International HR: Coca Cola Company Case Study Example
For multinational companies that have operations across any variety of contexts, human resource (HR) management remains an important issue that should be given significant attention. For such companies, ensuring quality management of HR is critical in managing international operations. Using the case of the Coca Cola Company, this essay evaluates international HR practices of companies in foreign contexts. The study findings are drawn from a secondary research on Coca Cola, including the review of extant literature and extraction of information from Coca Cola website. The main areas of discussion are international staffing approaches, expatriate performances management, training programs, and international compensation. The discussion is anchored on the basis that Coca Cola strongly builds on the above-mentioned aspects to develop a competent management process.
Coca Cola Company
Coca Cola Company, an American carbonated soft drink company, was founded in 1886 by John Pemberton. First, its products were sold at a pharmacy, but later, they were aggressively promoted and produced as soft drinks. The company is headquartered in Atlanta, Georgia, but the Coca Cola products have presence in 200 countries worldwide (Hart, 2011). Coca Cola has a brand list of more than 500 names and an employee base of about 140,000 in more than 200 countries of the world, with plans in place to expand into unreached regions of the world (The Coca Cola Company, 2014). Thus, 2011 financial records reveal that the Coca Cola Company has managed a net income of $11.8 billion in the financial year 2010 (The Coca Cola Company, 2012). The income is projected at 16% increase in the net income, with 70% of the income generated from sales outside the United States (The Coca Cola Company, 2012). With such a success, Coca Cola is a successful multinational company across the globe.
The Coca Cola Company’s HR segment has developed a culture that seeks to reduce employee turnover significantly (The Coca Cola Company, 2014). New recruits to the company are given special training to help them understand operations at the company. Attaching the newly employed staff members to the employees with vast experience at the company helps them to adapt to the ways of the company easily and understand the values prevalent at the company. In all its departments and divisions, Coca Cola strives to create a good blend of the local and Western culture in its working environment. Moreover, Coca Cola HR division has different ways of motivating its employees, including competitive compensation and other benefits such as giving of two cups of tea to employee for free each day.
Description and Analysis of Staffing Approaches Used at Foreign Subsidiaries
In its foreign subsidiaries, Coca Cola adopts both geocentric and ethnocentric staffing approaches (Markovich, n.d.). In geocentric staffing policies, which are the most preferred ones, the company uses a globally integrated strategy, allowing it to engage the services of managers who possess best qualifications disregarding their ethnic or nationality backgrounds. In ethnocentric staffing, the company hires expatriates to head high-level positions in foreign countries. Ethnocentric staffing is largely evidenced when Coca Cola enters a new market.
During recruitment, Coca Cola uses a series of steps for the background check and selection of employees. The company uses aptitude tests to investigate academic backgrounds of its recruits (The Coca Cola Company, 2011). For technical positions, the company uses work sample tests. All recruits have to undergo behavioral checks to determine their suitability for the positions. Background checks for differences across culture, countries, laws, and customs are regarded as an essential part of the staffing process.
In all its foreign subsidiaries, Coca Cola has initiated different ways of managing employees who range from manufacturers, bottlers, and distributers. The initiatives, such as implementation of HR optimization and use of technologies that support HR shared services (HRSS) delivery models, have been essential for staffing and management of employees. In all its international subsidiaries, the Coca Cola HR department has a strategic focus of attracting, developing, and retaining a diverse and highly talented workforce that can support the company’s business operations. Coca Cola Company’s business philosophy emphasizes happiness, health, and success of the company employees (The Coca Cola Company, 2011). All the departments and divisions understand the significance of creating open environments for workers, where they are inspired to achieve results.
Coca Cola HR departments in the international markets engage their employees in open communication, and offer an array of developmental opportunities, including admission to Coca Cola University for further training. The company has routine programs that train employees to show high performance. For instance, the 2009 records of the company’s HR activities shows that more than 27,000 employees and associates participated in 1,720 Coca Cola University classroom sessions worldwide (The Coca Cola Company, 2014). Another 39,100 employees participated in performance related e-learning courses worldwide in 2011 (The Coca Cola Company, 2014). In all the international divisions, it is a requirement for managers to discuss training and development programs biannually with their employees.
