Total customer obsession

Interview by Eric Collins

Dr Sunny Fong is Senior Director, People Lead – Asia & Japan at McDonald’s. Here he talks about his HR career, the importance of innovation and technology to an established brand, and how the food service industry is addressing the Covid-19 challenges.

Why did you choose to work in HR?

I studied BBA at the Chinese University of Hong Kong. Back then in the late 1980s, you had to choose either General Business Management or Human Resources. I chose HR for two main reasons: at that time there was a transformation in organisations, and HR was moving from an administrative function – often called Personnel – to more of a strategic function, so I saw a lot of opportunities there for well-trained HR professionals. Secondly, one nice thing about HR is that there are different functional areas or disciplines. There’s the human side, such as interviewing people, developing talents, and change, and there are some unique skills needed there. And then there’s reward management, or remuneration, a field requiring a more analytical capability. So, I was attracted to this diversity of functions within the field of HR.

Where did you begin your career?

I started out as an HR management trainee with the MTR (Mass Transit Railway). This is a big company and there was good job rotation with the opportunity to work in several different functions such as remuneration, employee relations, HR account services serving different departments, so I got the chance to build a solid foundation. After that I wanted to gain international exposure, so I joined Motorola, who at that time had a big manufacturing facility in Hong Kong.

I worked in a few other multinationals after Motorola. Then in the mid-2000s, I took a career break to pursue another career aspiration. I spent 18 months as an Assistant Professor at the Hong Kong Baptist University. I really enjoyed teaching, interacting with the students, and sharing my experience.

I joined McDonald's in 2007, with a new position especially created in reward management, which is to a certain extent my area of expertise. It was a new industry experience, in a company strong on employee engagement and branding, so that’s why I came here.

You mentioned reward management?

Yes, some companies call it compensation and benefits or remuneration. It is more around how you decide your grading structure, bonus schemes, benefit plans, all kind of programmes both tangible and intangible (for example, recognition schemes). How to motivate and engage your employees? How to recognise your best restaurant managers?

Could you describe McDonald's management structure?

We have gone through a major transformation since 2015. Before that we had a typical multinational structure with specific regionally based organisations covering areas such as the US, Europe, Latin America, Asia Pacific, etc. Since 2015 we decided to revamp the structure to align with our business strategy. We have the US segment, which is huge with over 14,000 restaurants. And we grouped all the markets wholly owned by McDonald's (e.g., Germany, Australia and Canada) in the International Operated Markets (IOM) segment. And then we have 80+ markets in one big International Developmental Licensed Markets (IDLM) segment. These are a little bit like franchises, the difference being that these markets are run by a big local business partner.

What are the advantages of the Developmental Licensee strategy?

Approximately 93% of McDonald’s restaurants worldwide are now owned and operated by independent local business owners.

DL is a key driver for growth and helps us to understand individual customer needs and local customer preferences, to penetrate the local market more readily, and to grow fast. We still have a core business unit team for each region, but the management hierarchy is pretty flat in order to be close to customers.

How about the training function?

We are very proud of the way that we develop our people. At restaurant level we hire a lot of part-time employees. Some of them joined us as high school students, and may decide that they will not go to university because they want to develop their career in our industry. So, we need to equip them with the necessary operational and also managerial skills. We call our learning development function for restaurant operations "The Hamburger University," and we have physical facilities in quite a lot of countries. But more importantly we have very rigorous training curriculum for employees at different levels in the restaurant. To become a restaurant general manager, for instance, you will need to go through specific modules. If you want to be promoted to the next level, which we call operation consultant where you manage perhaps seven or eight restaurants, that’s a different skill set, and we also provide specific training programme. That's critical. Equally important is equipping people with the necessary leadership development and exposure to new experience.

How do you handle innovation?

Innovation is key, and it is critical to innovate to meet customer needs. Back in 2013–14 we encountered quite a lot of challenges. So we asked ourselves, how can we elevate ourselves? While we will continue to run great restaurants and offer value to customers, the importance of customer obsession came in. We have to understand our customer needs. For instance, as always, we endeavour to innovate our menu and would do testing before launching new items. But to ensure customer obsession, we ensure we will collect enough insights from our customers. We now emphasise more on the importance of customer validation to back up innovations, and that’s how we respond to customer needs nowadays.

