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Differentiating the Best

from the Rest:


Identifying and
Developing Future
Leaders

Audrey Williams-Lee
Senior Director,
U.S. Talent Management

Denise Broz
Director,
Global Talent Management

IQPC
Talent Management Conference
Tucson, Arizona
October 16, 2007
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McDonald’s at a Glance
ƒ System-wide Sales = $57B
ƒ Total Revenues $21B
ƒ $4.4B Operating Income
ƒ 31,886 Restaurants in 118 markets
ƒ More than 70% of restaurants are operated
by franchisees and joint ventures
ƒ Serve 52 million customers per day

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Serving 52 Million Customers Daily

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Some Unexpected Succession
Needs...
ƒ Jack Greenberg resigns as CEO – Dec 2002
ƒ Jim Cantalupo becomes CEO – Jan 2003
ƒ Jim Cantalupo dies unexpectedly and Charlie Bell
named CEO – April 2004
ƒ Charlie Bell resigns due to illness – Nov 2004
ƒ Jim Skinner becomes CEO – Dec 2004
ƒ Four CEOs in 3 years!

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…in the Midst of Some Business
Challenges
ƒ First time ever reporting a loss (Q4 2002)
ƒ Jack Greenberg Resigns (December 2002)
– Stock price: $14.24

ƒ New CEO changes strategy to “Right the Ship”


ƒ From “adding restaurants to customers” to “adding
customers to restaurants”…from “getter bigger to
getting better”
– “Back to basics”
– Upgrading service
– Improving food taste
– Menu innovation

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McDonald’s Today
Through August 2007:
ƒ 52 consecutive months and 17 consecutive
quarters of positive comparable sales
ƒ Stock price over $50

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Overview of Talent
Management @ McDonald’s
ƒ Established as a new department within Human
Resources in 2002
ƒ Initial focus on top 200 positions and the talent pool for
those positions
ƒ Expanded focus to include longer-term talent pipelines
ƒ Aligned to provide guidance and support to the Areas
of the World
– Global Talent Management Business Partners
– U.S. Talent Management Function

ƒ Global Leadership Institute launched in 2006


– Focus on all Director-level and above employees

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2007 Top Companies for Leaders –
Fortune Magazine

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Talent Management Message Map

Tomorrow's Leaders
Today’s Leaders Deep, diverse pool
High performing, of replacement
committed leaders candidates for all
in all key key leadership
positions positions
Goal of TM
Ensure McDonald’s
has the leadership
talent to drive
business success
both today and
into the future

Development Culture
Culture that
both demands
& supports
learning and
development

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Talent Management @ McDonald’s…
Enabling the Business

Assessing Potential

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Talent Identification

ƒ Tools and processes utilized to


assess potential and readiness for
advancement:
– Performance Development System
– Performance Calibration Roundtables
– Talent Review Roundtables
– Talent Management Plan Process
– Enhanced Potential Assessment Process

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Differentiating Talent -- an
Evolution

2007

2006 • Introducing CLC


framework and
2003- new criteria for
assessing
2005 • Workshops for potential
senior leaders
regarding talent
• Workshops to
management
2002 • Programs in process,
strengthen skills
all areas of of HR
differentiating
the world to practitioners
and retaining top
accelerate talent
development
2001 • Common global
of high
performance • Broader use of
management potential external
framework talent assessments
• New
Performance • Performance • Talent
Rating Calibration and Management
Guidelines Talent Review planning
(20/70/10) Roundtables framework
implemented
• Performance
Drivers added
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McDonald’s Definition of Potential

Potential (Growth Potential) =


Likelihood of being a high performer in a position of
greater responsibility in the future

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A New Synthesis of Employee Potential
An employee’s potential is determined by his or her aspiration, ability and engagement

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New Attributes – McDonald’s

Desire to Lead
(Aspiration)

Organizational Learning
Engagement Orientation
(Engagement) (part of Ability)

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McDonald’s Predictors

ƒ Past Performance
– Trend of results achieved over last 3 years

ƒ Leadership Competencies
ƒ Other Attributes (New)
– Learning Orientation
– Desire to Lead
– Organizational Engagement

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Past Performance

ƒ Why does past performance matter?


– Predictive power (especially if new role is similar to
previous role)
– Reinforce a high performance culture

ƒ What we look for:


– Trend in performance ratings over last 3 years
– Consistency in ratings of same person by different
managers
– High performance in different types of roles

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Learning Orientation

ƒ Behaviors
– Seeks feedback on a regular basis and acts on it
– Learns lessons based on experience; does not make the same
mistakes twice
– Demonstrates ability to personally change for the better
– Quickly processes and grasps new concepts and information

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Desire to Lead

ƒ Behaviors
– Seeks out and assumes increased responsibility on job without
being asked
– Willingly goes above and beyond the call of duty on a regular
basis
– Steps up to assume leadership positions when placed in teams
– Getting ahead is clearly important to him/her

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Organizational Engagement

ƒ Behaviors
– Personally aligned to the organization’s vision and values
– Enthusiastically supports his/her organization/dept. and influences
others to commit to its mission
– Is a positive advocate for the business in all dealings external to
McDonald’s
– While candid and vocal internally about how things can be
improved, emanates a positive attitude about his/her
organization/department.

