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Coca-Cola was started in 1886 and is world's leading soft drinks company at present. The company has operations in over 200 countries and owns about 2800 beverage products. The company employs nearly 100000 employees across the world. Hence HR is a major function in an organization like this. The company is giving high priority to its work force and making considerable efforts in balancing them. This is reflected in the major elements of HRM in the company like recruitment, selection, talent management etc. Another key element of HRM in every company is the way the performance of employees is recognized and how they are appraised.
Performance management is undoubtedly an integral HR function in every organization and Coca-Cola is also no exception. The company gives high importance to human resource management and hence makes considerable efforts to enhance their operations and processes. The performance management process of Coca-Cola Company is done through 4 stages. It is explained as below:
Stage 1: Annual Performance Review
Stage 2: Plan Performance for the Year
Stage 3: Rewards and Recognition
Stage 4: Mid-term Review
On the successful completion of all these four stages, it can be assumed that the organization has conducted it annual performance cycle and certain objectives are attained.
Most of the top companies in America including Coke gives top priority to their performance management system and also doesn't feel it right to disclose much about it to the outside world. One of the Vice Presidents of HR in Coca-Cola has directly said that they consider disclosing the performance appraisal form to external parties equal to revealing the secret formula of Coke (Grote, 2000). This clearly indicates the attitude of the management of the company towards disclosing more about performance appraisal system. But the company has revealed that the process of appraisal involves three major steps:
Defining the job or role to the employee. The appraiser or superior has to make sure that the employee understands and is willing to take up the new job and responsibilities.
Appraise the employee based upon their performance.
The employee also receives feedbacks about the way they performed in the appraisal period. Here the superior or rater will be discussing the appraisee about the progress he has made during this time. The superior needs to give inputs for developing skills that are expected from the employee to excel in his job.
Thus it is evident that the company is goal-oriented and demands its employees to attain their individual objectives in order to get appraised. Hence the system for assessing the performance in the company is based on meeting of objectives. The objectives are rated based on a 4-point rating scale. The employees are categorized into mainly five based upon their performance. They are:
TNTR- Too New To Rate
NP- Not Meeting Performance Expectations
DP- Developing Performance
SP- Successful Performance
EP- Exceptional Performance
Based on their rating, the employees will be appraised to the next level. Each of the ratings has certain objectives that must be fulfilled as well as certain competencies that are required. Another integral part of the performance management process in Coca-cola is the KRA (Key Result Areas) setting process. KRA can be considered as a set of objectives that must be attained by each employee so that the organization can in turn achieve its goals. Thus there exists a high relationship between the performance management and achievement of organizational goals in Coca-Cola.
Another important method used in the company for performance measurement was balance core card (Malik & Khan, 2006). This method requires creating a vision, mission and organization strategy (Bourne, 2001). Yet another technique used is self-rating method which requires employees to rate themselves. This method was found be equally effective with the other methods used (Hale & Whitlam, 2000).
The extremely competitive industrial environment of today demands people who are highly skilled and technically qualified. It is because finally, it is the toil of the employees which results in organizational success. Therefore most companies are in the pursuit of attracting and retaining the quality workforce. Performance management is a critical aspect which gets attention in such a situation. It holds high relevance in an organization like Coca-Cola which is facing cut-throat competition in the current business world.
Performance management system serves a number of purposes for an organization. Many organizations find this as a placement tool. This is mainly applicable in internal recruitments or transfers (Wayne, 1995). Coca-Cola can also use this for similar purposes and thus reduce the cost of recruiting and training a new employee. Another important usage of PMS in the company is in career management. The training needs of the employees can be identified by conducting a proper performance management process and thus help in providing the required training to them thereby supporting them in achieving their goals. This would finally help in organization growth. Pfeffer (1999) has suggested that an organization can improve by means of training its employees and increasing their participation in decision making. He also advocated that the companies must try to bring in team based performance appraisals to enhance the productivity. Thus the system followed in Coca-Cola helps in communicating the performance expectations of the company to the work force. It also helps in obtaining their feedbacks. This would help the individual in clearly understanding his role and identifying his strengths and weaknesses (Piggot, 1999).
The company is also facing certain pressures from the external environment. Coca-Cola had to face a number of protests from the public and regulatory bodies in the past decade. The economic recession of 2007 which shaken the global economy also had an impact over the financial stability of the company. Even then the company was able to with stand the setbacks and was able to excel over many of its competitors. Coca-Cola entered in numerous social ventures during this period to boost their image in front of the public. Through focusing more on the corporate social responsibility, the company was able to maintain its loyal customer base as well as regain the trust of its stake holders. The major political, social, economical and technological factors that affected the company in the past decade are given below:
Political factors: The political factors include government policies, regulations, tax requirements etc. The company faced severe protests in India and the Middle East in the past decade. The issue of company conducting water misuse and depletion in India received worldwide attention (Luthans and Doh, 2008). The governments of these countries showed their disagreement with the company policies and practices and demanded a change. Many environmental laws were implemented which would have an effect over the company's operations. A number of public suits were filed against the company for causing health hazards to people.
Economic factors: The main constituents in this involve the total profit, growth in revenue, contribution to GDP etc. The company had to pass through a major economic shift in the past few years. The economic recession of 2007 had an impact over the company's revenue. The American continent was highly affected by the economic downturn and about 75% of the company's revenue comes from North America only. This is the reason behind the company being hit by the recession waves. It was the strong relationship that the company holds with its customers and stakeholders which helped it to withstand the pressures of downturn.
Social factors: The Company is also into a number of social ventures that would enable them to show their corporate social responsibility. Coca-Cola is helping out children around the world by providing them with books, scholarships etc for their education. In Pakistan the company introduced a program which guarantees basic education to the children. Apart from the company also donates largely to child welfare organizations. In 2004, a sum of â‚¬50,000 was donated to an Austrian children charity organization named SOS Kinderdorf. The company is also into campaigns against AIDS and has donated over 1 million USD for creating awareness against AIDS.
Technological factors: The Company is always the leader of introducing new and unique technologies. The inventions of ice-chilled coke, vending machines which are free of HFC, environment friendly plastic bottles etc. are some of its innovative technologies. Some of these inventions were quite helpful for the company to boost its brand image in front of public and stakeholders.
Hence one can conclude that HRM in Coca-Cola is quite effective and performance management is a key element in its success. If the company is capable of balancing its work force issues and environmental pressures properly, it could continue to keep its position as world's most popular brand.