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Chapter 2 Creating Your PDS Plan Information for Employees

© 2005 McDonald’s Corporation 2.1

Management of the Shift (MOS)

PDS Guidebook

Driving Manager and Restaurant Performance


Contents PageWhat is the Performance Development System (PDS)

Performance Assessment – Individual Performance Plan(IPP)

3

What are the Benefits Restaurant Manager/Management Team/Restaurant

3

How it Works 3 PDS Schedule at a Glance 4 Planning – Utilizing Restaurant Results - Utilizing

SMPI Results5

Monthly Progress Review and Feedback 6 Mid-Year Review 6 Year-End Review 7 Utilizing the SMPI to Maximize Performance

Development7

How Employees are Evaluated 10 Results Achieved 10 Leadership Competencies 11 Overall Performance 12 How to Calculate Ratings 12 Getting Started 13

Individual Development Plan - IDP 14 Creating a Strong IDP 15

PDS Guide Toolkit 17 Managers Guide to Assessing Employee

Performance17

Handling Underperformance 21 SMART Objectives

Individual Performance Plan (IPP) Forms Restaurant Manager, Assistant Manager, Shift

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Manager

What is PDS? The Performance Development System (PDS) is designed to drive high performance and support employee development at McDonald’s. This system involves creating performance plans, supporting those plans, evaluating performance, and developing employees.

Under PDS, your performance assessments are based on results achieved (what gets done) and leadership competencies (how it gets done). You are encouraged to take responsibility for your own performance development, while your managers provide support, coaching, and feedback.

Benefits for Restaurant Manager/Management Team/RestaurantPDS helps the Restaurant Manager by:

Aligning individual management team members performance objectives and work activities around restaurant priorities

Providing objective shift performance assessment criteria through utilization of the SMPI reports and targets

Providing routine coaching opportunities to develop management team skills and improve individual performance

Promoting a more concentrated focus on activities that will have the greatest impact on restaurant results

PDS helps the Restaurant Management Team by ensuring each employee: Understands their role and responsibilities for the year Engages in a performance and development discussion with their

Manager Understands how they will be evaluated at the end of the year Receives guidance on how to further develop their skills and advance

their career at McDonald’s Creates environment for recognition and rewards

PDS helps the Restaurant by: Aligning management team performance objectives with restaurant

priorities Promoting accountability and ownership for shift performance by linking

individual shift performance to rewards

How it WorksThe PDS process consists of 4 primary steps:

1. Planning2. Monthly Progress Review and Feedback - New3. Mid-Year Review4. Year-End Review



Performance Development System - Schedule at a GlanceTimeframe

Activity Managers Responsibility

Employee’s Responsibility

Employee and Manager Together

December - January

Planning Complete IPP/IDP for the upcoming year

Communicate objectives for employees to consider for the coming year

Document SMART objectives for the year on the IPP/IDP

Meet to review and modify the plan.

By end of July

Mid-year review

Assess employee’s performance to date

Perform self-appraisal of performance to date on business and individual development objectives

Meet to review manager and employee assessments and possibly revise objectives for the remainder of the year

December - January

Succession Plan/Talent Plan(Where Applicable)

December - January

Year-end review

Assess employee’s performance for the year

Perform Self-appraisal of performance for the year

Meet to review final assessments and establish plan for next year

Weekly, Monthly and Ongoing

Review employee’s SMPI results and progress on performance objectives - Provide coaching and recognition where appropriate

Record SMPI data to IPP - Discuss shift performance and status of performance objectives with manager

Meet to discuss shift management performance and progress on performance objectives



Planning

Step 1: Identify and agree on restaurant targets and prioritiesAt the beginning of the year, each Restaurant Manager should meet with their Operations Consultant or Owner/Operator to establish People, QSC, Sales (Guest Count), and Profit targets for their restaurant. Key restaurant performance reports should be reviewed and discussed during this session – ROIP, Mystery Shop, CSO, SMPI, Manager and Crew Turnover, Commitment Survey, Year-end P & L Statements and Profit Plan. Together, the Restaurant Manager and Operations Consultant should identify the top 1 – 3 opportunities in the areas of People, QSC, Sales and Profit and develop targets for each. At a minimum, 90 day turnover, CSO, Guest Count and PAC targets should be established and agreed upon. This meeting should also include a discussion on the leadership behaviors required to achieve targets.

