1994 Global Outlook Optimas Award Profile The Coca-Cola Co.
The obvious difference between these scenarios is the mode of transportation used by the employees. But the differences go deeper than that. Just as the distribution of product in each country varies, almost all elements of employment vary as well. In one country, po-tential workers may willingly respond to questions regarding their families, while in another these inquiries are taboo. Some cultures value high base pay, while others are motivated by bonus plans. Even holidays vary from place to place.
So how does Coca-Cola, which operates in not just these three countries but in more than 195 worldwide, manage its human resources issues? Through a decentralized system that's tied together by a shared vision and central support.
Coca-Cola is a multi-local company.
Although Coca-Cola's headquarters is in Atlanta, Georgia, USA, the soft-drink giant is more than simply a U.S.based company with some operations overseas. It's truly a global enterprise. Nearly 80% of the company's operating income comes from its businesses outside the United States. These businesses range from wholly owned subsidiaries and bottling companies to independent bottling and distribution centers that license its products—mainly soft drinks. The company also manufactures and markets juice and juice-drink products.
The businesses that produce, market and distribute these products span the globe. Coca-Cola manages them through 25 operating divisions making up six regional groups: North America, the European Union, the Pacific region, the Northeast Europe/Middle East (NEME) group, Africa and Latin America (see chart). Each of these groups has a president, accountable for the businesses in his or her area. In other words, each region, although a part of the bigger system, is its own entity. As Michael J. Semrau, assistant vice president and director of international human resources, says: "The Coca-Cola Company just happens to be headquartered in Atlanta. It could just as feasibly be headquartered in any of the other locations [where we do business] and it probably wouldn't make a difference."
The regions and businesses are linked together by a shared mindset to think globally and act locally, a philosophy that Vladimir Pucik, director of international programs at the center for advanced human resources studies at Cornell University, says defines a global enterprise. "If you look at a global company from a business perspective, the emphasis is a combination global integration and local responsiveness," Pucik says. Drawing a parallel to human resources, Pucik says that its role is to get all the different functional capabilities—such as selection criteria, training processes and performance assessments—to reinforce the way people can think globally and act locally.
That's exactly what HR at Coca-Cola strives to do. "Coca-Cola always has been known as a multi-local company," says Semrau. It's like a family: Each business, as each family member, has its own unique qualities and can stand on its own, but benefits from being connected to the group. And just like a family, the businesses have a certain bond. "The common thread running through Coca-Cola is its willingness to allow the locations to be different, to conduct the business in ways that are appropriate for the market in which they're operating," says Jeff Peeters, who's currently director of HR for corporate finance and human resources in Atlanta, but previously served as HR director for the Northwest European division in Brussels, Belgium. "When we sell the same products in Central Africa as in France, the way we sell those products is radically different: the level of sophistication is different, the support systems are different, distribution is different. Coca-Cola has found a way of balancing all of these differences with selling the same products. We don't impose any dominant culture—we really allow the local people to implement that." Semrau agrees. "Our culture isn't codified," he says. "In fact, a previous president used to say that to do that you might miss something. The culture really is one of diversity."
Because of this culture, the role of the global human resources professionals is to maintain the link between businesses and the corporation. The structure of the HR function supports this role and enables businesses to act locally while thinking globally. Each of the 25 operating divisions has a director of human resources, as does each of the six groups. They're supported by HR in Atlanta, but work fairly autonomously.
Peeters refers to the global human resources practitioners as "custodians for international equity," who make decisions for such issues as benefits, compensation and training based on corporate philosophies. He says that while he was in Brussels, he accomplished this by staying in touch with the policy-making unit in Atlanta by telephone and written correspondence, and tried to visit the head office at least once a year to keep abreast of what was going on and to adhere to general policies as much as possible.
Essentially, corporate HR functions by providing the philosophy around human issues while allowing local businesses to apply those philosophies as they see fit for their region. For example, rather than having a standard salary policy for all of its businesses, Coca-Cola has a salary philosophy, which is for its total compensation packages for its businesses to be competitive with the best companies in their markets. "We focus on the end product—the means to get there might be different in one part of the world vs. another," Semrau says.
