News Article

Coke Denied: Prevention Is the Best Defense

Fortune

Published: July 10, 2000

Why Coke? The company that liked to think of itself as the world's most diverse has for 14 months been entangled in the messiest wrangle about racial bias in the workplace since Texaco's. In mid-June the company reached a tentative settlement in the class-action lawsuit filed by eight black employees and ex-employees.

The lawsuit that humbled Coke got its start when small groups of African-American employees began meeting in their living rooms to share their frustration at what they saw as lack of opportunity. Rev. Joseph Wheeler attended those meetings and raised the employees' concerns with Coke officials. But Wheeler found the company's responses evasive and inadequate.

The suit, which was filed in April 1999, charged Coke with discriminating against blacks in promotions, evaluations, terminations, and pay. It was led by Cyrus Mehri, the attorney who won a $ 176 million settlement in the landmark Texaco case.

Six months after the suit was filed, CEO Doug Ivester effectively demoted the company's top black executive, Carl Ware; within days, Ware announced he would retire. By February of this year, Ivester himself was out of a job.

Ivester's successor, Doug Daft, has tried to reinvent the culture. He persuaded Ware to "unretire" and become executive VP for global public affairs. He also adopted two of Ware's key suggestions: making clear that top brass wants diversity and tying managers' compensation (including his own) to diversity goals.