Step 2: Restaurant Manager documents IPP performance objectivesAfter consulting with the Operations Consultant and/or Owner/Operator on restaurant targets and priorities, the Restaurant Manger writes their performance objectives on their IPP form. These objectives should be developed based on the following:

Restaurant targets (Plan) and priorities e.g. sales, GC and profit plan Restaurant shift management opportunities from SMPI Assigned areas of responsibility e.g. labor scheduling, food cost, crew

development, etc.Additionally, performance objectives should be written as SMART objectives. (SMART objectives are Specific, Measurable, Achievable Relevant and Time bound - See SMART Objectives section of Toolkit.

Step 3: Restaurant Manager Communicates Restaurant Priorities, Targets and Performance ObjectivesThe Restaurant Manager communicates restaurant priorities, targets and his/her individual performance objectives to the management team and instructs them to write their individual IPP performance objectives.

Step 4: Document and agree on IPP targets and performance objectivesEach Management Team Member documents their IPP performance objectives and meets with the Restaurant Manager to review them. The Restaurant Manager and each individual Management Team member identify and agree on final targets and objectives. The performance objectives and targets should take into consideration the following:

Restaurant targets (Plan) and priorities e.g. sales, GC and profit plan Individual shift management opportunities from SMPI Assigned areas of responsibility e.g. labor scheduling, food cost, crew

development, etc. Individual manager knowledge, skill and ability – developmental needs



Monthly Progress Review

Step 1: Record SMPI DataMonthly each employee should record SMPI data for the month to their IPP form (SMPI Review -Pg. 1) and meet to discuss their SMPI results (Strengths and Opportunities) and progress on performance objectives with their manager. (The Restaurant Manager meets with Operations Consultant, Owner/Operator and/or Operations Manager. Assistant and Swing Managers meet with the Restaurant Manager.) Step 2: Schedule Monthly Progress ReviewEach employee and manager should schedule a brief review of progress on a monthly basis. The objective for this session is to discuss SMPI results, progress on performance objectives and to provide an opportunity for coaching and recognition. The time investment for the monthly meetings will vary by employee based on their progress and the complexity of their assignments. The manager should determine the actual meeting duration based on these factors. 15 – 30 minutes should provide a good starting point for scheduling purposes. Mid-year Review

Step 1: Update IPP and Complete Mid-year Self-assessmentAt mid-year, each employee updates their IPP with SMPI and performance objective results, and completes a self-assessment on their demonstration of the leadership competencies during the first half of the year. This is submitted to their manager prior to the mid-year feedback session.

Step 2: Schedule and Execute Feedback SessionAt Mid-year, the manager schedules and executes a feedback session with each employee. During the mid-year discussion managers give feedback on progress against business targets, SMPI results, performance objectives and leadership behaviors. Performance trends, strengths and opportunities are noted and managers and employees should discuss areas of focus for the remainder of the year.

To prepare for this review, the employee should record monthly SMPI results on their IPP form (SMPI Results page 1) on a monthly basis. At mid-year, and again at year-end, the employee should record cumulative SMPI results for the period. The mid-year and year-end cumulative SMPI results should be discussed by the manager and employee. At mid-year, the employee and manager should confirm the employee’s IPP performance objectives are aligned with opportunities identified from the SMPI report. At year-end, the employee should develop individual shift management performance objectives for the next performance period.

This mid-year review provides the manager and employee with a sufficient time period in which to review, identify, discuss and address employee performance trends to ensure success prior to year-end.


Promotes greater accountability and ownership for shift performance


Year-end Review

Step 1: Update and Complete Year-end Self-assessmentAt year-end, managers request an updated IPP from employees. Each employee updates their IPP with SMPI and performance objective results and completes a self-assessment on their demonstration of the leadership competencies during the year. This is submitted to the managers prior to the Year-end feedback session.

Step 2: Manager Completes Year-end RatingsThe manager completes a rating on results achieved based on accomplishment of performance objectives and the operating environment. They also complete a rating for demonstration of leadership behaviors for each competency. Finally, a preliminary rating for overall performance is determined. Note: This rating is discussed with the managers’ manager (Operations Consultant, Owner/Operator, Operations Managers, etc.) before being finalized and communicated to the employee.

