McDonald's beefs up local support
“If you do it first class you never have to do it over again” – the words of Ray Kroc, who founded McDonald’s in 1955 opening his first restaurant in Des Plaines, Illinois. Having celebrated its fiftieth anniversary last year, the company would do well to bear these words in mind as it enters an important new phase in the management of its international benefits programme.
McDonald’s operates its international pensions benefits programme for its 400,000 employees across 120 markets with a combination of support from head office and local autonomy.
Interestingly for a such a large company with a global presence dating back to the opening of the first international McDonald’s restaurant in British Columbia back in 1967, the role of international benefits manager was only created at the beginning of this year.
“We created this function so that our local country operations can have someone with the technical expertise and an understanding of benefits so that we can work with them develop a framework and a global perspective,” explains Darin Winckler, head of international benefits at McDonald’s head office in Oak Brook, Illinois.
“We have multiple resources – legal, accounting and actuarial. We also provide support for local offices on medical, disability and life insurance and any other benefit issues that they may have.”
So what led to the creation of the position? “Taking a step back we realised that a lot of our countries do not have the capacity to fully manage their pension programmes because of staffing issues. It makes sense if they have someone here who can provide them with the expertise that they need.”
He adds: “We will help them perform a competitive review to see how we stack up against the competition from a total rewards perspective. This will then help them design a benefits programme.”
“We have always been very decentralised in terms of letting the local operations set up schemes as they see fit from a competitive and cultural standpoint,” says McDonald’s international benefits manager Darin Winckler.
“It has been up to them to manage the schemes locally. Some of the local offices have worked with consultants and brokers as necessary on different projects.”
In the future McDonald’s
will be developing a global framework based on the total rewards concept, including pension, medical, disability insurance and life insurance.
“We will work with all our markets to develop this framework, so we are all saying the same thing,” Winckler explains.
Another reason for the creation of the new position of international benefits manager is the lack of information about the local operations which head office has at its disposal.
“The data on the individual countries is not yet in place; this is a point of interest,” says Winckler.
“My initial task is to get out and meet with these people and finding out what we have and what we don’t have.”
He adds: “Initially, the most challenging aspect of my role is getting an understanding of what other countries are doing what the need is and working with them on the concept of the total rewards perspective. We want to make sure that we do know what’s going on eventually, but we will have a better idea of the support we will be providing in around six months’ time.”
Winckler will be starting out with the major markets and meeting those offices that already have experts in place. “It is our aim to support those offices as well as the markets which do not have these,” he says. “Once we have talked to people about their concerns and issues we will be able to design a programme to meet the future pension needs of each market. Now it is meet and greet time.”
He adds: “We will also be working with regional representatives and it is our plan to increase the number of staff with cross-border responsibilities.”
It is interesting, especially given the size of the McDonalds corporation is the fact that even basic data such as total assets worldwide are not available to this new function at present. Winckler clearly has his work cut out.
However, we can gain some reassurance regarding the health of the worldwide programme. “We don’t for now have any plans out there where there are any significant underfunding or overfunding issues,” Winckler says.
It will be interesting to see if this is still the case when more data is available from the local country pension schemes.
Does the creation of the new role of international benefits manager mean that McDonald’s bringing more functions back to head office? “We do not necessarily want to become more centralised,” Winckler says.
“Within the global framework we want to make sure that we are giving plenty of responsibility to the local offices, and make sure both that they are making the right decisions and that they have the support
that they need.”
So what does this responsibility consist of? “Each and every country has been able to manage its retirement plan as necessary,” says Winckler.
“At present they can set their contributions and invest their pension moneys how they wish. Again here – where asset allocation is concerned for example – they can tap into head office for support. We want to make sure that from a design and governance standpoint and from a legal compliance standpoint everything is in place. But at the end of the day responsibility and accountability is with the local markets.”
As elsewhere the natural progression has been to offload risk by moving towards DC plans.
However, Winckler notes: “We haven’t got any plans to switch any DB plans to DC at the present time.”
Multinational insurance pooling is a strategy that McDonald’s
has considered but the present structure – or lack thereof – means that it has not been exploited to date.
“We are educating the local offices in terms of the benefits of multinational pooling and hope that they will make more use of it than they have done in the past,” Winckler explains.
An anything less than sound grasp of its international pensions programme would be dangerous for a company that is trying so hard to improve its corporate image.