In their article about the Moscow McDonald's management education system, Vikhanski and Puffer (1993) have described how McDonald's success in Russia is attributable to the emphasis it placed on the dissemination of core values. The core values it disseminated in Moscow were the same as those disseminated in McDonald's America, or anywhere else in the world. These made the Russian employees of McDonald's feel part of the worldwide family of McDonald's. In fact, it is a core value of McDonald's that 'McDonald's is one big family and McDonald's cares about its workers' lives at work and outside work'. To operationalize this core value, Moscow McDonald's organized monthly social events for its employees . These included boat cruises along the Moscow River, sports meets, cultural programmes and other leisure time occupations, all paid for by Moscow McDonald's.
The employees of Moscow McDonald's were collectively called the crew of the restaurant. This is the term used at all McDonald's restaurants. McDonald's believes in using the same terms at all its restaurants worldwide to increase the sense of belonging to a single family. As an extension of this concept, Moscow McDonald's celebrated Hallowe'en, which is not normally celebrated in Russia. The Canadian staff at the restaurant initially took the lead in introducing the festival to their Russian co-workers . The celebration of Hallowe'en soon became an enjoyable and entertaining intercultural event. The crew found it fun to decorate their restaurant, wear Hallowe'en costumes, and have a party. They also liked the idea that they were engaging in an activity that their counterparts in many parts of the world participated in.
Professional events are also organized to strengthen the sense of family at Moscow McDonald's. These events, conducted as part of the chain of events engaged in by McDonald's restaurants worldwide, exert a strong motivational influence on the crew. One such professional event is the crew meeting, staged every three months. Another is the recognition of specific achievements of crew members , such as the attainment of certain milestones or excellence in performance.
Vikhanski and Puffer (1993) opine that because Moscow McDonald's employees feel special they had no difficulty adopting the work practices of McDonald's. 'They like the fact that, regardless of their position, they all call each other by their first name . They like to wear their nametag on their chest. They like to talk to customers with a smile, as if playing a theatrical role.' They were also proud to declare that they were part of the McDonald's family and were happy to wear the McDonald's uniform. There was nothing comparable to this core value of McDonald's - of all employees being part of a global family - in Russian corporations at that time. Consequently Moscow McDonald's employees had a sense of being unique, and wanted to demonstrate that they were worthy of their special status through exceptional performance.
There are two facets to a global corporation's successful operationalization of a core value. First, the core value should be worthy of being accorded core value status. It should have an inspirational component, and give the workforce a sense of direction. Second, the corporation should have the expertise to disseminate it across diverse cultures. Once this is achieved, a powerful unifying force holds the global corporation together. According to Wilmott (1993), the possibility of employees espousing heretical views leading to conflict situations is severely limited if the core values are strongly embedded. The strong core values held by McDonald's restaurants worldwide have enabled the corporation to be a high-performance company, free of debilitating conflict.
The success of Moscow McDonald's is reflected in the fact that it was the McDonald's restaurant worldwide that catered to the largest number of customers in the 1990s. In the first year of its operations it served 45,000 customers a day. The Russian customers were prepared to wait in line for 30 minutes to 1 hour to be served. Meanwhile, the motivated internal customers of Moscow McDonald's, the crew, provided speedy and quality service with a smile, in less than a minute.
At Moscow McDonald's, the employees did not feel schizophrenic about being part of the McDonald's family worldwide, while still being recognized as Russians. The strong work ethic that was communicated to them only served to imbue them with a sense of pride in their work. This made them admired by their compatriots. The crew were willing to reinforce the strong work ethic expected of them, by subscribing to it in fact. In the early 1990s there was never any evidence of discontent on the part of the Moscow McDonald's crew: so much so that Ivan, a maintenance person interviewed by Vikhanski and Puffer (1993), opined that he thought Russians were just like Canadians.
Moscow McDonald's did many things to ensure that their core value of a strong work ethic could take root in Russia. To begin with, it hired Moscow teenagers rather than adults as its crew. This was because Moscow McDonald's wanted employees without any work experience. That ensured that the core value of a strong work ethic could be engrained in employees who were unsullied by poor work habits. A few other companies have pursued this method of recruiting people with no prior work experience. Stephen Robbins (1990) has described how Sony Corporation recruited primarily school leavers who did not have any manufacturing experience for its branch in California. Since the new employees had no rigid views about their work life, they were easily inducted into the 'Sony family'. The employees at Sony California today feel proud to be part of the Sony family worldwide.
