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How Coca-Cola Built Strength on Diversity

A NEWSLETTER FROM HARVARD BUSINESS SCHOOL PUBLISHING ARTICLE REPRINT NO. U0804B

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In 2000, The Coca-Cola Company settled the largest

racial-discrimination lawsuit in history. Filed on behalf

of approximately 2,000 former and current U.S. employ-

ees, it resulted in a $192.5 million settlement. A seven-

member task force headed by former U.S. Labor Secretary

Alexis M. Herman was appointed by the court to oversee

the company’s diversity efforts. Before its four-year term

ended, Coca-Cola, under CEO Neville Isdell’s leadership,

asked that its oversight be extended another year.

The focus of this diversity work was treating female and

minority employees equitably in hiring, evaluations,

raises, and promotions. But Isdell and his team had an

additional goal: to turn diversity into a business advan-

tage. Read on for how Coca-Cola was able to do this.

—Christina Bielaszka-DuVernay, Editor

CBD: Take me back to 2000: What was your role at Coca- Cola then?

NI: At the time of the settlement, I was vice chairman

of Coca-Cola Hellenic Bottling Company in the U.K., the

second-largest bottler in the world, and looking forward to

retirement. I retired at the end of the following year, after

35 years with the company.

CBD: When did you come back—and why?

NI: The call to return to The Coca-Cola Company, this time

as chairman and chief executive offi cer, came in 2004.

It would have been easy to pass up the offer and leave

the challenges to others, but the company I fi rst joined in

1966 and loved so much kept falling short of what I knew

it could be. As a lifelong employee of the global Coca-Cola

system—and as someone who has spent more of his life in

Africa than on any of the other fi ve continents on which I

have lived—the discrimination lawsuit was an embarrass-

ment.

With the task force’s guidance, Coca-Cola was in the pro-

cess of establishing a culture that embraced diversity and

harnessed its strength, and I wanted to be part of this

effort.

CBD: In terms of diversity, where is Coca-Cola today?

NI: We have come a long way. Between 1999 and 2006,

minority representation among Coca-Cola executives at

the assistant vice-president level and above increased

from 8.4% to 21%. The percentage of women in executive

positions grew from 16% to 28% during the same time.

Below the executive rank, minority managers increased

from 16% to 25.5%. Coca-Cola is now recognized by a

broad range of organizations as a leader in fairness and

diversity.

CBD: How did the company get to these results?

NI: We established measurable programs and initiatives

designed to recruit, mentor, and retain women and minori-

ties in our workforce. It started with a simple premise: that

all our open positions would have to have diverse candi-

date slates before we could proceed with interviewing and

selection. To support this, we broadened our recruitment

strategy and required our external sourcing partners to

do the same. We began to look and communicate in new

places; for example, reaching agreements with approxi-

mately 50 Hispanic job boards, ensuring that our recruit-

ment messages were being seen by candidates where they

were looking.

We’ve made great strides in attracting diverse talent. Thirty-

eight percent of new U.S. hires from 2004 through 2006

were persons of color, including 20.3% who are African-

American. Among senior managers, 40% of new hires in

this same time period were persons of color, including

23.6% who are African-American.

In 2001, the company instituted mentoring programs

which have produced encouraging results. After fi ve years,

as the magazine DiversityInc has reported, 81% of African-

American mentees were still with the company, as were

100% of Asian-American and 96% of Latino mentees.

(Of Caucasian mentees, 73% were still employed at Coca-

Cola.) And 80% of all mentees had progressed in their

careers, changing jobs at least once since the program was

implemented.

CBD: You said that Coca-Cola has made diversity central to its business strategy. How?

NI: We recognized that to seize opportunities to appeal

to diverse consumers, we needed a workforce that could

fi rst see these opportunities. One step in that, of course, is

simply having a more diverse workforce. But it also meant

harnessing their insights.

We established employee networks, which we call forums,

to enable employees throughout the organization to actively

participate in shaping our culture and identifying market-

place opportunities. Here’s an example of one forum’s

contributions: a new energy drink featuring Blue Agave

fl avoring. With the support and guidance of our Latino

employee network, we launched our fi rst North American

product line with fully bilingual packaging, including label-

ing and nutritional information. Additionally, our employee

Copyright © 2008 by Harvard Business School Publishing Corporation. All rights reserved.

How Coca-Cola Built Strength on Diversity

How Coca-Cola Built Strength on Diversity continued

Latino network helped our sales force to introduce the

product to our Hispanic-owned customers, leading to an

extremely successful launch.

CBD: How did you work with the federal task force?

NI: Most would have viewed an external task force as intru-

sive and unnecessary. Instead, we chose to look at the task

force as a valuable advisor. After all, the members of the

task force, led by former Secretary of Labor Alexis Herman,

were all accomplished experts in the fi elds of diversity and

fairness; to not take advantage of their expertise would

have been a serious management mistake.

We shared every aspect of our employee strategies, ini-

tiatives, programs, policies, and practices with them. We

shared all employment decision data with them. They

conducted employee focus groups and shared thematic

insights with us. In short, we asked them to help us see

things for what they were, and we took advantage of their

broad experiences and insights to change our culture.

I saw so much value in this relationship that I asked the

court to extend the task force’s term for a fi fth year. It’s not

every day that you go down to the federal courts and ask to

stay under their jurisdiction for an additional year—many

people, I’m sure, might have questioned my sanity! But

I fi rmly believed that the additional year of collaboration

would help us, and it did.

CBD: What can other businesses learn from your journey?

NI: Our lawsuit was a painful reminder of why we must

always concentrate on our people and their concerns. Talk

to people at all levels of your organization and listen to

what they have to say. Put programs and practices in place

that measure your decisions for fairness. If a pattern of

concern begins to arise, address it immediately through

action and open, honest dialogue. u

Neville Isdell is chairman and chief executive offi cer of The Coca-Cola Company. He can be reached at

[email protected].

Reprint # U0804B: To order a reprint of this article, call 800-668- 6705 or 617-783-7474.

4 HARVARD MANAGEMENT UPDATE | APRIL 2008