Differences in laws and cultures play into that. For example, Peeters says that the openness that people in the United States have about salaries doesn't exist in Europe. "In Europe we don't discuss salaries. That's something between you and your employer, and you will never breach that level of trust. They would find it insulting to have to disclose their salary, and they would find it insulting if you disclose their salaries because they consider that to be something very personal." On the other hand, you can talk about their family backgrounds, their ages, and so on without a problem. In fact, they get offended if you aren't interested in their family backgrounds. In the United States, such inquiries would be in violation of the law. "So certain policies that are perfectly legitimate in the United States, if they aren't applied with the right level of judgment will offend people in other countries," Peeters says.
This can happen with particular programs as well. Peeters says that while he was working in Brussels, he learned about a sales course that was developed at corporate headquarters. The principle of the course, which was to assess where your customer is emotionally before making a sales pitch, made a lot of sense and was universal. But Peeters knew that the teaching approach wouldn't fly in the countries for which he was responsible. "We had to work on the course to not just adopt it but to take the principles and translate them into something that was culturally effective and acceptable," Peeters says. For instance, an example that the American version of the training used showed a financial planner selling insurance. Peeters says that, in Europe, people wouldn't go to a specialized consultant, they would go to a banker. Therefore, a salesperson in the European countries wouldn't understand the example.
Also, the corporate training course included video presentations that, in line with equal opportunity, portrayed people of different nationalities and gender in all types of positions. Peeters says that in certain countries these portrayals can be offensive. A female representing management, for example, would be out of line in an Arabic environment. "The main goal is to take the valuable piece of the Coca-Cola system and optimize its effectiveness in the local markets."
Working toward this goal works well for the soft-drink firm. "Through this decentralization and empowerment, associates can react quickly to market needs," says Semrau. "Also, no one central entity can be as responsive as 25, 50 or 100 local, hands-on entities."
Central support enables international HR to act locally while thinking globally.
Although they're fairly independent, human resources professionals around the world receive support from a core HR staff in Atlanta. One of the support systems available is an HR orientation, held twice a year in Atlanta for international staffers and once for those working at headquarters. The two-week orientation is for people who have recently joined Coca-Cola as HR representatives or for longer-term associates who can benefit. Its purpose is to give an overview of the company's HR perspective. "We try to blend a business overview with a human resources overview," Peeters says. "So we talk about the business, we talk about how the business translates in HR policies and what the practices are that follow from those policies."
Participants of the program leave with a much broader view of what the company is doing, not only in HR but in finance, marketing and other aspects of the business. They also learn about HR philosophies, as well as programs and policies already created that can be adopted. "Tools have been developed by people throughout the world and we want to be sure that others don't have to start from the beginning," Semrau says. For example, the company has designed a performance-development system, an industrial-relations negotiation model and regional expatriate programs that HR practitioners throughout the world can adapt. "We want to make sure that anyone coming into HR knows what exists," he says.
Probably the greatest benefit that the orientation participants receive, however, is the framework for an HR network within the massive Coca-Cola system. "We try to involve as many people as possible so that participants get exposure to the specialists in the various areas of the company—people whom they can call when they're confronted with issues in the field," says Peeters.
The company involves the specialists in various ways. Some of the key figures in functions such as training, compensation or benefits will make presentations to the group, relating what their functions' policies and practices are. Some help the newcomers in workshops. There are also numerous social events scheduled during the orientation periods that give participants a chance to get to know the specialists on a more personal basis. "Establishing that network is one of the most valuable things in that orientation course," says Peeters.
In addition to the orientation, Peeters says that the company is planning to roll out a more advanced development program for HR professionals early next year. It will be targeted specifically at those who aren't quite at a director level but who have shown the potential of getting there. Its goal will be to build skills, rather than to establish a knowledge base as the orientation strives to do. "We have noticed that HR as a profession evolves quickly," Peeters says.
