Human Resources Tips from the World’s Biggest Brand

CHRO Richard Floersch reveals management secrets from behind the counter at McDonald’s Corp.

By Nancy Flagg

Taking the Chief Human Resources Officer (CHRO) job at McDonald’s Corp. was the “easiest professional decision” Rich Floersch has ever made in his career. His journey to the top HR position in the world’s leading food service organization had its roots years back in a class he took while attending the State University of New York at Buffalo.

Career Foundations

While Floersch was earning his master’s degree, he enrolled in a class on compensation from renowned visiting professor George Milkovich. That single class, “more than any other cause, ignited my interest in HR and strong leadership practices,” Floersch said.

After graduating, the budding young professional worked for an HR consulting firm in Connecticut where he was able to work on a variety of projects in compensation, employee benefits, employee engagement and organizational studies.

Floersch credits his next job, Manager of Compensation for General Foods, as the one that prepared him the most for his ultimate career path. He had been recommended for a promotion, but rather than being moved into a higher position, the company moved him laterally into a Generalist position to give him broader experience. Floersch went from managing one person in compensation to supporting the entire Research and Development HR staff, complete with labor responsibilities.

“It was the best job change,” Floersch said. “I would otherwise have stayed as a specialist. They got me out of my comfort zone.”

Floersch’s next “game-changing job” was with Phillip Morris, leading the company’s Compensation Unit. He was appointed as the head of HR for the company’s Kraft Intl. group, which gave him significant international experience and got him back on a generalist track.

He’s Lovin’ It

When the CHRO job at McDonald’s opened up, Floersch said that he was “chomping at the bit” to get it. He was excited about the challenge of taking on the top HR role at a global corporation of more than 34,000 restaurants serving 69 million people in 118 countries every day. With its executives committed to revitalizing the company, Floersch would be able to uplift the company’s people practices, talent management and rewards program.

After accepting the position in 2003, Floersch interviewed 200 company executives and HR staffers to get their sense of what McDonald’s was doing right in its HR practices and where improvement was needed. A near miracle occurred—they “all said the same thing!” Floersch exclaimed. The consistent direction they described was a need to retain its high-relationship culture while creating a high-performance environment.

Floersch and his team took action to contemporize the compensation and benefit offerings and institute effective talent management leadership development programs. The team responded with strong performance-driven rewards and cutting-edge benefits programs as well as an accelerated development curriculum for high-potential executives.

Since implementing these changes, McDonald’s had been ranked by Fortune magazine as one of the top 10 companies for leaders and was listed as one of the Best Multinational Companies to Work For. Floersch himself has received numerous awards and accolades, including being inducted into the National Academy of Human Resources and being on the honor roll for the Most Admired HR Executive by Human Resource Executive magazine.

Floersch pointed to an internal survey of employees as a measure of success. He noted that the number of positive responses to the question “Would you recommend working at McDonald’s?” has soared.

Even with McDonald’s success, Floersch said, “We can’t ever declare victory, or say we cracked the code. We have to keep improving.”

Together We Can

McDonald’s pioneer Ray Kroc said, “None of us is as good as all of us.” Floersch’s management practices reflect Kroc’s philosophy. The “talent equation is the big differentiator of whether a company will be successful over the long term,” Floersch noted, indicating that he would prefer a talented A-level team with a B-level strategy over a B-level team with A-level strategy every time.

The key to talent development is to “put people in jobs that play to their strengths and passions,” because it gives them the best chance to succeed, according to Floersch.

Floersch wants new employees to get a good start. Because the company values strong relationships within HR, the department assigns newcomers a “buddy” of similar age who has been with the company for a few years. This system helps the newcomer find his or her way and maybe even make a friend.

Once on board, employees are given classroom and work opportunities to develop their skills. Sometimes an assignment might be a bit of a stretch, but “there’s nothing wrong with a little adrenaline” to promote development, Floersch said.

The HR leader’s management style supports team development. He sets standards, trusts the team with information about where the organization is headed, keeps things informal, gives challenging assignments and supports the team while giving them “enough room to get the job done.”

As an example, Floersch assigned a cross-functional team to a health care reform project. The subject was complex, and Floersch stayed close to the team but made sure they knew that they owned the project. Team members met with consultants, interacted with outside associations on regulatory impacts, made strategic decisions and presented recommendations to the CEO and executive team. “They did a great job,” Floersch concluded.

Floersch is a believer in the power of positivity to create a successful team environment. As a leader, he knows that his every action, including who he talks with and where he allocates his time, is being observed by peers and staff. He is conscious of his body language and attitude, and he wants to bring an infectious enthusiasm to the workplace.

One benefit program that contributes to an energizing, positive environment is McDonald’s sabbatical program. For every 10 years of work, employees earn a two-month paid sabbatical.

“People planning sabbaticals and returning from them generate considerable positive energy within their team,” Floersch said.

Floersch is particularly gratified that the “wonderful cultural aspects of McDonald’s” have been retained as the company has evolved its high-performance culture. Professor Milkovich would be proud.

Nancy Flagg is a freelance writer based in Sacramento, California.