People Management Practices at PepsiCo
Successful organizations have proper human resource management practices that correlate with the organizational structure (Welch and Welch 79). People management practices include a set of guidelines that help an organization to handle the internal environment of work. The internal environment comprises of the employees, competitors, managers, media, employers, customers, and sponsors.
PepsiCo is multinational that operates in over 31 countries across the world. Since 1898, PepsiCo established a commendable people management plan that governs the employees and oversees the managers. Without a plan, it would be impossible for PepsiCo to manage over 250, 000 employees across the world. Recently, the company earned Great Place to Work Awards, which recognizes the multinationals that treat employees well in Ireland (Leadership Development Strategy: PepsiCo 7).
According to the group CEO, the company developed a people management strategy in five years following a comprehensive research of the internal and external environment of the company. This paper intends to discuss people management practices at PepsiCo across the sphere.
Overall People Management Strategy
A company’s vision is the first element of communication that connects an organization and the target public. At PepsiCo, the vision statement focuses on the company’s ability to build long-term mutual relations with employees. Its main objective is to inspire people. PepsiCo management aims at creating a work force that will perform irrespective of supervision. This explains the intentions of inspiring employees in the organization.
Principal elements of PepsiCo’s vision include clarity in communication and regular consultations between employers and employees. Within the vision, the company is categorical about performance contracts, which ensure productivity. Performance contracts help employers assess the productivity of employees annually. After appraisal, the company determines the employees that deserve both monetary and non-monetary motivations (Leadership Development Strategy: PepsiCo 3).
In essence, PepsiCo understands that fair treatment of employees is the best strategy to ensure the satisfaction of consumers. The rationale is that a good employer creates a happy customer. As this happens, PepsiCo takes a particular interest in Coca Cola, which remains its greatest competitor since inception in the 1920’s (Hickson 19).
Employee Rewards and Motivation
PepsiCo uses both monetary and non-monetary strategies of motivating its employees. The human resource department ensures that its practices are fair and apply to all employees without discrimination. This happens in order to avoid gender-based and minorities related scandals. The human resource department has many objectives including the ability to create an environment of professionals. This can only happen when employees enjoy the benefits of associating with PepsiCo.
Cash benefits at PepsiCo include provision of loans to cover housing expenses. The disbursement of loans depends on the position of an individual in the organization, and the income levels. People will definitely take mortgages according to their income levels and ability to repay. PepsiCo assesses these factors and provides 75% of the entire amount of loan acquired for a particular house. Besides loan payments, PepsiCo pays all employees for overtime duties. Normally, employees have to work for 8 hours per day. This happens until they achieve 40 hours of the entire week as stipulated in the employment contract.
For each extra hour that an employee spends at work, the company gives bonuses to the employees (Leadership Development Strategy: PepsiCo 12). In most cases, this happens to junior staff, as the organization tries to encourage them to stay at PepsiCo. Finally, PepsiCo provides salary increments to employees on an annual basis. This mostly happens when the company makes profits and it equally depends on the employment contract (Michman and Mazze 98). Sometimes the company does not offer salary increments when it makes losses after an entire year. All cash benefits seek to provide a good work environment and quality living standards to employees.
Non-monetary motivation strategies aim at empowering employees. They also instill team spirit because of the open communication channels created. Employees can make popular decisions in the company, which makes them feel like part of the company structure. In addition, employees have an opportunity to join various labor relation organizations. Through such trade unions, they are able to correct the employer when PepsiCo mistreats them or refuses to pay their dues.
Labor unions equally strengthen relationships between the employer and employees. This happens because the Collective Bargaining Agreement (CBA) binds PepsiCo to the employees. The CBA creates an assurance that PepsiCo will adhere to its pledge to the employees. Another form of non-cash motivation includes training or organizing for company retreats (Leadership Development Strategy: PepsiCo 21). Training helps employees understand different undertakings within the organization in order to avoid mistakes.
Retreats help in team building making it possible for employees, and employers to understand each other from a personal point of view. PepsiCo promotes employees who completely commit to the organization according to the provisions of the performance contract. The most common promotions occur from assistant supervision positions to the position of a supervisor. PepsiCo also offers free transport to employees living within the cities in which company offices exist.
