HRM 522 Ethics and Compliance Programs week 6

“Take the Pepsi Challenge: Talent Development at PepsiCo”

Sample Number 2

Dr. David Fountaine, SPHR

Talent Management - HRM532 07016

Discuss how PepsiCo uses its talent to sustain a competitive advantage in the marketplace. (notice each assignment question is copied verbatim from the assignment instructions and typed in bold text)rrepeat this process for each assignment question. Use business style of writing and directly answer each question in a succinct manner. Ensure you include research in your answers.

PepsiCo sustains a competitive advantage in the marketplace by acquiring the right talent, properly managing, developing, and educating that talent, and stressing the importance of the company culture. PepsiCo uses the business strategy “Performance with a Purpose,” which incorporates talent sustainability as one of its main components (Dowell & Silzer, 2010). “Talent sustainability is about having the right people, in the right place, at the right time, doing the right work, in the right way” (Dowell & Silzer, p. 618, 2010). Talent management and development are central to their growth agenda. Evidence that PepsiCo successfully utilizes their talent to their advantage is the fact that many former PepsiCo leaders are now in leadership positions in other Fortune 500 companies, including seven CEO positions.

PepsiCo believes that three major sustainable advantages give them a competitive edge in the global marketplace; (1) muscular brands; (2) innovative products; and (3) powerful go-to-market systems (“Sustainable advantage”, 2004). This particular model all revolves around the center component which is people. The first sentence of PepsiCo’s corporate values statement says it best, “Our commitment to deliver sustained growth, thorough empowered people, acting with responsibility and trust” (Dowell & Silzer, p. 617, 2010).

Having clear, distinct processes and structures in place to sustain employee growth and development is vital with over 185,000 employees worldwide (Dowell & Silzer, 2010). PepsiCo has worked diligently to provide that structure and embedded it in the culture of the company.

Discuss three key elements of PepsiCo’s career growth model.

The Career Growth Model (CGM), developed in 2002, describes the approach to building a career at PepsiCo. The CGM consists of five main components: (1) proven results; (2) leadership capability; (3) functional excellence; (4) knowing the business cold; and (5) critical experiences (Dowell & Silzer, 2010). The CGM offers a guide to employees describing specifically what leaders and human resources consider when looking to promote, and how employees can plan for their own development both individually and with their supervisors (Dowell & Silzer, 2010). The CGM supports PepsiCo’s core belief that all employees should have the opportunity to grow and develop within the organization (Dowell & Silzer, 2010).

Proven results, both business results and people results, is the first component of the CGM, and the component that will get an employee on the track to success with PepsiCo (Dowell & Silzer, 2010). Individual results are measured by the performance management process and reinforce the cultural importance of growth (Dowell & Silzer, 2010). As the business grows so do the opportunities for its employees.

Leadership capability, as defined in PepsiCo’s CGM, is simply the competencies and behaviors (tiered by level) that employees at each level are expected to exhibit and are then measured via their 360-degree feedback process (Dowell & Silzer, 2010). This particular element is important in any company, but even more crucial in a huge corporation. By being specific in the expectations from midlevel leaders up through senior management, PepsiCo is giving every employee the structure, guidance and feedback to succeed.

The last component of the CGM is critical experiences. PepsiCo believes that providing their employees with the right set of experiences is the best way to develop talent (Dowell & Silzer, 2010). PepsiCo is convinced that to be effective in a leadership role, the individual must have experience in all three project areas (beverages, snacks and foods), and understand the operations of the go-to-market systems, which are franchise, warehouse, and direct store distribution (Dowell & Silzer, 2010).

PepsiCo acknowledges that talent management is ever-changing and developing. The one goal PepsiCo has for their employees that doesn’t change is long-term career growth. The CGM, which has proven to be quite successful, provides structure to the talent recruitment and development process.

Discuss three key elements of PepsiCo’s talent management model.

The talent management model was established at PepsiCo to define and communicate how they believe people are developed (Dowell & Silzer, 2010). This model incorporates three phases: identify, develop readiness, and movement (Dowell & Silzer, 2010). Identify is the process PepsiCo uses to recognize if an individual has the potential to take on senior leadership roles. This process is one of the biggest challenges in talent management, and PepsiCo accomplishes this through their people planning process, where talent is reviewed at each successive level in the company (Dowell & Silzer, 2010).

Develop readiness is based on the understanding that 70% of development occurs on the job, 20% from coaching, feedback and mentoring, and 10% from training (Dowell & Silzer). PepsiCo’s method is an integrated approach, combining leadership development programs combined with formal training for senior leaders with a feedback process from a collection of personality tests (Dowell & Silzer, 2010). Following the program, the participants are given follow-up coaching assignments with outside, certified coaches (Dowell & Silzer, 2010). The collection of all three talent development methods: (1) leadership development, (2) formal training (with feedback) and follow-up coaching assignments, and (3) the collection of personality tests has proven successful for PepsiCo when fast-tracking high potential leaders.

