bringing the Frameworks to Life
Performance management
Global PDS system
Distribution guideline (20/70/10)
Talent management
Talent Plan Frameworks
Global Leadership Staffing Process
Leadership Development Programs

20. Bringing the Frameworks to Life
Global People Metrics
90-day Crew Turnover
Management Stability
Reputation Index
HU Certified Managers
Global Commitment Survey
Consistent across 118 markets
At least 1x per year
Restaurant and staff

21. Bringing the Frameworks to Life
Employment Experience
Australia - MeTime
U.K. - Our Lounge
Latin America - McLand
U.S. - Hiring to Win
France - Recruitment Centers

22. Bringing the Frameworks to Life
Rewards
Global Annual Incentive Program design
Competitive positioning policy
Singular executive compensation program (top 200)
Strong recognition programs
President’s Award
Restaurant Manager Award
Circle of Excellence

23. Bringing the Frameworks to Life
McDonald’s Formula
Strategic frameworks developed with AOW input led by centers of expertise ie. talent, rewards, metrics and performance management
Decentralized, empowered environment - scale big ideas
Common unifying values
Partnership with franchisees
Passion for the brand

24. Questions and Answers