Also, the marketplace changes, theories change, and Coca-Cola revises policies and practices and tools to cope with these changes, accordingly. For example, a thrust within the company right now is for managers to become better coaches. "We can't automatically assume that HR knows how to teach these skills," Peeters says. So the development program will offer courses on these types of skills on an as needed basis.
Another support tool for human resources practitioners in the Coca-Cola system is the HR development committee. The company started using the development-committee model nearly 10 years ago within the finance division. Today, almost every functional area of the company has one. The role of the committees is to identify talent within their particular functions and then take the steps necessary to make sure that that talent achieves its potential. They also look at openings within their accountability to ensure that they're moving people who have the right skills into the right positions. "The goal is to make sure that we have the right competencies in the organization to help us meet our business objectives on an ongoing basis," Semrau says.
Nancy Shemaria, director of staffing, facilitates the HR development committee. (In other functional divisions, HR doesn't chair the committees. Functional heads do, with support from HR.) Other members of HR's committee are: Semrau, because of his vast knowledge of the international fields people and what the international needs are; Beverly Freeman, who was the vice president of human resources for Coca-Cola USA and has knowledge about the needs in that territory; the executive assistant to Michael W. Walters, vice president of human resources; and Michelle Beale, the vice president of HR for the Foods division. The criteria to be a member is a focus on and a commitment to development, and a knowledge of the people in the field.
Shemaria states that the purpose of the HR development committee is to ensure that the function continues to grow a ready supply of talent for human resources on an international basis by making strategic placements. "We're really not in the business of just filling positions," she says. "We're in the business of making sure that they're strategically based placements and that by putting someone in a particular position we're also developing that person so that he or she can go on to other assignments and continue to grow in the company."
The committee examines all open positions in human resources during every meeting and evaluates possible candidates. The main focus of the committee is on placing key talent—mid-management to senior-level positions— but because HR is a relatively small function, the placements can run the gamut.
Another task of the development committees is identifying key technical or professional skills for their functions' positions. The HR development committee identified key experiences or job knowledges in 10 areas that people in HR need. They are: facilitation skills, an understanding of global business and HR trends, organization design, HR functional knowledge, employee relations, industrial relations, learning and development, performance development, selection and staffing and total compensation.
In addition to these, the company has core foundation skills that Coca-Cola personnel need. They are a combination of capabilities and skills that the company uses to evaluate any associate in the organization. For example, foundation skills for managerial people include coaching skills, leadership capabilities and ability to think creatively. "They're quite generic, almost attitudinal," Peeters says.
Adds Shemaria: "What you end up with is a comprehensive set of both the general business skills and the function-specific skills. And by putting them together, we get a complete picture of what somebody needs to be able to do the job."
Along with developing key competencies, the HR development committee conducts talent assessments. It slices the organization either horizontally or vertically to look at a portion of the function. It then determines what skills are required of the positions in that group, evaluates the skills and talents of the people in those positions, and implements strategies to close any gaps.
For example, the committee will encourage and provide the tools to managers in that function to do development planning for their associates. "We play an influencing leadership role for which we may develop some assessment tools, develop the technical competencies and skills, and get those distributed throughout human resources as tools for all managers in human resources to use," Shemaria says. "But the role of the development committee isn't to watch over what the managers do. They still need to be managing, coaching and gathering feedback, separate from the development committee."
Essentially what the HR development committee does is reinforce HR's mission within its own ranks. That mission, says Semrau, is to "Work with all of the associates in the system to enable them to develop their full potential to exceed the expectations of customers, consumers and shareholders."
Quite straightforward, but nonetheless lofty considering the expansiveness of Coca-Cola's human resources. However, with staff in Australia and Morocco sharing the same mindset and receiving the same support as those in Italy and the United States, it's a goal that's certainly.
Personnel Journal, November 1994, Vol. 73, No.11, pp. 112-121.