The Coca-Cola Company Managing Organizational Change

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Introduction

Coca-Cola is one of the most successful multinational enterprises. Coca-Cola branches are located in almost 200 countries, and about 80% of the company’s revenue comes from its activities outside the United States (The Coca-Cola Company). The Corporate HR group sees its mission in developing and providing a core strategy on the basis of which local businesses can create their principles. For example, instead of a general payroll policy for all company divisions, Coca-Cola adheres to a general guide regarding wages. It means that the available package should compete with the best companies in the local market with all compensations. The corporate HR management Group conducts two-week introductory seminars for employees of all 25 departments dealing with human resources twice a year (The Coca-Cola Company). These seminars summarize the company’s HR management strategy and explain how local businesses can use it in their regions’ HR management programs. Coca-Cola considers this exchange of information to be the most outstanding achievement for which it is worth bringing together professionals in the field of personnel management. In general, the company seeks to improve personnel’s well-being and sustain a friendly working environment.

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The policy that seems a bit odd is that the company attempts to hire as many local people as possible. Diversification is the primary strategy of the world’s leading companies. Hence, Coca-Cola should alter this procedure since many migrants could get a chance to start working for this organization. This would also expand and strengthen the international relationship. In addition, it is beneficial for eliminating global issues such as age, sex, or race discrimination, and others. Therefore, this policy lacks adequate management and if fixed, could benefit the company both in increasing reputation and profit.

Company Background (Industry, Size, Employees, and History)

Coca-Cola is among the world’s most successful enterprises. Coca-Cola branches are located in almost 200 countries, and about 80% of the company’s revenue comes from its activities outside the United States (The Coca-Cola Company). The company manufactures and sells various soft-drink beverages, totaling up to about 2,800 products, making it the world’s biggest beverage manufacturing and distributing company. With its headquarters in Atlanta, Georgia, some of its most popular portfolios include Fanta, Sprite, Coca-Cola, and other carbonated soft drinks. (The Coca-Cola Company). Since 1889, the company has operated under a franchise distribution framework in collaboration with various bottlers worldwide, and its stock is listed on the New York Stock Exchange. Some of the reasons why Coca-Cola has been successful over the years can be attributed to the company’s strategic approach in HR and personnel management, which involves activities such as staffing, compensation, planning, evaluation, and development. With this in mind, this paper demonstrates that although most of these HR policies, strategies, and practices have been successful over the years, some of them need to be addressed and changed to meet modern change management theories.

Current HR Practice

The Corporate HR group sees its mission in the development and provision of a core strategy based on which local businesses can create their principles. For example, instead of a general payroll policy for all company divisions, Coca-Cola adheres to a general guide regarding wages. It means that the available package competes with other top companies within the local market with all compensations. The company’s HR management also conducts bi-annual introductory seminars that last for two weeks for its employees in all its 25 departments, which deal with human resources (The Coca-Cola Company). These seminars summarize its HR management strategy and explain how local businesses can use it in their regions’ HR management programs. Coca-Cola considers this exchange of information to be the most outstanding achievement for which it is worth bringing together professionals in the field of personnel management. In general, the company seeks to improve personnel’s well-being and sustain a friendly working environment.

HR Practice Changes

Regardless of the success of the majority of Coca-Cola’s HR policies and strategies, there is still room for improvement because possible changes can be implemented for the policies and strategies to meet current change management theories. First, the company’s recruitment process can be remodeled to adapt to existing practices that rely on technology and innovation. In this regard, the company needs to incorporate current technological practices more in their head-hunting and hiring processes, such as using online HR platforms like Glassdoor and LinkedIn, using social media, or using innovative tools like VR to identify and hire the most suitable employees for the numerous company roles (Grgić66). According to various current change management theories, Coca-Cola can develop a comprehensive digital employment framework based on a defined strategy that is transparent and recognizable to ensure it benefits from the modern socialized online environment. The company will gain by acquiring the best candidates from the market.

Secondly, Coca-Cola must treat HR as an independent and strategic organizational component and not just an administrative function that facilitates the induction and employee life-cycle for more effective HR management. The company can incorporate its HR management in planning, designing, and executing organizational growth strategies that focus on a people’s perspective. In this manner, HR can be regarded as a decision authority and not just an execution arm (Grgić, 69). To achieve this, continuous improvement in every HR function is necessary, including the sub-functions within HR, such as health and safety, compensation, screening and hiring processes, records, benefits, and training. Constant training and coaching are required, from senior to junior staff and throughout the organization, to ensure everyone has a complete overview of what its HR needs to work at its best. Therefore, Coca-Cola’s HR staff and managers also need to be constantly on the lookout for new and best practices to help the company achieve its objectives.