Step 3: Communication and Feedback on Performance and Final RatingsDuring the year-end review, managers meet with employees to discuss final performance ratings and provide feedback on the employees’ performance during the year. Areas for further development and required development resources e.g. Training classes, 12 Systems Toolkit, Roadmap to profitability web-site, etc. should be discussed and incorporated into the employee’s Individual Development Plan objectives.

Utilizing the SMPI to Drive Performance Improvement and Development

The Shift Management Performance Indicator provides tremendous opportunity for continuous performance development for all managers. The



SMPI provides objective and real information that managers may use to identify performance development opportunities.

On a shift basis, the SMPI report allows each manager to analyze their shift, reflect on strengths and opportunities and take action to improve performance for the next shift. Taking this action helps to improve performance from one shift to the next. Linking the SMPI with the Performance Development System creates a powerful tool for effective performance evaluation, improvement and development.

The following example illustrates how the SMPI and IPP combine to improve individual and restaurant performance. In this example the Restaurant Manager and Assistant Manager Dana meet for Dana’s year-end performance review discussion. One element of their discussion was focused on Dana’s SMPI results for the year. When the Restaurant Manager and Dana reviewed her cumulative SMPI results for the year, they identified a trend of low KVS and Service times.



As a result of their analysis and subsequent discussion, Dana wrote the following SMART performance objectives under the QSC Driver of her IPP plan for the following year (year-end 2008 SMPI opportunities would be used to develop performance objectives for 2009 IPP):

QSC/ Customer Experience Drivers

Mystery Shop Trends- Mystery Shops are a key measure of the customer experience. Develop a SMART objective that will contribute to achieving the Mystery Shop target for your restaurant.MS Rating- Current YTD 87% Year-end Target 94%

December 31st

Mystery Shop

Objective 1. Improve D/T order to present times from 95” to 90” or less with 85% or better cars under 90” by June 30th and Improve D/T cashier to present times from 52” to 45” or less with 85% or more cars under 45” by June 30th.

June 30th SMPI Report

Objective 2. Improve KVS reaction time from 50” to 30” or less by April 30th and 20” or less by June 30th.

June 30th SMPI Report

Additionally, from observing several of Dana’s Shifts the Restaurant Manager determined that Dana does not delegate or communicate effectively with her crew. For example; when Dana experiences a service bottleneck during her shift, she will typically jump in an position herself on a work station and remain their for extended periods instead of first reviewing her crew positioning to determine if she has them properly positioned to optimize customer service. She avoids communicating, delegating and providing direction to the crew as well. If Dana would provide more effective coaching and direction, she could motivate them and more effectively address service bottlenecks. The Restaurant Manager discussed this observation with Dana during her year-end performance discussion. As a result of their discussion, Dana will draft IDP performance development objectives focused on improving her communication leadership and delegation skills.

In addition to these performance objectives focused on Dana’s SMPI results, she may write performance objectives for her assigned areas of responsibility i.e. labor scheduling, crew training, PM, etc. and/or objectives relating to specific store priorities i.e. food cost management, crew 90 day turnover, new product implementation, etc.



How Employees’ Are Evaluated

Employees are evaluated by managers on two elements: Results achieved on performance objectives (what was done) Demonstration of leadership competencies (how it was done)

The overall performance rating is a weighted rating based on ratings from these two areas. As a guideline results achieved accounts for 75% of the overall rating and leadership competencies accounts for 25%. This guideline is used to inform the judgment of managers; however the ultimate decision for rating is at their discretion. Note: All performance ratings must have documented evidence to support the rating and be approved by the managers’ manager (Operations Consultant).

