Management Incentive at Mcdonalds

Anyone who glances at the front page of newspaper or watches the evening news knows that executive compensation is one of the hottest topics. There is a flurry of activity abd discussion surrounding the complex issues underlying executive compensation practices. Juggling public perception, shareholders demands and management expectation can seem an overwhelming task. Same challenges are faced by McDonalds.

McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald; in 1948 they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth.Since then the company does not stop growing.

A fast food chain of restaurant at McDonald's primarily sells hamburgers, cheeseburgers, chicken, French fries, breakfast items, soft drinks, milkshakes and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, wraps, smoothies and fruit. The fast emergence of the McDonald brought a lot of profit, not only that; along with high profits and sales revenue compensation for managers also became an important factor of company productivity. This report aims to answer the questions given in the case McDonalds’ Corporation: Designing an Incentive System and well as to provide additional information on current incentive system of the former company.

1.WHAT FACTORS SHOULD MCDONLAD’S CONSIDER WHEN DESIGNING A COMPENSATION PLAN FOR IT FIRST LINE MANAGERS?

To observe the performance of other agents is a difficult task. Hence, firms will create some

kind of incentive system to promote and encourage performance. In addition to the constant...