103107 cs mc_donalds_ll_final

CASE STUDY BERSIN & ASSOCIATES

Driving a High-Performance
Culture
McDonald’s Leverages Its Global Performance
Management Practices
—Leighanne Levensaler, Principal Analyst | October 2007

IN THIS CASE STUDY
In 2003, leading food service retailer McDonald’s Corporation
FOCUS: faced an unprecedented set of business challenges, including
extraordinary competition, a sagging share price and a wave of
PLANNING anti-American sentiment in the global marketplace. To improve
& STRATEGY performance and deepen customer relationships, the company
committed to a turn-around plan with clear objectives. Senior
CONTENT management recognized that, to be successful, it needed to instill a
DEVELOPMENT
culture that matched the company’s strategic aspirations.
LEARNING At McDonald’s, company culture is not taken for granted nor is it
PROGRAMS
offered as “lip service” to the employees – it is proactively managed.
LEARNING Well-known as a company with a strong culture supporting internal
TECHNOLOGY development and mobility, McDonald’s recognized that it needed to:

ANALYTICS & • Improve global management practices to align employees to the
MEASUREMENT business strategy;

TALENT • Ensure that every employee is held accountable for improving
MANAGEMENT performance; and,

• Share top talent as a truly global practice.

BERSIN & ASSOCIATES © OCTOBER 2007 • NOT FOR DISTRIBUTION • LICENSED MATERIAL

DRIVING A HIGH-PERFORMANCE CULTURE

In partnership with senior management, the global HR design group
KEY POINT
further enhanced the Performance Development System (PDS) – a
set of global performance management practices designed to build “People have always
alignment, hold employees accountable, and identify, develop and been McDonald’s legacy.
reward talent consistently around the world. I also appreciate the fact

This case study describes how one of the world’s most successful that, in an organization
companies and most recognizable brands drives a high-performance like McDonald’s, people
culture, and proactively manages talent on a global scale. and proﬁtability are

Highlights include: inexorably linked. You
cannot have one without
• The business drivers for implementing PDS;
the other.”
• The key components of PDS; – McDonald’s
Corporation chief
• Process step descriptions with example evaluation scales; and,
executive ofﬁcer
• Best-practice guidance and lessons learned for organizations that
are designing and implementing integrated performance
management initiatives.

BERSIN & ASSOCIATES © OCTOBER 2007 • NOT FOR DISTRIBUTION • LICENSED MATERIAL 2


TABLE OF CONTENTS
Company Overview 4

The Business Environment 6

The Challenges That Occurred 7

Talent Management at McDonald’s 7

Performance Development System 8

Overview 8

Key Components of PDS 9

Individual Performance Plan 10

Individual Development Plan 11

Mid-Year Review 11

Year-End Review 12

Performance Calibration Roundtable 13

Talent Review Roundtable 15

Compensation Decisions 15

Plan to Win and Performance Development System 15

Global Versus Local Perspectives 16

Governing PDS 16

Technology 17

Lessons Learned and Best Practices 18

Looking Forward 20

Conclusion 20

Appendix I: Table of Figures 22

About Us 23

About This Research 23

BERSIN & ASSOCIATES © OCTOBER 2007 • NOT FOR DISTRIBUTION • LICENSED MATERIAL


Company Overview

McDonald’s is the leading global foodservice retailer with more than
30,000 local restaurants serving more than 52 million people in more than
100 countries each day. One of the world’s most well-known and valuable
brands, the company holds a leading share in the globally branded quick-
service restaurant segment of the informal eating-out market in virtually
every country in which it does business. The world goes to McDonald’s
for some of its favorite foods – World-Famous French Fries, Big Mac,
Quarter Pounder, Chicken McNuggets and Egg McMuffin.

Figure 1: At a Glance

Company Name: McDonald’s Corporation
Company Type: Public (NYSE: MCD)
Industry: Leisure – Restaurants and Cafes – Fast Food and Quick Service
Restaurants
Founded: May 15, 1940 in San Bernardino, California
Employees: 447,000 (2005) (1.6 million in the global McDonald’s System)
Headquarters: Oak Brook, Illinois, U.S.
Locations: U.S., Europe, Asia-Paciﬁc, the Middle East, Africa,
Latin America and Canada
Founder: Ray Kroc, corporate founder
2006 Revenue: $21.60 billion
2006 Net Income: $3.54 billion
Website: www.mcdonalds.com

Source: Bersin & Associates, 2007.

