McDonald’s Australia has made some big – and healthy – changes in the past 18 months. McDonald’s CEO and Managing Director, Guy Russo talks to Lauren Thomsen-Moore about leadership and managing change, involving 56,000 staff at more than 700 locations.
Guy Russo tries to greet the new faces in their freshly pressed uniforms at the McDonald’s Management Training Centre in Sydney’s northern suburbs. Russo remembers all too well when he was one of those young hopefuls.
Russo first stepped into the world of McDonald’s in 1974 as a 15-year-old student eager to earn some pocket money.
In 1978, after completing his HSC, Russo decided to work full-time for McDonald’s: “I figured that if I got it wrong, I could always change course and still have plenty of time ahead of me.”
Russo took further formal training within McDonald’s and worked his way up through the ranks from crew member – “doing all the things that are important in a restaurant, from serving customers, to flipping burgers” – all the way to the National CEO in 1999 at the age of 39.
“I started at McDonald’s three years after its first restaurant opened in Australia, so I have been with the company practically from the word go. I have a real appreciation for the work that our employees do. It’s a very demanding job; it’s not easy,” Russo says.
Russo has experienced the company growth and evolution through the ’70s when the “drive-thru” was invented, to the ’80s when the breakfast menu was introduced, the ’90s when the McCafe was created, and now to the introduction of the healthy choice focus.
From crew member to leading the national company, Russo’s experience within McDonald’s, along with his management strengths, have made him an inspiration to his peers.
He still lends a hand and greets staff in the restaurants – unable to resist even when he is on holidays.
Even during his interview with Management Today, Russo stopped to pick up rubbish near the drive-thru area of the Thornleigh McDonald’s store in outer Sydney.
“Even when I’m on holidays I’ll visit a McDonald’s restaurant often when I’m on the road. Why? Because I’m interested, and it’s my business; it’s what is important for me . . . And I enjoy it, and it may only take a little while to go in and say ‘hi’.
“There’s now a lot of McDonald’s restaurants around Australia and you know, in the ’70s, a former CEO knew every manager’s name, then it was fairly easy. But for me, with more than 56,000 staff it’s not so easy. But I do know that staying in close contact, from a restaurant’s point of view, is very important.”
Russo says he is close to staff, and is open and approachable. He says the McDonald’s head office has an open door policy to further encourage an open and honest approach.
“There’s no need to knock and, unless you want a lot of my time, there’s no need to make an appointment. This allows employees to flow in and flow out of peoples’ work environments if they have something urgent that needs to be approved or executed for the benefit of restaurants,” Russo says.
Managers at all levels should be very interested in their staff, as well as their business, Russo says.
“As an example, I probably spend about 60 per cent of my time out of the office, in the restaurants serving, cleaning, wiping down tables, and saying ‘hi’ to the managers and customers,” Russo says.
He believes a manager’s role is to execute leadership strategies. “We have different levels of management. For example, managers who work in the restaurants have a major responsibility to deliver the best outstanding quality, service and cleanliness (QSC).”
Russo believes leadership is about taking risks. “It’s about guiding the direction you want a business to go, acknowledging successes, and executing the strategy to get you there.
“I think you can teach leadership principles, but, without a doubt, if you look through the history of the world, then you see examples of people that surface, that shine out as a leader. But were they taught? I think they learnt the principles and they watched other leaders but they end up executing it in their own style.
“If people are in a leadership role and they try to duplicate someone else’s leadership style, they fail. But perhaps they have learnt more from the mistakes others make.
“I also think mentoring has a role in creating leaders,” Russo says.
Russo claims that watching all kinds of leaders – “because there’s something you can learn from all of them” – inspires him.
“I think that honesty and integrity and a willingness to listen are, above all, the important traits for a leader to have.
“I also have no doubt that an outstanding manager is a person that delivers exceptional quality, service and cleanliness to customers; develops, motivates and rewards his/her people; and knows how to make money. Or knows how to deliver great returns to the shareholders,” Russo says.
Russo believes it is very important for managers to ensure that employees maintain a work/life balance and “be there for your children and spouse”.
“The McDonald’s Australia culture knows I am sincere about it. But it’s not one of those written up policies or programs. But, for example, the majority of our executive team are married, or have a partner and children. So having a meeting at 7am isn’t going to work if a third of them want to be involved in doing something in the morning with the kids.
