Global Human Resource Management at Coca-Cola - Assignment Example

Glоbаl Нumаn Rеsоurсе Маnаgеmеnt аt Соса-Соlа Customer Inserts His/Her Name Customer Inserts Grade Course Customer Inserts Tutot’s Name 11th March 2013 Table of Contents Table of Contents 2 Abstract/summary of contents 2 1.0 Introduction 3 1.1 Background (Information on Coca-Cola) 3 2.0 Key issues at Coca-Cola 4 1.1 Approach to HRM (Analyze with theory /strength and weakness) 4 1.2 Recruitment + staffing (Analyze with theory) 7 1.3 Performance Management (Analyze with theory) 9 1.4 Pay + Compensation (Analyze with theory) 10 1.5 Cultural Challenges Coca-Cola may face in country comparing the country/Coca-Cola culture issues and Challenges (Analyze with theory) 11 3.0 Conclusion 12 4.0 Recommendations. 13 References 14 Abstract/summary of contents The aim of this paper is to study human resource practices in Coca-Cola Company. The company has various subsidiaries all over the world and the main focus of this paper is its operations in America. America is well known for its competences in human resource management such as high level of education, high investment in training, good rewards systems and staffing/ pay rewards. These factors influence employee performance. For example, Coca-Cola employees are highly paid and motivated due to their high level of education and training. The report contains the introduction part which has introduced the company’s nature and scope of operations, products and competitor information. This part has also introduced the nature and scope of Coca-Cola Company. The key issues section has the strengths and weaknesses experienced by the company as well as the human resource methodologies used. The paper has also analysed the recruitment process of the company , employee performance and compensation. These aspects have been analysed by use of various theories such as convergence, divergent, contingency, resource based view, performance management and reward management theories (Barney 1985). The paper has also identified and analysed the cultural challenges facing Coca-Cola. The conclusion section has summarized the main issues in the paper while the recommendation section has put in place measures that the company should take in order to reduce its flaws and to improve efficiency and effectiveness. 1.0 Introduction 1.1 Background (Information on Coca-Cola) Coca-Cola Company is the largest global producer and seller of soft drinks and beverages. The company represents the tastes of the American people by ensuring that 2,800 of its products are available in over 200 countries. Some of its products are juice drinks as well as energy and sports drinks. It also creates a free business environment for other businesses to carry out their operations in a market friendly manner. Its operations are spread in Africa, Europe, Eurasia and America. Coca Cola has been acquiring other companies such as Great Plains Coca-Cola Bottling Company and Aujan Industries. The main competitors are PepsiCo Inc, Gruo Danone, Unilever and Nestle among others (Lorge 1997). The company has strategic planning and implementation that serves as the basis of its management. Strategic management is a foundation in many organizations. It involves establishment of a company’s future course, laying out of strategic moves and execution of the chosen strategy. Coca-Cola’s products in America have a low potential because of the consumer perception of its stigma. High levels of inflation have made the company to incur losses as well. This is because inflation has reduced the purchasing power of consumers. The legal-political environment has little effect on the company’s strategic management (Vrontis & Sharp 2003). The aim of this paper is to identify human resource practices of Coca-Cola America and relate them to various theories governing human resources. In order to achieve these objectives, this report has been structured into four parts: the introduction, the body, the conclusion and the recommendations. The parts have been numbered accordingly. 2.0 Key issues at Coca-Cola The main issues affecting Coca-Cola human resource management are employee performance, promotions and compensations. The company is also faced with cultural challenges because of the nature of its products and general operations such as acquisitions (Andrea, Schleicher & Lunardini 2006). 1.1 Approach to HRM (Analyze with theory /strength and weakness) Every organization is made up of people. Therefore, it is important for organizations to be able to manage their human resource factor effectively and efficiently. The department that is responsible for this role is the human resource department. Human resource management has evolved over time. Some of the human resource concepts that have been introduced are strategic management. The purpose of this paper is to evaluate how strategic human resource management can be used to achieve Coca-Cola’s objectives. One of the strengths that Coca-Cola has in achieving strategic human resource management is the ability to set-up a common ground for all its employees. This is in relation to the convergence theory. This theory explains how international integration operates by providing industrialization and management logic. It also explains how industrialized economies are combined around management structure. This is regardless of competence, specialization or decentralized form of management. When there is great integration among businesses as a result of improved communication, then variance in management practices reduces (McGraw & Harley 2003). The other strength that the company has is that it