Inside Coke's Diversity Story - Case Study Example

Coca-Cola: Inside's Coke's Diversity Story Contents Introduction 2 The Discrimination Suit 2 The Settlement 4 Disturbing Trends 5 Diversification Policy 5 Current Status 7 Conclusion 8 Bibliography 10 Introduction The Cocoa Cola company has a history that spans two centuries both at US and abroad. The company has expanded all over the globe. Controversies surrounded its operations even from the time when the product was sold from the counter for the first time. The flow of events in this study begins with a law suit filed for discrimination at Atlanta by three coloured employees namely Linda Ingram, Kimberly Gray Orton and Elvenyia Barton-Gibson. The company settled and sought to be supervised in the diversity policy. This report seeks to find the actions of the company thereafter and the effective implementation of the diversity policy announced and how it has supported the growth of the company. Discrimination on the basis of color and gender is not new to the U.S. But laws and social feeling has contributed much to see that racial discrimination is non existent at least in the near future. This is a care where the Judiciary directed and supervised the erring company to make amends and diversify its policies to end discrimination. The Discrimination Suit The law suit Ingram, et al. v. The Coca-Cola Company (Case No. 1-98-CV-3679 (RWS) was filed by the plaintiffs for "Four named plaintiffs, (Linda Ingram, Kimberly Gray Orton and Elvenyia Barton-Gibson.), represented a class of 2200 current and former salaried, African-American employees of Coca-Cola in this class action filed April 1999 in the Northern District of Georgia. The case involved race discrimination in promotions, compensation and evaluations. Among other things, the plaintiffs alleged a substantial difference in pay between African-American and white employees; a "glass ceiling" that kept African-Americans from advancing past entry-level management positions; "glass walls" that channeled African-Americans to management in areas like human resources and away from power centers such as marketing and finance; and senior management knowledge of these problems since 1995 and a failure to remedy them."1i The allegation was that there was pay discrimination between colored employees and whites. The court heard the matter which was taken up for settlement. "The plaintiffs claimed Coke discriminated against black salaried employees in pay, promotions and performance evaluations. The settlement covers black salaried employees in the United States who worked at Coke at any time between April 22, 1995, and June 14, 2000." The Plaintiffs counsel on their website further comment on the case as under: "In early 2000, the Court ordered both sides into mediation. The parties reached agreement on a Settlement-In-Principle on June 14, 2000. A final Settlement Agreement, valued at $192.5 million and designed to ensure dramatic reform of Coca-Cola's employment practices, was officially approved by the Court on June 7, 2001. Since the Settlement Agreement went into effect, the court-appointed task force chaired by Alexis Herman, former Secretary of Labor has issued annual task force reports highlighting the progress the Coca-Cola Company has made in complying with the Settlement Agreement."2 The views expressed on the issue by the news media and the website of major organizations of Human Rights welcomed the settlement move. For example the Interfaith Centre for Corporate Responsibility (ICCR) called it laudable and its post at the site on the day says: "On November 16th, The Coca-Cola Company agreed to pay more than $192 million in cash and equity payments in the largest racial discrimination lawsuit in U.S. history. The settlement resolved a federal class action lawsuit brought by African American employees against the company in April of 1999 and mandates major changes unprecedented in corporate history. Coke's Chairman Doug Daft has made it clear that he intends to root out discrimination at the company and restore the trust of the consuming public: "Discrimination of any kind - even if it's unintended, tolerated or simply overlooked - has no place at The Coca Cola-Company. We will not rest until we have reclaimed our position as the best of the best in these matters and restored the confidence of every person who touches The Coca-Cola Company. Settlement of this suit is an essential step in attaining that goal and other measures will follow quickly.' ICCR's Director of Diversity, Gary Brouse, has welcomed the agreement. 'I want to offer my congratulations to both the plaintiffs and the company for resolving this case. It's a real indication of common interest in resolving diversity issues. The next item of concern for all who are following the case will be how the diversity task force mandated by the settlement is staffed.'" 3 The Settlement The Settlement Agreement was approved by the Court on June 7, 2001. Coca-Cola agreed to settle the action for a sum of $192.5 million and necessitating the company to pay about $40,000 apiece for 2,000 African-Americans who were the subjects of the in the class-action suit. The company was further directed to spend about $43.5 million over the next 10 years "to eliminate pay disparities between African-American and white employees in comparable positions after comprehensive studies are done. An estimated $36 million would be used to establish employment practices that foster diversity in pay, promotions and performance evaluations."4 The task force appointed by the court to implement the directive consisted initially of Alexis M. Herman, Chair, M. Anthony Burns, Gilbert F. Casellas, Edmund D. Cooke, Jr., Marjorie Fine Knowles, Bill Lann Lee, and Ren A. Redwood. According to the statement of agreement the Cocoa Cola Company agreed to foster equal opportunities in "compensation, promotion, and career advancement for all employees in all levels and areas of the business, regardless of race, color, gender, religion, age, national origin, or disability, and to promote and foster an environment of inclusion, respect and freedom from retaliation"5 Disturbing Trends Opinions and press reviews stated that the case and consequent implications for the Company especially racial discrimination, "is having unintended consequences that some employment lawyers warn may inalterably sour employee-employer relations. Many employers who never before thought about being sued are buying employment liability insurance with unprecedented zeal; the plans generally provide up to $50 million in coverage