4 Tough Lessons from McDonald’s Employee-Site Missteps

The past six months have served up a lot of bad news for McDonald's (NYSE: MCD  ) . Between flagging sales, a wing dish that didn't fly, and demonstrations at some locations during this month's fast-food worker strike that called for better pay, the fast food giant has plenty of problems on its plate. To add salt to the wound, the company's own employee-services site has been the source of a lot of grief.

The final straw came this week, when McDonald's shut down the McResource employee site for "maintenance" after visitors grabbed screenshots of recommendations to avoid eating fast food because it's unhealthy. This capped a six-month period of PR trouble with vendor-provided site content that seemed oblivious or indifferent to the challenges faced by the company's hourly workers.

So what's the takeaway for companies looking to avoid similar problems and investors looking for smart choices? The obvious answer is that enterprises should be as vigilant about the tone and context of their internal communications as they are about their public campaigns. McDonald's shows us three reasons that this is crucial, plus one big reason why even the savviest words may fail the company.

1. Everyone will probably find out about everything

If a company has information on its internal site that undermines its mission and product line, odds are it will go public—see the McResource recommendation to employees to save money and better their health by avoiding soda, burgers, and fries. It's fine advice from a financial and health standpoint, but sadly at odds with McDonald's core products.

The company's official statement that the site was under "unwarranted scrutiny" is off, too, from the perspective of both consumers and investors. Who wants to eat food that a company describes to its own employees as unhealthy and a bad bargain? And investors may think twice about an enterprise that's got dropping sales, tons of unsold wings, and a habit of finding itself hoisted by its own petard in the media.

2. Generic information can make existing image problems worse

McDonald's hasn't revealed the name of its internal resources website vendors to the press over the past months. But this week's anti-fast-food recommendations were branded as content from ADAM, a health-education services provider that merged in 2011 with insurance and benefits tech company Ebix (NASDAQ: EBIX  ) . 

They also appeared to be stock content, and that has raised other questions. ADAM vice president Soula Chronopoulos told The Motley Fool that McDonald's is not an ADAM customer.

"We produce high quality medical content that is often resold through third party vendors or resellers," Chronopoulos said. "We are currently investigating how McDonald’s did in fact procure our content because we have no record of this in our files. We ourselves would like to know who the third party vendor is that developed their site so we can understand how they came to be using our content."

Regardless of the source, because everyone's going to find out about everything, smart companies will make sure they give workers information that can withstand the light of public scrutiny—and doesn't offend employees. That means commissioning custom content or at least reviewing the generic content that third parties provide to ensure it's relevant. It costs more than cut-and-paste information, but damage control costs a lot, too.

Earlier this month, the McResource site was mocked in the media for publishing a holiday tipping guide for services the company's low-paid workers can't afford, like au pairs, pool cleaners, and house cleaners. The guide came from the Emily Post website, and it's fine advice for people who can afford those services. But it appeared insulting to workers who are more likely to pick up extra work cleaning houses than they are to need help deciding how much to tip their maid. McDonald's removed the information from the site, but not before racking up plenty of criticism for its seeming indifference to its low pay scale and the tone-deafness of the advice.

3. Even custom content needs a clearly defined context

In July, the company came under fire for its personal finance advice to employees, which, as with the above-mentioned gaffes, set it up to have to defend its worker pay. A planning guide included a sample monthly budget that didn't account for food, child care, or gasoline. As the story gained traction, the guide's developer, Wealth Watchers International, told CNBC it was built on the assumption that the employee had housemates or lived with another wage earner.

But the damage was done. An explanation within the journal of how the authors arrived at the sample numbers might have staved off claims that McDonald's knew its workers couldn't make ends meet on hourly wages. (The budget journal is still available online.)

There's no PR fix for the issues raised by low wages

Underlying all of these employee-relations issues is the fact that many McDonald's workers, like other fast-food workers, are not paid very much and have few benefits. An October study from UC Berkeley said that more than half of American fast-food workers rely on government assistance to get their basic needs met at a cost to U.S. taxpayers of almost $7 billion per year.

No amount of properly customized and company-vetted personal finance advice can change that. And in fact, another media disaster for McDonald's this year involved a recording of a company resource-line representative telling an employee all the places she could seek government help to supplement her earnings.

McDonald's needs to reread its entire McResource site through the eyes of its hourly employees, consumers, and investors, and make adjustments accordingly. The company also needs to insist that its content providers deliver appropriate information that's consistently relevant to its workers.

But ultimately, if McDonald's and other fast-food companies aren't prepared to raise wages and quit relying on taxpayers to make up for low pay, then even the most scrupulous oversight of employee relations materials won't solve their image problems.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 27, 2013, at 4:36 PM, emferguson wrote:

    This is a long-time (since the 90's) McDonald's shareholder saying this: the low wage problem is easy to fix. Just raise the wages. Pay $15/hour, and the added labor costs should be dwarfed by the good PR, not to mention all those employees who can now afford to buy the food they make. Force competitors to match the wages or watch the best employees leave for McDonald's.

    And yes, I'm a taxpayer too, who thinks employers who can't pay a living wage should go under rather than sucking off the taxpayers.

  • Report this Comment On December 28, 2013, at 12:08 AM, predfern wrote:

    The living wage argument is an example of zombie economics and has been debunked by numerous studies. Why not increase the minimum wage to $100/hr?

    Obamas Minimum Wage Hike A Case of Zombie Economics

    By James A. Dorn

    This article appeared in Forbes.com on February 20, 2013.

    http://www.cato.org/publications/commentary/obamas-minimum-w...

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