reward management at coca cola company

Report-Reward management – Coca Cola Company

Introduction

A performance management system is a formal system, which a company uses for its evaluation of its employees quality performance. It is usually an on-going process, which defines the objectives and targets that need to be achieved by teams and individuals (Aguinis 2009). It also offers guidelines of the actual achievement and eventual rewarding for target achievement. Therefore, it is a process that requires planning, coordination between the management and the employees, and the key objectives ought to be linked to the corporate strategy (Shields 2007). The process should include planning, maintaining, reviewing and rewarding performance. With the purpose of cognizing various phases of the performance management system, this paper will analyse the system used at the Coca-Cola Company – Australia. The analysis will include an outline of the company, analysis and evaluation of its performance management system.

Background

The Coca-Cola Company was established in 1886, and has become a global brand. It has numerous companies responsible for the bottling and distribution of the companies in different regions. Among the companies is the Coca-Cola Company – Amatil, which distributes the Coca-Cola beverages in Australia. Coca-Cola Amatil is one of the largest non-alcoholic beverage bottlers in Asia – Pacific region (CCA 2014). It has the responsibility of developing and marketing brands for the Coca-Cola Company, and various other brands for Australian consumers. The company also manufactures its mineral waters and soft drinks. The company’s mission regards strengthening its position as the leading growth company bottling non-alcoholic, ready-to-drink beverages in Asia Pacific region (CCA 2014).

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Performance Management

Due to the amplification of the complexities of the businesses functions, new and comprehensive concepts have emerged in management. Performance management has emerged in order to ensure that the performance of the employees fits into the company’s strategic goals. It is conducted using different approaches including performance appraisal and rewarding system (Rose 2014). There is not a single model of performance management, which is accepted at universal level. Different researchers and experts have explained the concept in different ways. The model explained by Mabey, Storey & Salaman (2003), included five elements, which suggested the manner in which performance management ought to be implemented in an organization. The model has been adopted by various companies either directly or with various modifications. Figure 1 represents the model, which is a cycle.

Cycle of performance management
Figure 1. Cycle of performance management. Source: Mabey et al. (2003).

Salaman, Storey & Billsberry (2005) focus on two theories, which include the goal-setting and the expectancy theories. The goal-setting theory proposes that the individual objectives that an employee establishes have an essential role as a stimulus for superior performance. It is mainly because the employees keep following the objectives. If they are not achieved, there has to be an improvement in performance, or modification of the goals so that they become more practical. When performance improves, the results will lead to the attainment of the objectives set for the performance management (Salaman, Storey & Billsberry 2005). The expectancy theory is based on the hypothesis that individuals adjust their behaviour in the organization founded on the expected satisfaction of valued goals, which they set. The employees adjust their behaviour in a way that will most likely lead to the attainment of their goals (Salaman, Storey & Billsberry 2005).

Suli (2013) discusses the theory of performance management and states that it includes the control of all the steps of the process so as to make certain that there is effectiveness leading to the desired results. According to Suli (2013), it involves studying the process from its beginning to the end. The studying involves observing the entire process and then identifying key points. The identified key points act as the points of measurement so as to determine progress and outcome. Suli (2013), states that the process can be done either through the use of reports or personal observation. Using personal observation, the manager stops and watches as an employee does the actual work. When the reports are used, the statistics involving given areas are compared with other statistics to indicate the direction of progress. The expectation is that there will always be minor variations, but they should not be extensive (Suli 2013). There ought to be a balance between the usage of personal observation and studying of reports. The personal presence of the manager influences the performance of the employees. If there is not enough presence, it will result in less effort by the employees, and excess of presence can lead to distrust and stress from the employees. Suli (2013) concludes that performance management should involve balancing performance measurement, employee relations, and comprehending the reports.

Performance management involves both appraisal and reward system. Performance appraisal and reward systems are based on the assumption that the performance of the employees and their motivation can be improved through the establishment of a clear connection between efforts and reward (Armstrong 2010). It is done through a formal system with specific targets. It involves acknowledging the efforts of the employees and giving those who attain the targets an agreed reward or compensation (Azzone & Palermo 2011). The Coca-Cola Company – Amatil, which supplies with the Coca-Cola products in Australia, has its performance management system.

Performance Management at Coca-Cola – Amatil

The goal of the company is to maximise the performance of individuals to meet the standards and behaviours of the workplace. When the performance is seen fall below the set standards, the company provides adequate support and clear aims for the lifting of the performance to the required levels. If the standards are not achieved for a specified period, an individual’s employment with the company can be reviewed. The steps that are involved in the system include:

  1. Relevant facts regarding pre-set issues are gathered, and the manager informs and counsels the individual on the problem. The manager also indicates clearly and in detail all what is expected from the individual. In some cases, there can be the development of a formal action plan so as to assist in the achievement of the desired goals. Both the manager and the individual have to note the details of the process.
  2. If the performance related problem continues, the manager has the responsibility of counselling the individual and asking them to account for their actions. They should also explain the consequences that will happen if the problem is not solved. The manager also sets out an agreed action plan, which includes review dates and there is a formal documentation of the discussion.
  3. If the problem continues and the individual employee does not improve, they are warned and offered counselling on the importance of improving their performance.
  4. Failure to produce satisfactory results can lead to the termination of the employment as agreed in the action plan.

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In addition, the company borrows a lot from other Coca-Cola affiliate companies, and it conducts performance appraisal annually. The goals are set and at the end of the year the performance of the employees is appraised based on the set goals. At the beginning of every financial year, the objectives are set, and the employees are made aware of the goals, and if they achieve them, they become appraised. Several steps have to be followed in order to appraise the performance.

Job definition is the initial step, and it entails making sure that both the management and the employees agree on the duties and responsibilities that an employee is expected to perform. The second step entails the appraisal of performance. It entails making comparisons between the actual performance by the employees, and the set standards. Finally, the third step entails the provision of feedback. It entails discussing the performance with the employees and plans for further development are made. Upon achieving the set goals by the employees, there is compensation and rewarding. Compensation assists in improvement of the employees’ performance and conveying the message to the employees that the company is loyal to its employees. The benefits and compensations that the employees receive include basic salary, bonuses and medical scheme options, incentive programs, and superannuation (CCA n.d.).

Connection between the Company Strategy and Performance Management System

The company’s strategy entails focusing on remaining relevant not in the Asia-Pacific region. The strategy can only be achieved if the employees give their best in terms of performance. Consequently, the PMS approach used by the company contributes to the attainment of the company’s goals. Failure to achieve the set goals after various attempts and warnings may result in the dismissal of an employee. It is important for the workers to appreciate the importance of their performance to the overall strategy of the company. The approach taken by the company creates a good fit between the PMS and the company strategy.

Recommendations

The company has a good approach for its performance management system. However, having a shorter period for the appraisals can enhance the system. Currently, the company is conducting the appraisals annually. If the period was reduced to about six months, it would be easier for the company to keep track of the actions and solve problems in time. Additionally, the company should also consider using a 360-degree feedback appraisal system. Establishment of good standards will promote the system’s efficiency.

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