Pepsi Human Resource Management


FOREWORD

This report is based on the Human Resource Management implications practiced by Pepsi (Sales Department). The entire report is divided into three Parts. Each Part will discuss in detail the Human Resource Management practices by Pepsi. The First Part will discuss the Planning. The Second Part comprises of the Development and Direction and the Third Part of the report will deal with the Evaluation of its employees used by Pepsi.

The break up of the report into parts is for the convenience of the reader and to provide a better understanding of the text. This will help the reader to understand how Human Resources Management is carried out in the company and how it copes up with the modern environment. Figure, graphs and exhibits are used to provide supplementary information. The report also consists of the Company and Industry Profile and also the Competitors Analysis, and the Quality Management by Pepsi and a set of necessary information.

We have tried our best to make sure that this report provides a realistic view of modern-day Human Resource Management.

ABOUT PEPSICO

Pepsi-Cola North America, headquartered in New York, is the refreshment beverage unit of PepsiCo Beverages and Foods North America, a division of PepsiCo Inc. PepsiCo Beverages and Foods North America also comprises PepsiCo's Tropicana, Gatorade and Quaker Foods businesses in the United States and Canada.

Pepsi-Cola North America's carbonated soft drinks, including: Pepsi, Diet Pepsi, Pepsi Twist, Mountain Dew, Mountain Dew Code Red, Sierra Mist, and Mug Root Beer account for nearly one-third of total soft drink sales in the United States.

Pepsi-Cola North America's non-carbonated beverage portfolio includes “Aquafina”, which is the number one brand of bottled water in the United States, Dole single-serve juices and SoBe, which offers a wide range of drinks with herbal ingredients. The company also makes and markets North America's best-selling, ready-to-drink iced teas and coffees via joint ventures with Lipton and Starbucks, respectively.

PepsiCo, Inc. is one of the world's largest food and beverage companies. The company's principal businesses include:

Frito-Lay snacksPepsi-Cola beveragesGatorade sports drinksTropicana juicesQuaker Foods

PepsiCo, Inc. was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998. In 2001, PepsiCo merged with the Quaker Oats Company, creating the world’s fifth-largest food and beverage company, with 15 brands – each generating more than $1 billion in annual retail sales. PepsiCo’s success is the result of superior products, high standards of performance, distinctive competitive strategies and the high level of integrity of our people.

TERRITORIAL STRUCTURE OF THE SALES DEPARTMENT

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Pepsi believes in selling concept that’s why they have sales hierarchical levels. Pepsi has employed a very big sales force which is spread all over in Pakistan and covering their territories. Hence some Territories have been discussed in the next pages.        

QUALITY MANAGEMENT

 Any attempt to deliver superior quality hinges on the workmanship of personnel. In order to harness human potential and channel human effort in the most efficient manner possible it is imperative that product quality decisions interact strongly with organizational design and management philosophy. PepsiCo provides a classic example of delivering unparalleled quality through a systematic network of people arrayed in a framework that employs a divisional (territorial) departmental scheme with relatively low levels of specialization.  The result is a structure that is geographical based with a territorial head for sales based in Karachi. Where, if considering PepsiCo overall, than it would be right to say that its is product specialization, but our main area is PepsiCo Aquafina, it has, three Zonal managers based in three distinct yet diverse sections of the metropolitan and are given discretion to work freely within broad limits. The role of these Zonal heads is critical to the entire network since the chain of command takes a hairpin turn once authority is delegated to regional managers immediately below these zonal heads. 

The regional managers are placed strategically and are given clear guidelines as to performing their duties and concentrating their expertise in the area of their concern. Each Zonal manager oversees two regional managers, one for Retail and the other in-charge of the regional supply chain. The sales manager’s job is primarily pertains to maintenance of supply chain, quality checks, rechecks and post delivery quality assurances, which is why PepsiCo has always been the people’s choice.

It was observed that PepsiCo practices the Build up method to design its territories. They combine pieces of overall market to create units. By this approach actual and potential customers for “PepsiCo Aquafina” are identified, and their individual sales volumes are assessed. Careful study of the territory database enables the sales representatives to precede to the next step of the planning phase- the setting of objective.

The first concern here is the sales volume and market share goals in the territory, which are derived in a top down manner, starting with corporate objectives. Volume targets are of little value as profit objectives are essential in keeping the territory performance on track.