These employees have a medical cover; they visit the PepsiCo medical institution located within the offices. Even though such motivation tactics have no cash involvement, they influence productivity. In Ireland, people show much concern for non-monetary motivation in comparison to Asians who prefer cash benefits. In essence, culture plays a significant role in determining the motivation practices that PepsiCo adapts in different countries (Hickson 43).
PepsiCo deserves an excellent people management practice because PepsiCo is a global employer that manufactures different products. Even though it has its headquarter in New York, PepsiCo has employees in Europe, Asia, and Africa among other continents. As such, its people management practices needs to cut across different cultures. During a merger with Frito-Lay, Pepsi-Cola had to come up with a human resource structure that suits the two companies that merged in 1965 to form PepsiCo.
PepsiCo deals in the production of soft drinks, syrups, sweets, sweeteners, diet drinks, and water among other products. These supplies have different target audiences. Without a proper people management practice, it would be impossible to deal with clients, employees, the media, and rivals from diverse backgrounds.
The company’s people management plan ensures that production and marketing elicit a productive effect to the organization. Important aspects of the organization culture include the ability to adapt to different work environments. PepsiCo adapts to the prevailing culture and this explains why it takes a long time before establishing a new branch. Another element of the company culture is ability to encourage mutually beneficial relationships between employers and employees. This reduces the impact of a status quo on employee performance.
Strategies of Employee Retention
PepsiCo’s main competitor is Coca Cola. It strives to create a competitive team of professionals through training, and appraisal programs. Training occurs during orientation, and after employment. This helps in reducing errors related to work, and it encourages productivity. Additionally, PepsiCo is one of the companies that highly pay its employees, and this strategy helps in marinating the trained workforce (Welch and Welch 103).
Training is a transitional process and it would be bad for trained personnel to defect from PepsiCo. To ensure that this does not occur, the company increases salaries of employees through annual programs. Besides cash, a company appraisal offers employees bonuses, dream vacations, leave outs, and promotions. These incentives and non-monetary packages help in retaining employees at PepsiCo.
Finally, PepsiCo developed a Human Resource Interactive System (HRIS) that manages online communication between employers and employees. It makes information flow fast, effective, and affordable for the organization. Communication and good team of employees assists PepsiCo in developing products that suit the changing consumer needs. This led to the development of Pepsi diet, low carbohydrate drinks, and drinks with fiber content (Leadership Development Strategy: PepsiCo 13).
PepsiCo faces many challenges including defection of employees to the major competitor. In addition, training is costly, as it involves deployment of professionals outsourced from credible training firms. The company has to observe ethics all the time even though some managers breach the contact (Leadership Development Strategy: PepsiCo 16). In 2009, the company faced accusations of favoritism during recruitment of employees. Finally, the company has to adjust to different cultures across the world since this affects the originality of the code of ethics established from the PepsiCo headquarters.
Recommendations for Strengthening the Company’s Workforce Strategy
The PepsiCo workforce can be more productive if the management can lay emphasis on customers’ needs by developing skills in employees. For instance, providing a sales academy to employees so that they can learn how to satisfy clients is one way of strengthening the workforce. Sales academies offer counseling programs and guide employees on how to increase sales, and, at the same time, surpass clients’ needs.
In addition, the academies will ensure that the newly recruited talents remain competent and productive through continuous leadership development activities. Additionally, I will align employees’ personal goals with PepsiCo’s corporate strategies, as this will increase satisfaction among employees. Organizations that recognize employees’ personal goals are more likely to achieve their objectives than those that do not. Employees feel recognized and guided not only in achieving the organization’s goals, but also in achieving their personal objectives.
Hickson, Gill Robinson. Leading organizations: perspectives for a new era. 2nd ed. London: SAGE, 2010. Print.
Leadership Development Strategy: PepsiCo. S.l.: American Productivity & Quality Center (APQC), 2007. Print.
Michman, Ronald D., and Edward M. Mazze. The food industry wars marketing triumphs and blunders. Westport, Conn.: Quorum, 1998. Print.
Welch, Jack, and Suzy Welch. Winning. New York: HarperBusiness Publishers, 2005. Print.