Essay: Organization Managing Diverse Organizations

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Coca-Cola Diversity

Coca-Cola has faced a number of issues with regards to diversity and human rights over the years. The came under fire for doing business with Nazi Germany, allegedly using slave labor; for buying property that the Egyptian government took from Jews when it expelled them from the country; and famously in 2000 Coca-Cola faced a class action lawsuit for its treatment of black workers. The suit alleged that black workers were fired more often, were paid less than their white counterparts and were underrepresented in top management (Lovel, 2003). As a result of that lawsuit the company has made several changes to their business practices. There are differing opinions as to whether or not those changes have had a positive impact on the company's attitude towards racial discrimination. This paper will discuss the 2000 lawsuit and the reaction from both the company and the employees.

The 2000 Lawsuit

In April 1999, Coca-Cola Company faced a class action lawsuit that was brought on behalf of approximately 2000 African-American workers in the Atlanta area, where the company is headquartered. The lawsuit alleged that supervisors passed over African-Americans for promotion, paid them less than their white counterparts and were underrepresented in management. The lawsuit never reached trial, but was settled out of court for what was then a landmark settlement of $192.5 million in November, 2000 (King, 2001).

The settlement was in part due to the social climate of the time. Discrimination lawsuits were becoming commonplace among major U.S. companies. Firms like Denny's, AT&T, Boeing and Texaco also faced major suits. The climate in the courts was such that it would likely have been difficult for Coca-Cola to successfully defend itself, so a settlement was necessary.

The settlement contained seven historic clauses that represented shifts in discrimination settlements at the time. Coca-Cola agreed to a task force to be put in place for four years. The task force was to be court-supervised, and would oversee in particular the company's efforts to eliminate the subjective decision-making on the part of managers that had lead to the original claims of blacks being passed over for promotions and raises. This process involved the creation of job descriptions that emphasized objective factors rather than subjective factors such as personality.

The company was also compelled to hire an ombudsman to oversee the handling of discrimination complaints. In addition, it outlined its strategy in a statement of principle: "The Company recognizes that diversity is a fundamental and indispensable value and the Company, its shareholders and all of its employees will benefit by striving to be a premier 'gold standard' company on diversity" (Levit, 2008).

Internal Policies

At the time of the lawsuit, Coca-Cola had a number of policies on the books that had been enacted to improve diversity and race relations within the company. There is evidence, however, that these policies were not being adhered to strictly. An internal memo from the company's human resources manager Kevin Johnson, an African-American, in 1999 indicated that "there are several issues surrounding a need for education in the area of racism, diversity and fundamental training for supervisors and key roles in the organization. This issue is also facility wide" (Lovel, 2003).

Indeed, the only way for discrimination to occur on a broad level with anti-discrimination policies on the books is for the problem to be systemic. Cited was the corporate culture that relegated minorities to low-end jobs. Supervisors had been cited for having a "frozen mindset," indicating a level of racism inherent among managerial staff.

In order to address this systemic attitude that inhibits the full development of a truly diverse workforce, Coca-Cola agreed to a number of terms as part of its settlement. They became more active in promoting its diversity philosophy internally, for example with a heavy volume of postings on the corporate intranet, in emails, in newsletters and in personal meetings. The company also set up feedback loops in order to improve communication. The lack of communication -- or communication that was not terse anyway -- was cited as a key factor in the ongoing issues at Coca-Cola facilities.

In addition, the company established the Diversity Leadership Academy of Atlanta (DLAA). Coca-Cola set benchmarks for making diversity improvements, beginning with the policies that are already on the books. The company created a process by which diversity was improved and by which managers would be held accountable in the event of diversity failure. The wide range of solutions implemented by Coca-Cola in the wake of the 2000 settlement indicated that the company understood the systemic nature of its issues and moved to make systemic changes in order to manage the situation going forward (Knowledge @ Emory, 2002).

The shift in Coca-Cola's diversity program did not end their issues. Subsidiary Coca-Cola Enterprises, the company's bottler, faced discrimination suits of its own in 2003 (Lovel, 2003) and a report in 2002 stated that black workers at Coca-Cola often felt that nothing had changed at the company. Despite intensive efforts at the top, there was still little buy-in from the front-line supervisors who had been much of the problem in the first place (White, 2002).

Despite some lingering issues, Coca-Cola today is lauded as a diversity success story. The company was ranked #4 in Diversity, Inc.'s top 50 companies for corporate diversity. The company had a court-ordered task force in the wake of the 2000 lawsuit, and it voluntarily kept the task force after it was no longer required. CEO Neville Isdell noted that diversity at Coca-Cola is "certain and sustainable." The magazine noted as strengths of Coca-Cola's diversity program "unbiased retention across race, ethnicity and gender. Some of the statistics cited were "52% of female new hires were women of color, as were 32% of managers." The company also ties 20% of management bonuses to diversity success. Diversity training is also mandatory for the entire workforce, not just management (Diversity Inc., 2007).

One of the reasons for success of the Coca-Cola program was the creation of lines of responsibility. Senior management was compelled to take responsibility for making diversity improvements as a result of the lawsuit -- the $192.5 million settlement was a call to action, as was the mandated diversity task force. In addition, tying 20% of managerial bonuses to diversity issues placed significant responsibility on the front-line and middle managers, ensuring that top management's commitment to diversity would be diffused through the organization. Dobbin (2007) showed that having clear lines of responsibility is the most effective way to ensure that diversity management programs succeed.

Recent years

After the court-supervised task force was dismantled, Coca-Cola felt that it had developed diversity as a core value in the company and that its diversity initiatives were sustainable. The company today has extended its diversity programs to include management of supplier diversity, which is the next step in fostering an entire corporate community of diversity. Suppliers may lose their business with Coca-Cola or face other sanction if they do not comply with Coca-Cola's supplier diversity program. Employees still attend diversity training on an annual basis as well. In addition, the company has diversity executives, including a Director of Supplier Diversity and a Chief Diversity Officer.

There is no evidence that Coca-Cola has slipped back to its old ways. The company appears to have made diversity a significant part of its business in the wake of that lawsuit, and those changes appear to be sustainable. The systems designed to reduce discrimination have remained in place and continue to have their desired effect. The company also mentoring and coaching programs both internally and for suppliers, and these programs have proven to be the most successful at increasing the ranks of minorities in management positions (Cullen, 2007).

What Could the Company have done Differently?

While the outcomes for Coca-Cola in the long run from their discrimination lawsuit have been widely viewed as positive, the company could have undertaken many steps to prevent such a costly lawsuit in the first place. First, the climate in the 1990s was conducive to such lawsuits. Several major American firms were faced with discrimination lawsuits during this decade as minority workers became more aware of their rights and became more willing to fight for them. While some of the allegations at firms like Texaco were more serious than the ones at Coca-Cola, the company could reasonably have anticipated that it may face such a lawsuit. The increasing size of settlements could also have indicated to management that it would likely to be cheaper to address the issue proactively than to await a cost lawsuit, and still have to perform the needed work eventually anyway. The company had evidence from its human resources department that there was discrimination and at its Atlanta plants there was a significant amount of tension between managers and workers, with some of that tension originated from the managers, who were unable to deal with conflict in a productive manner. It would not, in hindsight, have been difficult to realize that the attitudes of the managers were… [END OF PREVIEW]

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