Ultimately, Coca-Cola’s HR policies and strategies can be effectively transformed by instilling a culture of introspection or self-awareness. This change is vital because a self-aware organization becomes receptive to change. Coca-Cola can achieve this by defining its HR competencies and measuring HR’s performance against set competencies. In this regard, the company should conduct regular HR customer satisfaction audits and clearly outline the areas HR needs to perform to support the business. Such requirements include influencing business decisions and strategy, providing leadership coaching, facilitating learning and development, and understanding specific performance indicators (Grgić70). This transformation can also be achieved by implementing new leadership principles, mission statements, and values definitions. Similarly, the company’s HR can create accountability by measuring introspection through performance reviews, one-on-one conversations, and offering employees various opportunities to reflect on their actions or behaviors.

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Diagnostic Tools Used to Determine Readiness

To determine if The Coca-Cola Company is ready for change, these two diagnostic tools should be used: Burke-Litwin and McKinsey Seven-S. Using the McKinsey Seven-S tool is vital in this process because it effectively analyzes an organization’s design through various elements, such as shared values, staff, strategy, system, skills, and structure (Yakimova et al., 1571). This tool will effectively determine whether Coca-Cola is ready for change by identifying whether employees’ individual strategies align with the company’s mission. As a result, teams and systems within the company can be optimally structured to match the organization’s objectives. On the other hand, the Burke-Litwin tool is appropriate to determine whether Coca-Cola is ready for change or not because it shows where organizational change originates and how it permeates the various parts of the company (Yakimova et al. 1571). Using the Burke-Litwin tool, in this case, is imperative as it is predictive and, therefore, can illuminate more light on what the company needs to adjust in its strategy to achieve its objectives.

Coca-Cola can use the Burke-Litwin diagnostic tool to anticipate new innovations and technology required for organizational change. For example, the automation of various HR procedures in the company would result from Coca-Cola’s desire to adopt new technology and innovation in its practices. Similarly, using online HR platforms for head-hunting and hiring processes would be inevitable if the company needs to target more youthful and skillful employees. This knowledge is essential as it can help Coca-Cola research, design, implement and “sell” the appropriate policies, practices, procedures, and processes to its employees whenever it needs to make critical organizational changes. By analyzing the company’s main transformational drivers – strategy and mission development, leadership development, and corporate culture – the Burke-Litwin tool determines that Coca-Cola is well-positioned for change implementation (Yakimova et al., 1572). Coca-Cola has a diverse “steering team” that can help the company transition from top to bottom and all different perspectives represented. The steering team can also provide diverse feedback because many eyes can look in different directions, giving a more balanced view of the change process as proposed by the McKinsey 7-S Change Management Model (Yakimova et al. 1572).

Change Management Model

Although Coca-Cola has outstanding HR practices that contribute to the company’s profitability, it has been identified that they can be further improved to match current trends in HR management. In particular, the firm should consider utilizing online recruitment, diversifying its workforce rather than hiring primarily locals, and developing a culture of self-awareness. In order to introduce these changes, the company may use Kotter’s 8-step change model that covers all stages of organizational change, ranging from establishing urgency to incorporating change into the corporate culture. This paper aims to discuss how each of the eight steps of Kotter’s model applies to Coca-Cola Company and suggest a strategy of change management addressing each of these stages.

A Sense of Urgency

The first step in Kotter’s model is the establishment of a sense of urgency. This stage is intended to inform employees about the benefits of the change and encourage them to assist with change implementation (Hee and Shanmugam 524). This step applies to Coca-Cola because its employees may be resistant to change given the fact that the firm’s current HR practices are effective. Therefore, they should be persuaded that the change is necessary to help the company remain competitive through the adoption of modern HR practices. In the company’s change management strategy, this step should be reflected by substantial communication efforts to inform employees about the need for change. The firm can send newsletters and conduct meetings to make employees aware of the benefits of new practices and how they will contribute to the company’s success.

