Refreshing a Beverage Company's Culture

When you hold The Coca-Cola Co.'s "red book" in your hands, it doesn't feel weighty enough to transform a $24 billion, 71,000-employee global icon into a more integrated, nimble company. Measuring just 8½-by-7 inches and totaling a mere 59 pages—most in large type—the book doesn't even warrant a table of contents.

That was precisely the idea. Creating an uncluttered, concise direction for the 121-year-old beverage company was Chairman and CEO Neville Isdell's goal. In 2004, after a meager 2 percent growth in sales that year, the board of directors called Isdell out of retirement to lead a workforce weary from two failed reorganization attempts.

On his second day, Isdell appointed Cynthia McCague, who had most recently led HR at Coca-Cola HBC in Athens, Greece, as senior vice president of HR at The Coca-Cola Co. in Atlanta. Another change he made that day was to move the HR structure from the general counsel's office to his office.

That move cemented a partnership between HR and senior managers that led to a seven-month internal analysis. The journey, captured in the little red book called "Our Manifesto for Growth," chronicles how Coca-Cola would regain its footing.

The Society for Human Resource Management bestowed The Coca-Cola Co. and its manifesto with this year's Strategic HR Leadership Award, given to the HR department that played a key role in driving the performance and reputation of an organization by leveraging organizational human capital.

A Brand Weakened

In 2004, Coca-Cola delivered a negative return on investment to shareholders. "The business wasn't growing, and the people had stopped believing in many ways that we could win" in the marketplace, recalls McCague.

Isdell knew Coca-Cola could do better. He could see the business was fragmented but needed help from others to fix it.

"There was no clarity about where we were going and what we needed to do," says Isdell. But even in an underperforming organization, "there are people who know what needs to be done and are looking for leaders to allow them to perform."

In August 2004, HR dispatched a survey to the top 400 managers to assess Coca-Cola's challenges. The questions asked "How well are we operating? What's getting in our way to perform? What's the level of trust? What's your view of leadership? What is collaboration like?" The HR execs then assembled a team of 14 associates to do deep-dive interviews with 70 of the 400 managers. The findings were analyzed, and some hard truths were identified:

• The business and its people lacked a clear direction and a common purpose.

• An employee engagement survey showed low morale and strained relationships with associates from reorganizations.

• Employees were dealing with challenges reactively and not as a unified team.

• The business model was focused on short-term results.

"Calling the problems out was a critical first step in recognizing the need for a common framework to move the company forward," says McCague. "We, as leaders, spent a lot of time together looking at those hard truths." Indeed, the top 150 senior leaders from around the globe met three times from December 2004 to March 2005 to go over survey results and interviews, and come up with solutions.

The 150 leaders broke into working groups called "workstreams," each tackling an issue. Each workstream was led by two senior executives and included operational and functional managers. For example, one workstream helped develop the new mission, vision and values:

• Mission: "To refresh the world in body, mind and spirit. To inspire moments of optimism through our brands and our actions. To create value and make a difference everywhere we engage."

• Vision: "People, Planet, Partners, Profit and Portfolio—called the five P's."

• values: "Leadership, Passion, Integrity, Accountability, Collaboration, Innovation and Quality."

Another workstream looked for better ways to reward and recognize people. Aside from the work accomplished, HR and Isdell had another motive for holding the workstream meetings. "The magic of the manifesto is that it was written in detail by the top 150 managers and had input from the top 400," admits Isdell. "Therefore, it was their program for implementation."

Rolling It Out

Implementation began in March 2005. HR partnered with public affairs and communication specialists to roll out the manifesto worldwide through one-day or two-day sessions, with small working groups exploring the implications for their parts of the business. Communication efforts included:

• Face-to-face meetings. Across the global organization, town-hall discussions were regularly held to brief associates.

• Intranet. The company's internal web site was overhauled and transformed into a real-time news-sharing portal.

• Web TV. Technology allowed personal video messages from senior leaders, enabling them to connect with associates worldwide.

• BlogBlast. Senior leaders, partnering with HR, facilitated a companywide, global blog that enabled associates to share their thoughts on the seven values and discuss successes.

Employees Respond

Alba Adamo has seen a lot of changes—not all of them good—since she began working at Coca-Cola in 1999. Prior to 2004, it "felt we were all working independently of each other. The company as a whole didn't have a clear direction," says Adamo, now director of revenue growth management for Latin America. "The manifesto is a framework that gives a direction and helps me in my role to see the opportunities where I can make a difference and put my ideas into action," she says. "The manifesto is connected to everything we do."

Those actions include a commitment she made as a board member in the Latino forum, an employee affinity group. "We put together a framework so that we could align all the initiatives with the Latino forum to the five P's," says Adamo. "I lead the People committee [in the forum], and we sponsor informal ‘lunch and learns' where we invite Latino senior executives in the company to share their success stories and help mentor other Latino employees." Company metrics reveal the progress that Isdell and McCague say is a result of the manifesto and the process of looking inward, working collaboratively to create solutions and engaging employees in implementation.

The 2006 employee engagement survey had an unprecedented 88 percent participation rate with improved results. Engagement scored 79 percent, up from 74 percent in 2004, a jump that researchers at Coca-Cola's external survey firm cited as "unprecedented improvement" compared with similar organizations. Communication and awareness of goals increased to 76 percent from 65 percent. View of leadership improved 10 percentage points from 2004, to 64 percent. Eighty percent said the manifesto is a well-formulated direction.

In other metrics, turnover at U.S. operations fell from 9.5 percent in 2004 to 7.2 percent in 2006. Shareowner value jumped from a negative return to a 20 percent return. Volume growth in units sold increased from 2 percent in 2004 to 4 percent in 2006, achieving the top end of long-term growth targets. Of the 16 market analysts following the company as of July 2007, 13 rated it as "outperform" and three as "in line."

But the biggest change can be felt in the halls of The Coca-Cola Co. "When I first arrived, about 80 percent of the people would cast their eyes to the ground," says Isdell. "Now, I would say it's about 10 percent. Employees are engaged.

"Don't, by any stretch of the imagination, think that we've reached the end of the road," he adds. "But we are well on the journey, and it's clearly showing results."

Adrienne Fox, a freelance writer and editor in Alexandria, Va., is a contributing editor and former managing editor of HR Magazine.