How to Calculate Ratings

Results Achieved Rating CalculationsThe results achieved rating is determined based on how well the employee accomplishes their performance objectives in the 4 business driver categories (People, QSC, Sales and Profit). The manager evaluates and rates employee accomplishment of each performance objective and assigns a total rating at the end of the results achieved section of the IPP using the following criteria:

What the Ratings Mean

4 Exceptional ResultsAccomplishments were significantly beyond target performance levels. Contributions to business unit/team and department results were exceptional.3 Significant ResultsAccomplishments met and sometimes exceeded target performance levels.All requirements and expectations of the job were fulfilled.2 Some Improvement Required Accomplishments met some but not all performance levels and/or basic job requirements were consistently met. Performance is unsatisfactory and improvement is required.1 Unacceptable Results Few performance targets were met and basic job requirements were not maintained. Performance improvement must be achieved.

The rating and manager and employee comments should be recorded on the results achieved rating summary. In our example below, the results achieved rating is 3 – Significant Results

Performance Objective - Results Achieved Rating - 75% of Overall Rating For additional details, refer to your PDS Guidebook

End of Year Rating: 4 Exceptional Results 3 Significant Results 2 Some Improvement Required 1 Unacceptable Results

Mid-Year Employee Comments:

Mid-Year Manager Comments:

End of Year Employee Comments:

End of Year Manager Comments:

RESULTS ACHIEVED RATING (75% 0f Overall Performance Rating)

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(For additional detail, see the “Managers Guide to Assessing Performance” in the Toolbox section of this guide.)



Leadership Competency Rating Calculations

To establish the leadership competency rating, the manager must review of the behaviors under each of the 8 leadership competencies and based on demonstrated performance by the employee, assign the appropriate rating (1 – 4) to each competency. Once the manager has assigned a rating to each competency, he/she must total the competency ratings and divide by 8 to obtain an average. This average represents the rating for the Leadership Competency section.

To determine the Leadership Competency rating, the manager must complete the following calculation:

Year-end Leadership Competency Ratings

The Leadership Competency rating for this employee in this example is 2.75 and represents 25% of the overall performance rating.


Year-end Leadership Competency RatingsInsert a rating (1-4) for each Leadership Competency Mid-

Year Trend

Year-end Rating

Communicates Effectively and Honestly 3

Develops Crew and Managers 2

Builds Teamwork 3

Influences by Example 2

Puts the Customer First 3

Organizes the Work 3

Supports Change 3

Plans Beyond the Shift 3

Total 22Average Rating (Above total divided by 8) 2.75


Overall Performance Rating Calculation

Once the manager has determined both the results achieved and leadership competency ratings, he/she can move forward with calculating the overall performance rating. The overall performance rating consists of a weighted rating of 75% for results achieved and 25% for leadership competency. In our example, the ratings for the two sections were as follows:

Results Achieved = 3 Leadership Competencies = 2.75

To determine the Overall Performance rating, the manager must perform the following calculation: Weighted Rating

Results Achieved

Rating 3 x 75%

+ Leadership Competency Rating 2.75

x 25%

= Overall Performance

Rating

2.25 .69 2.94

The overall performance rating for this employee is 2.94 or a significant performer based on the established performance criteria below.

Overall Performance LevelOverall performance rating takes into account results achieved on objectives and shift performance (75%) and performance on leadership competencies (25%).

4 Exceptional PerformanceThe employee achieved results that far exceeded expectations and requirements of the job, while modeling the Competencies expected of McDonald’s employees. The employee’s performance was always of exceptional quality. This rating is reserved for employees who have exhibited exceptional performance while meeting challenging demands.

3 Significant PerformanceThe employee achieved results that consistently met or occasionally exceeded expectations and planned objectives. This rating describes employees who successfully do their jobs and meet high performance standards while at the same time demonstrating McDonald’s Competencies. (Note: This rating should also be used for employees who are new in their jobs and who are progressing as expected.)

2 Some Improvement RequiredImprovement is required as the employee’s performance was varied, and his or her ability to meet expectations and accomplish planned objectives was inconsistent. This rating should be used for employees who achieved results but did so by demonstrating behaviors that are not consistent with McDonald’s Competencies. Employees in this rating category should be placed on an accelerated review cycle with a Performance Improvement Plan to improve performance.

1 Unacceptable PerformanceThe employee’s performance was unacceptable and needs immediate improvement. Expected results were not attained and planned objectives were not achieved. This rating also pertains to employees who achieved results but did so in a manner that is clearly in violation of the Competencies that are expected of McDonald’s employees. An employee in this category should be on a Performance Improvement Plan, and must meet the objectives of the plan to remain in current position. In some cases, termination without going through a Performance Improvement Plan may be appropriate.