Creating a Coalition

The second step in Kotter’s model is the creation of a coalition. It means that change should be led by a team with sufficient expertise in the field of change, as well as power and skills (Hee and Shanmugam 526). This stage applies to Coca-Cola because, for the organizational change to be implemented effectively, it has to be directed by a competent leadership team. In order to address this phase, the company’s change management strategy should include the creation of a leadership team. It should consist of people in the position of power, such as the CEO and the head of the HR department, and several competent HR managers who will assist in implementing change.

Vision and Strategy

The third step is the development of a vision and change strategy. According to Hee and Shanmugam, vision should reflect new HR initiatives and the desirable future that will be achieved through the change management plan (526). Strategy, in its turn, should be focused, energizing, and based on the key strengths of the leadership coalition (Hee and Shanmugam 526). This step applies to Coca-Cola because its employees should be aware of what the company is trying to attain and how it intends to do it. The firm should create a vision describing a clear picture of the company’s desired future, that is, a state-of-the-art company utilizing the most recent HR trends and valuing diversity in its workforce. The company’s strategy should include actions directed toward communicating the vision, implementing change, and incorporating the gains into the corporate culture.

Communicating the Vision

The fourth step in Kotter’s model is the communication of the vision. This should be done in a comprehensible way to facilitate the employees’ buy-in (Hee and Shanmugam 524). This stage is crucial for Coca-Cola because it helps to cope with resistance, which, according to the research, is the most frequent reason for failure in implementing change (Hee and Shanmugam 526). The company should develop materials with information about why change is necessary, when and where it should be completed, who is responsible for its implementation, and how different employees within the organization will be affected. This information should be communicated through multiple channels, including e-mail newsletters, personal meetings, corporate blogs, and modern communication such as Slack.

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Empowering

The fifth step of the model involves empowering the broad-based action. At this stage, the coalition removes any obstacles and barriers to change and provides support to employees to help them implement change (Hee and Shanmugam 526). Coca-Cola needs to incorporate this step into its change management strategy to ensure that the change process runs smoothly and employees are motivated to proceed with implementing change. To address this stage, the company’s HR managers should develop a survey for employees to identify any challenges faced during the change strategy implementation. Further, the firm’s leadership team should provide employees with professional training to help them meet the changing requirements and ensure that employees have a clear understanding of what they are expected to do.

Short-Term Wins

The sixth step includes generating short-term accomplishments to help the organization remain engaged in the change process. An important part of this stage is making these short-term successes visible in the organization to boost employees’ motivation (Hee and Shanmugam 524). This step is crucial for Coca-Cola because, without any visible successes, employees will be likely to revert to old HR practices. In order to address this stage in its strategy, the company can focus on such wins as the number of candidates obtained through online recruitment practices or the number of local candidates recruited in countries other than the US. Whenever the HR department shows positive results in these measures, the company should make these achievements apparent by discussing them at meetings and including them in newsletters.

Producing More Change

The seventh step in Kotter’s model is consolidating gains and generating more change. According to Hee and Shanmugam, the main activity at this stage is the development of new goals, building on the achievements made, in order to ensure the organization keeps moving with the change process (526). This phase is important for Coca-Cola because it will allow new HR practices to become integrated into the company’s strategy and will prevent the HR department from backsliding into the old state. At this stage, the firm may increase the targets for online recruitment and workforce diversity to enhance HR managers’ commitment to new practices.

Anchoring

The final step in the change model is anchoring new practices in the organizational culture. Frequent communication is key at this stage because it helps focus attention on the outcomes of change and make the change permanent (Hee and Shanmugam 526). This phase applies to Coca-Cola because the company will have to graft new approaches onto the existing cultural values of the personnel. For this process to be successful, the leadership will need to maintain continuous communication with employees, linking the company’s successes to new HR practices. Further, HR managers should not only proceed with applying new hiring methods but also select candidates who appreciate the new organizational culture.

Resistance and Communication

Organizational change refers to the circumstances under which a company or a business organization alters the system of its organization through the transformation of its culture, technology, the way it operates the businesses, the outlined infrastructure, or the internal process. Many organizations suffer resistance to change; the major causes of resistance are a lack of effective communication within the organization and a lack of trust in the system that is being newly implemented. Moreover, the fear of failure and emotional response also intrigues resistance to change. In case of resistance, the organization will formulate effective measures that include engaging the employees, proper communication, overcome the opposition positively through the motivation of acceptance and implementation of changes at various levels for easier management and development of the related performance.

