MANAGEMENT AT KENTUCKY FRIED CHICKEN
Introduction
Kentucky Fried Chicken Corporation is one of the leading fast-food chain of chicken operator, franchiser and developer around the globe. It was founded by Harland Sanders in Corbin, Kentucky. KENTUCKY FRIED CHICKEN has a global presence with more than 3700 units, of which 66% are franchised. Along with direct franchising, the company has also made some join ventures and is still investigating alternative ways to increase the market share in the fast-food market which is highly competitive.
Sanders was born in Indiana in 1890 and learned to cook at a very young age after his mother worked two jobs due to his father’s death. Sanders opened a gas station in Corbin in 1929, and developed a habit for cooking for his family as well as for occasional customers. He loved cooking pan-fried chicken, homemade biscuits, county ham and fresh vegetables. As the demand for his cooking rose, he moved to a facility that had a restaurant of 142 seats, a motel and a gas station. It was during 1930s that the image which developed throughout the globe started to be known. Two great things happened: the state’s governor named Sanders the honorary Kentucky Colonel; and secondly, he developed a unique method of spicing and frying chicken.
First Franchise
Colonel signed Pete Harman his first franchise in 1952; Harman was the owner of a restaurant in Salt Lake City, Utah. By the passage of next four years, he convinced a few others to add Kentucky Fried Chicken to their restaurant menus. Sanders incorporated in 1955 and in the very next year, he was on-road to demonstrate his chicken recipe; dressed in an enthusiastic way wearing a white suit, white shirt, black string tie, white mustache, while carrying a cane. To ease shipping the spices, advertising materials and pressure cookers, he shifted his business to Kentucky in 1956. By 1963, the recipe was franchised to around 600 outlets in Canada and America. The business was becoming too large for him to handle and hence, important decisions had to be made. It was the time to change.
Managerial Changes
KENTUCKY FRIED CHICKEN was sold for $2 million in 1964 along with an annual salary of $40,000 which later rose to $200,000 for public appearance. The investor group which made this offer was headed by John Y. Brown Jr. and John Massey. Pete Harman was also one of the group members, who was also the first franchiser of KENTUCKY FRIED CHICKEN recipe. Brown and Massey owned franchise rights both nationwide as well as internationally but excluding England, Florida, Utah and Montana. While Massey handled the CEO role, Sanders enjoyed the role of the ambassador. According to Business Week, Brown and Massey had led to the transformation of the “loosely knit, one-man showinto a smoothly run corporation with all the trappings of modern management.
In three years’ time, KENTUCKY FRIED CHICKEN ranked sixth in volume, even ahead of McDonald’s Corporation. Company started developing buildings with pre-fabricated red-and-white stripes. Massey and Brown had to make a revolutionary choice: changing the sit-down concept to stand-up and take-out store. This meant faster service and lower labor cost. In 1971, KENTUCKY FRIED CHICKEN merged with Connecticut-based Heublin Incorporation. With its marketing knowledge, Heublin introduced new products and increased the sales but the basic chicken business was ignored. The company ignored its relations with the franchisees due to which by mid-1970s, they were selling more as compared to the stores owned by the company itself. Further, stores looked outdated. Finally, Heublin invested $35 million to re-purchase stores from franchisees and renovate them. The basic cooking methods by Colonel were veered.
PepsiCo, Incorporation bought KENTUCKY FRIED CHICKEN in 1986 for $840 million due to its highly increasing revenue globally. PepsiCo opened the Colonel Sanders Technical Center in 1986 worth $23 million for the introduction of new products. The company started testing the home delivery service through Pizza Hut’s delivery system. By 1987, 150 stores were planned to open in countries where the company had limited presence. It is also the first fast-food chain of America to open in China. The Kentucky Fried Chicken Advertising Co-Op was established in 1966 which handled the advertising decisions. By 1976, issues with franchisees were solved and contracts were improved. In 1979, the National Purchasing Co-Op was formed which created a democratic organization serving the rights of the franchisees. But as the senior management changed with time, the issues re-ignited. While the competitors were penetrating the market with new products, KENTUCKY FRIED CHICKEN was struggling and hence, in late 1990, 209 U.S. stores were bought back to gain more control.
Managing at KFC
KFC has an inclusive culture where everyone is contributes based on their potential. The integral component of the culture is recognition—celebrating and acknowledging everything big and small. Teamwork is appreciated and members give on-the-spot appreciation to others. As identified, the culture is famous for teamwork, fun and having positive energy. Managing the people who work in an organization is referred to as Human Resource Management. Armstrong (2006) believes that it’s a coherent approach where the most valuable assets of the company are managed; these are the human assets which have a direct contribution to the achievement of organizational goals. HRM is also referred to as a set of policies through which the management determines how to move the manpower to achieve desired goals (Armstrong & Armstrong, 2009). In a service organization like a fast-food chain, the survival depends upon meeting the needs of the customers.
The reason why KFC failed to capture Indian and Chinese market is the cultural difference which is a significant influence on the motivation and behavior of the staff. As KFC has a highly diverse staff, there is a possibility of the existence of cross-cultural differences. It is important to communicate the cultural awareness and encourage cross-cultural interaction. KFC has been expanding vastly due to franchising, which is why management is poor. The company must make sure to focus on consumerism which is also the demand of the time and a great opportunity in the market. Rather than developing resentment by the consumers, a positive response to the sentiment of consumers’ needs to be developed. For this purpose, the company requires focusing on the quality of service they provide to their consumers.
Training of Employees
Training should be ongoing as even after an employee has gone through the necessary training, refresher courses should be given so that necessary skills are updated. KFC is currently offering training to the franchisers but it must be made necessary for the employees too. They should be taught specifically about issues like providing better quality of service, maintaining records accurately, setting daily objectives at work and to communicate effectively (Armstrong & Armstrong, 2009). This innovative technique for the business would have positive impact both on the employees as well as the customers of the company. Further, it should also focus on gaining knowledge of customers by conducting market surveys (Mandhanya, 2015).
Communication Channels
Two types of communication channels are used: personal and non-personal. Personal communication is face-to-face promotion whereas, non-personal channel is the use of media, events or PR activities. The delivery staff has been trained to deliver the right orders in the right time to the right customer. Online marketing is also incorporated by KFC including blogs and websites and even promoting through social media is effective. Through social media, KFC targets nearly all their customers. Due to its presence on social media and remaining in-touch with the customers through every possible means of communication, the company has a high level of adaptability to the changing needs of the consumers. They only lack in training their employees and must focus on teaching their employees to be ready to adapt to change.
Conclusion
Concluding, developing the Human Resource management is imperative for KFC and it must implement stronger strategy to deal with human resource issues. The employees require being trained about their jobs, the methods to reduce stress at work and to ensure clarity of the job objectives (Armstrong & Armstrong, 2009). KFC has had the opportunity of being headed by strong senior management and has a multi-cultural human resource. The company has been successfully dealing with diverse workforce and has strong adaptability to changing needs of the market. Though, in America it ranks second, but in the Asian countries, it is the pioneer in fast-food. To ensure customer retention, it must focus on employee development and retention.
References
Armstrong, M. (2006). Strategic human resource management. London: Kogan Page.
Armstrong, M., & Armstrong, M. (2009). Armstrong's handbook of performance management. London: Kogan Page.
Mandhanya, Y. (2015). Training and Development Strategies: Motivational Tool for Increasing Employee Retention. Training and Development Journal, 6(1), 15. http://dx.doi.org/10.5958/2231-069x.2015.00002.5
