HR practices in PepsiCo

Discuss About The Managers Can Anticipate Future Challenges.

This report will analyse HRM strategies of one of the most reputed companies dealing in food and beverages, PepsiCo. The headquarters of the firm is situated in Purchase, New York and the present CEO of the company is Indra Krishnamurthy Nooyi. While supplying with major brands like KFC, Frito Lay, Tropicana, Taco Bell, Quaker Oats, etc. the company has gained a superior reputation globally (PepsiCo Inc. Success Story, 2017).  The company has been doing many acquisitions and mergers to keep expanding their business globally. Presently the company deals in more than 100 countries and employees more than 274,000 satisfied workers. Although many challenges came in the growth path of the company, but with its strategic management and sound HR practices, PepsiCo has been able to overcome those successfully. The mission of the company is to reach the top position in world in food and beverage industry. The strategy company follows allows it to fulfil its mission and helps in formulating company’s vision to serve its customers with best products. PepsiCo believe in delivering “Performance with Purpose” and thus provides safe and inclusive workplace to its employees along with taking measures to safeguard environment (Bailey, 2014).

Organisations have to face many challenges in the form of legal, social, technological and economical where human resource practices have a strong influence and consequence on those challenges. Strategic HR models and practice provides overview to organisation’s HR teams to plan, develop and implement HR strategies in fulfilling the desired goals. In order to evaluate PepsiCo’s requirement for HR model, SWOT and PESTLE analysis will be made that can help in gaining information about challenges faced by it.

The production and distribution system of the company realises an annual growth of 5% each year. The internal analysis of PepsiCo shows the strength of the company that lies in its maintenance of staff by balancing personnel and work life. They provide flexibility in work culture which is also anticipated by employees. Whereas weakness in this strategy shows that errant workers may not like flexibility in work. Others may neglect their work that may result in inefficiency. Opportunity PepsiCo’s work practice shows creation of healthy lifestyle by creating friendly atmosphere in workplace. Employees feel less strained along with getting motivated to work more. Moreover valuable employees are retained by the company through this process. Threats associated are dealing with errant employees who abuse the work systems. This might create low productivity for which the company has to suffer (Young, 2017).

HR challenges in PepsiCo

Products of PepsiCo are subject to several laws such as drug, food and cosmetic Acts. Health and safety of people depend highly on the products available in market (Jeffery, 2017). Therefore, PepsiCo has to face many political barriers in its operation. Government stability in the countries PepsiCo deals is also important. Change of government hampers company’s distribution channels through alteration made in country’s regulatory systems. PepsiCo’s strategy to introduce itself in underdeveloped and developing countries shows its risk bearing attitude as issues can be faced while dealing with people of those countries. PepsiCo’s food products are depended on food and beverage raw materials. Any fluctuation in economic condition of country may affect PepsiCo economically as rise in fuel prices will affect its distributions and transportation costs. Moreover foreign exchange rates and other economic factors like energy supply, cost of raw materials and supply network can effect PepsiCo’s operations. PepsiCo has always been subject to lifestyle changes for which it has to perform regular campaigns and promotions. In order to connect with people, social factors are highly regulated by company to pay attention in current trends and requirements of its customers. Technologically, PepsiCo uses latest technologies and innovations for producing its food and beverages (Pepsico , 2017).

After making internal and external analysis of PepsiCo, the role of HR seems very significant to minimise risks and challenges that are faced by the company. Through sound HR policies, PepsiCo can eliminate its issues tactfully. But, to find gaps in their practices, finding out their current practice is also necessary.

The human resource policy of PepsiCo stands upon values and principles in which well being of employees are given priority.  Even rules and regulations laid by the company give equal opportunity to all of its employees to develop themselves through continuous learning and training programmes. Out of many, five HR practices that are been carried in PepsiCo are as follows.

Recruitment- Recruitment policy of PepsiCo is based on both internal and external selection of employees. PepsiCo’s recent technique for recruitment has been seen by making online recruitment through internet where applications and CV’s are received online. Companies make internal announcements for recruitments based on competencies and if it is not available, they depend on external applications (Bianca, 2017).

Selection: PepsiCo selects fresh applicants through forms filled by them after which written or oral exams are taken by specialised teams of the company. Performance exams enable company to get knowledge about the applicant and their work experience. The results are then examined before making final interview of the applicant. Eligible candidates are then sent for medical examinations to ensure safety in workplace along with making a thorough investigation of background.

Solutions to HR challenges in PepsiCo

Training and development: Under this process, PepsiCo makes several programmes and training session for fresh and existing employees to keep their knowledge upgraded and advanced. Training opportunities are provided through seminars, workshops and training classroom sessions (Foss, 2012).

Performance management: The competent employees of PepsiCo are awarded with appraisals and rewards to make them motivated to work more. A survey is also made through this process as incompetent ones are given warnings or demoted.

Compensation plan and benefits: Promoting from one level to the other segregates competent ones from the incompetents along with motivating employees to get promoted by working hard for the company. Increments in salary along with other bonus are also made by PepsiCo to retain their valuable staff (Business & Human Rights Resource Centre ).