conducts orientation sessions during the year for its staff. This is done among the 35 operating divisions. These sessions discuss how local businesses can use philosophy to implement human resource policies. Therefore, they create convergence of ideas and theories that are important in achieving the company’s goals (Brewster 2001, p. 224). Additionally, such training sessions bring harmony and unity among employees because they tend to know one another and to share common goals. This creates a room for more growth and development in the company. Another strength that Coca-Cola has in Human Resource Management is that it has established philosophies upon which other businesses can base their human resource activities. For example, the company has a common salary philosophy- The salary level should be competitive with the rest of the best performing companies in the market. This is in line with the resource based view. With this practice in place the company has been able to create harmony among its employees. Additionally, such a practice reduces cases of employees resigning and joining competing firms (Scullion 2001, p. 200). On the other hand, Coca-Cola Company experiences weaknesses in management of its human resources. For example, the staff experience dissatisfaction due to poor coordination between the workers and the management. Workers feel that they are not being compensated accordingly. This can be blamed on the management which overworks the employees due to the assumption that they cannot feel fatigued. Employees end up feeling tired with limited rest yet there are no holidays. This practice is in contrast to resource based view. It is in line with the contingency theory. According to this theory there is no one best way to organize a company’s human resource. This is because there is no particular way that is best effective in achieving the set-out goals (Smith 1984). Therefore, the best way to organize a firm’s human resource depends on the type of internal and external systems design and environment in which the business operates (Burns 2013). This means that organizations that have good internal features that best match the environment’s demands are in a position to achieve the best results (Luthans 1973). In this scenario, Coca-Cola’s management operates in a manner that it feels best suits its objectives. There is no particular method of conducting employee work shifts in order to ensure that they do not get overworked. Therefore, the company takes advantage of the workers and benefits from the extra effort offered by them. This practice is also in line with the divergent theory. This is because the company does not comply with the general practices regarding employee working hours. Therefore, it has established its own working procedures which are different from other companies in the industry. Coca-Cola’s employees also lack quality motivation. This is because there is a huge gap between the management and the workers. This gap is a barrier to effective communication which has made grievances to rise because employees feel that their problems are not being handled at the top level of management. Therefore, the company should establish mechanisms to ensure that employees’ issues are addressed accordingly. Such practices are convergent in nature. Convergent theory means that a company does not comply with the standard laws such as labour laws on employee treatment. Therefore, the company has formulated its own means of addressing employee matters. For example, Coca-Cola practices centralized decision making and command which makes the employees to feel that the authority procedure is improper. This can mean that the employees are powerless to raise and address matters affecting the company. For example, they are not allowed to extend credit or discount facilities to the employees. This practice is also in line with the divergent theory which means that Coca-Cola fails to comply with the universal labour law practices applicable in the other companies. Other factors such as lack of promotion and coordination create low employee morale in the company. For example, the company’s employees feel neglected whenever there are promotion opportunities. The company also, has poor coordination of its operations among its departments. For example, the sales department blames the marketing department for failing to heed to their problems. These problems have caused delay in delivery of products. Therefore, the company needs to introduce effective coordination activities (Boutzikas 2000). 1.2 Recruitment + staffing (Analyze with theory) Recruitment in Coca-Cola America is done when there are vacant positions and not on standby basis. The vacancies are advertised internally first in order to provide internal employees with an opportunity to apply for the available posts. In case it happens that there is no suitable person for a given post, the company searches for qualifications from its data bank before advertising the posts to the public. Selection depends on positions. Therefore, selection practices for one post are different from selection practices for another post. The major requirements during selection are education and skills. Aptitude tests are conducted after screening after which one is called for an interview. These practices are in line with resource based view which aims at achieving the best personnel possible for a particular post. Resource based view is a business analyses tool that focuses on how a firm can use its resources including the human resources to achieve a competitive advantage. This view emphasizes that internal firms’ resources