Elton Mayo’s Contribution On

Management Thought- Coca-Cola

Company

August2019
 CONTENT

SL NO. NAME OF CONTENT PAGE

01 INTRODUCTION
02 COMPANIES BUSINESS REVIEW
03 MANAGEMENT CONCEPT-
THEOROTICAL OVERVIEW
04 MANAGEMENT CONCEPT-
APPLICATIONS IN THE
ORGANIZATION
05 GAPS BETWEEN MANAGEMENT
CONCEPTS AND APPLICATIONS IN
THE ORGANIZATION ON ‘COCA-
COLA’ COMPANY
06 CONCLUSION
INTRODUCTION
Elton Mayo is the father of human relations in the Management.

The immediate period after World War Two saw a different approach in organizational studies.

Until that time, there was only talk of Scientific Management, which mainly focused on
productivity, efficient division of labor and workers as an extension of machinery

1950 saw a change to this discourse with the introduction of the Human Relations Theory. This
movement saw workers in a different light; they were now seen as thinking beings with needs,
who liked to receive attention. Companies realized that attention motivated employees and
even allowed them to get more out of themselves for the benefit of the organization.

Coca Cola Company is the world largest beverage company. Which daily produce billions bottles
of Coca Cola.

Sector- Non-alcoholic beverage Sector. Which aims to meet every lifestyle, occasion and
hydration.

Industry- It fall in the Manufacturing Industry.

This industry and sector has huge competition in the world. But Coca- Cola has been doing
business very effectively and efficiently all over the world. Workers And employers of Coca-Cola
are satisfied in their workplace. Because this company provides all types of facilities to their
workers.

Elton Mayo has describe about Human relation an Motivation in a company , Which Has been
followed by Coca-Cola company.

We have choose this Sector because this sector has huge productivity and for many years it has
been satisfied both the customers and workers . This company Also motivates their workers to
work efficiently.

Elton Mayo Had performed his experience in a electric plant . So We choose a manufacturer
company to show the productivity rate and workers Satisfaction through the light of Hawthorne
Study effect .
COMPANIES BUSINESS REVIEW
COCA-COLA BEVERAGE COMPANY

Overview:

The Coca-Cola Company is a beverage retailer, manufacturer and marketer of non-alcoholic

beverage concentrates and syrups. The company's flagship product is Coca-Cola, but it offers
more than 500 brands in over 200 countries or territories and serves 1.6bn servings each day.
The Coca-Cola Company is headquartered in Atlanta, Georgia. Its stock is listed on the New York
Stock Exchange (NYSE).

Mission
Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company
and serves as the standard against which we weigh our actions and decisions.

 To refresh the world...

 To inspire moments of optimism and happiness...
 To create value and make a difference.

Vision
Our vision serves as the framework for our Roadmap and guides every aspect of our business
by describing what we need to accomplish in order to continue achieving sustainable, quality
growth.

 People: Be a great place to work where people are inspired to be the best they can be.
 Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and
satisfy people's desires and needs.
 Partners: Nurture a winning network of customers and suppliers, together we create
mutual, enduring value.
 Planet: Be a responsible citizen that makes a difference by helping build and support
sustainable communities.
 Profit: Maximize long-term return to shareowners while being mindful of our overall
responsibilities.
 Productivity: Be a highly effective, lean and fast-moving organization
Profits
Coca-Cola annual/quarterly gross profit history and growth rate from 2006 to 2019. Gross profit can
be defined as the profit a company makes after deducting the variable costs directly associated with
making and selling its products or providing its services.

 Coca-Cola gross profit for the quarter ending June 30, 2019 was $6.076B, a 3.37%
increase year-over-year.
 Coca-Cola gross profit for the twelve months ending June 30, 2019 was $20.426B, a 3.98%
decline year-over-year.
 Coca-Cola annual gross profit for 2018 was $20.086B, a 9.34% decline from 2017.
 Coca-Cola annual gross profit for 2017 was $22.155B, a 12.77% decline from 2016.
 Coca-Cola annual gross profit for 2016 was $25.398B, a 5.27% decline from 2015

SUPPLIERS-

It consider its suppliers as critical partners, contributing to the ongoing and sustainable success
of its business.

