The Diversity Case: The Coca Cola Company – Then and Now

The Diversity Case: The Coca Cola Company – Then and Now

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Abstract

For any large company, it is critical to establish a separate program to plan for and manage diversity. Put simply, diversity management programs comprise a set of customary practices developed and executed by organizations to handle variety effectively among all the stakeholders. The significance of managing diversity within organizations cannot be overstated in the contemporary business world. Coca Cola Inc. is one of the large companies that have implemented practices to maintain diversity within the organization. The business justification for diversity comprehension and management is compelled by the perspective that diversity leads to considerable prospective benefits that outweigh organizational costs incurred and drawbacks. Coca Cola is a significantly diverse organization that offers more than 500 brands across approximately 200 nations and territories. Thus, the company manages diversity to attain greater success and enhanced brand image because of inclusivity.

The Diversity Case: The Coca Cola Company – Then and Now

Introduction

For any organization regardless of scope of operations or size, success in business involves the recognition of diversity and cultural practices, as well as communicating and functioning in a socially appropriate way. Coca Cola Company communicates and works with individuals characterized by diverse socio-cultural identities, including those with different socio-cultural identities. The first thing of importance for large organizations is that they ought to have a distinct program for managing diversity. From the case study, it is evident that in the past, Coca Cola adopted a generic approach of managing diversity devoid of a concise implementation explicitly designed for managing the individuals given their vastly different backgrounds, ethnicity, race, and socio-cultural contexts (Harvey & Allard, 2015). Businesses ought to integrate diversity in all their processes. The management of diversity within an organization is an express reflection of the realization, acceptance, and acknowledgement of differences, whether based on age, gender, race, ethnicity, and religion, among others. Coca Cola has been dealing with diversity issues, more specifically, the allegations of racial prejudice in the remuneration, career advancement, and job promotion practices where a section of the African American employees feel discriminated against based on race.

Coca Cola is inarguably one of the globe’s most recognized brands and has been at the top of the beverage industry for a long time. In fact, it has been listed by Fortune Magazine as one of the Most Admired Companies for over four decades, besides being in Forbes Top Twenty Five Inspiring Companies (Forbes, 2019). During the late nineties and early 2000 periods, the company was famous for losing the most significant racial criminal court case in the United States history in the lawsuit called Ingram et al. v. The Coca Cola Company (Winter, 2000). In the lawsuit, the plaintiffs alleged that the “glass wall” and the glass ceiling” policies deterred African Americans from progressing to top ranks within the organization and more so, in specific divisions within the company. Subsequently, only a few African-Americans had managed to advance to senior hierarchy in the organization, compared to the considerable representation of employees of African-American descent among salaried staff. The plaintiffs claimed that the company failed to avert and mitigate this form of discrimination.

Problem Statement

During a period when the large beverage company had been recovering from an unprecedented recall of Ivestor in Europe, the then chief executive officer faced a lawsuit that accused Coca Cola of prejudice against African American employees (Harvey & Allard, 2015). The company profusely denied the claims of discrimination from promotion to merit remuneration that was raised by the aggrieved employees. The beverage manufacturer’s denial of the allegations and the ostensibly separate unexpected appointment of Carl Ware as the senior-most executive of African American descent in the organization to co-chair its diversity advisory council represented vital signs that the organization was not treating the allegations with the essence they deserved.

Justification

Analyzing the organization as it was represented in the original outlay in 2009, out of the exempt workforce, minorities accounted for only 34 per cent (Salopek, 2009). The human resources conduct was a principal sphere of concern with an incoherent structure for promotional practices and job posting. At the management level, minorities’ representation was only 20 per cent while the figure stood at 47 per cent among the lower support levels. Such statistics were an indicator that there was an immediate need for changes to occur. Nevertheless, the appointment of Carl to the diversity advisory council represented a positive signal that the management was willing to change. Carl was credited with collaborating with the then South African President, Nelson Mandela, during the antiapartheid crusade to clear a way for Coca Cola to push for future sales in the country (Harvey & Allard, 2015).  Unfortunately, Ivestor, the CEO of the company at the time, in his witnessed style of operation and leadership, demoted Carl in 1999, which was a move seen as facilitating his removal as head of the company. In December 1999, Coca Cola’s board of directors decided to remove Ivestor and appointed Douglas Daft, an experienced executive who had worked at the company for over three decades. Daft possessed a vision of global diversity, and he soon set about to make the organization one of the most inspiring and desired employers around the globe. Eventually, it is essential to point out that the organization was starting to chart out a positive direction in terms of managing diversity.