 

PART ONE

HUMAN RESOURCE PLANNING

HUMAN RESOURCE MANAGEMENT AND PLANNING

MAXIMIZATION OF PRODUCTIVITY

Amidst a framework of corporate objectives enhancing organizational productivity occupy center stage. Regarding improvements in areas such as costs, quality, labor productivity and material productivity, PepsiCo has arrayed a sequential process to ensure that efficiency measures are conducted in abeyance with super-ordinate goals and also designed to devise parameters that are conducive to undertake such measures every now and then.

One of our questions is the extent to which Operations Management successfully implemented the broader corporate strategy. Our query was accommodated comprehensively and we came to know that behind the patent air of nonchalance, PepsiCo had actually adopted a two-way linkage as far as communication between operations management and other functional areas of the company are concerned.

It was brought to our attention that at the threshold of strategy implementation the environmental scanning process usually dominates the preliminary scheme of analytical activities. During this process the integrative linkage that PepsiCo has adapted to comparatively recently, comes to light. The incessant flow of information both lateral and vertical gives testimony to the fact that all heads and all those occupying managerial slots at strategic, tactical and operational levels in the organization work jointly to design the product or service and select the production process. In attempting to undertake productivity/efficiency studies, the company relies primarily on factual and procedural information provided by its managerial talent.

At PepsiCo top management’s corporate strategy defines the business that the company will pursue new opportunities and threats in the environment and the growth objectives that it should achieve. As is the case with most of the companies dealing with consumer products, PepsiCo also addresses its business strategy or, in more precise terms, the way it can differentiate itself from competition. Such decisions interact strongly with tactical decisions executed at relatively lower levels. There fore, long-term goals must be translated into guiding principles that formulate an out line as to where operational strategy would be heading.

COMPETITION:

Since our prime focus is the PepsiCo Aquafina so we shall be focusing on the competitors within the same category. In the category of Mineral Water, Pepsi® is currently facing a furious competition.

DIRECT COMPETITORS:

Some of the major direct competitors are listed below:

· AVA

· Fontalia

· Mineral Plus

· Pure Life

Together these three form a very fierce competition for PepsiCo. This brings to surface the core competencies that PepsiCo can utilize to overcome environmental changes as well. These core competencies are the unique resources and strengths that management considers when formulating strategy.

Following are a few areas where such distinctive competencies are highlighted.

1. Workforce:

Having the advantage of a flexible workforce well versed and proficient with policies, procedures and work-methods Pepsi® tries to differentiate itself on the basis of this advantage, which supersedes the list of its core competencies.

2. Facilities:

PepsiCo also serves as a classic example for those new in the field of beverages because it has the primary advantage of well located facilities-offices, stores, and plants. This provides the company with a competitive edge for it is able to handle a large variety of products at different volumes.

3. Market and financial know-how:

Atop its unique strategy of achieving the best by utilizing potential to the fullest Pepsi® invests heavily in recruiting talent that possesses vast knowledge relevant to market trends, likely avenues for funding, distribution channels and competitor strengths. This pays-off in the sense that the company can easily attract capital from stock sales, market and distribute its products, or differentiate its products from similar products in the market.

ESTABLISHING PERFORMANCE STANDARDS

Forecasting of sales provide the starting point for assumptions used in various planning activities and for the development of Human Resource performance evaluation system. Basically all functional areas of an organization have a planning task, and all their projections and future estimates depends upon the forecast level of sales.

In PepsiCo forecasting has been done on quarterly basis and for this purpose selected executives of different departments provides their esteem opinions based on statistical analysis or on historical data. The factors which the keep under strict are following:

v General Economic Conditions

v Industry sales

v Projecting Product Sales

According to Food and Service Manager in PepsiCo, for forecasting PepsiCo uses different combinations of Qualitative and Quantitative methods because using more than one method, increases the probability of projecting making it more realistic. Following methods have been used by PepsiCo for establishing performance standards.


PERSONNEL RECRUITMENT AND SELECTION

Recruitment is the process of finding and attracting capable applicants to apply for employment. Although operating managers are often involved much of the recruitment responsibility is of the professionals in the HR department, these professionals are called recruiters. Recruiters should be aware of the constraints and challenges surrounding the recruitment process before they attempt to find suitable applicants.

