Given The Facts from The Case, What Can You Glean from News Reports About McDonald’s, What Do You Think Is Going On?-Adapting Benefits to a Changing Strategy
MacDonald’s decision to improve their minimum pay at only the company-owned restaurants shows a long-held idea or belief of the company-Adapting Benefits to a Changing Strategy. The company is not known to set wages at the franchised units which have a higher number of their employees. It is something that the company is anticipated touting in the current ongoing federal labor law legal proceedings (Royle & Rueckert, 2022). While the hamburger chain decision they announced last week was a cheap or relatively inexpensive strategy for McDonald’s to improve their brand reputation with consumers, there was a high potential of backlash or resistance notably from the McDonalds franchises that operate more than ninety percent of the company restaurants in America.
Essentially, the McDonalds decision implies that the company has set the PayScale of its own stores against other fast-food chains and its own franchises. Doing so has also pitted it against other service-sector firms such as Wal-Mart and Target. In other words, the move to increase their hourly pay implies that the company needed to. The move by MacDonald’s was to increase their competitive edge for workers over other service-sector companies. McDonald’s decision brings into question the significance of payment benefits and compensation in a company (Royle & Rueckert, 2022). Over the long term, the provision of compensation benefits and competitive pay is instrumental in improving the company’s image with consumers while simultaneously helping leverage their workforce morale. Doing so will eventually lead to lower employee turnover and better customer service.
The Decision
McDonalds decision was announced before the implementation of the state minimum wage rating which in the process offered the franchises a huge amount of time to decide whether to respond or not. As much as there is time, not many franchises would respond to such a move. The visibility granted for an individual’s franchise is not the same when making a decision to increase their pay rate even though it is a public relations issue for McDonald. As such; the timing of the pay rate increase was strategic (Royle & Rueckert, 2022).
The announcement and the directive mentioning that the decision only applies to company-owned stores were meant to show that the company franchises make decisions on their own. The distinction is important to McDonald’s decision that the parent company does not share decision-making responsibility with its franchises regarding working conditions and setting benefits and wages. Consequently, McDonald has admitted that the changing millennial consumption patterns have rocked the company’s profitability. Therefore, the decision to raise their pay rate and compensation levels is meant to raise its results and improve their worker’s morale which implies that their pay boost decision was not a spur-of-the-moment step.
Specifically, How Do Corporate Strategy and Wage/Benefit Decisions Either Support or Conflict With Each Other?-Adapting Benefits to a Changing Strategy
Corporate strategy and wage benefits align in their decisions since they focus on establishing the business value, motivate employees and helping the company achieve strategic goals. The decisions taken are a continuous process which needs to be tailored carefully to respond appropriately to the changing environment and conditions in the market. Corporate strategy helps the company to improve its reputation to consumers, attract customers and improve the morale of its current employees (Milkovich & Newman, 2014). For instance, McDonalds in previous years has been experiencing low sales volume because of the changing health preferences of the millennial (Royle & Rueckert, 2022).
The decision to increase their pay benefits focused on leveraging the company image and helps to attract or retain talent in the market. For this reason, while it was initially a corporate strategy for the company to develop a strategic plan to help attract and retain employees, they needed to develop a wage benefits or compensation strategy to simultaneously help salvage the company image (Wood, 2020). For this reason, corporate strategy decisions and employee wages and benefits decisions are aligned by the focus on achieving the strategic plan goals of the company in the long run. In other words, the company needs to adapt the wages and benefits to the changing strategy.
Adapting Benefits to a Changing Strategy
Many companies fail to understand if the ordinary benefits have positive implications or payoffs. While employees rate wages and benefits are primary drivers in their job satisfaction, less than half of them appear satisfied with the compensation and benefits provided by the company. There is a mismatch between the perceived value to the employee and the cost to the employer. According to Milkovich & Newman (2014), employee compensations and benefits are no longer known as fringe benefits. However, the cost allocated to them has increased with time. The average benefits costs are roughly 30% of the compensation total (Milkovich & Newman, 2014). As such, benefits tend to add 44 cents per dollar of salaries and wages.
Most employees believe that the most important compensation and benefits are the medical benefits. Nonetheless, the primary issue is evidence that employees mostly underappreciated or undervalue the benefits the company offers (Royle & Rueckert, 2022). The perceived advantages of benefits increase when companies introduce choices via flexible benefit packages. It is the responsibility of the companies to design and plan effective benefit programs hence they need to communicate and interact with their employees regarding the benefits value to them.
References
Bilan, Y., Mishchuk, H., Samoliuk, N., & Mishchuk, V. (2020). Gender discrimination and its links with compensations and benefits practices in enterprises. Entrepreneurial Business and Economics Review, 8(3), 189-203.
Milkovich, G. T. & Newman, J. M. (2014). Compensation. Nova Iorque: McGraw-Hill/Irwin.
Royle, T., & Rueckert, Y. (2022). McStrike! Framing,(political) opportunity and the development of a collective identity: McDonald’s and the UK Fast-Food Rights Campaign. Work, Employment and Society, 36(3), 407-426.
Wood, A. J. (2020). Beyond mobilisation at McDonald’s: towards networked organising. Capital & Class, 44(4), 493-502.