can help a firm in attaining its goals ahead of its competitors. This is because resources are scarce and valuable. Therefore, unique talents such as superior performance, innovation and high level customer service practices can help an organization in achieving a competitive advantage (Fossas Olalla 1999). Coca-Cola America recruits highly qualified staff members in order to achieve a competitive advantage. The company also employs local people. However, it also recruits expatriates when there is a need to obtain specific skills that may be available in a particular locality. The other reason why it recruits expatriates from other places is because it wants to improve individual skills. Therefore, the company likes exposing its senior managers to the global environment. These practices are in line with the resource based view. By ensuring that the managers are highly skilled and exposed, Coca Cola places itself ahead of competition. For example, companies like Nestle aim at improving performance by employing highly qualified personnel. However, Coca-Cola ensures that it improves efficiency and effectiveness by developing its own personnel. As a result, the company has managed to remain highly competitive. Coca-Cola’s job training is regarded with high importance. Freshly recruited personnel are given information about the company’s products, values and procedures. The company emphasizes ethical behavior among the employees. This is meant to ensure that no bad habits that can lead to great problems can come up. In order to reduce occurrence of mistakes during induction, new employees are required to work under a supervisor. This is in line with the resource based view (Webb 2006). 1.3 Performance Management (Analyze with theory) Performance management is governed by two theories: the goal-setting theory and expectancy theory. According to goal-setting theory, the goals of an individual employee are important in motivating him to perform better. This is because the employees keep following their goals and adjust them in order to meet their needs. On the other hand, expectancy theory of performance management states that individuals change or modify their behavior in the organization based on expected satisfaction of their goals. Therefore, employees modify their behavior in a manner which is likely to lead them to achieve their goals. Coca-Cola America creates employee motivation by conducting promotion on employee performance basis. This motivates employees to work hard in order to attain their goals in accordance to expectancy theory. The goal setting-setting theory applies in Coca-Cola when employees are required to actively engage in developing assessment and evaluation criterion. Therefore, team work is expected to come up with goals that can contribute to improved performance (Salaman et al 2005). Coca-Cola operates globally and this means that the employees should practice team work in order to achieve the set-out goals. However, every employee may have specialization in a given field. During performance appraisal, the company uses evaluations that show team work. Therefore, employees with specialized skills may receive unworthy appraisal. However, divergence also plays a key role on performance management in Coca-Cola. Divergence theory maintains that organizations will experience cultural diversity. This implies that an organization that practices divergence appreciates different cultures and way of thinking. Divergence can be achieved by rejection of superficial commonality (Isabel 2010). Coca-Cola Company is divergent in its employment practices because it employs people from all over the globe. The views of such people are still appreciated even though they are different from the company’s practices. The company also motivates the performance of its directors by increasing their annual salaries. However, in order to make them perform better, the directors are paid nothing if the company fails to meet its performance targets (Anonymous 2006). 1.4 Pay + Compensation (Analyze with theory) Reward management is the establishment, maintenance and development of a system or policies for rewarding employees within an organization. The reward system should be fair, equitable and consistent with an employee's value to the organization. Some of the theories employed in reward management are Douglas McGregor's Theory X and Theory Y. According to McGregor's Theory X, managers have a pessimistic view of their employees. They think and belief that employees will evade job at the least opportunity and thus need to be monitored closely. On the other hand, managers that subscribe to Theory Y think and belief that employees should be motivated in order to work effectively (Gellman 2009). Coca-Cola’s senior managers and directors practice Theory Y. This is because they enable the lower level managers to engage in international business management and ventures. These managers travel a lot. The company compensates their expertise by organizing various trips to different destinations. For instance, there are 200 managers who are travelling at a time. Coca-Cola pays the personnel in its global service program a compensation package on US terms. This means that the workers in America enjoy the same compensation package as the workers in Europe and Africa. This compensation practice is also in line with the convergence theory. This is because Coca-Cola combines compensation packages that are in place in order to set-up a common ground for all its employees. Through appropriate compensation, Coca-Cola also applies the resource based view. This is because compensation creates motivation among the employees and it also improves their effectiveness and efficiency (Luthans 1973). This makes Coca-Cola to attain a competitive advantage in the industry. There have been incidences whereby the company has been practicing racial discrimination. For example, there have been cases of African American employees being discriminated on the basis of their colour. This has made them to be paid less than their Caucasian counterparts. Such a practice is divergent in nature. This is because it represents lack of international integration. The standard practice is that workers should be compensated equally. However, if the reverse happens, it means that the company needs to change its compensation policies (Anonymous 2000). 