To the world, the McDonald’s brand means something more than a
hamburger and fries. With the successful expansion of McDonald’s
into many international markets, the company became a symbol of
globalization and the spread of the American way of life. Communities
around the world benefit from its deep links to businesses, charities and
civic organizations.



Figure 2: At a Glance (cont’d)

Jobs and Opportunities

• Twenty of the top 50 worldwide managers started in McDonald’s
restaurants, including the current CEO.
• Sixty-seven thousand McDonald’s restaurant managers and assistant
managers started as restaurant staff.
• McDonald’s is the only restaurant organization to receive credit
recommendations from the American Council on Education (ACE).

People

• McDonald’s invests more than $1 billion annually in training.
• Hamburger University® has had more than 275,000 graduates
worldwide, with some eligible for college credits.
• “Best Place to Work for Minorities” – Fortune Magazine, 2005.
• “Corporate 100, Best Places to Work for Latinos” – Hispanic Magazine, 2005.

Community Commitment

• McDonald’s franchisees are local business owners and entrepreneurs.
• Ronald McDonald Houses® are homes away from home for families
with seriously ill children – with more than 265 Ronald McDonald
Houses in 28 countries worldwide.
• Ronald McDonald Care Mobile™ program is a ﬂeet of state-of-the-art
vehicles that deliver cost-effective medical, dental and educational
services directly to underserved children in their own neighborhoods.


The “McDonald’s System” provides employment and growth opportunities
KEY POINT
for more than 1.6 million people around the world. The business is
managed as seven distinct geographic segments or major markets: “If we are going to go

• United States; anywhere, we’ve got
to have talent. And, I’m
• Europe;
going to put my money
• Asia-Pacific; in talent.”

• The Middle East; – McDonald’s corporate
founder, Ray Kroc
• Africa;

• Latin America; and,

• Canada.



In 2005, McDonald’s celebrated its 50th anniversary – a celebration
that highlighted the unique opportunities McDonald’s has created
for millions of people over the past half century. Estimates are that
one in 10 people in the U.S. at some point in their lives have worked
“under the arches.” At McDonald’s, people can learn what it takes to
succeed – many move on to careers in other fields, taking with them
essential workplace skills and values, while others move up within
the organization to roles in the corporate home office, within their
restaurants or out in the field.

The Business Environment

In 2003, McDonald’s stock price was significantly lower than it had been
in a decade. Competition was intense and growing anti-Americanism in
the global marketplace brought significant challenges to expansion efforts.
Senior management was focused on improving company performance
and supporting initiatives that would deepen customer connections.

McDonald’s launched a revitalization plan called the “Plan to Win” –
which serves as the global business strategy and framework for deepening
those customer connections. The plan has five areas of focus – People,
Products, Place, Price and Promotion. The global “People Principles”
provide a framework for people-related programs and practices
worldwide. This reflects the company’s commitment to an inclusive,
supportive workplace environment – and to recognizing and rewarding
good performance. Global performance management was viewed as one
of the initiatives that could help to drive a high-performance culture, and
deliver better company and individual performance.

In early 2007, McDonald’s CEO reaffirmed McDonald’s commitment to
“Plan to Win,” stating that it,

“... is the foundation for our current and future success. In
fact, since we began our revitalization in 2003, we’ve grown
systemwide sales by almost 40 percent, an increase in revenues
by $6 billion. We’ve delivered double-digit increases in our average
annual earnings per share. Our share price has nearly tripled
and we are serving six million additional customers every day.”



The Challenges That Occurred
McDonald’s global performance management practices did not share A N A LY S I S
a common set of standards and, as a result, it was difficult for the
company to systematically identify and reward its top talent. Managers In most organizations,
lacked a common understanding of what “high performance” should the “talent” is currently
mean. For example, the five-point rating scale represented different deﬁned as a set of key
things in the various locations around the world. Also, candid directors and executives.
conversations were not occurring between employees and managers. Over time, Bersin &

To drive a high-performance culture, the company needed to: Associates believes
that organizations will
• Better differentiate performance at the individual level;
redeﬁne talent and
• Support managers in giving their employees open and honest associated practices
feedback; and, to encompass all
employees, including
• Tie rewards to the highest performance.
contingent and contract
With the support of the McDonald’s leadership team, the global HR workers.
design group redesigned and launched the Performance Development
System (PDS).