As a critical part of their value chain, the performance of our suppliers directly impacts the
sustainability performance and commitments of Coca-Cola

Under a unified procurement framework, they segment thier supply base universe of around
32,000 registered suppliers into direct and indirect spend suppliers (18,835 suppliers were
actively used for purchasing transactions in 2018).

Direct spend suppliers include ingredients and packaging suppliers.

Indirect spend suppliers include categories such as IT, production equipment, spare parts,
maintenance services, logistics providers, fleet vehicles, utilities, real estate, facilities
management, professional and other consultancy services, personnel and temporary labor
CUSTOMERS AND CLIENTS OF COCA COLA COMPANY :

Coca cola’s customers looking for better understand the effect of the coca cola business along
their culture value cycle. Their target is to increase growth and revenues to produce value for
their contributors.

The customers of coca cola are continually looking for ways to reduce costs, improve sales and
profits, and deliver better quality.

In 2003, north America-based marketing team at the coca cola company set out to reward the
company’s most loyal consumers and build a closer relationship with them by allowing them to
collect pin codes from bottle caps and product package and trade them for points, but one to
one marketing effort seemed a tall order for a large company that serves 1.5 billion drinks a
day, so in 2006 they started the loyalty program (My coke rewards),with the coke, diet coke
and coke zero brands.

The generation who were more likely to purchase diet drinks were baby boomers and as baby
boomers age, their beverage preferences are aging along with them.

In the other hand the youth of today and more importantly generation after them, are turning
increasingly to other beverages and they don’t share the same emotional bonds with the
brands as the baby boomers, that’s why coca cola which is the biggest brand in the world
started to lose its grip on its core consumers.

In an attempt to recreate this connection coca cola commissioned five talented young design
groups from five different continents with re-integrating the coca cola brand into the life of the
youth with the wonder of art, music and creativity, and the process won the hearts and minds
of all important opinion leaders of generation x and y. This project was called M5 (the
magnificent 5).

Sales and Marketing:

Coca-Cola reaches customers through the largest beverage distribution system in the world,
made up of company-owned or controlled bottling and distribution operations, as well as
independently owned bottling partners, distributors, wholesalers, and retailers.

The company is a world-class advertiser, known for multiple popular ad campaigns stretching
back many decades. It continues to keep its brand foremost in the mind of consumers with
heavy investments in advertising, spending about $4 billion each year in recent years.
Financial Performance :

Coca-Cola's annuals sales and profits have been trending lower over the past several
years as traditional soft drink sales have fallen with changing consumer tastes in
developed markets. Revenue has declined more than 30% over the past five years and
net income had also dropped significantly until 2018.

The soft-drink maker's sales fell 10% to $31.9 billion in 2018 as the refranchising of
bottling territories and bottling operations (part of a deliberate structuralchange)
resulted in a significant drop in sales from the Bottling Investments segment. That was
offset slightly by an increase in volume and a more favorable price, product, and
geographic mix.

Coca-Cola's net income that year jumped more than 500% to $6.4 billion on improved
operating margins and lower income taxes from the prior year, when profit was hit hard
by a one-time transition tax resulting from the Tax Reform Act signed into law in late
2017.

Cash at the end of 2018 was $8.9 billion, an increase of $2.9 billion from the prior year.
Cash from operations contributed $7.3 billion to the coffers, while investing activities
provided another $6.3 billion from proceeds from disposal of investments. Financing
activities used $10.6 billion, primarily on payments of debt and dividends.

Company Background

Atlanta pharmacist John Pemberton invented Coke in 1886. His bookkeeper, Frank Robinson,
named the product after two ingredients, coca leaves (later cleaned of narcotics) and kola nuts.
By 1891 druggist Asa Candler had bought The Coca-Cola Company, and within four years the
soda-fountain drink was available in all states; it was in Canada and Mexico by 1898.

Candler's family sold the company to Atlanta banker Ernest Woodruff for $25 million in 1919.
Coca-Cola went public that year.
MANAGEMENT CONCEPT-THEOROTICAL OVERVIEW
Who Was Elton Mayo?
Elton Mayo was born in Australia in 1880. Mayo worked from 1926-1949 as professor of
Industrial Research at Harvard University. He is best known for his work based on the Hawthorn
Studies, as well as his book, The Human Problems of an Industrialized Civilization

The Hawthorn Studies

Hawthorn was a Western Electric plant based in Cicero, Illinois. At its peak, the factory
employed close to 40,000 people. The Hawthorn Studies were a large group of productivity
studies conducted between 1927 and 1933 that collected large data sets.

