Capstone Project: Coca Cola Enterprise Human Resource Management Strategy
Discuss how Coca Cola Enterprise uses its human resource management strategy to support its business strategy.
Coca Cola Enterprise has a strategy for its human resource and for the business organization itself. The business strategy for the company has four objectives:
Strengthening of the brand portfolio, where every firm under Coca Cola Enterprise is self sufficient; fully leveraging revenue management capabilities. The profit realized by the company should be the maximum possible at all times; continuing to build and improve customer relations. It ensures that interaction between the company and its customers is at the best social and economic levels; continuing to increase efficiency and effectiveness in operation in order to have low operation costs but high returns on the investment.
As Robert reports, according to Kevin Shingley, the company has four human resource management objectives (Roberts, 2011). These objectives are: high quality of human resource, diversity, utility of talent to have speedy operation, cost effective and efficient human resource. Diversity ensures that brand portfolio is strengthened since different cultures, races and beliefs are incorporated in human resource decision making. The multi- talented human resource of the company ensures that diverse ideas are generated, thus increasing innovation. This achieves the objective of maximizing revenue generation. The high quality labor force ensures that the goods and services offered are of distinctive standards. This impresses customers, thus creating proper customer relations. Lastly, cost management ensures that acquiring, training and recruiting the human resource is economical. This means that the amount incurred in the whole process is positively proportionate to the value that the human resource adds to the company. This ensures a lot of return on capital for a little money spent on the recruitment process, thus achieving the efficiency and effectiveness objective of the business.
Evaluate how the company is leveraging its human capital to contribute to the financial performance of the business.
The fusion of human resource strategy and business strategy allows uniformity of the two components of the business. This, in turn, improves efficiency and effectiveness, therefore ensuring profit maximization. Precisely, this is achieved in the following ways:
Since the company has a diverse human capital, ideas from all the societies that the company serves are incorporated during decision making. Because Coca Cola Enterprise has a diverse human resource the ideas and beliefs of people of all races, religions, countries, and continents that the company serves are put into consideration during decision making. This ensures customer tailored goods, thus increasing sales.
The human resource is acquired based on mastery of talents. This ensures that operations are carried out speedily. Furthermore, talents avail different ideas. These ideas are transformed into innovations, which results to different types of products. For example, the company has over seven brands of drinks in different types of bottles. This provides a variety of channels for revenue creation, thus accounting for the amount $4,856.1 Million in 2011 (Annual Report, 2011).
High quality of employees ensures that the public relations are almost perfect. This increases customer, as well as investor confidence in the company. This has accounted for the $591.8 Million profit realized in 2011 (Annual Report, 2011) and $78.1 earnings per share.
The cost effective human resource is managed in a way that the expenses incurred in maintaining it are relatively lower than the incomes generated. Evidently, from the income statement, salary expenses become low ($501 M including administrative), thus creating higher profit margins to the company.
Discuss how the legal and regulatory environment impact human capital management.
The legal and regulatory environment refers to the policies and laws set by the authorities of a region. These authorities comprise one of the external factors of the business environment. The human resource is limited to the boundaries of the laws and policies. For this reason, it is affected by the legal and regulatory environment. Most of these policies vary from one state/country to another. However, Coca Cola being a multinational company is prone to experience most of these policies. They include:
Terms of contract: in some countries like China, there is a limited number of workers who can be employed through temporary contracts. This forces a firm to have most of its labor capital as employees on permanent contract basis. Consequently, it increases the costs of maintaining the labor force.
Minimum wage: most countries of the world have a minimum salary that an employee can be remunerated. This implies that in such countries, regardless of the worth of the employee in terms of return on capital, they must be paid a specific minimum wage. This could cause inefficiency in labor force management.
Insurance policy: most countries require that all businesses be insured in the employer’s compensation policy. This is a situation where the employees would be compensated when they are harmed accidentally in the line of duty. This increases the amount of money spent in maintaining the labor capital.
Working conditions of workers: some countries and states put a limit to the environment to which the labor force can be exposed. This poses as a challenge especially to those firms that use machinery and chemicals, such as Coca Cola. Due to the noise and fumes, the workers need protective gear. This raises the cost of human capital.
Evaluate the company’s hiring and employee retention strategies
According to Nevroz, Coca Cola Enterprise has the most skilled and knowledgeable human resource in the beverages industry (Nevroz, 2012). The hiring and retention process starts with job analysis and designing (Nevroz, 2012). This is a stage that involves two parts; job description and job specification. Job description refers to the obligations that the job exposes an individual to. This involves reporting, preparation of any documents, making analysis among many other obligations. Job specification is all about the skills that the potential employee must have. This includes the academic knowledge, working experience among other requirements.
The second stage is the planning and forecasting (Nevroz, 2012). This is where the human resource management team analyzes all the available jobs as determined by the job analysis and design stage. The most essential slots are prioritized and then the firm identifies all positions that will be filled. The forecasting part involves identifying potential changes in technology and the impacts that they will have on the positions. At this level, room for modification of positions is left.
Finally interested candidates are allowed to express their interest. Each one is analyzed through interviews to determine the most suitable individuals. This decision is made based on the abilities of the individual. Once someone enters the Coca Cola Enterprise human resource, efforts are made to retain them. These efforts include ensuring employee happiness at workplace (Nevroz, 2012). The working conditions are made conducive so that every employee can work to the maximum. Employee unity is also achieved through team activities like CSR and games. This makes them feel like a family unit. Employees also get employment security by signing contracts, so that they remain at peace as they work (Nevroz, 2012). These efforts contribute to the loyalty and will of employees to work with the company.
Create a training and development program that would be appropriate for the company’s management team.