Movement is the element of the talent management model that plans for movement of talent within PepsiCo, and is arguably the most challenging aspect of the talent management model (Dowell & Silzer, 2010). The goal of this element is to build a strong talent base by movement of high-potential talent (Dowell & Silzer, 2010). Identifying potential is easier than moving the talent into leadership positions in a structured and purposeful manner. The objective of this element of PepsiCo’s talent management model is that over time, and through successive movement of high-potential talent, the process builds a talent bench for the future (Dowell & Silzer, 2010).

Discuss the challenges that PepsiCo faces related to its talent management system.

According to Dowell & Silzer (2010), the four main challenges/questions that PepsiCo faces with respect to its talent management system are: (1) defining high-potential; (2) which metrics to use in the talent management system; (3) plan execution by leaders; and (4) the required changes needed to accommodate the needs of the incoming generations.

According to Dowell & Silzer (2010), defining high-potential employees from average employees is crucial, and doing it with a high degree of precision represents the “holy grail” of talent management. There is no set ideal of what potential looks like, making this area such a challenge. In addition, the criteria for potential may change as senior leadership changes.

The next challenge/question addressed by Dowell & Silzer (2010) is which set of metrics to use in a talent management system. Some companies, including PepsiCo, emphasize the importance of the depth of the talent bench, but leave the issue of which metric to use unanswered (Dowell & Silzer, 2010). It makes sense to emphasize the depth of the talent bench—which means more than one potential successor for each leadership role—so that each leader has two or more choices for a successor. Dowell & Silzer (2010) identify another metric that is commonly used in organizations, which is the number of developmental moves made during a time period, whether it is in the same or different areas. This metric has been used in PepsiCo, but Dowell & Silzer (2010) stress the importance of the moves being in the interest of improved capability and stronger bench over time, versus just random movement of the employees. This leads to a very important realization – it is critical to understand the background and capabilities of each individual being moved within to ensure a developmental experience that will maximize the talent of the employee and will build the long-term bench for PepsiCo (Dowell & Silzer, 2010).

Yet another metric is meant to drive enterprise-wide accountability by tasking leaders to move a certain percentage of employees across divisional or location borders (Dowell & Silzer, 2010). However, this metric puts a higher emphasis on quantity versus quality. I think that movement just for the sake of movement isn’t always an approach that will maximize the employees, or PepsiCo’s long term goals.

The last metric that Dowell & Silzer (2010) address is a talent distribution model, which displays high-potential talent by function, division, region or country. However, this metric, appears to be limiting in its ability to assess the true ability of the employees to reach specific important positions. The approach appears helpful for developing a broad view of the available talent, however, unless all the employees are equally functional it does little to characterize their ability to reach certain critical leadership roles (Dowell & Silzer, 2010).

Determining which metric to use is a significant challenge for PepsiCo, or any company. Each metric is going to have a different outcome. Determining which metric best fits PepsiCo will likely be determined on a trial and error basis before it is truly refined.

The next challenge that Dowell & Silzer (2010) discuss is getting senior management to execute on plans when the time is right. “All the best talent management tools, templates, assessment models, and career plans in the world are only as effective as the people executing them” (Dowell & Silzer, p. 633, 2010). At this point, a partnership between senior leadership and a Human Resource officer can be invaluable in navigating though the talent management process.

The last challenge discussed by Dowell & Silzer (2010) is how to change the talent management system to meet the needs of the next generation. The workforce is aging and younger generations are starting to move into more senior roles in the organization. These generations bring with them different expectations and values, thus the need for change. Dowell & Silzer (2010) identify some possible operational changes that PepsiCo may need to address in the coming years.

First, they will need to provide transparency in career paths, performance expectations and the sharing of talent calls with employees. While some organizations believe in telling employees where they stand, others do not for fear of the consequences. Younger generations, the Millennials in particular, are far less accepting of not knowing where they stand, and may demand feedback.

Second, flexibility in work arrangements and how work gets accomplished may need to be adjusted in the future. Issues, including mobility (unwillingness to relocate), life stages (how personal issues interact with career progression), and job-hopping (excess job movement) may need to be reevaluated as organizations move forward. PepsiCo and other companies have been able to disregard these ideals in the past, but the change in the workforce, and the expectation of the new generations will require changes to the talent management system for the continued success of PepsiCo’s business and human assets.

References

Dowell, B. & Silzer, R. (2010). Strategy-driven talent management: a leadership imperative. San Francisco; Jossey-Bass.

Sustainable Advantage. (2004). Retrieved April 29, 2010, from www.pepsico.com/download2004-annual-english.pdf