Sooner or later, a catastrophe is bound to strike just about every successful business. But just a few years ago, a series of fateful events at McDonald's Corp. dealt a harsh blow to the global empire. Jim Cantalupo, who came out of retirement in 2003 to become CEO and engineer a company turnaround in financials and service, died suddenly of a heart attack in April 2004. His successor, Charlie Bell, stepped in to continue Cantalupo's revitalization efforts, but within weeks of becoming CEO, he was diagnosed with colon cancer and resigned in November 2004, less than two months before his own death.
Succession planning? Rich Floersch can cite by chapter and verse the value of succession planning. It was within months after he began his tenure as McDonald's executive vice president and chief human resource officer that Cantalupo suffered his heart attack and just seven months later that Bell was succeeded by Jim Skinner, the current CEO.
As one of this year's Human Resource Executive® magazine's HR Honor Roll inductees, Floersch led the charge in the McDonald's boardroom and throughout the company to instill the values of talent management, including succession planning and leadership development.
Considering that McDonald's has a footprint spanning 118 countries with about 1.6 million franchise employees, that could be a supersized headache. Yet, Floersch grasped the challenge, initially taking his inspiration from a management plan by Cantalupo, Bell and Skinner, called "The Plan to Win."
Deceptively simple, Floersch says, the plan helps focus on a core business philosophy from Cantalupo: Be better, not bigger. That, says Floersch, is his mantra.
"I think, in the past, we had been so strong on growth that we lost our focus on our core business," says Floersch, speaking from the corporate headquarters in Oak Brook, Ill. "We say, 'We took our eyes off the fries.' And it was very true."
Floersch studied the "Plan to Win" and decided that its focus on quality, people and service suited his department well, so he aligned it with the HR plan on talent management, succession, quality service and employment image.
"We now have metrics that go all the way down to the store level for things like customer satisfaction and employee commitment, both at the manager level and the crew level," he says.
He's also determined to keep the talent pipeline filled with expertise and enthusiasm.
"You can't invest enough in your next generation of talent," he says. "Having people who are ready to take over and, just as important, having people who are as good, if not better, than those who are in the jobs today -- I think that's a really important criterion for saying people are ready."
McDonald's has long used its Hamburger University to teach principles in operations and management, either at the company's headquarters or at the university's seven regional centers around the world. For middle management and above, Floersch was a key architect in creating and supporting accelerated management programs he refers to as the Leadership Institute. The executive officer program, part of the institute, typically lasts six to nine months and features 10-day in-class sessions at Thunderbird School of Global Management, in Glendale, Ariz., with classes taught by both university and McDonald's faculty.
Since 2004, more than 250 high-potential leaders have graduated from the programs of the Leadership Institute, with a retention rate of about 94 percent.
"I'm of the belief that these [programs] can actually be more effective than rewards, because they're a visible signal of how much you care about them and want to invest in them," says Floersch.
Skinner says Floersch defines the very commitment the company values.
"Rich is an effective business leader with a real passion for people and for our brand," he says.
Even beyond the doors of McDonald's headquarters, Floersch is passionate about the HR profession. He is a member of the Washington-based HR Policy Association, where he serves on the board of directors and is chairman of the association's Center on Executive Compensation.
Jeffrey C. McGuiness, president of the HR Policy Association, calls Floersch a dynamic professional and a masterful communicator.
"Rich just has incredible insights," says McGuiness, adding that many seasoned HR professionals would cringe at the prospect of developing guidelines associated with executive compensation, given the recent drubbing from the Securities and Exchange Commission, the calamities on Wall Street and the press that the subject can sometimes attract.
"He took the bull by the horns, really, and worked with us to develop the center," McGuiness says.
Floersch also enjoys shining a spotlight on the vocal talent in the company. He helped to create The Voice of McDonald's -- a biennial talent contest modeled after American Idol, the televised talent phenomenon -- which drew 3,600 entries from around the world this year to compete for the grand prize: a check for $25,000.
Natercia Pintor, a McDonald's employee from Lisbon, Portugal, finally took the grand prize.