Diagnosed Resistance to Change

Resistance to change in an organization is a critical problem that hampers the development of an organization. Diagnosis of the resistance to change is a compelling problem that helps establish the loopholes in implementing change. Therefore, the diagnosis of resistance to change is vehemently manifested in various ways within the employees, including frequent absenteeism (Mumby et al. 1157-1183), the lateness seen in the employees, and failure to report to work after implementing a change. Moreover, avoiding new assignments that ensure the employees are accustomed to the recent change is a significant sign of resistance (Mumby et al. 1157-1183). The employees resist attending to the duties and prefer sticking to the previous assignments they used to attend to before the change was implemented.

A clear sign of resistance to change is reduced productivity. A reduction in productivity compared to the previous outcomes before a change is implemented resistance. Furthermore, reduced productivity in terms of missing deadlines and slowing the production process while they blame the implementation of the change is a clear sign of resistance to change (Mumby et al. 1157-1183). Low morale at work, frequent complaints, decision paralysis, and poor communication are major signs of resistance to change.

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Three Potential Causes of Resistance

During the implementation of a change in the organization, some reasons perpetuate the resistance to change. The potential causes of the resistance include mistrust and lack of confidence in the person making the change and the change to be implemented (Goksoy 85-89). The primary cause of resistance is a lack of confidence in the person making the change as people are more profound to resist the change due to the decision-maker and not the change itself.

Fear of failure is a major cause of resistance to changes. The employees fear the changes will not match their ability to adjust and adapt, hence reducing their productivity levels (Goksoy 85-89). The fear of failure throws the employees in a self-defensive action, and they tend to guard their success and prevent failure from the change being implemented. Therefore, the employees will not voluntarily yield to the changes being implemented. Poor communication is costly and facilitates the resistance to the changes being formulated in the organization (Goksoy 85-89). Failure to create active communication, a plan to practical communication actions such as small group discussion and meetings, and effective exchange of ideas lead to resistance to change. The opposition is majorly due to misunderstandings between the decision giver and the employees.

Three Potential Sources of Resistance

One of the major sources of resistance in an organization is insecurity. Employees become insecure about the changes because of the oblivion of the implications of the changes. Insecurity of the employees makes them feel the environment is harsh and resort to resisting the change. Another potential source of resistance is inconveniencies caused by change in the organization. With the change, there are new technologies, working environments, and procedures. Employees need to adjust to the changes using their physical and mental energy, leading to inconveniences. Therefore, the employees feel disturbed by the inconveniences leading to resistance to the changes. Furthermore, economic loses is a source of resistance, that occur due to changes brought about by new technologies and procedures. Therefore, the firm my adapt the new technologies and procedures rendering most of the employees as surplus leading to economic loss.

Minimizing Possible Resistance

Resistance in every firm is devastating to the economic health of an organization. Therefore, the urgency to mitigate the resistance to change is present permanently. The most refreshing approach to combat the resistance is to involve the employees in the decision-making process as they are the reliable body to implement the plan. Furthermore, the involvement of the employees in the decision-making process enhances the ease of formulation of timely decisions and approaches towards an objective. Moreover, proper communication enhances the clarity of the change; hence the employees acknowledge the transition readily. Good communication ensures the idea behind the change is relayed accurately to the entire department in the organization; therefore, the change plan will be understood.

Relationship Between Resistance to Change and Communication

Communication is crucial in the implementation of change because it ensures a continuous flow of information. Furthermore, communication enhances the sharing of ideas between the employees and the organization’s leaders. Therefore, eradication of resistance due to the understanding between the employees and decision-makers. The relationship between resistance and communication is centered on the influence of various communication strategies on resistance to change. The contention in the relationship takes a dimensional argument that suggests excellent and efficient communication in a firm or business organization leads to a proper understanding of the change hence reducing resistance (Karaxha 290-299). In contrast, poor communication contributes to resistance due to misunderstanding.

Three Communication Strategies

Communication strategy is essential in ensuring effective communication is relayed and they include expressive techniques, specific strategy, well-reasoned communication strategy. Effective communication provides the implementation of various methods, including expressive techniques where the person relaying the information ensures the identification of the purpose of the decision in change being addressed. Furthermore, a specific strategy ensures the person making the decision communicates the point accurately and provides explicitly. The basis for making the change is well understood and comprehended by the employees. A well-reasoned communication strategy effectively ensures the idea behind the change is conveniently explained to the employees, and the employees’ opinions are also addressed and effectively implemented.