Overall Performance Level Rating: 2.94 - Significant

Rating Guideline1.0-1.49 Unacceptable1.5-2.49 Some Improvement Required2.5-3.49 Significant3.5-4.0 Exceptional

For additional evaluation considerations and tips, see the “Managers Guide to Assessing Performance” in the Toolbox section of this guide.



Getting Started

To begin the process, complete the following steps.

Step 1: Locate the IPP for your position and complete the information at the top of the form (e.g., Name)

Step 2: Familiarize yourself with the business targets, performance objective categories and leadership behaviors expected for your position.

Step 3: Consider what areas of focus will be most important for success in the coming year.

Step 4: Begin the process by meeting with your manager.

See “How it Works” section of this guide.



INDIVIDUAL DEVELOPMENT PLAN – IDP

The Individual Development Plan (IDP) should be used to establish a detailed development plan to improve performance in your current job, or to determine targeted objectives to gain skills and knowledge for future positions.

As a starting point, you should meet with your manager to discuss your short-term and long-term career goals, and competencies that are important for your current and future jobs. You and your manager should discuss and evaluate your performance on these key competencies and establish development goals that will help you gain skills and knowledge to improve performance on each targeted competency. The development goals can focus on strengthening leadership competencies or operations competencies.

IDP PLAN DEVELOPMENT ACTIONS:

1. Establish short-term and long-term career goals – On the IDP form write a statement that captures your 1-3 year career goals.

2. Meet with your manager to determine and agree on development opportunities and goals –

Discuss and identify development opportunities and goals to improve performance in your existing job and to acquire skills and knowledge needed for future jobs. You should ask and answer the following questions at a minimum:

i. What leadership and job competencies do you need to improve on to achieve high performance in your current job?

ii. What skills and knowledge do you need to acquire or improve to achieve your 1 – 3 year career goals (Future Jobs)?

iii. What are the top 1-3 development opportunities/goals to focus on for the year?

iv. What actions, resources or commitment is required to achieve development goals?

3. Write development goals –Write specific development goals improve performance in your current job or to

acquire/improve skills and knowledge for future positions.Write a brief statement that describes how each development goal will make you

more effective in current or future jobs.Write specific success measures for each development goal.Determine and write specific action steps required to achieve each development

goal. Completion dates, and resources/commitment needed for each action step should be included on the form.

Completion of your individual development plan and development discussion with your manager can occur during the same time frame as your performance review, or at a different time. Talk with your manager about what will work best for your review cycle.

On the next page you will find a resource that will help you to create an effective Individual Development Plan.



NOTE: Managers may choose to list Individual development goals/actions as performance objectives under the “People Drivers” section on page 2 of the IPP form, or use the Individual Development Plan to create a more comprehensive development plan.

Creating a Strong IDP

The purpose of this document is to help you find your focus in creating a robust individual development plan (IDP). It is organized by a series of questions and considerations, all of which are important in crafting a strong IDP. Use this document when creating or revising your IDP.

Directions: As you read each section below, reflect on your current IDP if you have one. If you answer no to 3 or more of the statements under any given section, use that section as your starting point to update your development plan.

Section 1: What is your situation?

Do your development goals fit the current job situation and the restaurant/business situation? Yes/No: Your IDP focuses on development needed for your current situation

(e.g., you are new in position, improved results are needed, there is a change in your responsibilities or scope, etc.)

Yes/No: Your developmental goals leverage the current restaurant or business challenges & opportunities to help you grow & learn.

Yes/No: Your development actions help you build or strengthen key business relationships.

Section 2: What are your development needs? Is your IDP connected to your individual development needs and career

goals? Yes/No: Your development goals are connected to your long-term career goals,

assessments or feedback received, and your overall performance feedback. Yes/No: Your IDP focuses on preparation for your next role if a move is likely in

the next few years. Yes/No: If you do not have a long-term career development plan, your IDP

includes steps to create one (i.e., Career Development workshop; job shadow senior managers or others; or actions to know yourself, know your options, create your plans, etc.).

Yes/No: If you have not received significant feedback from others about your development needs or career aspirations, your plan includes actions to get that feedback.