Talent Management at McDonald’s

At McDonald’s, talent management ensures that the company
has the leadership talent in place to drive business success both
today and in the future. Talent management within McDonald’s
has an overall goal with three main objectives:

1. Every key position has a high-performing,
committed leader;

2. A deep, diverse pool of replacement talent is available for
every leadership position; and,

3. The company’s culture demands and supports learning
and development.



Performance Development System

Overview
PDS is designed to drive the performance and development of
McDonald’s employees, with several important purposes:

• Provide a structure to align individual performance goals with
business strategies;

• Foster individual growth and enable sustained performance;

• Support performance evaluations that are based on results achieved KEY POINT
(e.g., what gets done) and demonstration of performance drivers
(e.g., how it gets done); McDonald’s founder Ray
Kroc once said, “Take
• Provide a process for identifying employees who are ready for
advancement; and, good care of those who
work for you and you
• Allow for a differentiation in performance assessments which, in
will ﬂoat to greatness
turn, allow for differentiation in distribution of rewards.
on their achievements.”
This is a “system” because it is integrated with other programs and
systems within McDonald’s. From an HR standpoint, it links into
talent management, compensation, recruitment, and learning and
development (L&D). Employees and managers are responsible for
understanding and implementing PDS.



Figure 3: Example of of an Integrated Talent Management Processaround Performance Management
Figure 3: Example an Integrated Talent Management Process around Performance Management

Sourcing 2 3
Known
Performance
& Recruiting
Competencies Management
to Succeed

Gaps in Operational
Gaps in Operational Skills Gaps
Roles and Skills
Roles and Skills
1 4
Talent Strategy Learning &
& Planning Gaps in Leadership Development
Pipeline

Compensation
Recommendations HiPo’s and
Succession
Planning

Leadership
7 Candidates
5

Compensation Succession
Planning
6
Leadership
Development


Key Components of PDS
The key components of PDS include:

1. Individual Performance Plan;

2. Individual Development Plan;

3. Mid-Year Review;

4. Performance Calibration Roundtable;

5. Year-End Review; and,

6. Talent Review Roundtable.



Figure 4: 4: Establishing the Individual Performance Plan
Figure Establishing the Individual Performance Plan

Manager and Employee Roles

When Managers Employees Managers and
Employees

December– Communicate the Develop individual Meet to review,
January following information to performance plans, modify and
employees: current year including performance approve individual
objectives, measures and objectives, measures performance plans.
targets for the workgroup. and targets.

Source: McDonald’s, 2007.

The PDS timetable begins with the creation of business strategies and
their alignment with individual performance plans, and ends with year-
end reviews and strategic people-planning.

Individual Performance Plan

The Individual Performance Plan (IPP) helps employees focus on the KEY POINT
objectives that matter most in supporting McDonald’s priorities. This
plan is the foundation that allows accurate assessment of performance “Cascading goals” is the
and the differentiation of performance levels among employees. process of adopting goals
Beginning in December, managers work with employees to create an at different levels within
IPP as a tool to align their objectives for the coming year with that
a company to ensure
of the business unit, department, and team strategies and initiatives.
alignment between the
These objectives should be “SMART” (Specific, Measurable, Achievable,
organization’s objectives
Relevant and Time-bound). One or two of these objectives should be
for personal development, reflecting the areas in which employees to individuals’ activities

intend to take specific action steps to develop their skills, knowledge and goals.
or experience. Those who manage people should also have one or
two “people development” objectives. During the year, employees are
responsible for meeting the objectives and are encouraged to document
their achievements. Managers are responsible for providing feedback,
coaching and support to their employees throughout the year.



