McDonald’s rewards diversity
McDonald’s said it is tying 15% of executives’ bonuses to meeting targets including diversity and inclusion and began disclosing data on the racial makeup of its workforce, major steps by one of the largest US companies to better reflect the population.
Among the information McDonald’s is releasing for the first time is a full breakdown of US employees by race, ethnicity and gender, a victory for transparency advocates and investors who are increasingly pressing companies to do more to address the country’s deeply rooted social inequality.
In addition to publicly releasing its worker demographics — contained on a form known as EEO-1 that corporations are required to give to the US government — the fast-food giant laid out a plan to increase the number of people of colour in its US management ranks and to achieve gender parity worldwide, according to a filing this week.
“We cannot be complacent in our pursuit to better ourselves and our communities. Few brands in the world have our size and reach,” McDonald’s CEO Chris Kempczinski wrote in a memo to employees. “Our customers, franchisees, employees, suppliers, and shareholders expect us to make a difference.”
As part of its new metrics, McDonald’s is targeting 35% of US senior management to be from under-represented groups by 2025, up from 29% currently.
It also aims for women in 45% of senior roles worldwide by the same year and 50% by 2030, compared with 37% now.
Like other big American companies, McDonald’s has a complicated history when it comes to diversity.
It has won praise for championing black business ownership, but some black franchisees recently filed suit, saying they were steered towards crime-ridden neighbourhoods and set up to fail. McDonald’s disputes that characterisation and says it has supported the franchisees.
The Chicago-based company has also contended for years with accusations that it overlooks workplace harassment and abuse, culminating in the very public dismissal of its former CEO in late 2019 to drive home its commitment to gender equality in the #MeToo era.
Women’s share among McDonald’s leadership and professional positions was in line with or slightly better than the industry, according to the company’s data.
McDonald’s has a slightly higher proportion of black and Hispanic executives and senior managers than the food services and
drinking places sector but lags behind the industry for those employee groups among first- and mid-level managers, according to the company’s data. Black and Hispanic workers make up a larger share of professional employees compared with peers.
The data is from 2018, the most recent year available because of reporting delays caused by the Covid-19 pandemic.
The fast-food retailer had 205,000 workers worldwide at the end of 2019, including corporate employees and workers in the restaurants it owns directly.
The plans it announced on Thursday have been in the works since the middle of last year, when the company pledged to step up efforts to fight systemic racism by addressing any hiring biases, increasing the diversity of its leadership and doing more to attract diverse franchisees. In November, it hired a new global chief diversity, equity and inclusion officer, Reginald Miller, from footwear company VF.
Rising pressure
Pressure has been mounting for the chain to release its workforce data.
New York City comptroller Scott Stringer and investors including the New York City Employees’ Retirement System in December warned McDonald’s and about two dozen other major corporations that shareholders would be asked to vote on nonbinding proposals requiring the release of the EEO-1 forms at their next annual meetings if they didn’t release them on their own.
“McDonald’s has taken a real step toward protecting its workforce by agreeing to our request that it tie its top executives’ compensation to the diversity of its workforce and the wellbeing of its employees,” New York State comptroller Thomas DiNapoli said. “It’s my hope that other companies follow McDonald’s example.”
State Street Global Advisors, one of McDonald’s largest shareholders, upped the ante last month, announcing plans to start voting against the compensation committee chair in 2022 at any companies in the S&P 500 that don’t disclose their EEO-1 survey responses.
A Bloomberg survey of 100 top US companies published in October found that 25 were disclosing their EEO-1 data. More have come forth since, including Starbucks, which also said it would tie executive pay in part to diversity targets. Starbucks is aiming for 30% of all corporate roles to be held by people of colour by 2025, and at least 40% of retail and manufacturing jobs.
Under McDonald’s new plan, executives will be measured in four categories related to the company’s values, goals for racial and gender diversity, and creating a culture of inclusion. Those metrics will determine 15% of incentive pay, with the rest coming from operating income and sales growth, according to the filing.