Introduction
In our previous blogs, we have written about the external business environment influencing companies operating in the food industry and further about the organizational structure that was present in the majority of fast-food chain restaurants. We then proposed an organizational structure that in our opinion facilitates the best becoming agile and responsive to the environment and demand.
In this blog we would like to focus on the internal environment of the company in terms of the organizational culture and leadership. However, in our opinion the leadership style highly influences the culture and therefore we will put emphasis on this aspect.
We will continue with the perspective of the global fast-food restaurants as given their size and scope of operation we believe for these actors agility is essential.
Backward gap analysis
Our analysis in this report will take the form of a reverse gap analysis – we will start by defining what would be an ideal leadership model for fast-food restaurants in order to create a favorable organizational culture, to improve the performance, and ensure the growth direction of a company.
After selecting the indicators for the desired leadership style, this will lead us to identify the ideal leadership style.
The third stage of the analysis will be devoted to the investigation into the current state, by looking into real-life examples of companies. Lastly, the points of difference between the current and desired styles will be identified, which will indicate what are the points for improvement for the players in the industry.
Our consideration regarding the ideal leadership style has started from reflecting on the organizational structure that we pointed out to be the desired one for a company in the food industry such as fast-food restaurants. In our previous blog, we have put emphasis on:
- Good communication and information flow
- Involving lower levels in the decision-making in order to be more flexible, more responsive to changes in the demand and overall trends, as well as in order to use the expertise and experience of employees working close to the customers
- Creating/Involving top management team (board of directors) representing different geographical divisions to ensure better information flow, exchange of expertise, responsiveness to the market
Knowing this, we have thought of a leadership style that would complement each other and we identified the following indicators:
- Adaptability: adaptability to the external environment is an essential factor to be successful in a constantly changing industry, to know more about external changes in the food industry, please refer to Blog 1.
- Flexibility in the decision-making process: trust for the competences of the fellow employees.
- A strong long-term vision for the company: CEO, board of directors as well as all managers and franchise owners should understand and act along with the vision and mission of the company.
- Charismatic leader and managers: creating a sense of purpose and engaging
- Capable of setting clear and achievable goals for himself and others
Stage 2: Identifying the desired state - leadership style
Fast food chains are huge corporations that need to be led by a very specific and well explained vision and sense of mission. That can be achieved by combining important skills and traits of the leader. Ensuring clear organization culture and leadership style facilitates the growth and successful management of a company.
The considerations of the indicators for the perfect management style have led us to identify transformational leadership as the closest match.
This leadership has 4 dimensions (B.M.Bass, 1990):
- Charisma: provides a vision and mission
- Inspiration: supports high expectations and standards
- Intellectual stimulation: challenges workers to generate new ideas
- Individualized consideration: showing interest in the personal development of individuals
For further explanation of each of the dimensions please refer to Appendix 2.
Stage 3: Analyzing the current state
McDonald’s
The leadership style practiced in McDonald’s restaurants is autocratic and therefore crew members are not involved in any decision-making.
Autocratic leadership is characterized by individual control over all decisions and little input from group members. Autocratic leaders typically make choices based on their ideas and judgments and rarely accept advice from followers. (Cherry, 2020) Autocratic leadership involves absolute, authoritarian control over a group. Autocratic leadership is necessary to streamline processes, grow their customer base, and pave the way for long-term survival in the restaurant business. (What Is Autocratic Leadership?, 2014)
Advantages vs. Disadvantages (What Is Autocratic Leadership?, 2014)
McDonald's could adopt another style of leadership but fears that there will be severe backlash from the teams who may seek more independence. McDonald’s cannot afford to give authority to crew members or train them to self-starters. McDonald’s epitomizes globalization which in turn supports standardization. The team leaders of all McDonald’s outlets are trained to voice the opinion of its senior management. So, only autocratic leadership will thrive within this multinational food chain. (Boje, 2006)
Employees have to follow orders and do not have to be creative. The disadvantage is that people may not like to be part of a team that is being dictated by a leader and results in high employee turnover. However, McDonald’s is not affected by employee turnover as it is very easy to find replacements. (Boje, 2006)
Organizational Culture
McDonald’s organizational culture emphasizes human resource development and efficiency. It supports business growth and success in the international fast-food restaurant market. The main characteristics are:
Burger King
The reason why we decided to investigate the leadership and culture situation in Burger King is that it is the second-biggest fast-food chain and as it turns out – a one with a very rough history of changes in the leadership.
Leadership style
The leadership style that was present for a very long time was (1) authority-compliance style described by Blake and Mouton in 1964. In the recent history of Burger King, the company has transitioned in leadership, however, is still deviating between (2) coercive power tactics and (3) pace-setting leadership style (College & Petitti, 2018).