Yes/No: Your development actions help you build your network.



Section 3: Do you have the motivation?

Do you have the motivation & support needed to succeed? Yes/No: You are excited or motivated to achieve your development goals. Yes/No: You can clearly articulate your development plan and the rationale

behind it. Yes/No: You can clearly see how achieving these goals will help you move

toward your longer term career goals. Yes/No: Your manager is supportive of your development goals and actions. Yes/No: Others, who will play a role in your development, are committed to the

specific actions you need from them. They will help hold you accountable to your plan.

Yes/No: Sufficient resources (time, budget, mentors. etc.) are available to support your plans.

Section 4: Do you have a variety of learning & development methods?

Does your plan incorporate a variety of learning & development methods, emphasizing on the job activities? Yes/No: Your IDP includes multiple types of formal and informal learning

methods, such as:o Stretch assignments, projects, research (with guidance/feedback as

needed)o Joining or leading a project team or task forceo Gathering feedbacko Community, volunteer, or civic activitieso Shadowing, informational interviewing, observing people or processeso Reading, book club, book discussiono Mentoring (giving or receiving)o External programs, professional or trade associations, external

networkingo Formal training or educational programs

Yes/No: Your IDP contains development activities that fit your learning style.

Section 5: Do you have SMART goals?

Are your development goals SMART? Yes/No: Specific. Your development goals are specific, clear and concrete, and

have supporting action steps. Yes/No: Measurable. Your development goals include how you will measure

success, or assess what has changed. Yes/No: Actionable. Your development goals are clearly spelled out, and you

know how to begin. Yes/No: Relevant. Your development goals fit your career plans, business

situation, and development needs. Yes/No: Time bound. Your development goals have completion dates included,

and at least one IDP review and update is planned.


Restaurant Performance Development SystemMOS PDS Guidebook

PDS Guidebook Toolbox

Managers’ Guide to Assessing Employees’ PerformanceThe overall performance rating is based on both the results achieved against individual performance objectives and scorecard targets and the leadership competencies ratings.

As a manager you make the final decision about what overall performance rating to assign. Your decision should be informed by, but not automatically dictated by the weights of 75 percent for results achieved and 25 percent for leadership competencies. You should have evidence to support your ratings

Results Achieved Against Business Targets, Performance Objectives – 75% of Overall Performance

When developing a preliminary results achieved rating, for performance objectives, evaluate the employee’s accomplishments against the established measures.

Rating Scale for Results AchievedRWhat the Ratings Mean

4 Exceptional ResultsAccomplishments were significantly beyond target performance levels. Contributions to business unit/team and department results were exceptional.3 Significant ResultsAccomplishments met and sometimes exceeded target performance levels.All requirements and expectations of the job were fulfilled.2 Some Improvement Required Accomplishments met some but not all target levels and/or basic job requirements were not consistently met. Performance is unsatisfactory and improvement is required.1 Unacceptable Results Few objectives were met and basic job requirements were not maintained. Performance improvement must be achieved.

In making your decision, first consider where the individual’s performance results’ fall in terms of the range for the results achieved scale. Next, use the following guidelines to assign a rating (1-4) that best represent the results achieved by the individual in the given time period.

• Quality of work—the quality of services or work delivered in terms of accuracy, thoroughness, and appropriateness.

• Timeliness of delivery and output—the timely delivery of services or work product in terms of schedules, deadlines, and targets.

• Productivity—the quantity or amount of work produced personally on assignments, tasks, projects, products, or services.

• Use of resources—the efficient use of time, money, materials, and people to deliver In the United States, and elsewhere to the extent permitted by national law:

McDonald’s reserves the right to amend or modify the policies and procedures described in this guide at any time without prior notice. The information and processes contained in this guide do not create any contractual obligation between McDonald’s and its employees. At McDonald’s, employment is at will. This means that employees are free to terminate their employment at any time, for any reason, and McDonald’s reserves the same right. The president of McDonald’s is the only person who may make an exception to this, and it must be in writing and signed by the president.