“There isn’t a meeting that can’t wait – or be done between 9am and 5pm. I can have smaller meetings at 7am but if I bring in the whole team of 20, then someone loses out.”
Russo also says he helps out at his son’s school tuckshop about 10 times each year.
With women making up half of the McDonald’s Australia workforce of 56,000, Russo has taken a strong stance on increasing the numbers of women in senior management roles throughout the Australian business.
During his time as CEO, Russo has achieved significant change for women in his business. The company has increased senior female executive numbers by 12 per cent and increased female restaurant managers by 24 per cent.
“Men have given men chances for too long,” he says and blames CEOs in Australia for the lack of women in senior management positions.
Russo was named Australia’s Leading CEO for The Advancement Of Women at the Equal Opportunity for Women in the Workplace Agency’s (EOWA) third annual Business Achievement Awards in 2003.
“If only 8 per cent of women are in senior management positions, the one person who can solve that is the top person – the CEO. And I’m saying men, because men run 92 per cent of organisations,” he says.
“For me, it was a matter of getting on board and saying ‘I’m going to fix this’, because I think it’s good for business. And you need to be able to tap into the available quality of individuals in your organisation. How could you ignore half of the workforce? And this is what I think CEOs have been doing.”
Russo says he believes people are spending too much time on strategies, programs and policies instead of just fixing the problem.
“So I’m giving women some opportunities in managing and leading departments. And what do I expect of them? I expect them to succeed.
“We’ll give them mentoring and development programs, whether it be internal or from outside. It’s just giving them the same opportunities that men have had over decades, centuries.
“So I feel very passionate about it, but I think it’s also the right thing to do.”
But he warns that spending a lot of time analysing why things are the way they are gets people nowhere. “You have to be proactive.”
In general, Russo says the majority of McDonald’s head office staff come through the ranks from the restaurants into the office, but adds: “I’m not naïve enough to believe that some of the best talent I can hire is also from outside the company.
“But even in my own team, I think there’s a good percentage of us who have come through the restaurants.
“It’s very healthy to have a team with outside experience; they bring new experiences and allow us to continue to polish the golden arches!”
Why is a fast food restaurant group like McDonald’s trying to do something about the worldwide obesity crisis?
According to Russo, “McDonald’s wants to be part of the solution”.
“While our industry did feel like it was being blamed for obesity, obesity came way before fast food came to this country, and obesity exists in some countries where fast food isn’t even present.
“But clearly how you eat, what you eat, how often you eat, along with how you exercise, could curtail the issue of obesity,” he says.
Russo has attended obesity summits and met with a small group of professionals – nutritionists, doctors and scientists – to see what McDonald’s could do to assist in combating obesity.
“My team got together and decided that our approach would be to invite experts to our offices and to invite suggestions as to what McDonald’s could to do to contribute to creating a solution.
“At first some of the experts were in shock . . . it was on the tips of their tongues that we were part of the problem not the solution,” he says.
Russo said the Salads Plus menu was in planning prior to the obesity summits; “but I must admit that after the summits we targeted the Salads Plus menu to be under 10g of fat”. Putting apples onto the menu was a big shock for some of the nutritionists, Russo says.
“Their questions to me were would we be happy to get our staff to say ‘would you like an apple with that?’
“I said ‘absolutely’. So I made sure that we did tell our staff that we are serious about this. So we’re happy for them to suggest apples.
“We are so serious about it that when we launched it to market we were selling the apples for about 75 cents to the customer. At the beginning of this year, we had all of our franchisees and our own company restaurants reduce that cost to 50 cents; this was even more of a commitment to say we want these things to sell and we want them to do well,” Russo says. Russo relates that in the ’50s the McDonald’s founder Ray Kroc said: “I’m not sure what we’ll be serving in the year 2000, but one thing I can guarantee is that we’ll be serving more of it than anyone else”.
“So that tells you that it wasn’t carved in granite about us being a burger, fries, and Coke place. He had views about customer service that are as important today: about being fast; friendly and clean,” Russo said.
The world is enough
At this stage of his career, Russo says the most important thing for him is to continue running the McDonald’s organisation and “ensuring that it continues to be an outstanding growth organisation”.
“My view of my career has always been about focusing on the job you’re doing now and not focusing on the next job.