In the Russian culture, teenagers generally do not work, and labour laws exist to ensure that their academic pursuits do not suffer. Companies have to give time off for teenagers to take examinations. Since Moscow McDonald's felt that it would be difficult for teenagers to study and work for McDonald's with commitment to the company's core values, it decided to hire youngsters between the ages of 18 and 25, and not teenagers per se. In spite of this, it managed to attract droves of applicants with no prior work experience willing to be trained. This is aligned to McDonald's North America's policy of investing in the socializing of new employees so that they learn the company's core values. New employees of McDonald's in North America attend Hamburger University and are given inputs on how to behave.
Moscow McDonald's devised its own hiring procedures adapted to the Russian context, to ensure that its core values could take root among its employees. This was a departure from the route normally followed by transnational corporations operating in Moscow at that time. Transnational corporations in Russia usually took employees recommended by their joint venture partner. The joint venture partner recommended candidates it wished to patronize. Such employees did not have an appropriate work ethic and were therefore not of the same calibre as the transnational corporation's employees in other parts of the world. Such employees could not become part of that global corporation's family of employees.
Moscow McDonald's instead placed an advertisement in the Moscow newspapers inviting applications. The restaurant received 27,000 applications. This gave the company a huge pool of candidates from which to select those who could imbibe the company's core values. Additionally, it conducted a recruitment competition to shortlist candidates. The competition served to eliminate unsuitable candidates. It also invested the selected candidates with a sense of achievement, and motivated them to put their best foot forward.
Moscow McDonald's used the standard McDonald's training techniques. This strengthened its employees' sense that they were a part of the McDonald's family worldwide. In the United States, many employers are happy to take on former McDonald's crew members because of their good work ethic. This testifies to McDonald's capability for getting its employees to internalize company core values.
This is the case with Moscow McDonald's as well. New recruits are taught what work ethics and attitudes are expected of them. They learn to be responsible and disciplined, and adhere to high standards of quality and customer service. When crew members fall short of the mark in their work behaviour, they are given remedial instruction and training. A crew member is generally not fired for unsatisfactory performance. This helps employees feel that they are part of the McDonald's family.
Four Russians were selected to be managers at Moscow McDonald's when the restaurant first started operations. They received the same training as all other McDonald's managers. Thus the same management techniques were employed at Moscow McDonald's as are used in the other 10,500 McDonald's restaurants around the world. To ensure this, the managers were first sent to McDonald's Institute of Hamburgerology in Toronto for five months. The management programme included video-based education, lectures and on the job training. The four managers were then sent to McDonald's Hamburger University in the United States. This University was established in 1961 by McDonald's as a fulltime international training centre . It gives its graduates a degree in hamburgerology.
There, the four Moscow McDonald's managers found that they were among McDonald's managers from all over the world; 235 on that occasion. They truly felt part of McDonald's global family. They also attended a course about advanced restaurant operations where they further imbibed McDonald's work ethics.
The way McDonald's successfully disseminated its core values at its Russian restaurant may be sharply contrasted with the inability of Canadian aerospace giant IMP Group Limited to embed its core values in the joint venture it started in Russia. IMP entered into a joint venture with Russia's national airline Aeroflot to start a hotel, the Moscow Aerostar.
Reference to the Moscow Aerostar experience will illustrate that the achievements of McDonald's were well earned, as they do not happen without thought and effort.
While McDonald's concentrated on youngsters who could be socialized into a given set of core values, Moscow Aerostar targeted 'the pick of the litter' who responded to their advertisements. These candidates were qualified professionals like medical doctors , psychology professors, engineers and lawyers . They were grossly over-qualified for many of the jobs they accepted such as receptionist , but at the same time had no experience of the hotel industry and had to be trained from scratch and treated like novices. The security supervisor had a 'degree from the Highest School of the Militia and a 5-year Law Degree' while the Bellman Supervisor had a 'degree from the Institute of Geological Prospecting'.