In countries where the above is inapplicable, McDonald's reserves the right to amend or modify the policies and procedures described in this guide to the maximum extent and under the conditions permitted by law. McDonald's relationship with its employees in a particular country, including but not limited to the creation, terms and termination of that relationship, are governed by the law of that country. It is not the intention of this guide, nor shall it be deemed, to create any additional contractual obligations between McDonald's and its employees unless such is required by National law.

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the services or work product.• Value added—the degree to which the services or work produced meet or exceed the

expectations of internal and external customers.

In the United States, and elsewhere to the extent permitted by national law:



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Leadership Competencies – 25% of overall performanceUse the following ratings when assessing how well an employee displayed each category of leadership competencies.

Instructions Competency Rating Keya) Read the expected behaviors for each Leadership

Competency. b) Consider how well the employee fits the definition and

demonstrates the expected behaviors, and where the employee may be able to improve.

c) If an expected behavior doesn’t apply to a specific position, do not consider it when determining a rating for the Leadership Competency.

d) Record comments for each Leadership Competency and assign a rating

4 Exceptional Demonstration Demonstrated the expected behaviors in an extremely effective and consistent manner. This employee is considered a role model of this Leadership Competency.3 Significant Demonstration Demonstrated the expected behaviors for this Leadership Competency in a consistent and effective manner.2 Some Improvement Required Did not consistently and/or effectively demonstrate some of the expected behaviors for this Leadership Competency.1 Unacceptable Demonstration Demonstration of the expected behaviors for this Leadership Competency was unacceptable and needs immediate improvement. Behavior was in clear violation of one or more of the expected behaviors.

For each leadership competency, consider the following:• What specific examples support your assessment• What are your expectations about the employee’s performance based on the employee’s tenure

in his or her position

• Is there a need for development in a particular competency?• Can an individual improve their performance by improving a particular competency?

Process Notes

1. If an individual hasn’t had an opportunity to exhibit a specific behavior, you should not factor the behavior into the overall rating for that leadership competency. Also, if an expected behavior does not apply to a specific position, it should not be used to determine the leadership competency rating.

2. Managers should solicit feedback from others, including peers and subordinates, with whom the employee interacts.

3. As you consider the expected behaviors for each leadership competency, it’s important to think in terms of the current performance period rather than what has happened in the past. However, if there has been a consistent pattern of deficiency in exhibiting a given behavior over time, and especially if this has been addressed with the individual in the past, this should weigh more heavily in the rating for the overall leadership competency category.




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Overall Performance RatingThe following ratings are used to describe the employee’s overall performance level. The overall performance rating for individuals is based on both the results achieved against business targets, performance objectives and the leadership competencies ratings.Overall PerformancePerformance Level

Definition Characteristics of Person Performing at this Level

4 ExceptionalPerformance

The employee achieved results that far exceeded expectations and requirements of the job, while modeling the leadership competencies expected of McDonald’s employees. The employee’s performance was always of exceptional quality. This rating is reserved for employees who have exhibited exceptional performance while meeting challenging demands.

Note: You must be able to document the exceptional results versus the defined business objectives and/or describe an event that occurred which added work beyond normal expectations.

What results did this individual accomplish that were well beyond the normal job expectations or objectives that were set for the year?

“Exceptional performers achieve ‘best in class’ results for themselves while simultaneously improving the performance of the people that surround them. If you asked the person’s manager, manager’s manager, internal clients, peers, best-performing subordinates, work-performing subordinates, they would all agree that the person achieves fantastic results while modeling the behaviors (leadership competencies) that drive high performance of others” (Harold Reynolds, SVP of Organizational Effectiveness).Below are some questions to ask yourself when you are considering whether or not a direct report should be rated an Exceptional Performance.

- Are accomplishments at a significantly higher level than normally expected for the job?

- Does this employee continuously improve himself/herself, others, and his/her work?

- Does this employee exhibit McDonald’s leadership competencies with no major gaps?

- Would those who surround this employee (peers, direct reports, his/her manager’s manager, customers) agree that he/she is an Exceptional Performer?

3Significant Performance

The employee achieved results that consistently met or occasionally exceeded expectations and planned objectives. This rating describes employees who successfully do their jobs and meet high performance standards while at the same time demonstrating McDonald’s leadership competencies. (Note: This rating should also be used for employees who are new in their jobs and who are progressing as expected.)