The most appropriate training and development program would be a six step model that stretches from acquiring an employee to making them a policy maker. These stages are:
Interns: this is the lowest level of human resource. These are the newest members of the human resource team. Their main duty is to carry out low level tasks that are limited within the organization, like being inter-departmental communication channels.
Associates: They would be assigned a mentor from the team of employees, who would illustrate to them the operations of the company in one specific field of operation.
Employees: these are individuals who have specialized in one field of operation of the company. They carry out both public relation and intra-organizational activities of their field.
Senior employees: these are individuals who are responsible for ensuring that policies are implemented by the employees. Therefore, they supervise the work of employees.
Management trainees: these are people who have the knowledge of being managers but have no relevant experience. They are assigned a junior manager to delegate some responsibility to them so that they can get management experience over time.
Junior managers: these are people, whose mandate is limited to making policies that only regard the lower levels of employment and their immediate firms, for instance working conditions within a firm in one country would be handled by junior managers of that country.
Senior Managers: these are the overall policy makers for the whole company; this means the policies to be used for all firms in all countries.
Rank and remuneration would be based on position and performance.
Evaluate the company’s compensation strategy.
According to CCE, the latest compensation strategy adopted by Coca Cola Enterprise was drawn in 2008 (CCE, 2009). This strategy is composed of a philosophy which seeks to achieve four objectives. These objectives are:
Pay for performance (CCE, 2009): this means that every employee is paid to add value to the company. Therefore, this translates that the company does not pay for people, instead, it pays for the labor they offer to the company. The compensation mode is based on the position held by the individual. This position is determined by the performance level of the person; therefore, compensation is based on how much a person offers as return on capital.
Pay competitively (CCE, 2009): the company is determined to ensure that the rates offered to its human resource are the best in the market. This is an effort to make sure that the acquired employees are satisfied with their compensation levels. This increases loyalty and fidelity guarantee of the workers. At the same time, it increases their motivation levels, and as a result, they work hard to give back as much as they earn.
Support the business strategies of the company (CCE, 2009): the compensation method seeks to ensure that both the long-term goals and the short-term goals of the business are identified and implemented successfully. To achieve this, the strategy awards employees for immediate execution and the management for future planning. These goals span for three to five years.
Align employee interests with those of shareholders (CCE, 2009): the interests of employees as well as managers should be synchronized with those of the shareholders. This means that as much as shareholders want profits, workers should also get proper financial compensation for them to get motivation for generating profits, in the long run and short run.
Discuss how the company can gain a competitive advantage by adopting a strategy of diversity in its employee base
Diversity in human resource means having a variety of workers; who represent as many societal setups as possible. Thomas identifies eight groups that represent a diverse human resource (Thomas, 2004). These groups are discussed individually.
Natives: these are the local people. Coca Cola Enterprise, being a multinational company has many firms in many countries. Employing people from these countries ensures that the goods produced for each country are tailored to suit its needs.
Blacks: these are people of the black race. These are people whose indigenous settlement is Africa. Many blacks share beliefs and tastes. For this reason, Coca Cola considering a black employee would cover a large part of the African continent.
The disabled: these are people who cannot perform one or two activities due to physical abnormality. Such people usually require special resources; therefore, a disabled employee would give Coca Cola Enterprise the real picture of how they can be served best.
Asians: these are people of the Asian continent. They are believed to have common beliefs and tastes, therefore if represented in the human resource, their interests would be met, thus the Asian market would be tapped easily.
Whites: these are people from Europe and American natives. All these people are westernized; therefore, Coca Cola Enterprise managing a western culture would mean covering the whole white population. Other groups are Hispanics, women, gays/lesbians/bisexuals. An employee base with all these people would provide first hand source of ideas on how to cover the respective markets. This would increase sales due to an availability of a large market base.
Recommend a human capital strategy for the company.
A human resource strategy is essential in integrating human capital to financial and material capital. For this reason, any human resource strategy adopted should suit the business as well as the employees involved (Sluijs & Kluytmans, 1995). For Coca Cola Enterprise, considering its production scale and market served, the human resource strategy adopted should contain the following objectives:
Maintain the company’s identity in the market: This means that the type of labor capital employed should reflect the stake claimed by the company in the market. Coca Cola Enterprise, being the best beverage company should as well have the best employees in the market.
Excellent relations: The employees should be able to communicate with the internal and external environments sufficiently to create a balance of interest. The shareholders as well as the customers should be able to feel that they are being served properly by the team of human resource.
Merging interests: the employees and managers should be able to merge their personal interests with those of shareholders and the business. This means that an employee should not focus on their personal benefits and forget those of the business and the shareholders. Every action should benefit all the stakeholders.
Economy and efficiency: the amount of money spent to acquire and maintain one employee should be worth the value that the particular employee adds to the company. This means that if an employee is not contributing to profit realization, then they are not supposed to be maintained by the company.
Annual Report. (2011). Coca Cola Enterprise Limited. Journal of Coca Cola Enterprise.
Coca Cola Enterprise (CCE). (2009). Compensation Program Objectives. Journal of Vanguard.
Department of Immigration and Citizenship. (2011). Workplace Diversity Strategy: 2011-2013.Government Publication.
Nevroz, G. (2012). Human Resource Management within Coca Cola – Presentation Transcript. Retrieved From http://slideshare.net
Roberts, H. (2011). 2011 Strategic Talent Acquisition Conference: How Coke is Increasing Quality of Hire While Reducing Global Spend. Journal of Human Capital Institute.
Sluijs, E., & Kluytmans, F. (1995). Business Strategy and Human Resource Management: Setting the Scene. Journal of Open University.
Thomas, D. (2004). Diversity as Strategy. Journal of Harvard Business Review.