Coke Boosts Diversity After Lawsuit, Final Report Says

Duane D. Stanford, Atlanta Journal-Constitution, Dec. 1, 2006

An independent task force monitoring Coca-Cola’s diversity efforts issued its final report to the court Friday, saying the company has fulfilled its legal promise to level the playing field at Coke for minorities and women.

The report also came with a warning from the task force and the judge overseeing a landmark $192.5 million racial discrimination lawsuit settled by Coke six years ago: Don’t stop improving just because we’re gone.

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The report closes the book on a class-action lawsuit filed in April 1999 by four African-Americans who accused Coke of denying them equal opportunity to excel at the world’s largest soft drink maker because of the color of their skin. The workers said Coke discriminated against them in pay, promotions and performance evaluations.

The suit tarnished Coke’s image and led to several protests against the company, including a bus “ride for corporate justice” that stopped at several cities before ending up at Coke’s annual shareholders meeting in Wilmington, Del., in April 2000. The raucous meeting was attended by the Rev. Jesse Jackson, other activists, employees and hundreds of shareholders.

Coke agreed to settle the class-action lawsuit a few months later, following more than a year of public criticism and negative media attention, and long before trial. The company paid nearly 2,200 African-American class members an average of about $40,000 each. The settlement included an estimated $36 million to create diversity programs intended to ensure fair treatment of workers. Lawyers in the case made $20.6 million.

Since 1999, Coke has increased the representation of minority salaried employees from 26 percent to nearly 35 percent, the task force reported. The company also has made gains promoting and hiring minorities within the senior leadership ranks, the report stated.

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Linda Ingram Lewis, one of the initial four plaintiffs in the lawsuit, said she hopes minority and women employees at Coke now understand the work that went into getting the company where it is today.

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Lewis is convinced Coke has made great strides since her days as a sales analyst for Coke, so much so that she’d be willing to work there again, she said.

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The chairwoman of the task force, former U.S. Labor Secretary Alexis Herman, praised Coke for tying its diversity programs to its business plan and making them an integral part of the training of middle managers, “who have to be the translators for the future.” Herman said the future of Coke’s diversity programs will depend on the company’s “willingness to question itself, its willingness to hold that mirror up.”

Herman said she and the six other members of the task force worked closely with Coke executives during the five years they monitored the company. They held meetings at Coke every four to eight weeks, company officials said, and discussed issues regularly by phone in between. Coke funded all of the task force’s work and the members were paid for their service, but Coke wouldn’t divulge how much Friday.

Herman said Coke Chairman and Chief Executive Neville Isdell, who joined the company in 2004 in the middle of the monitoring, has been “steadfast and committed” to diversity.

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“This is about a business case,” Isdell said he and others concluded. “This is not about settling a lawsuit, about complying with a court order. This is just what we need to do as a business.”

Isdell said it would be a mistake for Coke to focus too much on statistics when it comes to diversity.

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“If you don’t have the right psychology in the organization, if you don’t have the right commitment, if you don’t have what I call a color blindness within the organization, then that won’t happen because then you will replicate the sort of cliques that tended to evolve that caused the lawsuit in the first place.”

Among the task force’s findings:

* Diversity among Coke’s elected and appointed officers increased from 8 percent minority in 2000 to 21 percent in 2006.

* From 2002 to 2005, minority representation among middle managers went from about 21 percent to 27 percent.

* Coke should continue its program that monitors everything from hiring decisions to performance evaluations to ensure fairness and to allow executives to fix problems immediately.

* The company should continue annual surveys of employees on how they feel about diversity issues and fairness within the organization.

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