The very first study that was done concerned workplace lighting. The study sought to
understand if changing lighting conditions resulted in increased or decreased productivity.

To run the experiment two groups were created. A control group and a group with improved
lighting conditions. What happened when lighting was improved for one group? Well,
productivity improved for that group.

But, here’s the strange thing. Productivity also improved in the control group! When they
reduced lighting for one group productivity also increased! Not only that, but each change
(increase or decrease) also lead to increased employee satisfaction.

Many other experiments were run as part of the Hawthorn Studies. Their results also
contradicted what was expected from Scientific Management.

So, what’s going on?

This is where Mayo comes in. He was the person who was able to make sense of these results
which ran contrary to what everyone expected.

He recognized that the worker isn’t a machine and that how they are treated and their
environment is important. He recognized that work is a group activity and employees have a
need for comradery and recognition. They have a need for a sense of belonging.

In a nutshell, productivity has a psychological element to it.

The Hawthorn Effect
In addition to the social concern for the worker, one of the big things to come out of the
Hawthorn Studies was the Hawthorn Effect. This states that changes in behavior happen when
you are monitoring or watching employees. The near presence of someone watching you
changes the way you behave. You start to perform better.

This explains why productivity improved in the first experiment when lighting was improved,
and also when it was made worse.

The Hawthorn Study was the first of its kind to recognize that if you treat an employee a certain
way, a good way, they might be more productive for the organization.

Mayo’s Theory of Motivation

Based on analyzing the data of the Hawthorn Studies, Mayo proposed that employees aren’t
that motivated by pay and environmental factors. Instead, positive relational factors play a
bigger role in productivity. The importance of group working cannot be overstressed. It is the
group that determines productivity, not pay and not processes.

For example, if someone is working too fast they will be ostracised from the group. Likewise, if
someone is working too slow the same thing will happen.
Mayo created this matrix to show how productivity changed in different situations.
You can think of group cohesiveness as being how well the group gets on, their comradery. You
can think of norms as being whether the group encourages positive or negative behaviors.

There are four positions in the matrix:

1. Groups with low cohesiveness and low norms

These groups are simply ineffective in terms of productivity. A team like this wouldn’t last very
long. This is because nobody would be motivated to be productive in any way.
2. Groups with high cohesiveness and low norms
These types of teams have a negative impact on productivity. Here the team gets on great, but
negative behaviors are encouraged rather than positive ones. Gangs are often cited as
examples of this type of group.

3. Groups with high norms but low cohesiveness

This type of team can have a limited positive impact on productivity. This is because each team
member will be working towards their own success rather than that of the team. If one team
member does something great, then good for them, but it doesn’t really improve the
productivity of the rest of the team.

4. Groups with high norms and high cohesiveness

These are the teams that can make the greatest positive impact on productivity. In this type of
team, each team member supports each other to succeed. People are personally committed to
their success and also to the team’s success. A strong support network forms within this type of
team.

Summary Of Hawthorne Studies

The Hawthorn Effect states that your productivity changes when someone is watching you. It
increases.

Mayo not only identified the Hawthorn Effect, he was also the first to identify the importance of
the psychological element of workplace motivation. He recognized that if you treat an
employee well, they might be more productive for the organization.
So we can precisely describe the contribution of Elton Mayo in Management Thoughts in four
parts. They Are given below

4 Main Contribution of Mayo in Developing

Management Thought-

Some of the major contribution of mayo in developing management thought are as follows: 1.
Human Relations Approach 2. Non-Economic Awards 3. Social Man 4. Organization as a Social
System.

Mayo was the first person to plead for the understanding of workers’ problems the context of
growth of science and technology.

He wished the management to understand the problems of workers and make efforts to
redress them.

His main contributions are discussed as follows:

1. Human Relations Approach:

Mayo is rightly called the father of human relations movement. His ideas were a milestone and
a turning point in human relations approach of the management. He recognised the importance
of human beings in management. He said that human beings are complex and influential input
into organizational performance. The social and psychological needs of human beings cannot be
ignored, if management wants to enhance productivity.

