Giving 'McJob' a new meaning: McDonald's sets example with beefed up benefits, career paths

Nation's Restaurant News, March 7, 2005 by Robin Lee Allen

The restaurant industry rightfully was up in arms two years ago when Merriam-Webster included in its dictionary the term "McJob," defined as "low-paying and dead-end work."

At the time, the late Jim Cantalupo, then chairman and chief executive of McDonald's Corp., shot off a letter to Merriam-Webster, taking it to task for its "inaccurate description" of foodservice jobs. He also admonished the publisher for delivering % slap in the face to the 12 million men and women who work hard every day in America's 900,000 restaurants."

While Cantalupo's words were effective in 2003, the Oak Brook. Ill.-based company now is speaking louder with its actions by redefining just how good a so-called McJob can be.

In the past few years, the quick-service conglomerate has enhanced its medical benefits, improved its recruiting and training practices, and watched its turnover fall below industry averages.

Richard Floersch, McDonald's executive vice president of human resources since November 2003, reports that manager turnover at McDonald's now ranges between 10 percent and 20 percent, compared with an industry average of 33 percent, according to Dallas-based People Report, which tracks human-resources-related trends at member companies.

Meanwhile, turnover among McDonald's crew members in 2004 was 90 percent to 100 percent, down from 150 percent a few years ago, according to Floersch.

Floersch noted that there was no one silver bullet responsible for the downward trend in turnover, but he added that the company's recent steps to re-energize business at its 31,500 units worldwide have had the positive side effect of boosting morale and commitment among its 400,000 workers.

In addition, McDonald's, which offers medical coverage to full- and part-time employees at its 9,212 company-owned units, is facing the monumental problem of escalating health care coverage costs head on by joining with 60 other major corporations to purchase group medical coverage at lower costs.

Admittedly, it would be hard for any insurance company not to accommodate a coalition boasting the muscle of McDonald's, General Electric, IBM and Sears Roebuck, but taking such an initiative sends a powerful message to those who would rather view corporate America as blind to the country's health care crisis.

In the same vein, as lawmakers consider how to best address the looming problems with Social Security, McDonald's is working to increase retirement savings among its workers through an enhanced 401(k) plan available to both hourly workers and managers. Through the plan, the company matches $3 for every $1 that employees put in their accounts, up to 1 percent of their pay. The company also matches dollar-for-dollar the next 4 percent of pay contributed by employees, who also are eligible for a discretionary profit-sharing match up to 4 percent depending on the company's performance.

In addition, McDonald's is encouraging more workers to contribute to 401(k) accounts by instituting this year an automatic enrollment for managers, which requires them to opt out of the program if they don't want to contribute. Previously, they had to opt in. As a result of the change, manager enrollment in 2005 more than doubled to nearly 90 percent, according to Floersch. At the same time, hourly participation also doubled to more than 20 percent.

After changing and expanding so many internal programs, McDonald's wanted to make sure its workers understood what new perks were available to them, according to Floersch. So McDonald's created an HR newsletter--designed with input from an advisory council of employees--that is filled with details about retirement funds and medical coverage along with reminders to get regular dental checkups and tips for eating more healthfully. The newsletter, which is dubbed "addin' it up" and was influenced by the chain's "i'm lovin' it" ad campaign, is filled with colorful charts and easy-to-read tidbits and is designed to convey a more youthful and contemporary attitude.

Where career development is concerned, McDonald's has upgraded its orientation process so that new hires are likely to stay on board. Furthermore, the company is working harder to identify management candidates and to get them the training necessary to move into bigger jobs.

No doubt lines like "Would you like fries with that?" will continue to pepper comedy routines and Hollywood movies despite McDonald's new programs and similarly progressive changes at other foodservice companies. But as competitors take their cues from the fast-food leader and further amend their own HR practices, over time the negative stereotypes will fade. And maybe someday the word McJob--in the eyes of Merriam-Webster and others who would denigrate the hard-working people in the restaurant industry--will have an entirely different meaning altogether.