Given this information, it is not difficult to conclude that the employees of Moscow Aerostar did not experience a sense of pride in their work. Shea (1994) notes that when the Russian employees at Moscow Aerostar were quizzed about how they felt about the rewards they received, typical responses were as follows : 'The salary is not good but management treats me well', 'The hotel is not doing enough for me, I expected more', 'In general, I am pleased with what I am earning , but with respect to the West, it's nothing', and 'The bonus is not very useful, things are quite expensive at the hard currency shops .' By way of another example regarding the lack of satisfaction amongst the Moscow Aerostar employees, consider the following:
On the first anniversary of the opening of the hotel, a banner was displayed thanking employees for their hard work and each one was personally handed a food basket containing a bottle of French red wine, a kilo of French cheese and a pineapple. Only one employee said thank you. In fact, one employee said that he did not like red wine and asked for a bottle of white.
The Russian employees at Moscow Aerostar were paid an average salary of US$25 per month. This salary was double the state average. The employees were also paid a performance-based bonus that for the better performing could be as much as US$140 per month. IMP felt that they were being generous to their Russian employees because they were being paid more than Russian companies were paying their employees. The Russian employees at Moscow Aerostar however could not resist comparing themselves with what the Canadian expatriates were receiving.
IMP had originally envisaged that it would halve the number of expatriates at the end of one year. Instead, at the end of one year the number of expatriates increased. Considering the blatant disparity between the Russian employees' income and the Canadian expatriates' income, the Russians can hardly have been expected to feel part of a family. Additionally, employees who feel that they are being treated as second-class citizens in comparison with employees from another culture are not going to be mentally receptive to corporate core values. Moscow McDonald's, by contrast, pulled out all its expatriates within a year and a half of starting operations, and replaced them with Russian managers.
Major impediments to developing Russian managers and communicating Moscow Aerostar's core values to them were IMP's defective orientation and training programmes. In the first instance, all training was done in Moscow. One reason the Russians were not given training in Canada was because it was feared they would not return, but would find ways of staying on in Canada. After all, they were engineers, doctors, scientists, computer specialists and so on, who might attempt to locate jobs in Canada where they could use their professional expertise. Additionally, and more to the point, it was more economical to conduct the training in Moscow. By contrast, Moscow McDonald's ensured that all its managers were trained in Canada. The top managers were further trained, as has already been mentioned, at the McDonald's international training centre in America. Naturally, far from feeling discriminated against, the Moscow McDonald's managers felt integrated into the McDonald's worldwide family. Consequently, they felt motivated to do their best for the company.
Far from having a clue why she was having no success in transmitting IMP's core values to the managers of Moscow Aerostar, Laurie Sagle, the Canadian Director for Training and Personnel, surmised that the fault must rest entirely with the Russians. In fact, most of the fault lay with her and the fact that she had imposed a quasi-Canadian system of training on the Russians. One day of the training was devoted to teaching employees how to smile. This was done using role plays and evaluations. After the employees had mastered the art of smiling, they learnt how to listen. Those who had to handle telephones were then given input on telephone manners. This was followed by a day devoted to teaching female employees how to use make-up. On this occasion, Laurie Sagle went to great lengths to demonstrate that 'the woman who rated highest on productivity and efficiency was the one with an appropriate amount of make-up on, because she looked like she was ready for business'. After the employees had learnt how to smile, listen and speak on the telephone, they were subjected to a written test.
A transnational orientation programme is an important vehicle for transmitting a company's core values to their employees. If the wrong values are communicated at this point, the damage done is almost irreversible. At the Moscow Aerostar orientation, what message were the highly educated Russian employees likely to pick up? One possibility is that they are being trained to 'act out' a role, and in the process make inroads into the wallets of their customers.
Meanwhile, the employees could observe that Moscow Aerostar was making a great deal of money. The Canadian newspaper Globe and Mail (9 February 1993) reported that a single-occupancy room with breakfast at the Moscow Aerostar cost US~$205 per night. A suite for triple occupancy cost US~$395 per night. Moscow Aerostar's restaurants charged prices comparable to similar restaurants in Canada. The main restaurant offered the full buffet meals that the restaurants of international four-star hotels normally offer. Lobster dinners were available three nights a week. Moscow Aerostar also had a steak and seafood restaurant. Thus the Russian employees of Moscow Aerostar who were not entitled to a bonus earned less in one year than the hotel charged per night for a triple occupancy suite.
