In October 2016 chief executive of the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) Matthew Taylor was commissioned to lead an independent review into modern employment. The review’s findings were published in July 2017, and in February 2018 the government announced it will ‘take forward’ – meaning at the very least consult on – all but one of the recommendations.
For this new series we put Taylor in conversation with business and HR thought leaders to find out what’s currently on his and others’ minds when it comes to the economy, Brexit, organisational design, change, measuring good work and more. For the first in our series Taylor catches up with Paul Pomroy, CEO of McDonald’s UK and Ireland…
Matthew Taylor (MT): I think I’m right in saying you’ve had 50 quarters of uninterrupted growth? So what’s the secret to your success?
Paul Pomroy (PP): We learned the hard way; we’ve not always been successful. Back in the early-2000s we’d really lost our way… Steve [Easterbrook, former UK CEO and now global CEO] was the first person that really got us as a brand to listen. Then you have to act. Then it’s having the confidence to have your own vision. You can get distracted in terms of wanting to be like someone else... We’ve actually ignored Brexit deliberately; I have a very small group of people who are allowed to worry about Brexit.
MT: What interests me about McDonald’s is there’s a kind of humility that says you can’t force customers to do something they don’t want, you can’t force the franchisees to do something that doesn’t work for them, you can’t force the staff to do something that’s not possible. And I’ve always thought that humility is an underestimated leadership idea.
PP: The language I use internally is that we need to be confident but humble. My mum saying to me ‘whatever situation you’re in, if you treat people with honesty and respect you won’t go far wrong’ [has stuck].
MT: I went to your AGM and some of your executives were getting up and apologising. Not for big things; they were saying ‘sorry the IT system hasn’t quite worked for you’. That’s a particular style and I wonder how much that’s to do with you.
PP: You’ve got to stay grounded because you can’t start believing your own hype. You’ve got to remember that it’s the people around you that are really good. Then it’s knowing when to freshen it up. So since being in this position my exec team has changed a lot. And for the right reasons.
The other thing is recognising that everyone’s got an opinion that’s valid. Solutions to a lot of our problems come from the younger crew members in our restaurants. So how do you unlock 125,000 people that have all those solutions for us but in a controlled way? We’re not there yet.
MT: When you talk about the system, in the McDonald’s context that means something quite specific. So tell us about that.
PP: Ray Kroc, our founder in the US, was passionate about the system. His philosophy was that at every point in time each leg of the stool – our suppliers, franchisees and staff – has to feel that they’re doing as well from the system as any of the other legs.
MT: You don’t change your suppliers very often do you? You must have people hammering at your door every day saying ‘I can offer you spuds cheaper’. How do you resist that pressure? Because a lot of leaders don’t.
PP: I believe there’s more to business than the next month’s or quarter’s profit. You can often take a short-term gain that causes long-term problems. If you look at the problems retailers have faced over the last five years, we’ve not got caught up in those – the horse-meat scandal for example…
A healthy tension needs to exist within the business. As an example, some businesses will put quality and food innovation together. But the problem is that when you want innovation you might turn a blind eye to control. We get all of our top suppliers together and after that they go away and work on their strategic plans and have to work together.
MT: The way you talk about it, there’s a strong sense of constantly balancing forces to keep this alchemy together. So that’s more of a stewardship way of thinking about your role?
PP: Part of my role is to think about the future but have the confidence not to dictate how we get there. The analogy I sometimes use is that I’m a sailor permanently trying to trim the sails.
MT: I have this phrase: in times like this you need a compass not a map. As a sailor a map’s no good.
PP: Exactly. Someone asked me ‘how will you know when you’ve got there?’ My answer was when a young crew member who’s 16 years old stands at a party and says ‘I work for McDonald’s’. That wouldn’t happen today. It might happen slightly more frequently than five years ago… I can’t set the navigation to get there; it’s not straight.
MT: So one of the things about what gives people satisfaction in work is a sense of purpose. I worked for Blair in the third term and every single day the newspapers were Iraq, Gordon [Brown] trying to get us out… and the strange thing was there was esprit de corps within Number 10 that was incredibly powerful…So I wonder in a way – because the McDonald’s brand was in a pretty poor state and because there is still in British culture a kind of snotty attitude towards McDonald’s – are you almost united by knowing there’s a group of people who are always going to look down their noses at you?
PP: I love the challenge. I love those moments when you first take a journalist or MP into our restaurants and they get to meet the crew members who have almost come off the street and are running restaurants by 21…
MT: Do you encourage people to put their hand up if they see something wrong? And are you sure that happens?
PP: Following your review we did an exercise called The Big Conversation, because we weren’t talking to our youngsters in the right way. That’s now being offered to all franchisees. We survey people but this is more about sitting down and actually talking and listening.
We’ve got an agency involved and they ask the questions that leaders may not ask because they’re impartial… It’s creating a culture where there’s an honesty about how you talk to people and a reflective moment where a manager goes back to a crew member and says sorry, or says to a customer ‘I’m really sorry but we’re short of staff’.
MT: The interesting thing about McDonald’s is your relationship with your franchisees; you can’t tell them what to do so your form of authority is one that has to be negotiated.
PP: We have a really strong framework but within that there’s flexibility. What you want is them as entrepreneurs pushing the framework so suddenly the bar is raised. And we find out stuff really quickly from them. In some businesses where you haven’t got franchisees you may wait a week because of the fear of hierarchy. We bring them together four times a year with me present and 70 are part of our planning cycle. There are 10 on the people strategy side and they come forward with ideas, so the framework baseline keeps improving.