“I think people that spend too much time focusing on the next job – whether vertically (within the organisation) or horizontally (in another organisation) – can take their eye off the ball in their current job,” Russo says.
As to the future, Russo says the opportunities in the McDonald’s world are endless.
“There are more than 20 of my staff currently working somewhere in the McDonald’s world. They are Managing Directors of Malaysia, Indonesia, and a number of other countries around the world. The CEO I replaced in 1999 – Charlie Bell – is now second-in-charge of McDonald’s for the whole world, based in Chicago.
“I have no doubt that if I was interested in pursuing a job overseas, that it would be possible. The big decision would be how I would balance that with family,” Russo says.
Lauren Thomsen-Moore is a staff writer for Management Today.
McDonald’s business facts
- In the past financial year, McDonald’s spent $16 million on the training and development of its people – ranging from crew training through to MBAs.
- McDonald’s management training and development is conducted at regional training centres around the country.
- McDonald’s cycles more than 4000 managers a year through its training courses.
- The Advanced Operations Course is conducted at the company’s largest venue, the $8 million Management Training Centre at Thornleigh in NSW.
- Each of the training facilities in Sydney, Melbourne, and Brisbane offers the latest in training technology, and includes a training kitchen designed to teach students how each piece of equipment works.
- McDonald’s guarantees that the training and development it offers employees is current and informative and delivered within a professional environment.
- For ambitious managers who work their way through the ranks, the quality training and development experience continues with the Advanced Management Development Program. This consists of specially tailored one- to two-day programs by the Australian Institute of Management (AIM) and provides McDonald’s employees with the latest in management training. The Executive Development Program is designed and delivered in conjunction with the Macquarie Graduate School of Management (MGSM).
- “McDonald’s provides all of its employees with the best training in the industry. The training we provide to our people is critical to the success of our business. Our formally accredited management training and development program provides successful managers with transferable qualifications up to, and including, an Advanced Diploma of Management – the highest qualification below a university degree,” Russo says.
- McDonald’s Australia is a Registered Training Organisation (RTO), allowing McDonald’s to offer accredited courses to employees that lead to nationally recognised qualifications. The qualifications that are issued are similar to a TAFE certificate and identify the level of training achieved. The qualifications can be used to develop career paths in McDonald’s, the retail industry, or beyond.
Russo blames CEOs for lack of female senior managers
McDonald’s CEO Guy Russo has made his views on women in management very clear and has been recognised for his efforts.
He was named Australia’s Leading CEO for The Advancement Of Women at the Equal Opportunity for Women in the Workplace Agency’s (EOWA) Business Achievement Awards in 2003.
Russo blames male CEOs in Australia for the lack of women in senior management positions.
Speaking at the launch of the book Chief Executives Unplugged: Business Leaders Get Real about Women in the Workplace Russo said: “[CEOs over the age of 60] just don’t get it, and perhaps if Prime Minister John Howard paid more attention, then something can be done about it”.
The book – produced by EOWA – features interviews with 10 Australian business leaders about how they came to be passionate champions of working women, and how both women and men can harness their potential to achieve business success.
Other CEOs featured in the book include: Brian Schwartz, Ernst & Young; Wayne Osborn, Alcoa World Alumina; Peter Hanenberger, former GM-Holden CEO; John McFarlane, ANZ; and Sue Vardon from Centrelink.
Published by New Frontier Publishing the book is available for $19.95.
- McDonald’s Australia opened its first restaurant in the Sydney suburb of Yagoona in 1971. Today, more than one million people in Australia eat at McDonald’s every day.
- McDonald’s Australia has 730 restaurants with more than 56,000 employees, which includes corporate staff in the Company’s five offices located around the country. The NSW office has 314 employees, Melbourne has 66, Adelaide has 11, Perth has 21, and Brisbane has 51 office staff.
- Of the 730 McDonald’s restaurants, 70 per cent are licensee-owned and operated and the remaining 30 per cent are company-owned.
- McDonald’s is one of the largest purchasers of Australian products spending more than $500 million on locally grown ingredients each year.
- In an average year McDonald’s Australia purchases 307 million hamburger buns, 88 million kilograms of potatoes, 60 million eggs, 24 million litres of milk, 18 million kilograms of beef, 5.5 million kilograms of cheese, 11 million kilograms of chicken, 5 million kilograms of lettuce and 1 million kilograms of beetroot.