Figure 5: 5: McDonald’s Individual Performance Plan and Year-End Assessment
Figure McDonald’s Individual Performance Plan and Year-End Assessment

Individual Performance Plan and Year-End Assessment
Individual Performance Plan

Information about you (Employee completes)
Name Title
Rating Scale
Region/Division/Department Band Descriptions
----- S el ec t -----

Person you report to Performance period

Date of mid-year review Date of year-end review

Results achieved (Manager completes at year-end using the ratings from the Performance Calibration Roundtable )
4 Exceptional Results Accomplishments were significantly beyond target performance levels. Contributions to business unit, team, or department result s were exceptional.
3 Significant Results Accomplishments met and sometimes exceeded target performance levels. All requirements and expectations of the job were fulfilled.
2 Some Improvement Required Accomplishments met some but not all target levels and/or basic job requirements were not consistently met. Performance is unsa tisfactory and improvement is required.
1 Unacceptable Few objectives were met and basic job requirements were not maintained. Performance improvement must be achieved.

Objectives and accomplishments (Employee completes)
Write objectives that are Specific, Measurable, Achievable, Relevant, and Time-bound (SMART). You and your manager should work together to develop goals, dates for completion, and ways to measure
achievement of your objectives. For the mid-year review and year-end review, enter accomplishments for each of your objectives.
Objectives that support your teams business Date to Measur ement Accomplishment
strategies (List 3 to 5) complete

Team Objectives
and Individual
Objectives that support your individual development
Objectives
(List 1 or 2 based on performance drivers or functional
competencies)

Rating Exceptional Results Significant Results Some Improvement Required Unacceptable

Page 1 of 6In the U.S., at McDonalds, employment is at will. This means that employees are free to terminate their employment at any time, for any reason, and McDonalds reserves the same right.
2.20.03 The president of McDonalds is the only person who may make an exception to this, and it must be in writing and signed by the president. McDonalds reserves the right to amend or modify the
policies and procedures described in this guide at any time without prior notice. The information and processes contained in this guide do not create any contractual obligation between McDonalds
and its employees.
The legal import of PDS varies from country to country. If you want more information concerning the legal import of PDS in your country, please contact your local HR Department Head.
'2003 McDonalds Corporation. All Rights Reserved.

Individual Development Plan

The Individual Development Plan (IDP) focuses on core and leadership
competencies, and job-specific or functional competencies that
employees need in order to be successful in their current or future
positions. The IDP should identify the plan for an employee’s career
aspirations. The goal is to have employees thinking about the skills they
want to acquire and how to continuously improve.

Mid-Year Review

Mid-year reviews take place by the end of July of each year. During
this review, an employee and his / her manager review year-to-date



Figure 6: 6: Examples of Individual Performance Plan Objectives
Figure Examples of Individual Performance Plan Objectives

Objective Date to Complete Measurement

Lower product costs by directly December 31 Realize a product cost savings of
identifying and contributing a $350 per store.
project cost savings.

Find ways to improve administrative End of 4th quarter Redesign process flow for expense
processes and reduce the vouchers to reduce cycle time from
amount of the manager’s time 8 days to 5 days.
devoted to administration.

Obtain a lower cost on one office Monthly during the Total office supplies expense not to
supply item each month. 2003 fiscal year exceed $10,000 for the 2003 fiscal
year.


performance progress on objectives and his / her demonstration of the
performance drivers. This is the time to revise annual goals based on
shifting business priorities.

Year-End Review

At the end of the year, employees submit their accomplishments to their
managers. Each employee and his / her manager have a face-to -face
meeting to ensure the manager understands the accomplishments and
can present them at the calibration roundtable. These accomplishments
are rated and, along with employee’s performance drivers ratings, are used
in the year-end performance review and to assess advancement potential.

In January of the following year, employees are evaluated on their
overall contribution for the year. Two major areas are considered:

• Results achieved on performance objectives or the “What”
(75 percent weight); and,

• The display of McDonald’s performance drivers or the “How”
(25 percent weight).

McDonald’s performance drivers include:



• Sets clear objectives with results accountability;
A N A LY S I S
• Coaches and values people;
To create and sustain a
• Acts in the best interests of the system; high-performance culture,

• Communicates effectively; an organization must have
meaningful differentiation
• Embraces change, creativity and innovation; and, among employees.