Recruiters pursue the applicants through a variety of channels. The growing diversity in the workforce and the changing demographics often require recruiters to be more proactive.

Ø The Pepsi®’ has a very strong selection and recruitment process.

Ø The preliminary stage consists of publicizing the job opening.

Ø The processing stage includes interviewing and credential assessment.

Ø The conclusion stage comprises of reviews with budgeting and planning department.

Ø The candidate after being awarded the job is kept under close observation during the probation period of 3 months for monitoring his/her performance.

TRAINING AND DEVELOPMENT

There is a common misconception that a salesman is born, which is clearly a wrong concept, because they are actually made. Once new recruits are hired, they must be given adequate training and orientation, so that they have ample knowledge about their respective commitments.

Sales training should come along the Salesperson’s career life cycle. Like a Product’s Life Cycle, a human also has a career cycle, which needs its nourishment altogether. A Salesperson’s career life cycle also comprises of 4 stages; Preparation, Development, Maturity and Decline.

The first question is, why is training so necessary? There are two major reasons for that; firstly to develop the right working habits, and secondly, to offset the detraining that one encounters daily.

Here, at Pepsi®’, with as many as 85 sales personnel, it is also obligatory that they should be given the due training, due to the above stated reasons. Having a superb reputation in the market, their salesperson must carry themselves in the same manner. At Pepsi®’ training to the Sales staff is given on four occasions:

Ø Orientation of new Recruits.

Ø When a new Product is launched into the market.

Ø When a new strategy of activities is devised.

Ø When an old product needs refreshed outlook or a new campaign is given to promote it.

DESIGNING A FORMAL TRAINING PROGRAM

At PepsiCo, a yearly training program is devised, which is mandatory for all sales personnel. This is done to develop the employee abilities to (a) manage themselves (b) work with others (c) lead others. Few of the salespeople were also exposed to overseas training and 10 of then were sent on international assignments for developing their skills and experience.

The Methods which has adopted to train their salespeople are:

Ø Lectures: This mode is the most important as it practically covers all theoretical and practical aspects of the training camp.

Ø Visual Aids: The most commonly used format of training is done by visual aids. This is advantageous so that it can be repeated and seen again.

Ø High-tech training methods: Computer interactive details can also help as training factors. Pepsi®’ recently upgraded its software and hardware capabilities, so it had to train its staff and managers with the up to date technologies.

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INCENTIVES AND COMPENSATION

Incentives and gain sharing are compensation approaches that reward specified outcomes. Incentives usually link individual performance and rewards, where as gain sharing unusually embraces groups of employees.

Pepsi® gives yearly bonuses to its employees at the middle and lower levels of the hierarchy, whereas for the upper level they have profit sharing.

Other incentives, which are also awarded to the employees, are:

ü Insurance: health, accident, disability etc.

ü Paid vacations.

ü Paid leaves: sick leave, maternity leave.

ü Retirement plans.

ü Educational assistance.

ü Personal use of company car.

ü Club Memberships.

PepsiCo keeps its employees motivated through these incentives and they believe that Motivation, evaluation and Compensation are inter- linked.

FIGURE 2: Links between Motivation, Evaluation and Compensation

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RECOMMENDATIONS

ü As far as Training and Development is concerned they should emphasize more on INFORMAL TRAINING which is along the way, when doing fieldwork, working in the office a salesperson is continually getting training. This is informal training, or more commonly understood as experience.

ü The major advantage of this training technique is that it provides a realistic training experience as well as the immediate opportunity to correct bad selling habits and techniques.

ü The Territory In charge should make the sales quota for each territory and he can rightly estimate the prevailing conditions and can set the realistic targets.

ü The theory suggests that a salesperson should be evaluated by looking at the overall performance of the sales person.

CONCLUSION

PepsiCo Pakistan is enjoying high profits due to its well-built distribution channel. The company has an effective sales lineup and they maintain the standard of the sales people through periodic formal training sessions throughout the year. The company has products of supreme quality and they enjoy the satisfaction of their customers. Due to highly maintained quality standards, PepsiCo shines as compared to the products in its competition. If PepsiCo will maintain its standards in the same way then they can surely increase their sales volume and will keep on delighting their customers.


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