McDonald’s doubles down on ‘values’ in the wake of controversy

  • McDonald’s told employees on Monday that it is looking into new training and hiring processes that emphasize corporate values, according to notes from the event viewed by Business Insider. 
  • Global Chief People Officer Heidi Capozzi began a top to bottom review of the HR department when she joined McDonald’s April, replacing David Fairhurst — who McDonald’s now says was fired “with cause” after making women at the company uncomfortable. 
  • McDonald’s is investigating allegations against the HR department under Fairhurst, as well as suing its former CEO Steve Easterbrook, alleging Easterbrook covered up sexual relationships with three employees. 
  • Read how former McDonald’s CEO Steve Easterbrook went from the chain’s savior to its worst nightmare here.
  • Visit Business Insider’s homepage for more stories.

McDonald’s is doubling down on values in the wake of controversies, including a lawsuit from Black former franchisees and the company accusing its former CEO of covering up sexual relationships with employees.

On Monday, McDonald’s held an online event with corporate employees around the world, discussing the importance of values at the company, according to notes from the event viewed by Business Insider. 

Global Chief People Officer Heidi Capozzi said McDonald’s is exploring how to incorporate values into the hiring process, as well as looking at new training centered on values for “everyone from our corporate staff to our restaurant crews.” McDonald’s values will also be incorporated into a performance management update. 

“We will be updating performance management, so that as part of our year-end process, we are evaluating against priorities and objectives that were accomplished, but also how that work was accomplished according to our values,” Capozzi said. 

McDonald’s HR department is facing allegations of past misconduct

Capozzi started a top-to-bottom review of McDonald’s HR department when she joined the company in April.

Her predecessor in the role, David Fairhurst, was fired in November 2019. While the company did not share the reason for Fairhurst leaving McDonald’s at the time, Capozzi said in a recent internal meeting he was fired “with cause” after making women at the company uncomfortable. 

Fairhurst would regularly drink with a group of other HR staffers, which included women significantly subordinate to him at the company, current and former employees told Business Insider as part of an investigation into McDonald’s recent controversies. Business Insider spoke with more than half a dozen current and former McDonald’s employees and franchisees on the condition of anonymity. 

Read more: Insiders reveal how former McDonald’s CEO Steve Easterbrook went from the chain’s savior to its worst nightmare as sex-scandal accusations threaten to envelop the fast-food giant

Fairhurst was seen pulling a female staffer onto his lap at a party in late 2018, an employee who witnessed the incident told Business Insider. The Wall Street Journal reported that McDonald’s investigated and ultimately told telling employees that excessive drinking was inappropriate. Despite the investigation, Fairhurst continued to serve as the head of HR.

“The inmates were running the asylum,” when it came to McDonald’s HR team, one former corporate employee told Business Insider. Fairhurst — the head of HR — was creating HR problems, instead of solving them, he said. “It was no secret that this was a serious problem.”

While two former employees questioned the decision to keep Fairhurst on as the head of HR, a current employee who works on the global people team said Fairhurst’s alleged behavior was not necessarily seen as something that could impede investigations. 

“We just thought he was a sad man who drank too much and weirdly didn’t have friends outside of people who worked for him,” the employee said.

In early July, McDonald’s received an anonymous tip about misconduct from the HR department under Fairhurst’s leadership, according to McDonald’s. The tipster also claimed former CEO Steve Easterbrook had a sexual relationship with an employee, which led to McDonald’s reopening its investigation into Easterbrook.

McDonald’s said in a statement that the “board will follow the facts wherever they may lead.”  

McDonald’s is suing its former CEO, alleging he covered up sexual relationships with employees

McDonald's CEO Steve Easterbrook

McDonald’s former CEO Steve Easterbrook.

Getty Images

McDonald’s sued Easterbrook in August, after opening an investigation into the ex-CEO in July. In the complaint, McDonald’s said it found “dozens of nude, partially nude, or sexually explicit photographs and videos of various women,” including three McDonald’s employees, attached to an email Easterbrook sent himself. 

McDonald’s is suing Easterbrook to claw back his multi-million dollar severance package. 

“Recently, one of us came forward directly to me and brought to our attention matters that resulted in the most recent lawsuit against our former CEO,” chairman Rick Hernandez said in Monday’s meeting, according to notes from someone who attended.

“To me, what is very, very important is that this person felt that they could come forward,” Hernandez continued. “Not only that person, but all of us have seen the results of that. I think it’s a demonstration in real life of our commitment to these core values because it’s so easy to not listen, or not react, or to take some other course.”

Easterbrook did not respond to Business Insider’s request for comment. In a motion to dismiss the complaint, Easterbrook’s attorney argued that McDonald’s filed its lawsuit in the wrong state and already had access to the “new” information when the severance agreement was signed, calling the lawsuit “meritless.” 

Easterbrook was terminated from McDonald’s in November, after the company investigated a relationship between the then-CEO and another employee. McDonald’s found evidence that the relationship involved sexual messages and photos, but was not physical. McDonald’s said in its August complaint that it terminated Easterbrook “without cause,” allowing him to receive his severance package, in hopes of smoothing the transition. 

Chris Kempczinski replaced Easterbrook as McDonald’s CEO in November 2019. In the months since, Kempczinski has aggressively emphasized corporate values at McDonald’s. 

One former employee told Business Insider that people at corporate called Kempczinski the “human equivalent of the vanilla McDonald’s ice-cream cone,” thanks to his squeaky-clean reputation and personal preferences. In fact, Kempczinski told employees in a town hall last November that he eats McDonald’s ice cream every day. 

 “I think there’s also a recognition that as a new CEO, it’s very important for me at the very beginning of my tenure, to establish how I’m going to be leading the company, my expectation of other leaders across the company from a set of actions and the values that are going to guide us,” Kempczinski said on Monday. 

McDonald’s is facing a number of lawsuits 

Laura Steinberg, a partner at Sullivan & Worcester who specializes in cases related to executive misconduct, said that McDonald’s suing Easterbrook could open the company to lawsuits from shareholders. 

“The very lawsuit against Mr. Easterbrook places the integrity of that first investigation into some question,” Steinberg said.

Three Teamsters pension funds sued McDonald’s, alleging that allegations against Easterbrook suggest the company promotes a culture of sexual misconduct. McDonald’s filed an answer to the teamsters’ complaint last week, saying the pension funds lack  “a credible basis from which to infer any actual or possible mismanagement, wrongdoing, or corporate waste warranting investigation.” 

There have been a number of lawsuits filed against McDonald’s by restaurant workers, including an international coalition of unions alleging that the company has a “global sexual harassment problem.” McDonald’s said allegations of harassment “were investigated as soon as they were brought to our attention.”

Two Black corporate executives sued McDonald’s in January, alleging that they faced racial discrimination while working at the company. McDonald’s denied the claims. 

Fifty-two Black former franchisees recently sued McDonald’s in another racial-discrimination lawsuit, saying they were not offered the same opportunities as white franchisees. McDonald’s denied the allegations, which chairman Rick Hernandez addressed on Monday. 

“I’ve been a member of this board for a long, long time,” Hernandez said. “I’ve been in a place where I can observe how the company has carried out its business. And I can assure you that what is alleged is completely inconsistent with my experience in McDonald’s.”

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