The other staffing approach that is widely used in all Coca Cola subsidiaries is a continual tracking and documentation of employee productivity, progress, and morals. Identification and documentation of employee progress and productivity have enhanced the standardization of service delivery in all Coca Cola divisions across the world. This process helps HR to design appropriate trainings that suit the needs of all their employees. Moreover, standardization that follows documentation of employee progress helps in ensuring that the workforce receives cultural diversity training that fits their contexts.
Training Programs for Expatriates
In most cases, Coca Cola’s HR department prefers to staff its operations with the local personnel, especially at operational levels. Senior managers may however be expatriates, as they are expected to have international exposure at strategic levels. The company requires expatriates in their foreign systems for two main reasons. First is when a specific set of skills is required and it is not readily available within the local areas of operations. The second reason is the management’s desire to improve certain employee’s skill base. To ensure effectivity, expatriates are trained to enhance their skills and help them adapt to the local contexts.
Prior to their departure to new workstations, Coca Cola expatriates have to go through an orientation training that prepares them for the foreign country. They are given training on the language of communication, mainly the official language of communication that is recognized by the company. In addition to language, expatriates are trained on the local culture and given a briefing on the country history, local customs, and living condition expectations. The training does not stop at orientation stage. During the assignments, the expatriates have to undergo continual development training. These trainings are intended to expand their skills in their new positions, help in career planning and home country development. While in near completion of their service at their foreign bases, expatriates receive repatriation orientation training. Repatriation trainings focus on workplace, lifestyle, and employees.
Performance Management of Expatriate Managers
Coca Cola appraises the performance of its top expatriate managers from its headquarters (Hart, 2011). The appraisal entails the examination of breakthrough objectives and business plan achievements. The company uses a point ranking scale in its appraisal to avoid ambiguity and biasness during the appraisal process. Given that the process of appraisal of expatriates is done from the headquarters, several factors influence the process. These factors are either internal or external. External factors are those that the company does not have control over and it has to adhere to. For example, they are the country’s legislations and labor union requirements. In most contexts, legislation requires performance evaluations and appraisals to be non-discriminatory, which concurs with Coca Cola’s policy to encourage diversity. Sometimes, local labor laws oppose the utilization of management’s preferred methods of evaluation, prompting a new performance appraisal method that is negotiated between labor unions and Coca Cola managements.
The internal factors that influence performance evaluation of expatriate managers are corporate culture and non-structuring culture. Corporate culture at Coca Cola currently plays the key role in the design and management of performance appraisals of managers. The values, habits, and beliefs that employees share within Coca Cola usually interact the company’s formal structure to enhance behavioral norms that are evaluated in performance evaluations (Hart, 2011). Coca Cola HR team is cognizant of the fact that non-structuring culture rarely encourage high performance achievement by labors, whether as a team or individually, as it results in negative appraisal.
Coca Cola pays its expatriate managers differently from the regular workers in their local countries. Although this paper could not obtain actual compensation figures, compensation package for Coca Cola expatriate managers is usually benchmarked with the purchasing power models that are based on the US rates. In addition, the company offers its expatriates housing, telephone, transportation, and other cost of living allowances that mimic the rates in the USA. Other benefits include security packages, insurance packages, return yearly tickets to home country, help with transferring of one’s family, and sometimes, assisting the manager’s spouse to find a job in the local country.
With international subsidiaries in nearly all countries of the world, Coca Cola uses global staffing approaches that support its goals and objectives. This research has depicted an international company that is successful in its international HR processes. Both ethnocentric and geocentric staffing approaches are intended to net suitable employees for the job. Upon their successful recruitment or transfer, Coca Cola employees, notably expatriate managers, have to undergo orientation, continual development and repatriation orientation training to help them cope in job and in their new stations. Coca Cola expatriate managers have to undergo a performance appraisal, usually designed from the headquarters; however, it is influenced by internal and external factors. The company compensation policy for the expatriates is competitive and usually based on the US purchasing power rates.
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