McDonald's Challenge: Will a New Grading System Alienate the Company’s Employees?

Published on: 16 May 2022
by KnowESG
Mc Donalds - from outside

While McDonald's was intending on implementing a new grading system, franchise owners, whose franchise number is about 13,000 in the United States alone, pointed out the strains within the workforce, which makes the timing of the decision very questionable.

The company intends to implement the Operations PACE (Performance and Customer Excellence) system in January 2023. The program calls for six to ten visits per year from company and third-party assessors per location, without including the regular inspections for things like local food safety regulations. McDonald's said that the evaluation method includes personalized resources that will help franchisees improve daily performance and increase sales, profits, and customer counts.

"We must remain laser-focused on maintaining our world-famous standards of excellence in our restaurants", McDonald’s said.

The owners’ fear that it will result in a less-collaborative approach to operations with harsher grading is based on the testimony of three people with knowledge of the matter and two separate surveys of franchisees.

"It just kills morale, and with the current hiring environment being as tough as it is, I can’t afford to lose any more people", said one franchisee with decades of experience and a dozen locations who, despite paying $16 an hour, has 500 employees but is short of 100.

Tensions with franchisees are nothing new at the company, and these include labour issues and record-high costs. Labour costs have risen at McDonald's and other fast-food corporations, causing franchisees to raise prices in tandem with pay, along with the competition for workers. There is also a growing union push at various restaurants and retail outlets across the country.

Two different surveys have confirmed the opinions about installing the PACE systems at such a critical time for the company and its franchisees.

“Who in their right mind would add so much pressure to a widely-known distressed industry [and its] employees, facing the worst labor shortage in history, inflation and price increases, the fear of pandemic tremors, and so much more by instituting such a laborious program as PACE?” according to a source in franchisee leadership with knowledge of the situation.

Source : CNBC

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