Mcdonalds in Russia – 14

Challenges McDonalds faces in Russia – employees
– Relationship development (Negotiator changes: started w/ Olympics, 70s was closed, in in 90s)
– Bureaucracy & red tape (extensive)
– Supplier availability & skill (limited: small potatoes)
– Skilled (we fitted) employee availability (limited)
Challenges McDonalds faces in Russia – customers
– Cultural barriers (significant cultural differences)
– Customer awareness (unfamiliar food & ordering system)
Challenges McDonalds faces in Russia – ease?
– Infrastructure (insufficient phones, roads)
– Currency: rubles (unconvertible: π couldn’t be repatriated to CAN)
– HRM practice understanding (unfamiliar: used to working for state owned practice)
Russia Vs. Sweeden – Collectivism/Individualism
Canada has higher by 40
Russia Vs. Sweeden – Power Distance
Russia has higher by 50
Russia Vs. Sweeden – Uncertainty Avoidance
Russia has higher by 45
Russian-HRM Under Communism
– Management’s view of employees (a cost)
– Skill development (not permitted: bureaucracy & quotas)
– Career Progression (limited)
– Incentives to work harder (few: quotas)
– Employment security and key focus
– Salary differential (small: egalitarianism emphasized)
McDonalds Russia – Performance
1. Profit margins
2. Store traffic
3. Management success
McDonalds Russia – Profit margins
Higher than global average
McDonalds Russia – Store traffic
2X that of other markets (emphasized store traffic not new openings (handheld order devices so that order already placed when at beg. of line, high speed toasters)
McDonalds Russia – Management success
– Became CEO of McD’s Russia
– President of McD’s in Eastern Europe
McDonalds Russia – Key Success Practices
1. Relationships
2. Marketing (before opening 1st store)
3. Commitment
4. Human resources management
Relationships
Cohon (over 100 visits to Russia, 1976-1990)
Marketing (before opening 1st store)
– TV show took flights to McD’s in different countries
– Media allowed to sample food & view stores
Commitment (didn’t exclude anyone from customer basis)
– McComplex (production centre to produce everything in Russia)
– Acceptance of rubles
– Real estate purchases (shows commitment)
– Philanthropy (children’s charities)
– Financial crisis accommodations (price reductions, Russian food options)
McD’s Russia Initial Entry – Recruitment Methods
– Newspaper ad & HEADHUNTERS
– Position “applications accepted”
McD’s Russia Initial Entry – Recruitment Criteria
– Personality (character)
– Previous work experience? -0. not interested in baggage from state owned enterprise
– Telephone (accessible)
– Live with 30 mins of the restaurant
McD’s Russia – selection
– Multi-round interview w/ both RUS & CAN
– Competition
– Probation period
McD’s Russia Today – Recruitment Methods
– Newspaper ad
– HEADHUNTERS (relationship based society)
McD’s Russia Today – Recruitment Criteria
– PERSONALITY (character)
– PREVIOUS FOREIGN WORK EXPERIENCE
– English skills
– Previous training
McD’s Russia Initial entry – training management
– on-the-job training (1 mgs 3 employees)
– home country HQ programs (in-class training)
– Toronto restaurants (skydome)
– Hamburger University (bachelor or hambergerology, consistent ops procedures, service, quality)
expats from various countries ENHANCES:
– identification w/ the firm
– understanding firms org culture
– network development
– pride (by being in a global network)
Training – crew members
– on-the-job training (secret shoppers, timing, get to smile)
– videos (translated into Russian)
Foreign firms entering today – Training
– Self study (russians very effective)
– Coaching
– Courses (English & computer)
– Home country HQ programs
Foreign firms entering today – Appraisal
– up-and-down system
– link to training (higher appraisal = higher compensation)
Foreign firms entering today – Compensation
– salary
– bonuses
– non-monetary benefits
McD’s Russia effective motivators
– free meals
– private health insurance
– free vacation trips
– product discounts
– free cultural events
McD’s Russia salary
substantially higher than avg
McD’s Russia bonuses
given for mastering tasks & meeting performance targets
retention – job hopping
managers, salespersons, accountants
effective tools for retention
– company atmosphere (org culture)
– presence of friends
– social activities
– free meals
– future stability in & commitment to Russia
– advancement opportunities
– training programs availability
– company loans
Key Takeaways from russia slides
– communist Russia & western HRM practices differ greatly
– many of these HRM practices continue today in Russia
– Mcds succeeded by 1. recruiting employees that best fit the firm 2. using HRM to meet the needs of these employees
– HRM practices must fit the type of russian employee
Russia Vs. Sweeden – Quality of Life/ Career Success
Canada has higher by 15
McD’s Russia – selection (today)
– Multi-round interview: motivation *jobs based on qualification not relationships
– Competition: pride
– Probation period: satisfaction
Foreign Firms Entering Today
1. Training
2. Appraisal
3. Compensation
bonuses are effective motivators when
based on individual performance, not more than 25% of fixed salary (high uncertainty avoidance)
non-monetary benefits are effective motivators when
address shortages
-free meals, private health insurance & product discounts

quality of life
– free vacation trips
– free cultural events

crew members compete are are compensated by compensated by
1. Salary
2. Bonuses
3. Non-monetary benefits
crew members: Salary
substantially higher than average (to elevate lifestyle: be wary of job hopping)
crew members: Bonuses
given for mastering tasks & meeting performance targets
crew members: Non-monetary benefits
– free meals
– private health insurance
– free vacation trips
– product discounts
– free cultural events
Retention (job hopping issue)
shortage of
– managers, salespersons, accountants

* wage must be higher than competitors

Effective retention tools
collectivism (retention)
– company atmosphere (org culture)
– presence of friends
– social activities

– free meals
– future stability in & commitment to Russia
– advancement opportunities: weren’t avail under centrally planned system
– training programs availability
– company loans

Key Takeaways from russia slides
communist Russia & western HRM practices differ greatly (still)
– many of these HRM practices continue today in Russia (especially state owned enterprises: tainted by state experience)
– Mcds succeeded by
1. recruiting employees that best fit the firm
2. using HRM to meet the needs of these employees
– HRM practices must fit the type of russian employee