1.5 Cultural Challenges Coca-Cola may face in country comparing the country/Coca-Cola culture issues and Challenges (Analyze with theory) Coca-Cola Company is alleged to take part in racial discrimination. For example, in 1999, some African American employees sued the company for discriminating them in terms of pay, promotion and evaluation of their performance. It is said that the company grouped some African-American employees at the bottom of the pay scale (Svensson 2011). This meant that their annual income was $26,000 below the Caucasian counterparts. The company settled the lawsuit by paying $193 million in order to stop itself from incurring more damages. This is a cultural challenge to the company because the company is unable to operate smoothly in regions dominated by the African-American residents. Additionally, the company uses expatriates from America and Europe to oversee operations in new markets. This can create rivalry among the local residents who expect to be offered the same posts. This is also a cultural challenge to the company. Additionally, Coca-Cola’s products are getting criticism because of the ingredients used in manufacturing them. This has reduced demand for its products in the US (Lee, Sung & Gregorio 2011). Coca-Cola has been involved in various incidences of contamination. For example, in 1999, some Belgian children fell ill after they used the company’s products. This made the government to recall the products produced by Coca-Cola. The company took time before addressing the incident which meant that it assumed the situation. At the same time, France reported various cases of illnesses caused by consumption of Coca-Cola’s products (Lee, Sung & Gregorio 2011). As a result, Coca-Cola’s reputation got affected because of poor service as well as negligence and lack of accountability. Belgium and many European countries have implemented antitrust laws. This means that many firms are keen on market share when they are undertaking mergers and joint ventures. For example, in 1999, Coca-Cola became very aggressive in countries such as France. As a result, the company decided to purchase Orangina which is a beverage company in France. However, this request was denied when the French government failed to approve the purchase. This act created cultural rivalry such that the Coca-Cola’s acquisition in Cadbury Schweppes was scaled (Collins 1991). 3.0 Conclusion This report has analysed the background of Coca-Cola Company. It has also analysed the strategic management practices conducted by the company on the basis of human resource management theories. The theories applied are: convergent and divergent theories, contingency theory, resource based view, performance management and reward management theory. Several elements of human resource management such as remuneration, performance evaluation and recruitment have been analysed as well. Coca-Cola has had various strengths and weaknesses all of which have been analysed in the paper. Finally, the paper has handled the cultural challenges and issues that the company faces. 4.0 Recommendations. Coca-Cola is an international company that is operating successfully. The company has been beneficial to the employees by offering good compensation packages and remuneration. However, the company’s lower level employees feel demotivated. Therefore, the company should introduce better compensation packages for the lower level employees as well. There is poor communication and coordination of operations between the managers and the workers. This has caused delay in delivery of goods and services. Therefore, the company should establish more effective methods of handling employee issues. This would improve coordination as well as delivery of the company’s products on time. The company should improve the quality of its products in order to reduce death cases that have been experienced in some countries. This would help to improve the company’s market share. It should also establish equal employment or recruitment practices in order to reduce court cases regarding violation of human rights and racial discrimination. The company should come up with means of reducing cases of business rivalry. For example, its plan to acquire some companies in France showed a high level of unhealthy competition. Therefore, Coca-Cola Company should set up mechanisms to settle its legal, cultural and ethical issues and concentrate on production of more user-friendly products. References Andrea, G Schleicher, M & Lunardini, F 2006, ‘The role of promotions and other factors affecting overall store price image in Latin America’, International Journal of Retail & Distribution Management, vol. 34 no. 9 pp. 688-700. Anonymous 2000, “Coca-Cola CEO sets diversity goals, creates new post at company to promote more minority employees’, Jet, vol. 97 no. 16, p. 18. 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