Reward Management at Coca-Cola Company - Case Study Example

Reward Management Name Professor Institution Course Date Reward Management Executive Summary Recent researchers have focused on trends of performance management systems and reward management, and their impacts on towards organizational success and effectiveness (Aguinis 2009). Organizational managers and researchers equally have had the opinion that performance appraisals anchored on performance measurement systems bear a positive effect on the company’s performance. Therefore, this paper will outline, analyze and evaluate the performance management system used by Coca Cola to achieve its key strategic goals. Coca Cola Company uses 360-degree feedback as their performance management systems to gauge and reward employees. The report will by various current theories and practices from the literature which relate to performance management systems. Introduction Virtually all organizations have performance management systems which are anticipated to achieve numerous vital objectives with regard to the human capital management (Aguinis, Joo & Gottfredson 2011, p.530). Performance measurement in theoretical and practical fields has drawn a great interest in the recent years. The companies are currently integrating performance management system which can help them meet their objectives. Cokins (2005) claimed that human resource department in major organizations has been tasked to recommend the most effective performance management systems which is can be understood by both managers and employees in terms of implementation. However, the major objective of implementing performance management systems is always to reward and improve the performance of the hardworking employees and to eliminate incompetent and poor performers (Liu et al. 2007, p.6). As a big reputable company, Coca Cola has not been left behind in the implementation of performance management systems. Based on the information, this report will outline, analyze and evaluate the performance management system used by Coca Cola to achieve its key strategic goals. Coca Cola uses 360-degree feedback as their performance management systems. Company Overview The Coca-Cola Company is a non-alcoholic beverage producer, marketer distributor. The company was first started in 1889 Atlanta US and has since expanded and now operate in over 200 countries across the globe (Coca-Cola Company 2015). The company is ranked as the market leader in beverage industry with over 500 products in the market. Coca-Cola carries out its operation on franchise basis since 1889. With this arrangement Coca-Cola Company just manufactures syrup and beverage concentrate which it sells to various bottlers across the globe that have an exclusive rights. Some of the Coca-Cola products consisting of Coca-Cola, Oasis, Dasani Sensations, Fanta, Schweppes, Seasons, Full Throttle, Nordic Mist, Georgia, Minute Maid and Tropical among others (Coca-Cola Company 2015). A market research conducted about beverages stated that over 50 billion beverages drank every day globally and out of these, 1.6 billion of those drinks have Coca-Cola trademark. An annual company report of 2013 claimed that the company employees more than 130,600 people across the globe. The company has maintained its top position in the market leader for more than hundred years. However, with competition increasing from Pepsi, Cott and Britvic, Coca-Cola cannot just wait to be overtaken but to cement its position in the market. Therefore, it has implemented performance management system within its organization to ensure it has the best employees which can realize its vision, mission and objectives. Mission and Vision Mission As stated earlier, Coca-Coca has its documented mission, vision and objectives which they rely on employees competent and values to achieve (Coca-Cola Company 2015). This roadmap begins with the mission who declares the company purpose and works as the yardstick on which the company weighs their decisions and actions. The company mission is to inspire the world and create happiness and optimism among its customers. Vision The vision of Coca works as the platform for guiding each factors of its business by clarifying what the employees require to carry out so as to continue realizing quality and sustainable growth. Therefore, Coca-Cola Company (2015) claimed that the company vision concerns people, portfolio, profits, partners and productivity. The company intends to make its organization a better place for working as people get inspire. Similarly, it intends to bring product portfolio with quality and which satisfy customers’ needs and desires. Coca core business in the beverage industry is to make maximize its shareholder’s profits through sustainable and positive performance driven by the employees (Coca-Cola Company 2015). In short, it concentrates on productivity and performance. Organizational Objective The objective and aim of the Coca-Cola Company is to become the best customer service business and post the best results in terms of beverage sales. To the company 'best' implies as being number one brand in each category of competition (Coca-Cola Company 2015). Also the Coca-Cola objective is always to create a positive culture and wining to help deliver quality products to its target markets. Situational analysis of Coca Cola SWOT Analysis Coca-Cola has employed its internal capability over the years to improve its business and operations in the beverage market. The company’s internal capability has been matched with employees’ quest for higher performance. A situational analysis using SWOT gives comprehensive image of company’s internal capability and how to utilize the opportunity to overcome the external forces. Strength Coca-Cola is a strong brand recognize across the globe. The company has the largest share of market in the beverage industry. The company has more than 500 products sold in over 200 countries. Coca- Coca