What Are The Chief Determinants Of Increased Volume And...

YOUR ACTION: Bring a written response to these questions to turn in (but it does not need to be formal, just want to show you read the case and are ready to discuss in these questions in class).

1. What is your response to the issues presented in this case? I agree with the difficulty of the reward criteria. It was extremely confusing to read, and I am not even familiar of all the “lingo” that they are referring to. I also think that there are certain things that manager’s bonuses are based on, that they have no control over. I appreciate that McDonalds tried different plans for their managers when they decided things weren’t working. I also believe that the managers putting pressure on the upper level management to figure out a compensation plan was completely valid, and necessary. I also agree that there are problems keeping individuals motivated who are in service-oriented fields. It is a problem that needs to be addressed daily and one that will probably never fully go away.

2. What are the chief determinants of McDonald's success at the unit level? QSC (Quality, Service, and Cleanliness) is a big determinant of success. They also had mentioned that sales determined success. Volume and profit were brought up several times when it came to determining success.

3. What are the relevant benefits of increased volume and reduced cost? Increased volume will obviously be making the unit more of a profit, and reducing costs will leave that money for other uses, such as a salary increase, or a bonus. In this case, if it makes sense to cut costs, this may be done to open up more of a bonus structure for management. In turn, hopefully giving managers a larger salary or a bonus will turn into them working harder, which will hopefully increase the volume and profit of their unit.

4. Who has greater discretionary control over these factors, store managers or the corporate level executive? Explain your reasoning. I believe that at the end of the day, the corporate level employees have the final say. They are the ones who are going to “dish out” the money for a salary increase, or a bonus. They also have an “overhead” view of the company, in which they may able to see things happening before they actually happen (i.e.:

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