• Has strategic focus. Many use the “20-70-
10” distribution to rank
These ratings are combined to determine an overall performance rating.
employee performance
Figure 7 shows the rating levels, along with the distribution guidelines.
– to identify top talent,
Managers review the year-end IPP and assign a preliminary rating on results give promotions, decide
achieved, performance drivers and overall performance for each employee. on merit increases, offer
speciﬁc development
In late January, managers attend a performance calibration roundtable
interventions or for
and talent review roundtable during which they meet with their
downsizing.
peers and common supervisor. They discuss and share input on
employees’ performance for the previous year in order to arrive at a
final performance rating for each employee. Performance calibration
roundtables and talent review roundtables may be combined.

Performance Calibration Roundtable

The purpose of the performance calibration roundtable meeting is
to improve the overall quality and fairness of the ratings by ensuring

Figure 7: Overall Performance Ratings
Figure 7: Overall Performance Ratings

Numeric Label Distribution
Rating

4 Exceptional Performance 20 percent

3 Significant Performance 70 percent

2 Some Improvement Required 10 percent (divided between
Some Improvement Required
1 Unacceptable Performance and Unacceptable Performance)




that a common standard is being applied. Performance calibration
BEST PRACTICE
roundtables offer the following advantages.

• Rating inflation will be minimized by having the roundtable For companies using a
members discuss what the various rating scales mean. standard distribution
for performance ratings,
• A diverse group in the roundtable brings different perspectives
about each employee's performance over the past year. performance is evaluated
as both absolute and
• Through group discussions, the members will ensure that all
relative. Performance
employees are considered on results achieved and on each
calibration roundtables
performance driver.
are an essential
practice to determine
an employee’s relative
distribution placement.

Figure 8: Four Classiﬁcations of of the Readiness for Advancement Process
Figure 8: Four Classiﬁcations the Readiness for Advancement Process

RN RF NP CL

Ready Now Ready Future New to Position Current Level

Describes employees Describes employees Describes employees Describes employees
who are capable who, assuming who have been who, at the time of the
of immediate development continues, promoted or hired into assessment, are not
consideration for a are expected to the organization viewed as being ready
promotion to a be capable within within the last for a promotion to
position of significantly 2 years or less of 12 months for whom it a position of
greater responsibility consideration for a is too early to assess significantly greater
in the specific function promotion to a position their potential for the responsibility within
within the business to of significantly next level of 2 years or less. This
which their greater responsibility responsibility. category includes
development is being in the specific many outstanding
directed. functions within the performers (“aces in
business to which their places”) as well
their development is as individuals with no
being directed. interest in advancement
at this time.




Talent Review Roundtable

At the same time a manager assesses overall performance, he / she
determines an employee’s readiness for advancement. At a talent review
roundtable, managers identify and discuss employees who are ready for A N A LY S I S
advancement, agree on specific action plans for those employees and
finalize ratings. To enable comprehensive discussions during the talent Many companies (due
review roundtables, managers should also collect information about to their size or timetable
each employee’s strengths, development needs, development action plan, constraints) combine the
career aspirations, mobility, recommended moves and turnover risk. performance calibration
and talent review sessions
Approximately 25 percent of employees will fall in the “Ready Now” and
into one event – although
“Ready Future” categories.
a common theme we
Some additional talent review roundtable meetings are conducted by the hear is the desire to
lead functional executives at the home office in order to assess readiness separate the events.
for advancement of senior directors or officers in their functions.

Compensation Decisions
When ratings are finalized after the calibration roundtables, managers
use a web-based tool to make their compensation decisions and
allocations. Each manager is given a sum or pool of available
funds to allocate among his / her reports. Managers submit their
recommendations for bonus and merit increases, along with the
performance ratings. This information is bubbled up to higher levels
in the organization to ensure there are enough funds available.
By March 1, increases and bonuses are granted.

Plan to Win and Performance
Development System
Now in its fourth year, Plan to Win continues to keep McDonald’s
efforts focused on the right things. PDS incorporates corporate goals
that ultimately cascade from Plan to Win for performance planning and
objective-setting. This ensures company alignment and helps to drive
individual accountability for Plan to Win.



Global Versus Local Perspectives

In order to sustain success in global performance management, global BEST PRACTICE
efforts must be balanced with local perspectives. Given that each market
and organization within McDonald’s is unique, the company applied In complex, global
the “Freedom within a Framework” philosophy to PDS that is used by corporations, the
other key systems. The framework identifies what is negotiable and what “Freedom within a
it is not negotiable. For example, the revised four-point rating scale and
Framework” philosophy
performance drivers (including their definitions) are non-negotiables.
is essential to successfully
Conducting a performance calibration roundtable to finalize ratings is
a strong recommendation, but in some cultures it may not work. HR deploying and managing

business partners help to translate PDS to be in-line with the operating enterprisewide programs.
environment, while abiding by local laws, regulations and procedures.

