Can This Turnover Number from McDonalds (44%) Be Right?

Kris Dunn Kris Dunn, Recruiting, Retention, Total Rewards

I’m not a big user of McDonald’s, but I get that the rest of America is.  I’m usually looking for a leaner option when I’m out and about, although I’ve been known to slide through the drive through to order plain hamburgers from time to time – a lean option that is pretty reasonably priced in my area ($.90 per)…

But enough about my sensitive tastes.  The WSJ recently did a feature on the home of Ronald McDonaldRonald  thinking through an employment brand revamp, to better engage employees and cut turnover.

Their current annualized turnover number?  44% per the article.  Can that be right?  I would have guessed it much higher.  From the WSJ via the wire at the Baltimore Sun:

"Such numbers can mean big money for McDonald’s. A senior executive recently put the chain’s annual employee turnover at 700,000 – or nearly 44 percent of the company’s 1.6 million employees worldwide.

Managerial turnover is around 20 percent globally, while that of crew members averages 80 percent to 90 percent, with significant differences by country, Floersch said. He wouldn’t disclose statistics for individual markets but pointed to China and Germany as having among the lowest annual turnover.

McDonald’s is putting particular emphasis on deterring people from quitting within the first three months of being hired. If they stay beyond that, their productivity – and the company’s return on its training investment – both improve.

Also, the fewer new employees a restaurant manager needs to recruit, the more money that store is likely to make. An experienced crew and manager can add as much as $100,000 to its annual sales, the company estimates. And low turnover can save perhaps $10,000 in annual overhead.

To cut turnover, managers are interviewing crew and other employees to determine what they value most about their jobs, and what might be done to improve them.

One key topic these days is health insurance. "We’re working with our owner-operators to provide medical coverage at reasonable rates," Floersch said.

Because of its size, McDonald’s can obtain a significantly lower group rate from its primary health insurer, the Blue Cross & Blue Shield Association. So far about 70 percent of its franchisees are under the company’s umbrella plan. The amount of an employee’s co-pay is determined by the franchise."

So, I thought the 44% number overall was low – after all, aren’t the majority of their workers the folks on the line within the retail locations.  If you gave me the 80 or 90% number, I would have accepted that – but 44%?  Maybe that’s the global number and the loyal Chinese worker is making up for the 150% burn rate stateside.

Interesting to see MickyD’s pointing to health insurance as a pillar of their retention efforts, which has long been an arrow in the Starbucks engagement quiver and value proposition.  Looks like the big barrier to that will be convincing the McDonald’s franchisees to cover the majority of the cost on behalf of employees.  Starbucks doesn’t have that problem, since all stores are company owned.

It’ll be interesting to see if stores who pay 70-90% of the cost see reduced turnover when compared to franchises who pay only 30-50% of the cost. 

Sign me up for the PPO, and while I’m here, super-size that value meal for me….