Alternative Course of Action

Coca Cola’s lawsuit saw over 2,000 more individuals joining as plaintiffs, eventually transforming into a major class-action suit, which maintained that the organization had systematically prejudiced against African Americans through offering them lower remuneration than others for identical work performed, subjecting them to different forms of harassment, and passing over them when promoting employees (Harvey & Allard, 2015). In the course of the settlement, an accord was established to create a task force that offered independent supervision of the company’s compliance over four years. The objective of the task force was to assess the practices and policies, recommend pertinent improvements to those particular policies and practices, and investigate cases of complaints, which would culminate in the generation of “The Statement of Principle,” a formal, written document. Hence, Coca Cola came up with a vision that committed to excel among the Fortune 500 Companies in the promotion and encouragement of equal opportunity in career advancement, promotion, and compensation for all staff members at all echelons and areas of business not considering aspects such as religion, disability, national origin, gender, race, and color. Besides, the company committed to foster a setting of freedom from retaliation, respect, and inclusion (Winter, 2000). Also, the company recognized that diversity represents a fundamental, indispensable value and that Coca Cola, its stockholders and all employees would benefit through working to be a premier gold standard organization on diversity. Also, the company would set measurable and lawful entrepreneurial objectives to attain the set goals over the prescribed four-year duration. The accord applied to all non-hourly America-based employees of the beverage manufacturer.

Evaluation of Alternatives

In the event that the company can successfully follow the objectives of the agreement reached, it can then turn the culture around from internal practices. To transform the internal culture within the short run, the company will find it challenging. However, with pragmatic programs and policies instituted, alongside overwhelming support from the leadership and the rest of the employees, there could be a significant level of change within the corporation. Unfortunately, an ineffective leader can corrupt a whole corporation and cause so much distress, but like cancer, once eradicated, Coca Cola can grow and flourish as it used to. In the Settlement Agreement, the corporation committed to perform a meticulous assessment of its human resources way of functioning, promote and encourage a diverse environment in the organization, and take the required action to guarantee equal staff mentorship opportunities and fairness.

Subsequently, it is vital to have a strong team of leaders that can understand and manage diversity within an extensive, diverse background. From the case study, it is evident that Coca Cola suffered from diversity-related lawsuits because of the poor leadership of the then CEO. Under the Settlement Agreement, the company decided to have a representation of all the racial classes in the Board of Directors. With equal representation, the implication is that individuals formal races will have the confidence that they have equal representation and the prospect of legal issues emerging because of racial prejudice will diminish significantly. Instead of managing diversity in a generic manner, it is vital to institute a distinct program solely for the purpose of managing diversity. With the introduction of a diversity advisory council, the corporation demonstrated its commitment towards addressing the complaints and creating an environment that would deter such cases from recurring. Besides, communication emerges as a critical element for ensuring that employees are aware of any changes made (Barak, 2013).   

There are various archetypes that organizational leaders have designed and executed to permit for organizations to manage their diversity successfully. Based on the Coca Cola case, there are two paradigms that the corporation ought to have pursued. First, Coca Cola should have adopted the Discrimination-and-fairness Approach, which makes considerable efforts to appoint and to some degree, hang on to diverse employees, but treats all individuals within a particular social demographic category equally (Barak, 2013). With this paradigm, there are various pertinent issues. For example, the corporation might not have designed a strategy to manage diversity and this may in turn leave minorities within the organization devoid of true representation. A notable approach is the Access-and-Legitimacy in which most corporations accept and celebrate differences. The implication is that the corporations can serve their diverse customer pool better. After reading the case study, it is important to point out that Coke has discernibly shifted from the Discrimination-and-Fairness Approach to an Access-and-Legitimacy Approach.