How is McDonald's adapting to preferences for a plant-based diet?

McDonald's already offers meatless burger in some countries, such as India, South Africa and Australia.

In Canada we have tested a new product which is a plant-based burger, under the P.L.T. (Plant, Lettuce, Tomato) trial, and we are evaluating learnings from our recent test to inform future menu options.

How about regional diversity?

If we take menu items as an example, of course we have many iconic products like Big Mac or Filet-O-Fish and fries, which are core menu items and popular in almost all the markets that we operate. But at the same time, we need to cater for local market differences. A classic example is India. We do not serve beef and pork in India, and there is a big vegetarian population. So, we introduced tasty vegetarian burgers. In Hong Kong we have been launching twisty pasta, which is well loved by local customers for breakfast. Many Asian customers love durian, and so we launched durian McFlurry in Malaysia and Singapore, and customers are crazy about it.

How about the role of technology?

We introduced our Velocity Growth Plan in 2017 and identified three pillars of the growth strategy. We needed to retain existing customers; regain customers we have lost; and convert casual customers to committed customers. In order to support this effort, we identified digital as one of our key accelerators and are committed to re-shape our interactions with the customer – whether they eat in, take out, drive thru or order delivery.

For instance, we have been introducing new digital elements in our stores, including digital menu boards, self-ordering kiosks, and mobile ordering. At the end of the day, we want to deliver our brand promise of "making delicious feel good moments easy for everyone."

Will management need to develop a new skill set to leverage technology effectively?

Technology has been changing constantly over the past few decades. I think the key is that our people have a mindset which is open to change. That is critical and applies to everyone, not just the colleagues in the technology function. Take an example, in HR we need to ask ourselves how can we use tech to attract applicants? Then how can we use tech to help interview candidates? In Australia for instance we have taken to use Snapchat to attract candidates, which gave them a job search experience that resonated with them.

How well is change managed in universities?

I do see a lot of changes in recent years, especially in connecting with the business world. CityU is a good example, we have departmental advisory committees where the corporate world is well represented. From the student side, there are more and more opportunities to understand the business world through internships. Another change is mentoring, that’s a great idea to provide students with exposure to the outside world. Nowadays we talk about reciprocal mentoring. We need to learn from one another. That way we can work across the so-called generation gaps.

How do you see employment opportunities changing for our Management graduates?

This is a timely question, especially because of Covid-19. I would say it is still uncertain at the moment, as it will take quite some time to understand the short- and long-term impact of Covid-19. We talked about tech, and there are always growth areas. Right now, all companies are talking about digital, AI, and cyber security. Perhaps management graduates need to ask themselves, "how can I upgrade my knowledge in say digital marketing, big data and cyber security, so that I can differentiate myself from the crowd?"

Can the food retail business overcome Covid-19?

Obviously, currently sales in the industry are down in most countries, but at the same time we can ask ourselves what can we do to mitigate the risk? How can we leverage more from, say, delivery? Can we make delivery contactless? We need to try and anticipate the trends post Covid-19. We need to monitor and check whether this is going to be short- or long-term? On the people side, through this whole episode, we need to keep asking how we can engage with our people. How can we stay connected with them, and make sure they understand what has happened? How can we assure employees that it is now very safe to come back to work in the restaurants?

What about sustainability?

As one of the world’s largest restaurant companies, we have the responsibility and opportunity to take action on some of the most pressing social and environmental challenges in the world today. The size and reach of our business put us in a unique position to improve people’s lives and the environment. We want to use our global scale and continue raising the bar on what it means to be a responsible company committed to people and the planet.

Our current "Scale for Good" priorities cover Climate Action, Beef Sustainability, and Packaging & Re-cycling, and Family Commitment. Another element of sustainability is people. How can McDonald's provide youth opportunities to train young people the skills that they can use in their future lives?

Dr Sunny Fong
Senior Director, People Lead – Asia & Japan