Under these circumstances, the Russian employees of Moscow Aerostar had no reason to believe that they were part of a family of global employees. They would not perceive the company as possessing any core values worth mentioning. On the contrary, it is likely that they saw themselves as being exploited. First, their compensation was not commensurate with the profits generated by Moscow Aerostar. Second, their expatriate colleagues were paid substantially higher salaries. And third, they were expected to act out in an artificial and contrived fashion in front of their patrons with the sole intention of getting these patrons to spend money.
At McDonald's, by contrast, the employees perceived that they were being paid equitably. They were provided with perquisites that were eminently suitable for them. Perquisites as a form of compensation offered by a global company will be appreciated more fully if they are relevant for a specific culture. At Moscow McDonald's the perquisites included free healthcare facilities at premium hospitals and clinics, free meals on the job and free vacations . Moscow McDonald's employees were also able to order groceries from the restaurants' suppliers at wholesale cost. This provision was to help employees offset problems of unreliable supplies of groceries that they otherwise had to contend with in Moscow.
Any effort at talking in terms of core values by Moscow Aerostar is likely to be viewed with scepticism by their Russian employees. After all, they believe that they are not being treated fairly . To add insult to injury , IMP made a bonus system a part of the compensation scheme. The Russians probably perceived this system as a mechanism by which IMP could 'play with them'. Laurie Sagle had intended that the bonus system should act as a motivational tool. However, the Canadian system of trying to build up star performers was not going to work at Moscow Aerostar, where the employees had been accustomed to a collectivist regime . That is not to say that a bonus system cannot be introduced for a Russian workforce. However, under conditions where the employing multinational company is viewed as lacking in core values, any attempt to use systems different from what the local nationals have been accustomed to would be resented. The Canadian senior management was astonished whenever they were faced with such situations as supervisors wanting to know why non-supervisors were excluded from attending the special functions that were organized for the supervisors alone. The situation that seems to have emerged is one of the Canadians and Russians being so culturally different that they were unable to share the same core values, which need not have been the case at all.
At Moscow McDonald's by contrast, attempts were made to tap productively the collectivist mentality that may have existed among the Russian employees. Contests were periodically held to get teams of employees to compete against each other. The restaurant managed to organize these events in a spirit of fun, and these efforts were not resented. The multinational company was assessed as having deeply held core values that they adhered to in practice. This enabled the Russian employees to accept any practices the company introduced in Russia in good faith.
At Moscow Aerostar, Laurie Sagle believed that the training programme she had implemented was the cornerstone of her effort to build an effective workforce. Unfortunately, she missed a golden opportunity to win the loyalty of Russian employees. Unfortunately she saw the training programme only as a mechanism for 'elevating' the Russian employees up to international standards. She did not see that there was also a requirement on IMP's part to use this as an occasion to try to bond with its employees. The relationship between employing corporation and employed personnel has to be viewed as a mutually symbiotic relationship. In the case of Moscow Aerostar, the Russian employees were viewed from a condescending angle and not as equal partners .
During the training programme, an entire session was devoted to teaching the Russian employees how to communicate better. A game used at the session was the 'broken telephone line game'. For this game the participants sit in a row. The participant at one end whispers a message into the ear of the next person, who in turn whispers what he or she hears into the ear of the next person, and so on down the line. The last person in the line says out loud what he or she has heard . This, more often than not, is a garbled version of the original message. The object is to demonstrate that communication can get distorted if a message is not conveyed properly, and that as the communication is relayed to more and more people who engage in distortion, the message can get completely twisted out of shape.
Although the game is amusing and can serve as an icebreaker, the learning derived from it is quite trivial. It is rather outdated as a training technique. The highly qualified Russians who attended the communications sessions must have found it farcical. Inadvertently, IMP was presenting itself as a multinational that over-valued itself. Was this the best training session in communications that IMP could conceive of for its Russian hotel?
As has already been stated, it is the core values of a transnational corporation that hold it together. To ensure that these core values can be disseminated effectively, a transnational corporation must first of all have core values that are worthy of dissemination. Second, it should begin the process of inculcating these values to a branch in a new culture from the beginning. Many successful transnational corporations begin the process of dissemination at the initial orientation and training programmes. Third, the senior management functioning in the new culture, especially the senior management from the home country, should be seen as operationalizing those core values in their own work lives.