Burger King has been facing problems with the leadership for a long time. They emerged when BK was owned by Pillsbury. Pillsbury had battled with a pair of franchisees, taking the issue to the court. This has reinforced the authoritative management style of Pillsbury and paved the future path for the relationships with franchisees (College & Petitti, 2018). An example of BK authoritative attitude can be including a clause in the franchise contract saying that a franchisee “must not own other restaurants and must live within an hour’s drive of their franchise” (College & Petitti, 2018). Later rapid ownership changes made it difficult to establish one leadership style and preserve it.
The problems identified for Burger King lay in lack of consistent vision communicated within the organization, due to ever-changing leadership. The franchisees need a clear and motivational vision. Moreover, the company took on the path of exercising coercive power after suing a couple of franchisees and eroded the trust in the leader. The authoritative side of BK leadership style brought focus on the production and performance but no concern for people. Franchisees have complained about ownership being unresponsive when they shared their concerns or problems and they expressed their objection towards not being consulted on Burger King’s advertising strategies. (College & Petitti, 2018)
Organizational culture
Burger King has an organizational culture that supports the high performance of the employees. The main characteristics of their culture are (Young, 2017):
Stage 4: Comparison and identification of points for improvement
After applying the indicators for the ideal leadership style to the ones of McDonald’s and Burger King, we identified several points for improvement.
From McDonald’s:
- Decision making on the lower levels, adding middle managers (regional) to the authority level
- From decision making comes adaptability, by giving more freedom to franchise owners and/or regional managers, companies can respond to the changes on the market in a more efficient way, not harming the global image.
- Information flow shall be adjusted: new and creative ideas and optimizations shall be accepted from all levels of an organization.
From Burger King:
- Having consideration and interest for employees
- Investing in employee development and training rather than firing them
- Aligning the team – building the feeling of unity and not antagonism and hostility
- Mediating the conflicts and looking for solutions as a team
Conclusions
We have done thorough research into the leadership styles in order to identify the one that suits the food industry and namely international fast-food chain restaurants, as we believe that the right leadership style facilitates the growth of the company, the commitment of the employees and enables the right management of human resources and skills.
Our considerations of indicators for the right style have led us to the transformational leadership style to be the most suitable one. This particular style fills the gaps between common leadership styles in the industry: autocratic, pace-setting, and using coercive power.
In order to create a favorable organizational culture that stimulates the employees to perform well and reach for more, which indirectly influences the growth of the company and utilizing its potential, we came to the conclusion that it is needed to have consideration and interest for the employees, their development; enable decision-making on lower levels; giving more freedom which shows trust in the capabilities of the partners and workers; allowing for the common generation of ideas and stimulating exchange of information.
Our recommendation is therefore the application of transformational leadership style, which will result in better organizational culture, is sustainable in the long term, and creates room for responsiveness to the changes in the demand and overall industry trends. For our overview of such style please refer to Appendix 3.
Bibliography
Boje, D. (2006). The leadership of Ronald McDonald: Double narration and stylistic lines of transformation. The Leadership Quarterly. 17(1), 94-103. DOI: https://doi.org/10.1016/j.leaqua.2005.10.004
Cherry, K. (2020, June). What Are the Pros and Cons of Autocratic Leadership? Verywell Mind.
College, M., Petitti, M. (2018). Burger King: Seeking Consistency in Leadership and Image. Retrieved on October 6, 2020, from: https://nanopdf.com/download/burger-king-seeking-consistency-in-leadership-and-image_pdf
Goleman, D. (2000). Leadership That Gets Results. Harvard Business Review. 78(2), 4-17. DOI: https://hbr.org/2000/03/leadership-that-gets-results
Lunenburg, F. C. (2012) Power and Leadership: An Influence Process. International Journal of Management, Business, And Administration. 15(1), DOI: https://www.cmr-journal.org/article/download/12051/pdf_24/
McDonald’s. (n.d.). Codes of Conduct | McDonald’s. Code of Conduct. Retrieved October 8, 2020, from https://corporate.mcdonalds.com/corpmcd/investors-relations/codes-of-conduct.html
McDonald’s. (2020). Global Diversity, Inclusion & Community Engagement | McDonald’s. Global Diversity, Inclusion & Community Engagement. https://corporate.mcdonalds.com/corpmcd/about-us/diversity-and-inclusion.html
Nye, J. S. (2013). Transformational and transactional presidents. Leadership, 10(1), 118–124. https://doi.org/10.1177/1742715013512049
What is Autocratic Leadership? (2014, November 25). St. Thomas University Online. https://online.stu.edu/articles/education/autocratic-leadership.aspx
Young, J. (2017). Burger King’s Organizational Culture Characteristics. Retrieved on October 6, 2020, from: http://panmore.com/burger-king-organizational-culture-characteristics
Appendices
Appendix 1
Table 1: Overview of coercive, authoritative and pace-setting leadership styles adapted from “Leadership That Gets results”, by D. Goleman, 2020, Harvard Business Review
Appendix 2
Figure 2: 4 dimensions of transformational leadership (source: B.Senior & S.Swailes, Organizational Change, 5th edition)
Appendix 3
Figure 3: An adjusted transformational leadership for fast-food chain restaurants (source: blog authors)