There exists a possibility that Coke could have deterred many of the prejudice lawsuits through reinforcing the strategies of the Access-and-Legitimacy Approach. The organization was in considerable need to revamp its policies and practices in diversity (Harvey & Allard, 2015). Despite the changes proposed by the Settlement Accord being essential for the sustained success of the corporation, it is difficult to extol the corporation for the alterations they made because they ought to have implemented them earlier in a proactive approach. The case demonstrates a possible environment of hostility towards minorities by the management, including harassment cases based on color differences. Despite the procedures, committees, and programs being determined at the corporate level, actual diversity issues occur at the roots. For example, the case study does not mention whether the executives and the Board of Directors follow up on any of the proposed practices to establish their execution or review their successes and failures. Besides, since the initial lawsuit had such a tremendous impact that led to a massive out-of-court settlement, the ruling most ostensibly opened the floodgates for similar cases to be filed. At some point, there is an argument that the organization would have been better off having their day in court.

Conclusion

The changes made by Coca Cola in terms of diversity management have been important to the organization because they have helped to regain employees’ confidence in diversity and made the company grow and flourish as it used to earlier. The success is mirrored in the multiple recognitions and awards that the corporation has received following the damaging racial discrimination lawsuits that it had faced in the past. The most viable solution to address diversity issues in the organization is to recruit a team of strong leaders with visionary perspectives to avoid legal suits. With a leadership team that has equal representation of all races, it is unlikely that Coca Cola will face suits of equal magnitudes in the future. As seen from the study, such lawsuits stem from issues at the roots of the organization to those concerning management. The managers represent an express reflection of any organization and ought to conduct random diversity evaluations regularly. This particular form of strategy will add to the already present company diversity management program postulated by the Settlement agreement. By doing so, the company will become a model for the rest of the Fortune 500 companies and achieve business success on a regular basis.

Recommendations

While coca Cola’s Settlement Agreement provides an outline of practices and programs to ensure appreciation and embrace of diversity across all organizational levels, it fails to demonstrate a plan for communicating the changes to all the employees. Therefore, one of the most important recommendations would be for the company to set up a communications strategy that would regularly update employees on any changes. Additionally, it would be prudent for the company to have a leadership based on a proactive approach. In other words, companies that manage diversity better are those that are able to anticipate challenges emerging from diversity matters and prevent or mitigate them. For example, Ivestor was not proactive enough as he demoted Carl despite him being the only African American leader to attain his position. In doing so, he failed to consider the repercussions that his decision would have, especially considering that the representation of minorities in top management was already low.

Also, a critical recommendation for management would be to make regular follow ups of the practices and review the extent of impact they have on diversity changes across the organization. For example, the management ought to have a team that reviews the progress of diversity changes in the organizations through liaising with supervisors at the plant level and discussing the findings with the top management. In addition to having equal representation for different races in top leadership, it would be prudent to ensure that they have the requisite leadership skills, competencies, and knowledge. Diversity contributes to a deeper degree of creativity and innovation, the capacity to localize to new-found markets, and the capacity to become adaptable by access to rapid decision-making and top-level talent pools. If Coca Cola is able to integrate these views into its vision as outlined by the Settlement Agreement, then it logically follows that they will be able to manage diversity better and prevent unnecessary lawsuits that tarnish its image.  

References

Barak, M. E. (2013). Managing diversity: Toward a globally inclusive workplace. New York: SAGE.

Forbes. (2019). America’s 25 most inspiring companies. Retrieved from https://www.forbes.com/pictures/eiji45gfgm/americas-25-most-inspiring-companies/#2e2464134d97

Harvey, C. P., & Allard, M. J. (2015). Understanding and managing diversity: Readings, cases and exercises (6th Ed.). Boston, MA: Pearson.

Salopek, J. (2009). Coca-Cola division refreshes its talent with diversity push on Campus. Retrieved from https://www.workforce.com/2011/03/21/coca-cola-division-refreshes-its-talent-with-diversity-push-on-campus/

Winter, G. (2000). Coca-Cola settles racial bias case. Retrieved from https://www.nytimes.com/2000/11/17/business/coca-cola-settles-racial-bias-case.html