Human Resource Management

Assignment Question

Improving Customer Satisfaction at McDonald’s

McDonald’s performed well throughout most of the economic downturn by sticking to its
strategy of rolling out a steady stream of new menu items as a range of prices—from
inexpensive snacks wraps to more costly fruit smoothies—intended to appeal to more
customers. It also remodelled and tidied up many of its 14,000 US restaurants. However,
satisfying customers with speedy and friendly service was a persistent challenge.

The bad news about customer satisfaction became a company wide focus in March 2013
during a webcast with franchise owners. McDonald’s executives noted that 1 in 5 customer
complaints was related to friendliness issues and that the problem was “increasing”.

A slide from Steve Levigne, vice president of business research for McDonald’s USA, stated
ominously: “Service is broken”. The top complaint was “rude or unprofessional employees”,
complaints and speed of service had “increased significantly over the past six months”, and
some customers even found the service “chaotic”. The news was soon picked up in the
business press.

McDonald’s First Response. In the webcast, McDonald’s asked franchisees to hire more
employees and provide better training to deal with complaints. McDonald’s, for its part, began
to roll out a new system for taking orders, new software to better manage the workload and
number of employees on the line, and a structure that provides manages more direct
responsibility for specific areas of operation (e.g., the kitchen or customer service) (Jargon,
2013).

Admitting Its Mistakes. McDonald’s has acknowledged its role in creating service challenges
due to tis aggressive expansion of the menu. “Jeff Stratton, president of McDonald’s USA,
said the chain introduced seal new products and limited-time offers this year to give
customers more variety,” reported The Wall Street Journal. It quoted Stratton as admitting,
“The pace of product introduction in my opinion: too fast” (Jargon, 2013).

The PR Battle. McDonald’s made its effort to deal with such problems part of its PR strategy.
“The company’s response could serve as a case study in using customer criticism as a basis
for a brand-building PR campaign,” writes Richard Brownwell, a content manager for the
PRNews website (Brownwell, 2013). Brownwell praises the company for listening to its
customers, then further improving communication with a new feedback system, and being
open and candid about its troubles.

That openness was evident during the webcast wherein the company shared many steps it
was willing to address customer satisfaction. For example, the company changed its 2014
business plan to invest in better food prep tables and improve training.
Work in Process. McDonald’s has further to go. Late in 2013 QSR Magazine, which routinely
reports on the average speed of service of various fast-food chains, found McDonald’s
average service time not only lagged its competitors, but it was the slowest reported over the
18 years that QSR has kept track (Oches, 2013).

Moreover, early in 2014 the company apologized further when the CEO, Don Thompson,
admitted, “We’ve lost some of our customer relevance.” Thompson announced other likely
adjustments to the menu, including customized burgers and a stronger emphasis on breakfast
(Jargon, 2013).

Employee Wages. Although McDonald’s has been open on most topics, it has not talked
much about one factor that may be affecting service—employee compensation. Articles and
critics in the business press connect poor service to the high rate of turnover, which they
connect to low pay. McDonald’s does not publicly report its turnover rates, but fast-food
restaurants typically run an average annual turnover rate of 60% (Lutz, 2013). Taken together,
this suggests that when unhappy customers are added to low pay, McDonald’s may be
experiencing even higher rates.

Questions

1. What is the problem with McDonald’s?

- Identify the outcomes that are important in this case.

- Which of these outcomes are not being achieved in the case?

2. What concepts or theories can be used to help you to understand the problem in this
case?

- What person factors are most relevant?

- What environmental characteristics are most important to consider?

- Do you need to consider any processes? Which ones?

- What concepts or theories are most relevant for solving the key problem in this case?

3. What are your recommendations for solving the problem? Outline your plan for solving the
problem in this case.
Reference

J. Jargon, “McDonald’s Says ‘Service is Broken,’ Tries a Fix,” The Wall Street Journal, April
11, 2013, B1, and at
http://online.wsj.com/article/SB10001424127887324010704578414901710175648.html.

R. Brownwell, “McDonald’s Makes Point of Repairing Its Service Issues in Public,” PRNews,
November 15, 2013, http://www.prnewsonline.com/water-cooler/2013/11/15/mcdonalds-a-
mini-case-study-in0effective-communications/.

S. Oches, “Special Report: The Drive-Thru Performance Study,” QSR Magazine, October
2013, http://www.qsrmagazine.com/reports/drive-thru-performance-study.

J. Jargon, “McDonald’s Acknowledges Service Has Suffered,” The Wall Street Journal,
November 14, 2013,
http://online.wsj.com/news/articles/SB10001424052702303789604579198432499699844.s

A. Lutz, “McDonald’s Customer Service Has Never Been Worse,” Business Insider, October
2, 2013. http://www.businessinsider.com/mcdonalds-need-better-customer-service-2013-10.

(Source: A. Kinicki & M. Fugate, 2016)