Governing PDS

Beginning with the initial redesign effort, the global HR design group
has worked hard to ensure executive support, to collaborate on strategy
and design with HR business partners from the major markets, and to
seek input from line managers and employees on PDS.

• McDonald’s Human Resource Leadership Council (HRLC) BEST PRACTICE
provides the overall strategic direction and ensures investment
for PDS. Leverage key
competencies across all
• The Talent Management Department is the primary team
accountable for PDS strategy and design. talent-related programs
to reinforce your
• Global HR Business Partners support and localize execution of
organization’s desired
PDS within the major markets.
culture.
Additionally, the global leader for PDS initiated an advisory team of line
managers that meets once a month to incorporate different perspectives.
This advisory team represents the line managers who use PDS everyday
– and who see first-hand what is and what is not working. (Officers
sometimes do not hear or interpret the feedback the same way the line
managers would interpret it directly from employees.) To assemble this



team, HR generalists around the world were asked to identify managers
and directors who would have a passion for giving feedback and who
would be excited to be part of the team. In terms of giving input for
future changes, this team is just as critical as the HRLC.

Global governance of the execution of PDS is a challenge without a
web-based performance management system. Ultimately, it is up to the
HR business partners in the various countries to monitor compliance
and report outcomes. They look at the 20-70-10 distribution and
how the organizations are doing in terms of meeting expectations. At
the home office and in U.S., HR business partners are able to use the
compensation system to analyze a wide range of information. They
look at data about diversity in terms of the distribution of ratings and
compensation. Additionally, they look at whether people are truly using
the full range for compensation. But this type of data is not captured
on a global basis since compensation practices and systems vary from
country to country.

Employees provide direct input to PDS through the annual employee
opinion survey – which is reviewed by the talent management group to
continuously improve PDS.

Technology

PDS is currently administered through a combination of Microsoft
Word and Excel templates, email, and several regional compensation
management systems. When asked about the lack of a web-based
system, the global lead for PDS said,

“It is a disabler that PDS is not a web-based system – but
not a deal-breaker. It is more important that people
are engaged in the process and are executing on their
performance plans.”

Still, the company realizes that technology can further enhance PDS
and related initiatives, such as the talent review process and merit
pay. The global lead for PDS hopes to achieve many benefits with
technology, including:



• Realizing greater efficiencies in the process;

• Providing the ability to monitor compliance and ensure the effective
use of the system and global consistency; and,

• Enhancing the experience for managers and employees.

In 2007, foundational activities are being conducted to prepare
for the implementation of an integrated system supporting critical
talent management functions, including performance evaluations,
development planning, talent readiness / succession management and
merit-pay allocation.

Lessons Learned and Best Practices

Through several years of global experience with PDS, McDonald’s has
learned many lessons and offers some wisdom (whether you are looking
to redesign your company’s performance management approach or you
are attempting to expand it).

• Be prepared that it will take multiple years before people really
understand and embrace the system. At the time of its inception,
PDS represented significant changes to many existing approaches
for annual performance evaluation around the world. Many people
were very fearful of a perceived forced distribution at McDonald’s
– they were concerned that PDS would force people out of the
company unwillingly. Communication and change management
are essential to dispelling misconceptions like this one, reducing
fear of change and ensuring successful adoption. Remember to
continuously focus on change management. It is equally important
to communicate why and how the current process is changing, as
well as how it is not changing.

• Keep it simple. These things can get complex. You forget that,
for HR, this is the main part of the job. It might seem simple but,
for a line manager (whose functional area is architecture), people
development is just another thing they have on their plates. It is
important to make sure managers understand that developing and



managing their direct reports is a key responsibility of their jobs no
matter what their jobs are.

• Include both the “What” and the “How” as part of the overall
performance rating. The two major areas to consider are the
performance results (or the “What” an employee accomplishes) and
the performance drivers (or the “How” the employee accomplishes
them). The “What” helps you evaluate if the behavior is consistent
with your culture and company values.