has effective and well designed marketing strategy which beats its competitors based on approach and finance. The strength of Coca-Cola in the beverage market enables it to have higher bargaining power over its suppliers. This enables it to acquire its raw materials at a reduced price. The company has one of the most effective and successful corporate social responsibility; an opportunity which has enabled it to create a strong relationship with consumers and also to market its products. Coca-Cola has in the past sponsored FIFA world Cup in South Africa and English Premier League (Coca-Cola Company 2015). The company has the most widespread distribution channels across the globe and employees which efficiently serves its products. The company has several qualified employees (Coca-Cola Company 2015) Weaknesses Changes in consumer taste and preference has to some extents affected the company sales as some customer now prefer beverage with less chemicals. Coca-cola focus majorly on non-alcoholic drinks meaning if the sector stagnate it will be hard for the company to penetrate other markets. Negative publicity based on low quality products. Opportunities Diversification into other industries such as tourism Expansion through company acquisition Product development especially to health drinks Threats Growth and competition from PepsiCO and other beverage companies is threatening the sales and positive financial performance of Coca-Cola (Blanding 2010) Water Scarcity in some parts of the world especially Sub-Saharan African has affected its production because the company largely depends on water. The Fluctuation of economy is reducing disposable income in some countries hence reducing Coca-Cola sales (Blanding 2010). The company products largely depend on disposable income since they are considered luxury products. Declining in sales and profits margins as a result of economic dwindling. Current performance management system In the recent years, Blanding (2010) stated that the sales of Coca-Cola Company have declined because of negative brand image. In several instance, the company has been criticized for manufacturing products which put to risk the health of its consumers. For instance, in 2003, a non-profit making organization called Centre for Science and Environment accused Coca-Cola of making products with pesticides in India. The chemical such as DDT, lindane, chlorpyrifos and malathion were found o the drink. The company admitted and committed to rectifying the mistakes in the new batches. As a result, its sales dropped by 11% following the saga in the last quarter of 2003 financial year. In the same market in 2006, state of Kerala in India banned the company from selling its products due to presence of pesticides in some of its products (Blanding 2010). Such poor performance has enabled the company to adopt performance management system so as to improve its operation and performance. Performance management adoption is certainly a critical function of the human resource management department in all organizations (Ton & Huckman 2008), and Coca-Cola cannot be an exception. Coca-Cola put more emphasis on the significance of human resource management thus puts substantial endeavors to improve their processes and operations. Employees with good ratings are rewarded while non-performance and laid-off. Currently, Coca-Cola uses 360-degree feedback to gauge the performance of its employees. Maylett (2009, p.53) stated that the 360-degree feedback is defined as a performance assessment where individuals are appraised and being given a rating from numerous different aspects within the organization. Luthans & Peterson (2003, p.246) contended this rating is carried by people an employee makes contact with during the operation such as supervisors, subordinates, and may include even customers. This is a confirmation that there are many stakeholders in the company which can be relied on to evaluate the performance of an employee rather than his or her supervisor. The feedback from such process enables a staff to recognize how their work is analyzed from subordinates, supervisors and external customers (Wagner & Hollenbeck 2010). The management of Coca-Cola believes that the employees roles is not just work on the defined roles but also can go ahead and provide solutions to the general problems affecting the company as stated in the SWOT analysis (Blanding 2010). Blanding (2010) went ahead that the performance management practice of the Coca-Cola Company is carried out through 4 phases include; Phase 1: Yearly Performance evaluation Phase 2: The yearly Plan Performance Stage 3: Recognition and Rewards Phase 4: The Mid-term appraisal Upon Successful conclusion of every stage, the management presumes that the company has done its yearly performance phase and particular objectives and goal are realized. Majority of the leading firms in the US including Coca-Cola offer top regards to performance management systems, and also does not disclose about the outcomes to the public (Blanding 2010). In 2000, Maylett stated that Vice Presidents of Coca-Cola of Human Resource Division directly claimed that they think revealing the performance evaluation is like disclosing secret to the public and opponents (Maylett 2009, p.56). This practice shows the management attitude of Coca-Cola towards revealing concerning performance management system. However, the corporation stated that its 360-degree feedback process of evaluation goes through three main phases including stating job roles to employees, appraising employees on the basis and the results are communicated to the employee. Platts & Sobo´tka (2010, p.351) posited that the person (supervisor, manager or customer) evaluating an employee has to ensure that the staff is willing and has understood his or her responsibility upon which they will be appraised. Upon conclusion of the evaluation process, the rater has to discuss the feedbacks with the