2. Non-Economic Awards:

The earlier assumption was that workers will work more if they are offered more monetary
incentives. Taylor was the main proponent of this approach. Elton Mayo said that the
techniques of economic incentives were not only inadequate but also unrealistic.
He was able to show that humane and respectful treatment, sense of participation and
belonging, recognition, morale, human pride and social interaction are sometimes more
important than pure monetary rewards.

3. Social Man:

Mayo developed a concept of ‘social man’. He said that man is basically motivated by social
needs and obtains his sense of identity through relationships with others. He is more
responsive to the social forces of the informal group rather than managerial incentives and
controls. He also related productivity to a social phenomenon.

4. Organization as a Social System:

Mayo was of the view that informal relationships in the organization are more effective than
formal relationships. People form informal groups to give a bent to their feelings and seek
guidance for action from such groups.

In Mayo’s words, “An organization is a social system, a system of cliques, grapevines, informal
status systems, rituals and a minute of logical, non-logical and illogical behavior.” He was of the
opinion that managers should maintain an equilibrium between the logic of efficiency’
demanded by the formal organization. He thought that besides logic and facts people are also
guided by sentiments and feelings.

MANAGEMENT CONCEPT-APPLICATIONS IN THE Coca-Cola

Company-
How Management Functions are Performed at Coca Cola-
Planning

The top management of the company engages in formulating five year longer term plans as well
as shorter term planning for the next year or so.
Organizing
The key to understanding the organizing function at Coca-Cola is to recognize that employees
with similar skills and common work functions are grouped together. This helps the company
avoid redundancies in problem solving processes as well as bestowing a certain functional
autonomy at all levels

Leading
The leadership at Coca-Cola believes in a democratic and laissez faire approach to leading which
is necessary considering the business it is in which is heavily dependent on both the macro level vision
and mission that need to be translated and transformed into micro level execution.

Controlling

The controlling function in Coca-Cola is done through periodic reviews of managerial and
salespersons performance. Towards this end, an appraisal system based on objective evaluation of
whether the employee being appraised has met his or her targets forms the backbone of the controlling
function in the company.

Implications of Elton Mayo’s contribution in ‘Coca-Cola’

company
Job satisfaction is very vital for an employee, because when an employee is pleased with his/her job
then he/she will give greatest productivity in his/her working hours. Job satisfaction is in stare to one’s
consideration or state of mind relating to the nature of their work. Job satisfaction can be tending by a
sum of factors, e.g., the quality of affiliation with supervisors, the quality of the atmosphere in which
they work and degree of completion in their work, etc. it can also be exposed through observing the
employee’s values. It is good not only for employees but employers as well because it increases
effectiveness.

Elton Mayo's contribution to management theory helped pave the way for modern human relations
management methods.
Based on his well-known Hawthorne experiments, Mayo's management theories grew from his
observations of employee productivity levels under varying environmental conditions. His experiments
drew a number of conclusions about the real source of employee motivation, laying the groundwork for
later approaches to team building and group dynamics. Mayo management theory states that
employees are motivated far more by relational factors such as attention and camaraderie than by
monetary rewards or environmental factors such as lighting, humidity, etc

In this sector we are showing that how “Coca- Cola” is trying to implementing Hawthorne Studies effect
on their company-

Participative Leadership Theory:

This theory aims at developing an understanding to decision making in different scenarios. The
theory suggests that people working in teams must be more collaborative and less competitive.
Team based decision making is better and more committed than individual persons.

Coca Cola Company uses this theory and focuses on the development of teams for more
focused and cooperative decision making rather than being alone. Leaders are selected for
individual teams based on qualities as commitment, collaboration, cooperation, motivation
friendly behavior etc. different programs are arranged so that the team member can participate
and develop those leadership traits. Coca Cola Company effectively inculcates this process.

Human Relations Approach:

At The Coca-Cola Company, respect for human and workplace rights is engrained in their
culture and guides their interactions with employees, bottling partners, suppliers, customers,
consumers, and the communities they serve.  their Human Rights Policy, along with
thier Supplier Guiding Principles, establishes a foundation for managing their business around
the world in accordance with their commitment to respect human rights.