Note: This describes the majority of employees.

• Performs well and contributes to the restaurant• Consistently gets the job done in the right way• Is competent in job skills• Has no significant performance issues with any of the leadership

competencies

2SomeImprovementRequired

Improvement is required as the employee’s performance was varied, and his or her ability to meet expectations and accomplish planned objectives was inconsistent. This rating should be used for employees who achieved results but did so by demonstrating behaviors that are not consistent with the leadership competencies expected of McDonald's employees.

Note: Employees with a Some Improvement Required rating require specific performance improvement plans and should be placed on an accelerated review cycle.

• Does not meet some of his/her target performance levels or achieve defined goals

• Meets expectations on his/her goals but does not display some of McDonald’s leadership competencies

1Unacceptable Performance

The employee’s performance was unacceptable and needs immediate improvement. Expected results were not attained and planned objectives were not achieved. This rating also pertains to employees who achieved results but did so in a manner that is clearly in violation of the leadership competencies that are expected of McDonald’s employees. An employee in this category should be on a Performance Improvement Plan, and must meet the objectives of the plan to remain in current position. In some cases, termination without going through a Performance Improvement Plan may be appropriate.

Employees in this rating category should be placed on an accelerated review cycle with a Performance Improvement Plan to improve performance.

• Does not meet target performance levels or achieve defined goals• Does not display McDonald’s leadership competencies• Does not contribute to the organization in an impactful way




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Expected Distribution Guidelines McDonald’s expected distribution guidelines indicate the percentage of employees that should fall within each level of the overall performance rating scale.

The expectation is that approximately 20% of employees will fall in the Exceptional Performance category, approximately 70% will fall in the Significant Performance category, and about 10% will be in the Some Improvement Required and Unacceptable Performance categories combined.

These guidelines represent a realistic distribution of performance ratings when challenging, measurable objectives have been established. Managers should make a strong effort to approximate the expected distribution in their ratings by being candid in their employee assessments and subsequent ratings.

Process NoteIf managers are effectively assessing performance, the expected distribution guidelinesshould be seen in groups of 30 people or more.

At the store level, the distribution is less likely to occur. You may have more or fewer in the top or bottom rating categories.




Some Improvement/ Unacceptable

Exceptional Performance20%

Significant Performance70%

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Handling Underperformance

Some of your employees may fall into the Some Improvement Required or Unacceptable Performance categories. For these employees, identify possible causes and determine a course of action using the following guidelines and your in consultation with your Operations Consultant, Owner/Operator and Human Resources representative if applicable.

In some situations, you may choose to create a performance improvement plan. Other cases may require immediate termination of the employee.

In deciding the course of action to follow, consider the employee’s commitment to improving his or her performance, whether or not the employee has received a low performance rating previously, the level of the employee, and the needs of the business.

A performance improvement plan is a short-term plan to help employees raise their performance to an acceptable level. Depending on the country, employees generally have a specified number of days to bring their performance up to a consistently acceptable level.

This can vary depending on the employee’s job level, instances of repeated underperformance, country legislation, and other factors.




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SMART Objectives

SMART objectives allow the employee and manager to establish a tangible measurement of accomplishment for each performance objective. A well written objective must be SMART

What is a SMART Objective?

A SMART objective is an objective that is: (Specific, Measurable, Attainable, Relevant, Time-bound

Specific: Being specific helps everyone, including you, understand what you will need to accomplish. For example: I will train three additional grill closers on the weekend shift to be verified by the 27th of March.

Measurable: Measures help you to know when the objective has been met. Measures can be numeric or descriptive; they can define quantity, quality, or cost.When you are specific, you should be able to measure your results. In the above example, you will know you have achieved your objective on March 27th if you have three grill closers complete SOCs at 100%.

Attainable: The objective must be within your power to accomplish, or if it is something that more than one person must work on, everyone must know about it and be committed to achieving the objective. You should not make commitments for others who might be unable to carry out the work.

Relevant: The objective should identify actions that are important to the customer, restaurant, region/division and/or country.

Time Bound: The time frame you assign an objective should also be reasonable and within your power to achieve.

SMART objectives help you focus on what you need to accomplish in a way that ensures success.




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IPP FORMS




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