Recommendation of a Communication Strategy

A well-reasoned communication strategy is the most appropriate strategy that should be implemented in organizations. The communication strategy is vital in the engagement of both the employees and the decision-makers in reaching a final agreement for the effective change to be made, thereby reducing resistance. A well-reasoned communication strategy effectively ensures the need for the change is conveniently explained to the employees, and the employees’ suggestions are also addressed and effectively implemented.

Communication Plan

The communication plan for the change initiative uses the most efficient communication strategy, a well-reasoned communication strategy. The plan will first incorporate the most vital communication practice that involves the discussion of the decision at departmental level. The plan ensures the employees at each department engages in the amendment of the decision. The next step of the plan is execution of interdepartmental exchange of ideas regarding the decision made on change. Lastly, the plan ensures the overall discussion and adjustments of the decision made, and this includes the discussion of the issues raised by the employees through well-reasoned communication strategy.

Sustaining Change

Once companies have a firm grasp on the necessity of change, they must maintain the reforms. These procedures would be situation-specific but may involve prioritizing employees. For example, when leaders involve workers, they may make change simpler (Goksoy 87). This should be accomplished through effective organizational change communication that instills a sense of optimism within the workforce. Another effective method for maintaining change is anticipatory consistency. Workers need to understand that leadership will not abandon them, that they will continue to deliver excellence, that they will drive change for their personal development and corporate success, and that they will resolve to continue growing as effective and transformative leaders.

As technology continues to encroach on today’s corporate environment, the human factor’s participation at the Coca-Cola Company becomes increasingly critical for building a strong brand and sustaining the corporation’s success. Employees who are pleased and content with their workplace environment and empowered to overcome obstacles posed by a globalized market will always reach their potential (Hee and Shanmugam 528). Such employees will go beyond their perceived capabilities to solve problems, retain customers, and ultimately help establish a reliable firm, prone to development, and capable of posing intense competition to the ones that fail to prioritize their personnel. The Coca-Cola Company’s employees seek consistency, not complacency. The former provides the assurance necessary to manage tasks properly and achieve personal and organizational goals. The latter is a method of sabotaging productivity and performance. Inconsistency in the workplace fosters confusion, which results in stress and uncertainty. Therefore, employees at the Coca-Cola Company should forecast, to an extent, how executives would react to specific scenarios.

Conclusion

With subsidiaries in over 200 countries, Coca-Cola is one of the world’s most successful enterprises. The company’s strategic approach in HR and personnel management is considered one of the main reasons contributing to the company’s overall success. Even though many of these HR practices have been resourceful for many years, the company needs to address and change a few to match up to current change management theories. Kotter’s change model provides a framework that can help Coca-Cola adopt new HR practices, namely, online recruitment, increased workforce diversity, and the culture of self-awareness. Resistance is majorly caused by poor communication, mistrust, and lack of confidence and fear of failure. The most refreshing approach to combat the resistance is involving the employees in the decision-making process as they are the reliable body to implement the plan. After having a firm grasp on the necessity of change, there is a need to maintain the reforms. Effective strategies would be situation-specific but might involve prioritizing workers and anticipatory consistency. Unpredictability in the workplace creates confusion, which leads to stress and uncertainty.

References

Goksoy, Asli. “The Role of Psychological Empowerment and Organizational Citizenship Behaviors on Employee Resistance to Change.” European Journal of Interdisciplinary Studies 3.2 (2017): 85-93.

Grgić, Jana. Coca-Cola internationalization strategies. Diss. University of Zagreb. Faculty of Economics and Business. Department of International Economics, 2020.

Hee, Ong Choon, and Nanthinee Shanmugam. “A Review of Human Resource Change Management Strategies in the Digital Era.” International Journal of Academic Research in Business and Social Sciences, vol. 9, no. 3, 2019, pp. 521–531.

Karaxha, Halit. “Methods for Dealing with Resistance to Change.” Baltic Journal of Real Estate Economics and Construction Management 7.1 (2019): 290-299.

Mumby, Dennis K., et al. “Resistance Redux.” Organization Studies 38.9 (2017): 1157-1183.

“The Coca-Cola Company Human Resources.” Comparably, Web.

Yakimova, Z. V., N. A. Tsareva, and A. A. Vlasenko. “Value Personnel Management: Diagnostic Tools and Development Mechanisms.” The Turkish Online Journal of Design, Art and Communication TOJDAC December (2017): 1571-1572.

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