Dealing with Risk and Uncertainty
Company's Recent Actions Dealing with Risk and Uncertainty
In recent months, McDonald's has been conducting further investigations into the conduct of Steve Easterbrook, its former CEO, regarding whether he concealed indecencies by other personnel in addition to accusations of prospective misconduct within the human resources department. Mr. Easterbrook was let go by McDonald's numerous months ago after it was established that he was partaking in sexual relationships with a subordinate. The company has sourced a new chief executive to manage the company, and Easterbrook was given a severance package worth tens of millions in compensation. However, a fresh lawsuit filed by McDonald's alleges that Mr. Easterbrook conducted sexual relations with three employees in addition to bestowing a well-paid number of shares to one of the employees. This is a significant problem for the company as it has had to deal with major allegations of wrongdoing by its senior executives (Haddon and Vranica, 2020).
It is not deemed illegal conduct to carry out consensual relationships with workmates or subordinates. Nonetheless, in this case, McDonald's faces the dynamic power problem in the sense that these subordinates could have felt obligated and forced to partake in such relationships to maintain their jobs. Furthermore, numerous women working at McDonald's have filed complaints on sexual harassment and gender discrimination. Former employees indicate that their complaints regarding the conduct of their co-workers and also senior executives such as Easterbrook were ignored and overlooked. In this regard, McDonald's is not only suing Easterbrook for covering up these relations but also has, in recent months, conducted an internal review of its HR department (Haddon and Vranica, 2020).
Advice for Improving Risk Management
The fundamental objective of risk management is to guarantee that the organization solely takes the risks that will facilitate the attainment of its key goals and objectives while maintaining all other risks under control. The capability to manage risk will aid McDonald's in conducting itself more confidently on business decisions in the future. There are several recommendations for McDonald's in improving risk management.
First of all, McDonald's must alter its organizational culture. Organizations have to learn the art of adapting to changes or otherwise risk experiencing failure. Managers ought to be proficient in working with scheduled organizational change in addition to being responsive to changes in the organizational environment (Alvesson and Sveningsson, 2015). The reality of the fact that the CEO of the company was established to partake in indecent conduct implies that the company's culture is terrible from the top of its hierarchy to the bottom. Owing to the several preceding complaints on harassment, discrimination, and also hiring and firing, the company has permitted a toxic work culture to prevail, especially in the franchises that are independently owned. In this regard, it is recommended that McDonald's should change and transform its organizational culture (Campbell, 2019).
Secondly, McDonald's should conduct training workshops for both management and employees on how to conduct themselves. This training is intended to ensure that none of the personnel violate the company's code of conduct. Moreover, the company should carry out sexual harassment prevention training for all employees and managers to guarantee the safety and protection of vulnerable personnel (Ghio and Verona, 2020).
Third, it is recommended that the company should conduct frequent internal reviews of its various department and place stringent penalties for any misconduct determined. To begin with, the company should encourage employees to anonymously report any incidences of misconduct not just from their fellow workers but also from their superiors. This is to ensure that employees do not fear retaliation (Ghio and Verona, 2020). Consequently, the company should take any complaints or...
…Also, the organizational structure influences the flow of information between different levels within the entity (Barney and Hesterly, 2009). McDonald's Corporation employs a divisional organizational structure. In essence, in this
corporate structure, the company is split into departments or components that are handed responsibilities based on operational requirements. Each of the company's division deals with a particular operational aspect or a group of strategic goals and objectives (Barney and Hesterly, 2009). McDonald's structure at the top comprises the CEO, the COO, and the CFO. After that, the company is split into different divisions, including marketing, corporate affairs,
finance, human resources, and strategic planning divisions. McDonald's also has other functional divisions comprising of the customer services,
supply chain, legal, franchising, and
security and licensing departments (McDonald's, 2020).
One of the major shortcomings of the divisional company structure employed at McDonald's is the likelihood of conflict between heads of divisions. That is, every top executive of the different divisions seeks to demonstrate their supremacy, and this results in conflict. There is also the probability of the misuse of power. Secondly, there is the duplicitous nature of functions. That is, every division necessitates a whole set of functions. This results in the duplicity of endeavors amongst divisions. Consequently, there is a high probability of resources being misused and the increment of cost of operations (Barney and Hesterly, 2009).
In the case of McDonald's, one of the ways of undertaking immediate and important changes to its organizational structure is through the formation of a small but largely insightful enterprise risk management division. This division will be headed and directly report to the Chief Risk Officer. This will play a critical function in determining any strategic risk problems faced by the company, examining such risk problems, and also resolving them before they become severe issues (Louisot and Ketcham,…