employee and the progress (Smither, London & Reilly 2005, p.34). When all employees are assessed, the best or one with potential is rewarded using various means such as promotion, financial incentive, just encourage or a combination of all. Motivation theory has established this strategy help the employees to excel in their jobs. Motivation make employees feel valued and as the owners of the company. However, at Coca-Cola company, the raters discusses the with low performers ways to improve as a way of giving them a chance to improve (Blanding 2010). It should noted that the company still believes in them because they were professionally recruited hence had all the quality to perform. Although, some factors could have contributed to decline of their performance such job roles, lack of motivation or diverse organizational culture (Smither, London & Reilly 2005, p.47). Negative feedback sometime hurt the employees since they could be treated with rejection and threatens their attitude towards work and company. In the process, Healthfield (n.d) opined the management experts recommend that companies embody leadership skills in handling such results. For instance, transformative leadership would help inspire employees of their potential and motivate them to discover their best. Transformational leadership skills also emphasizes on developing moral values and strengthening of employees’ commitment to serve others as stated by Coca-Cola’s vision. Luthans & Peterson (2003, p.251) argued the importance of using 360-degree feedback is that it is more accurate compared to other performance management system such as psychological appraisals, management by objective and behavioral checklist. Fit between the PMS and the company strategy Coca- Cola has internal capabilities such qualified supervisors and managers to help conduct performance management evaluation (Blanding 2010). The company has elaborate training which matches company endeavors to match company strategy and employees skills. Continues training of supervisors and managers ensure that strategic objectives that keeps on changing based on the business are understood and passed to the employees after gauging their capability. The company’s strong brand is itself a strategy to market the products and the company as the best in the market. The situation requires that the company often measure its performance based on employees competency which can be translated to making quality products. Performance management system requires use of funds to conduct a success process. Coca-Cola has large financial base which provides a strategic fit through which the company can match its strategy and performance management system (Blanding 2010). Conclusion and recommendation Even though the outcomes of performance management system is always intended to make improves its general performance it has some impact of operational the employees and company. Therefore, various recommendations are provided to help manager conduct a successful process. 1. Help the employees understand the process: performance reviewed process always create emotional stress on employees. There the rater or the evaluator must help the employees understand it is part of the best practices of the management and employees since it helps them improve on their weaknesses. 2. Do not victimize the employees; performance review should not be carried with a sole purpose of eliminating poor performing employees but to discover why they are not performing well. If the process is carried based on victimization, employee’s morale will decline since it puts their job security at risk. 3. The company must have adequate finance to run the process. Performance management system adopted itself must be effective enough run to successful completion. Lack of enough funds leads to stagnations and disruption hence incorrect results. References Aguinis, H, Joo, H & Gottfredson, R.K 2011, Why we hate performance management–—And why we should love it, Business Horizons 54, 503—507. Aguinis, H 2009, An expanded view of performance management, In J. W. Smither & M. London (Eds.), Performance management: Putting research into practice, San Francisco, Wiley. Blanding, M 2010, The Coke Machine: The Dirty Truth Behind the World’s Favorite Soft         Drink, New York, Avery. Cokins, G 2005, Performance Management - Integrating Strategy Execution, Methodologies, Risk, and Analytics, John Wiley & Sons, Inc. Coca-Cola Company 2015, Coca-Cola Company Official Website, viewed on 3rd May 2015 from http://www.coca-colacompany.com/ Healthfield, S. M n.d, The Great Debate About 360 Degree Feedback. About Human Resources, Viewed on May 3, 2015 from http://humanresources.about.com/library/weekly/aa051501a.htm Liu, Y, Combs, J. G, Ketchen, D. J & Ireland, R. D 2007, The value of human resource management for organizational performance, Business Horizons, Vol. 50, No.6, p. 503—511. Luthans F & Peterson S 2003, 360- Degree feedback with systematic coaching: Empirical Analysis suggests a winning combination, Human Resource Management, Vol. 42, No.3, pp. 243-256. Maylett, T 2009, 360-Degree Feedback Revisited: The transition from development to appraisal, Compensation and Benefits Review, Vol.41, No.5, pp.52–59. Platts, K. W & Sobo´tka, M 2010, When the uncountable counts: An alternative to monitoring employee performance, Business Horizons, Vol.53, No.4, pp.349—357. Robbins, S. P 2009, Organizational behavior, Cape Town, Pearson. Smither, J.W, London, M & Reilly, R.R 2005, Does performance improve following multisource feedback? A theoretical model, meta-analysis and review of empirical findings, Personnel Psychology, Vol.58, pp.33–66. Ton, Z & Huckman, R.S 2008, Managing the Impact of Employee Turnover on Performance: The Role of Process Conformance, Organization Science, Vol. 19, No. 1, pp. 56–68. Wagner, J. A & Hollenbeck, J. R 2010, Organizational behavior: Securing competitive advantage, New York, Routledge. Read More