• Implement performance calibration roundtables. These
are critical to get managers on the same page as to what high
performance looks like. If the managers are doing it in a vacuum,
it is really hard for them to ever change their mental models. For
example, it is not the amount of hours a person spends in the office
or how hard he / she works – it is the results he / she achieves.

• Start with the officers of the company. In year one, McDonald’s
only rolled out PDS to the company’s officers. In order to ensure
success in the global implementation at the staff level, the company
felt it was essential to get that group’s buy-in and support. Officers
were able to communicate why this was the right system for
McDonald’s and even championed the change management
kick-off sessions.

• Reinforce the concept of shared accountability for managing
performance. Define the manager’s role as a coach who provides
tools, information and direction as needed. Expect employees to
drive the process and take ownership for their own performance.
Use the performance management process as a key way to engage
people in the business and as a mechanism for helping them
understand how to improve performance and impact
business results.

• Provide opportunities for ongoing performance support and
training on performance management. When McDonald’s
launched PDS, the company set up change management sessions
and just-in-time training around the world. After the initial launch,
all new managers and employees are introduced to PDS during
the new employee orientation program. Within the first month
of employment, new employees are invited to attend brown-bag



sessions on PDS. In addition to PDS documentation, McDonald’s
offers an e-learning module for both the employee and manager,
which documents the step-by-step annual process. How managers
evaluate performance results and drivers is critical to employee
satisfaction and engagement. For a successful performance
management process to work, managers must feel proficient and
confident in the process.

Looking Forward

McDonald’s is committed to continuously improving its performance
and talent management practices. Near-term plans include phasing out
the current performance drivers and using the competencies from the
core competency model to support the individual performance and
development plans. To ensure effective change management, the global
HR design group will work with the HRLC and the global HR business
partners on the communications and deployment strategy. Additionally,
the governance groups will continue supporting the global HR design
group in development of a technology strategy, business case and
deployment approach.

Conclusion

This case study provides a mature model of a business-driven talent
management initiative. To transform into a high-performance
culture, McDonald’s:

• Analyzed its performance management practices; and,

• Designed an integrated approach to support the organization to:

o Identify,

o Develop,



o Reward talent, and

o Devote significant resources to global governance and
change management.

Today, the company is delivering the strongest business results in
the last 30 years. PDS is a critical enabler to this success by ensuring
alignment of individual performance goals with the business strategy
and continuously cultivating ready talent for the future.

“i’m lovin it™”



Appendix I: Table of Figures

Figure 1: At a Glance 4

Figure 2: At a Glance (cont’d) 5

Figure 3: Bersin & Associates Integrated Talent Management Process around Performance Management 9

Figure 4: Establishing the Individual Performance Plan 10

Figure 5: McDonald’s Individual Performance Plan and Year-End Assessment 11

Figure 6: Examples of Individual Performance Plan Objectives 12

Figure 7: Overall Performance Ratings 13

Figure 8: Four Classifications of the Readiness for Advancement Process 14



About Us
Bersin & Associates is the only research and advisory consulting firm focused
solely on WhatWorks® research in enterprise learning and talent management.
With more than 25 years of experience in enterprise learning, technology and
HR business processes, Bersin & Associates provides actionable, research-based
services to help learning and HR managers and executives improve operational
effectiveness and business impact.

Bersin & Associates research members gain access to a comprehensive library
of best practices, case studies, benchmarks and in-depth market analyses
designed to help executives and practitioners make fast, effective decisions.
Member benefits include: in-depth advisory services, access to proprietary
webcasts and industry user groups, strategic workshops, and strategic consulting
to improve operational effectiveness and business alignment. More than 3,500
organizations in a wide range of industries benefit from Bersin & Associates
research and services.

Bersin & Associates can be reached at http://www.bersin.com or at
(510) 654-8500.

About This Research
Copyright© 2007 Bersin & Associates. All rights reserved. WhatWorks® and
related names such as Rapid e-Learning: WhatWorks® and The High Impact
Learning Organization® are registered trademarks of Bersin & Associates. No
materials from this study can be duplicated, copied, republished, or re-used
without written permission from Bersin & Associates. The information and
forecasts contained in this report reflect the research and studied opinions of
Bersin & Associates analysts.


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