Transforming McDonald’s key talent model for a new age

McDonald’s Corp is a company in the midst of change, but it is an evolution the senior leaders – including David Fairhurst, Corporate Executive Vice President, Chief People Officer – have relished in recent years.

Working with Dave Ulrich, Rensis Likert Professor at the University of Michigan’s Ross School of Business, and a partner at the RBL Group, Fairhurst oversaw an “objective assessment” of the business to gain a solid understanding of what “world-class leadership” means and how it would apply to McDonald’s.

“We wanted to see how we stacked up against others not only within our industry sector but to leading businesses outside our sector as well,” he says.

Fairhurst and his team eventually came up with an acronym called “BEST,” for Building Blocks, Execution Proficiency, Strategic Proficiency, and Talent Proficiency.

“This highlighted the historic strength we needed to build on while helping us focus on the new muscle we needed to develop,” he says.

Building Blocks, for example, refers to the behaviours and traits most critical in an agile, growth environment, while Execution Proficiency refers to the ability to prioritise and get things done. Strategic Efficiency centres on making customer-led decisions to drive competitive advantage, and Talent Proficiency relates to building the capabilities of others.

All senior leaders at McDonald’s were assessed against the BEST model. For the first time in the company’s history, each one was assigned an executive coach. Through a combination of developmental opportunities and replacement of some members of the team with new talent from within or outside the organisation, McDonald’s executive team evolved to reflect a blend of internal and external experience, says Fairhurst.

By 2017, nearly every senior leader on McDonald’s Corp CEO Steve Easterbrook’s executive team was new to their role.

“Steve and David have done a marvelous job of redefining leadership for the next generation,” says Ulrich. “Traditionally, McDonald’s DNA was all about cleanliness and convenience. They’ve upgraded that to ‘customer obsession’ — as in, rather than employees just smiling at the customer, the customers smile back because they’re delighted with the service.”

The goal for Easterbrook and Fairhurst is to have an organisation stocked with “ambidextrous” managers — those who are comfortable dealing with ambiguity and paradox, says Fairhurst.

Reinventing performance management

Fairhurst’s zest for shaking things up and questioning established ways of doing things extends to processes such as performance management.

“What I hear is that performance management in most organisations has little correlation to the performance of the business,” he says. “It involves lots of appraisals, processes, and time but a big question mark as to how it relates to driving business performance.”

Fairhurst aspired to something different at McDonald’s.

“We completely redesigned performance management,” he says. “You can’t manage performance, but you can motivate it.”

The new model is built around clear and effective goal setting, performance feedback, and career-development conversations with managers, says Fairhurst. More than one person now delivers feedback, and managers are required to have at least one goal-setting conversation with direct reports at least annually.

“We’ve gotten great results so far,” he says. 87% of employees report having had goal-setting conversations with their managers, while 75% have received performance feedback, and 82% have had career-development conversations.

Fairhurst has also emphasised the importance of teams within the organisation.

“Organisations are typically siloed into different functional areas, but the reality is that more of our work cuts across those functions,” he says.

The company’s partnerships with the Uber Eats and DoorDash online food-delivery services in the US are prime examples. McDonald’s was able to extend the services to its customers by quickly pulling together the right people from around the world, irrespective of geography or function. In 2018, McDonald’s partnership with Uber Eats generated US$3 billion in revenue.

“The future is about fluidity, agility and speed,” says Fairhurst.