for compensatory damages, settlements, legal fees and related costs. To avoid damaging lawsuits, more companies are requiring employees to arbitrate claims rather than air them in court. To some, arbitration is a welcome reprieve from contentious legal duels, while others say it strips workers of their right to a trial." - As reported in USA Today. Diversification Policy The policy that was created for ending gender discrimination resulted in changes in the company structure that had far reaching consequences for labor and suppliers all over the world. Discrimination was not confined to the head quarters but at all sites of the company world wide. Other than the supervised ending of racial discrimination, The Company also ventured into rehabilitating and reaching out to the needy with its funds. It announced a $1 billion commitment to fund businesses for minorities and women dedicating $50 million over the to nonprofit organizations aimed at students in the minority sector and mentoring programs and to participate by funding internship programs in marketing and finance in black colleges and universities. "Other components of the company's diversification program include increased minority supplier commitments, urban economic partnerships and marketing investments, and opportunities for minority financial institutions and businesses through the company's financial strategies and investments. James Chestnut, executive vice president, Operations Support, was appointed to oversee the program."6ii Diversification Policy - Implementing the Court Directives Coca-Cola was under the task force supervision for five years from 2000 to 2006. The supervision ended in December 2006. The attorney of the employees in the lawsuit said that "The task force implemented and monitored Coca-Cola's diversity performance in each of these categories "The Nine Systems"Performance Management, Staffing, compensation, Diversity Education/ Strategy, EEO, Problem Resolution, Career Development, Succession Planning, Mentoring" The percentage of coloured executives increased from 8.4% in 1999 to 21.1% in 2006. Similarly the number of managers increased from 16 to 25 percent in the same period and those of specialists employed from 22 percent to 33 percent. The total percentage of coloured people for the same period increased from 26 percent to 33 percent. The Company is determined to see that the diversity is carried on. Commenting on the momentum Alexis Hermann the chairman of the task force opined that "It's not an add-on but an integral part of Coca-Cola's future" Following this Cocoa Cola has made strenuous efforts to really bring about a transformation. The Coca-Cola Foundation, Inc. was founded to issue the grants it promised, with a fund of ($38,989,613 and has donated more than $12,504,811. Similarly the Coca-Cola Scholars Foundation, Inc. with $38,637,000 assets has donated over $1,700,000. The company was set to spend $1 Billion on U.S. Diversity Initiative. Current Status On date the Company has a very clear policy and mechanism to monitor issues relating to discrimination. The thrust as shown in the site of Cocoa Cola underlines these commitments. Freedom of Association and Collective Bargaining: relates to the establishing of recognized unions. Forced Labor: The Company has given up all form of forced labor like prison labor bonded labor and indentured labor. Child Labor: With respect to the ILO standards the company policy is not to employ minors. Discrimination: Promises to keep the tradition of "equal opportunity and intolerance of discrimination. We are dedicated to maintaining workplaces that are free from discrimination or physical or verbal harassment on the basis of race, sex, color, national or social origin, religion, age, disability, sexual orientation, political opinion or any other status protected by applicable law. The basis for recruitment, hiring, placement, training, compensation and advancement at the Company is qualifications, performance, skills and experience."7iii The other policy considerations relate to Work Hours and Wages, Safe and Healthy Workplace, and Workplace Security. The Company has taken keen interest in the community development. "We are also committed to creating economic opportunity and fostering goodwill in the communities in which we operate through locally relevant initiatives." To protect employees the Company has opened an 'Ethics Line' which operates through the site http://www.koethics.com/ which guarantees immediate action. Conclusion The scenario where a corporate of the stature of Cocoa Cola was found to have discriminatory policies is itself very alarming. The reports of the committee which watched over its diversification and subsequent transformation in to a corporate entity with concerns for equality and removal of bias and also addressed itself to social causes. The immediate effect of this will be the change in attitude of the workers themselves, and the community at large. While the bias at the home office and Europe where the probability of getting sued is strong, the company policy may be operating well. It is unfortunate that the supervision did not extent to the foreign units at Asia s well. Since the company is in the middle of other allegations regarding its water use and depletion of resources, in many countries the diversification and absorption takes a second seat. The diversification in alien countries also is due to the laws of those countries which require local participation in the venture. Still Cocoa Cola is often in confrontation with locals and environment bodies at many places like India, and Africa. We have to conclude that the diversification policy implemented in the US under court supervision did prove to be a success and has enhanced the company image. However it is too early to conclude that the diversification will create a global impact at all its offices and subsidiaries. Bibliography The Real Thing: Truth and Power at the Coca-Cola Company By Constance L. Hays ISBN: 0-375-50562-8 New York: Random House, 2004 Cult of Power: Sex Discrimination in Corporate America and What Can Be Done About It By Martha Burk ISBN: 0-7432-6450-9 New York: Scribner, 2005 Other Quoted Mehri & Scalett Attorneys for plaintiff at their site http://www.findjustice.com/cases/rights-discrimination/ingram-cocacola/ http://www.iccr.org/news SECOND ANNUAL REPORT OF THE TASK FORCE December 1, 2003 V PHILANTHROPY NEWS DIGEST Vol. 6, Issue 20 May 16, 2000 http://theory.eserver.org/world-of-coca-cola.html http://foundationcenter.org/pnd/archives/20000516/003374.html End Notes Read More