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Improving Clarity Regarding Long
Term Potential

From To
Promotion Readiness Potential For Advancement
ƒ Ready Now – immediately
Then
ƒ Ready Future – within 2 yrs
Promotion Readiness
ƒ Current Level – longer than 2
yrs ƒ Ready Now – immediately
ƒ Ready Future – within 2 yrs
ƒ Long Term – longer than 2
yrs

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Talent Management @ McDonald’s…
Enabling the Business

Accelerated Development

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Accelerated Leadership
Development – Purpose
ƒ Use leadership development process to drive
business results, shape culture and build leadership
depth
ƒ Strengthen and build the capabilities of future senior
leaders
ƒ Broaden participants’ understanding of strategic
business issues and challenges from a
multifunctional, multicultural perspective

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Accelerated Leadership
Development – Purpose
ƒ Provide an opportunity to broaden participants’
internal and external networks
ƒ Provide means for senior leaders to better know the
capabilities of talent within geographically dispersed
markets
ƒ Encourage and support a mindset of continuous
learning

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The Beginning: Leadership @
McDonald’s Program (LAMP)
ƒ Global program
– Australia, Indonesia, Ireland, Panama, U.S., Venezuela

ƒ Participants nominated by senior leaders


– High potential Senior Directors/Directors
– Recently promoted Officers

ƒ 22 cross-functional participants
– 60% female
– 44% minority

ƒ Nine month program (June ‘03 - February ‘04)

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Accelerated Leadership
Development – Current Status
ƒ Leadership @ McDonald’s Program (LAMP)
– U.S., Latin America, Canada
– 112 participants, 5 programs

ƒ European Leadership Development Program (ELDP)


– 46 participants, 4 programs

ƒ APMEA Leadership Development Program (ALDP)


– 53 participants, 3 programs

ƒ Global Leadership Development Program (GLDP)


– 20 participants, 1 program

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Global Diversity

43 Countries

Sweden
UK
Canada Denmark
Ireland Russia
Poland
Belgium Germany Ukraine
USA Portugal France
Turkey Japan
Spain China
Egypt
Mexico
Hong Kong
UAE
Thailand Taiwan
Panama
Venezuela Singapore
Malaysia
Philippines
Brazil Indonesia
South
Australia
Africa
Chile Uruguay
Argentina New Zealand

Pacific Islands

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Accelerated Leadership
Development – Structure
ƒ Common framework with ability to customize
– Leadership of self, of others and of the
organization
– Rigorous Assessments
– Coaching and Feedback
– Leadership Modules & Experiential Activities
– University Experience
– Action Learning

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Program Timeline

Insert Lamp Timeline

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Developing the Pipeline

ƒ China Leadership Development Program


ƒ Germany Director Development Program
ƒ U.S. Real Estate Leadership Development
Program
ƒ U.S. Career Development Initiative

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Leadership Development – Officer
Feeder Pool
ƒ U.S. Functional Accelerated Programs
– Accelerated Operations
– Cross-Functional Development

ƒ Leadership Institute
– Broad-based Leadership Development

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McDonald’s Leadership Institute –
“Be Your Best Leader”
ƒ A global community that drives McDonald’s
business by guiding leaders to reach their
potential and drive business success
ƒ Eligible leaders are those at the Director level and
above (or equivalent) around the world

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Portal to Connect to Resources

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Talent Management @ McDonald’s…
Enabling the Business

Measuring Success

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We Identify A Few Key Metrics…

ƒ Talent Management Plan Metrics


ƒ AOW Scorecards
ƒ Qualitative Data

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…That Show Progress and Align
with the Business
ƒ Talent Management Plan Metrics
– Strength of incumbent leadership team:
– At least 95% meeting or exceeding objectives
– 100% of low performers on improvement plans
– Year-over-year diversity improvement
– 90+% of positions with strong
successors
– 95+% retention of top performers
– Development plans in place for all leaders

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APMEA Talent Measures

ƒ Annual reporting of talent plan metrics


ƒ Quarterly reporting tied to overall business results
ƒ Semi-annual country level talent scorecard with
measures linked to APMEA-wide talent objectives

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APMEA Country Level Talent
Scorecard
ƒ Overall Bench Strength
– Examples: % positions with adequate replacements, unique
successors, ratings for existing team
ƒ Process
– Examples: Time to fill, % from succession plan
ƒ Talent Assessment & Development
– Examples: written development plans, annual development spend by
level
ƒ Diversity
– Examples: % positions held by local talent
ƒ Planned Actions from Talent Plan

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APMEA Country Level Talent
Scorecard

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Measurement Goes Beyond the
Numbers
ƒ Qualitative Data – Accelerated Leadership
Programs
– Senior Leadership involvement and commitment
– On-going funding and support for the existing Accelerated
Leadership programs
– The strength of the ALDP, ELDP & LAMP “brand”
– Unsolicited feedback from leaders of program participants
– Development of new programs focused on talent
– Increased leadership capabilities of our overall Officer
population

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Some Challenges…

ƒ Open and honest conversations with employees


about potential
ƒ Assessing talent cross-culturally
ƒ Better use of planned job moves to accelerate
development
ƒ Optimal allocation of development resources
ƒ Managing career development and growth in a
flatter organization
ƒ No technology infrastructure to support processes

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In Summary
ƒ We invest in developing all leaders, but invest
more in our high potential population

ƒ The process is an evolution


– Cannot do more than your organization is ready to
absorb (LAMP)
– Accept your small wins and be on the lookout for
opportunities (US Functional Programs)

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In Summary
ƒ Standardize on a few key forms and processes

ƒ Lack of technology not always a barrier


– Forced to focus on limited number of priorities (and a
smaller set of data!)
– Won’t hide behind the technology; more dialogue

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Questions?

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