After reviewing the HR practices in PepsiCo, challenge related to them has also been identified. Firstly, the recruitment process implemented in PepsiCo consists of principles that can make suitable candidates unavailable. The internal staff of the company may feel unmotivated if new people are given higher posts and they have to answer new ones. Since the company follows recruitment on the basis of talent, senior staff of the organisation may feel neglected. Secondly, the selection process of the company has to undergo group discussion that may create confusion among people. While discussions are made, finding talent can become difficult. Third challenge faced in HR technique is in training and development programmes. Company gives special consideration to selected employees for training purpose. The selection made by them may create favouritism within the company that may provide adverse affects. Here ethical issue can also be seen in which company violates its own vision i.e. treating each person equally. Fourth challenge in Hr practice of PepsiCo is their promotion techniques. The company promotes those people who are competent. Under this principle the less competent ones or the ones who have limited quality but possess dedication towards their firm might feel appalling (Crawlability, Inc, 2011).

Selection- The selection process in PepsiCo can be based on finding out number of resumes received for job opening as compared to the number of qualified people in it. Qualified candidates can be compared with MQL or according to the leading marketplace. In this way qualified people will become in the top list in the job criteria. The KPI formula that can be utilised here is ‘Number of Qualified Person per Cost’. Implementing this strategy is also possible with the help of latest techniques as well as company’s responsibility to find qualified people will also be fulfilled.

Recruitment: In companies, vacancies are filled by employees selected from internal or external sources. In PepsiCo, since ethical challenge related to recruitment has been observed, implementing new process of recruitment is feasible. The company can make recruitment on timely basis where each employee gets equal opportunity to show their talent. Along with it, recruiting outsiders through recruitment process can be made fast by finding bottlenecks in hiring process. KPI formula of ‘Recruitment Timeline’ can be utilised to eliminate the challenges related to recruitment process (HR in Asia, 2016).

Training and Development- PepsiCo face’s challenge in HR practice related to training and development and making use of KPI metrics can solve this issue more  ethically. There are many ways through which metrics can be formulated according to the job criteria like finding cost of training, average training hours and investments for payroll. After finding the initial figure, metrics can be formulated at the time of training progress to find end results. This way PepsiCo will be able to build a sound development program along with involving each employee in the process (Mimeo, 2016).

Promotion- The challenges related to promotion practices in PepsiCo also needs to be changed. The company can use ‘People Metrics’ from which they can evaluate individual efforts along with considering internal promotions versus external hiring. This metric can be calculated by dividing salary of employee with salary offered by competitors. This system can make present employees feel more secured and contended (Jackson, 2017).

Conclusion

After making analysis of HR practices in PepsiCo, it can be said that however competent any organisation is, the need for change is necessary. The meaning of HR strategies has not been limited to traditional systems only, but involving new techniques and policies are also important. PepsiCo needs to work more on its HRM practices and plans to reduce challenges faced by it. The HR plan recommended in this report can provide assistance to the managers so that they can anticipate future challenges.

References:

Bailey, S. (2014). PepsiCo: A company overview. Retrieved from https://marketrealist.com/2014/12/pepsico-company-overview/

Bianca, A. (2017). The Role of Human Resource Management in Organizations. Retrieved from https://smallbusiness.chron.com/role-human-resource-management-organizations-21077.html

Business & Human Rights Resource Centre . (n.d.). PepsiCo. Retrieved from https://www.business-humanrights.org/en/pepsico-0

Crawlability, Inc. (2011). Human Resource Management of PepsiCo. Retrieved from https://www.managementparadise.com/forums/human-resources-management-h-r/214313-human-resource-management-pepsico.html

Davis, J. (2017). PESTLE Analysis. Retrieved from https://www.linkedin.com/pulse/pestle-analysis-jared-davis

Foss, K. L. (2012). HUMAN RESOURCE MANAGEMENT PRACTICES AND INNOVATION. Retrieved from https://www.druid.dk/laursen/files/Handbook_of_Innovation_Management_LaursenFoss.pdf

HR in Asia. (2016). 5 Key Performance Indicators for Successful Recruiting Teams. Retrieved from https://www.hrinasia.com/recruitment/5-key-performance-indicators-for-successful-recruiting-teams/

Jackson, T. (2017). 18 Key Performance Indicator (KPI) Examples Defined. Retrieved from https://www.clearpointstrategy.com/18-key-performance-indicators/

Jeffery, A. (2017). CNBC:PepsiCo profit beats on demand for healthier snacks, drinks. Retrieved from https://www.cnbc.com/2017/04/26/pepsicos-quarterly-profit-surges.html

Mimeo. (2016). The Top Training KPIs. Retrieved from https://www.mimeo.com/blog/top-training-kpis/

Minnesota. (n.d.). SWOT Analysis. Retrieved from https://www.health.state.mn.us/divs/opi/qi/toolbox/swot.html

Pepsico . (2017). Retrieved from https://www.pepsico.com/

PepsiCo Inc. Success Story. (2017). Retrieved from https://successstory.com/companies/pepsico-inc

Young, J. (2017). PepsiCo SWOT Analysis & Recommendations. Retrieved from https://panmore.com/pepsico-swot-analysis-recommendations