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May 17, 2017

McDonald’s Golden Arches Founded on a “Kroc” Code of Ethics

McDonalds' Code of Ethics

“The quality of a leader is reflected in the standards they set for themselves.” – Ray Kroc, McDonald’s

This past weekend, I watched “The Founder” with my children. Though we rarely eat at McDonald’s, we were intrigued by Kroc’s story. The movie started off innocently with a businessman working hard on the road to sell a mixer. My son actually even commented that he felt bad for Kroc at the beginning because he was not able to sell any mixers. But, as the movie progressed, we learned that Kroc was NOT the founder of McDonald’s. Rather, he manipulated his position of strength to essentially take the company away from the two innocent brothers that created the concept of fast-food. Where was his code of ethics? How could he violate the trust of the very people that gave him a chance? If we are to believe Kroc’s quote, then he was not a very good leader because his own ethical standards were sub-par.

Others have said that he was a persistent and tenacious leader that had vision. I do not disagree. Yes, McDonald’s became an American household name because of Kroc’s idea to put each restaurant at rest stops along highway routes throughout the country. Mothers would seek out the golden arches confident that there would be clean bathrooms. There is no question that Kroc was a dynamic leader who created an international empire. He worked very hard and was relentless. But, what happened to his code of ethics? Arguably, Kroc did not believe that what he was doing was the right thing to do. Rather, he made a very clear decision to breach his contract with the original founders of McDonald’s, knowing that he had deeper pockets and could defeat them in court if necessary. What was even more troubling was his blatant misrepresentation to the original creators during his purchase of the business. At the eleventh hour at the closing table, he switched terms on the Sellers and essentially “lied”. Kroc had no intention of ever sharing any percentage of profits of the company with the two brothers, yet he promised he would. He made a “handshake” deal and asked the brothers to believe him and trust that he would honor his word.

Kroc never gave ANY profit of the company to the two brothers as he had promised them at the closing table. The value of the 1% which was the original term would have equaled to $100 million per year. Sure, it’s a lot of money. But, imagine the other 99% of the profit that Kroc and his other shareholders received. Did Kroc really need to act against a code of ethics and deny any profit to the original creators of McDonald’s, two genuine brothers with integrity?

When the movie finished, my son said “is that the way it goes, bad people win and good people lose?” Though he recognizes that its not the rule, he certainly believes that many people achieve success by cheating, lying, and NOT following a code of ethics. Such a sad realization that my son at the age of 12 already has a sense that many people do not adhere to their code of ethics – so that they can make money and get ahead. I told him that he should always listen to his inner voice, follow his code of ethics, and always do the right thing, no matter the consequence.

Today’s leaders are faced with ethical dilemmas daily, if not hourly. How can we inspire our C-Suite executives and managers to create a culture of compliance? I believe that it starts with a culture of conversation where we create a safe space for organizations to discuss compliance issues and ethical challenges. We must empower ourselves to think through the myriad of scenarios that could present in our daily lives and consider the reasons why a certain action or response would be the ethical and best one.

My mission is to spread the need for ethical vigilance and to inspire others to always consider their code of ethics by listening to their inner voice. I just wish Kroc had listened to his inner voice and had done an ethical reality check. Do you think McDonald’s would be as successful today if Ray had acted more ethically in his business dealings with the McDonald brothers?

 

 

Rashmi Airan‘s mission is to share the need for ethical vigilance and to inspire you to make good ethical choices in all areas of your life. Rashmi is an ethics speaker and consultant fighting to create a culture of conversation and bring ethical issues in business to light, to promote integrity, to enhance commitment to fiduciary duty, to build ethical leadership, and to shift the paradigm of ethics standards through ethics training.

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One Comment on “McDonald’s Golden Arches Founded on a “Kroc” Code of Ethics

nanoo
September 3, 2017 at 3:28 pm

Thanks very nice blog!

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