1. There is an open environment in the Coca Cola Company which allows the employees to
communicate with each other and it allows the information to flow inside the company and
discourages the barriers between members to share information. Before making the decisions
the top level managers discuss it with the middle level managers and before decision making it
is shared till the end of the hierarchy. The Coca Cola Company allows the employees that
anyone of them can meet the general manager if he/she is facing any kind of difficulty.
2. Interdepartmental communication is done in the form of formal and informal manners. To
get the feedback of the employees and get the view of the employee about the manager the
grapevine is used.

Total reward policy

Total reward is a concept where an organization makes an effort of motivating and retaining
employees to get maximum result in return. Coca-Cola has a program known as cloud-based
technology whereby, employees are given the freedom to make choices of rewards (Thorpe,

2000). The choice of one may differ from another. For instance, some employees may consider
trips, holidays, and vacations necessary while others may like allowances and scholarship for
their children.

The contribution of total reward in Coca-Cola is fruit bearing. Employees feel motivated, and
through that, the company can utilize their labor to the fullest. A motivated employee will
produce more than expected results which are the reasons why the company is doing well in
the market regarding sales due to the production of high quality (Thorpe, 2000). The
organization performance is impacted positively, and that is why Coca-Cola is currently the best
performing beverage company worldwide.

Here we can see that Coca-Cola Company is providing not only the monetary rewards but also
the non monetary reward. Which is strongly Mentioned in the Eltons mayos contribution in
Management thoughts.

Motivation Theory

1.Coca Cola Company gives high attention to the motivation of the employees. Promotions of
hardworking employees are a part of the company’s policy. Promotions of employees are done
on the performance basis which is a great motivation for the employee that higher his
performance there is more chance of his promotion.

2.Beside from promotion strategy the Coca Cola Company also uses the compensation strategy
to motivate the employee; Coca Cola is paying industrial average in compensation. Not only this
different campaigns and competitions between the employees itself are also used to motivate the
employees.

3.Managers play a very important role in the motivation of the employees in Coca-Cola
Company. They help them in all their problems either they are personnel or professional. They
give them feedback on their performance which makes the employee feel good. Working
environment and a challenging milestone are a major factor in employee motivation in the
company.

GAPS BETWEEN MANAGEMENT CONCEPTS AND APPLICATIONS IN THE

ORGANIZATION ON ‘COCA-COLA’ COMPANY
Coca-Cola is one of the largest beverage company in the world. It Always provides all types of
facilities to their workers and employers. But there are no gaps between the Management
concepts and Applications in the company.

There are some recommendations how they can improve their production by increasing
workers satisfaction. These are given below-

1. The Coca-Cola Company should not only reward the well performing and high profiled
sub-ordinates but also encourage the less performing ones to build their confidence.
Confidence is not an inborn trait, but is gradually implemented through a systematic
process of learning. Extra-training services to underperforming employees are more
than a reward (Watkins, 2010). The company should categorize reward and also
diversify them in that employees should have a variety to choose from. They can either
be monetary, non-monetary, performance-based or recognition rewards (Oling, 2011).
Coca-Cola should also increase transparency and avoid biasness while rewarding in that
any employee should be subjected to a reward for a task well done.
2. Coca-Cola should also concentrate on value addition of their employees.
3. It is necessary to provide good future prospects to the employees
4. Though they provide well promotional features, It is necessary to provide the
promotional opportunities to the all employees according to their job
CONCLUSION
In conclusion, the paper brings about the concept of Mayo’s contributions in Coca-Cola
Company to a green light. Key factors of a reward of reward system have been displayed which
entails motivation of employees towards attainment of organizational objectives. The paper
also demonstrates the role of line managers at Coca-Cola Company in ensuring that the process
of reward is successful. The paper has also evaluated total contribution reward and practice
reward. Finally, the paper has recommended of the measure Coca-Cola should apply to
enhance the effectiveness of the reward system.

It has been followed the Elton Mayo’s Contribution very perfectly in the organization. All the
workers and employers are very satisfied with their job environment. Which helps the
organization to increase their productivity and profits.

So we can say that every Organization should follow the Elton Mayo’s Hawthorne Studies in the
organizations to increase productivity.