MT: I think the traditional hierarchical structure is really problematic; communication flows aren’t great and the world is changing very quickly, and also I think young people don’t want to work in bureaucratic hierarchical structures. We know that a feeling of autonomy is a really important part of job satisfaction. So I think what’s interesting about McDonald’s is you’ve just evolved into really quite a unique organisational form that gives you enormous advantages.
PP: But trying to keep that connection between our people and all levels of the business is a challenge. The other challenge is the world is changing so fast. So you’ve got this tension where you hear a lot of leaders saying ‘we want to be more agile’. But if you’re not careful you lose the DNA of fantastic execution…
MT: What worries me is when people tell me it’s not a challenge, when people say ‘everyone in my organisation signs up to our values’.
PP: Contracts were a dilemma for us. When the spotlight was shone on zero-hours contracts our people were like ‘why are people having a go at us?’ So the outside world created a problem for us internally that wasn’t actually a problem. We’ve now got to a really good position where 80% have stayed on fully-flexible contracts, 20% have moved to traditional contracts.
You raised a good point before when we met when you said ‘your business is growing, the best time to fix things is now’. The easiest option is to think ‘well I won’t fix that now; I’ll leave that for someone else’.
MT: I quoted McDonald’s in my review in that the Labour party’s official position is that zero-hours contracts should be abolished and I disagree. For me it’s not about saying this is good, this is bad; it is about fairness. What I liked about the way McDonald’s went about this is you offered staff fixed hours if they wanted, and as far as I’m concerned that’s two-way flexibility.
Also the other reality – and this must also be a challenge for you – is that while I believe in the notion of work quality and believe you can measure work quality, I also think that it’s subjective. If I’m working in McDonald’s over my Summer holidays it’s not a vocation for me. But other people will start at 17 and then several years later be millionaires running franchises.
So you have to recognise that among your staff there are very different motivations.
I think a perception a lot of people have of McDonald’s is that it’s a totally-centralised corporation. And that’s a problem because people don’t really like global corporations. Do you agree that maybe at the moment the way you talk about yourself does not put sufficient emphasis on the fact that you’re local restaurants with local staff and part of the local economy?
PP: I completely agree. There’s Mike in Lewisham who, knowing some of the problems the kids face in that area, embraced working together with the community. He’ll go along to some of the community hubs and talk about what he’s been through when he started working at McDonald’s with no qualifications. Suddenly he’s got a connection because they don’t see him as the big corporate person. If they turn up at McDonald’s and misbehave they see Mike who they saw last week at the community hub, so it really works.
MT: A lot of companies choose the things they’re going to show responsibility about; they’ll choose basically an easy topic. So if I was your public affairs consultant I’d say ‘for God’s sake I do not want McDonald’s and knife crime in the same sentence’. But the reality is sometimes the victim has just been to McDonald’s, sometimes the perpetrator’s just been...
I think your franchise model gives middle managers the authority to do this stuff. Whereas in other organisations saying to your branch manager ‘you’ve got the freedom to engage locally’ is difficult because the culture’s not there… So we need organisations to be much more imaginative about organisational forms. Most, particularly in the public sector, are all organised in exactly the same way. Part of the problem with quality of work in the UK is the fact every organisation feels the same.
PP: My philosophy is letting experts run the business. It freaks people out, but I don’t see the Christmas advert before it goes out. You have to create environments people feel safe in.
MT: But I know that this issue about hierarchy and autonomy and creativity is a challenge for your head office. There it’s more of a traditional place…
PP: Massively. So I’ve tried a few things recently. Now I don’t chair executive meetings, I sit in the middle; it gives me a different perspective. I’m trying to create less dependence on me.
MT: Many people say ‘we have to have this really strong triangular structure.’ I think the reality is that because you’ve got that triangular structure you have to think of the world in a different way…
I wanted to finish anyway by talking about innovation. Do you ever get irritated that people always cite Amazon, Facebook or Google? And yet you’re unbelievably innovative…
PP: It doesn’t get me down. Part of my philosophy is we can never be cutting edge. We have to be an incredibly fast follower on a trend that’s going to last. A great example is the kiosk. We actually got those from the likes of John Lewis and the airlines, we were watching them… But if we’d gone early we’d have caused absolute chaos.
MT: So you don’t want to claim to be innovative, you want to be clever? You want to claim to notice the world, and being innovative for the sake of being innovative isn’t your thing?
PP: No. The bit we’ve got to get better at though is the world is moving faster; so how do you stay a really fast follower? One of the things we’re watching at the moment is: at what point does technology in a car mean you can talk to your screen to place an order at McDonald’s?
MT: My mother used to use the phrase ‘less haste more speed’. And it sounds like the McDonald’s philosophy is less innovation more change… So final question: in five years’ time what will be the biggest difference about McDonald’s?
PP: The way tech will help our workforce and customers will be unrecognisable. But to be successful you can’t just use tech to save money. You’ve got to use it to improve the customer experience.
MT: And that’s your story so far isn’t it? Your use of tech has not been about job cutting but making changes?
PP: We created 5,000 new jobs in the past year and 1,000 new managers. We’ve actually got more people working in our restaurants today. More than half of our restaurants are 24/7 and that trend will only continue…
So you’ve got to be open-minded to accept the changes that are coming. It would be wrong if a brand stood still and said ‘I’m not going to change’.