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 oI the Development and Direction and the Third Part oI the report will
deal with the Evaluation oI its employees used by Pepsi.
The break up oI the report into parts is Ior the convenience oI the reader and to provide a better
understanding oI 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 inIormation. The report also
consists oI the Company and Industry ProIile and also the Competitors Analysis, and the Quality
Management by Pepsi and a set oI necessary inIormation.
We have tried our best to make sure that this report provides a realistic view oI modern-day
Human Resource Management.
ABOUT PEPSICO
Pepsi-Cola North America, headquartered in New York, is the reIreshment beverage unit oI
PepsiCo Beverages and Foods North America, a division oI 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 soIt drinks, including: Pepsi, Diet Pepsi, Pepsi Twist,
Mountain Dew, Mountain Dew Code Red, Sierra Mist, and Mug Root Beer account Ior nearly
one-third oI total soIt drink sales in the United States.
Pepsi-Cola North America's non-carbonated beverage portIolio includes 'AquaIina, which is
the number one brand oI bottled water in the United States, Dole single-serve juices and SoBe,
which oIIers a wide range oI drinks with herbal ingredients. The company also makes and
markets North America's best-selling, ready-to-drink iced teas and coIIees via joint ventures with
Lipton and Starbucks, respectively.
PepsiCo, Inc. is one oI the world's largest Iood and beverage companies. The company's
principal businesses include:
O lrlLoLay snacks
O 9slCola brags
O aLorad sorLs drlnks
O @rolcana [ulcs
O ;uakr loods
PepsiCo, Inc. was Iounded in 1965 through the merger oI Pepsi-Cola and Frito-Lay. Tropicana
was acquired in 1998. In 2001, PepsiCo merged with the Quaker Oats Company, creating the
world`s IiIth-largest Iood and beverage company, with 15 brands each generating more than $1
billion in annual retail sales. PepsiCo`s success is the result oI superior products, high standards
oI perIormance, distinctive competitive strategies and the high level oI integrity oI our people.
TERRITORIAL STRUCTURE OF THE SALES DEPARTMENT

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.

















"UALITY 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 oI overall market to create units. By this approach actual and potential customers
Ior 'PepsiCo Aquafina are identiIied, and their individual sales volumes are assessed. CareIul
study oI the territory database enables the sales representatives to precede to the next step oI the
planning phase- the setting oI objective.

The Iirst 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 oI little
value as proIit objectives are essential in keeping the territory perIormance on track.



PART ONE

HUMAN RESOURCE PLANNING

HUMAN RESOURCE MANAGEMENT AND PLANNING

MAXIMIZATION OF PRODUCTIVITY

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

It was brought to our attention that at the threshold oI strategy implementation the environmental
scanning process usually dominates the preliminary scheme oI analytical activities. During this
process the integrative linkage that PepsiCo has adapted to comparatively recently, comes to
light. The incessant Ilow oI inIormation both lateral and vertical gives testimony to the Iact 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/eIIiciency studies, the company relies primarily on
Iactual and procedural inIormation provided by its managerial talent.

At PepsiCo top management`s corporate strategy deIines 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 oI the companies dealing with consumer products, PepsiCo
also addresses its business strategy or, in more precise terms, the way it can diIIerentiate itselI
Irom competition. Such decisions interact strongly with tactical decisions executed at relatively
lower levels. There Iore, long-term goals must be translated into guiding principles that
Iormulate an out line as to where operational strategy would be heading.

COMPETITION:

Since our prime Iocus is the PepsiCo AquaIina so we shall be Iocusing on the competitors within
the same category. In the category oI Mineral Water, Pepsi is currently Iacing a Iurious
competition.

DIRECT COMPETITORS:

Some oI the major direct competitors are listed below:

AVA

Fontalia

Mineral Plus

Pure LiIe

Together these three Iorm a very Iierce competition Ior PepsiCo. This brings to surIace 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
Iormulating strategy.

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

Workforce:

Having the advantage oI a Ilexible workIorce well versed and proIicient with policies,
procedures and work-methods Pepsi tries to diIIerentiate itselI on the basis oI this advantage,
which supersedes the list oI its core competencies.

Facilities:

PepsiCo also serves as a classic example Ior those new in the Iield oI beverages because it has
the primary advantage oI well located Iacilities-oIIices, stores, and plants. This provides the
company with a competitive edge Ior it is able to handle a large variety oI products at diIIerent
volumes.

Market and financial know-how:

Atop its unique strategy oI achieving the best by utilizing potential to the Iullest Pepsi invests
heavily in recruiting talent that possesses vast knowledge relevant to market trends, likely
avenues Ior Iunding, distribution channels and competitor strengths. This pays-oII in the sense
that the company can easily attract capital Irom stock sales, market and distribute its products, or
diIIerentiate its products Irom similar products in the market.

ESTABLISHING PERFORMANCE STANDARDS

"An estimote of compony soles for o specifieJ future perioJ"

Forecasting oI sales provide the starting point Ior assumptions used in various planning activities
and Ior the development oI Human Resource performance evaluation system. Basically all
Iunctional areas oI an organization have a planning task, and all their projections and Iuture
estimates depends upon the Iorecast level oI sales.

In PepsiCo Iorecasting has been done on quarterly basis and Ior this purpose selected executives
oI diIIerent departments provides their esteem opinions based on statistical analysis or on
historical data. The Iactors which the keep under strict are Iollowing:

v General Economic Conditions

v Industry sales

v Projecting Product Sales

According to Food and Service Manager in PepsiCo, Ior Iorecasting PepsiCo uses diIIerent
combinations oI Qualitative and Quantitative methods because using more than one method,
increases the probability oI projecting making it more realistic. Following methods have been
used by PepsiCo Ior establishing perIormance standards.









ART TW0



Bevelopment onJ Birection of W0RK Iorce

PERSONNEL RECRUITMENT AND SELECTION

Recruitment is the process oI Iinding and attracting capable applicants to apply Ior employment.
Although operating managers are oIten involved much oI the recruitment responsibility is oI the
proIessionals in the HR department, these proIessionals are called recruiters. Recruiters should
be aware oI the constraints and challenges surrounding the recruitment process beIore they
attempt to Iind suitable applicants.

Recruiters pursue the applicants through a variety oI channels. The growing diversity in the
workIorce and the changing demographics oIten require recruiters to be more proactive.

O The Pepsi` has a very strong selection and recruitment process.

O The preliminary stage consists oI publicizing the job opening.

O The processing stage includes interviewing and credential assessment.

O The conclusion stage comprises oI reviews with budgeting and planning department.

O The candidate aIter being awarded the job is kept under close observation during the probation
period oI 3 months Ior monitoring his/her perIormance.

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 liIe cycle. Like a Product`s LiIe Cycle,
a human also has a career cycle, which needs its nourishment altogether. A Salesperson`s career
liIe cycle also comprises oI 4 stages; Preparation, Development, Maturity and Decline.

The Iirst question is, why is training so necessary? There are two major reasons Ior that; Iirstly to
develop the right working habits, and secondly, to oIIset 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
staII is given on Iour occasions:

O Orientation oI new Recruits.

O When a new Product is launched into the market.

O When a new strategy oI activities is devised.

O When an old product needs reIreshed 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 Ior all sales personnel.
This is done to develop the employee abilities to (a) manage themselves (b) work with others (c)
lead others. Few oI the salespeople were also exposed to overseas training and 10 oI then were
sent on international assignments Ior developing their skills and experience.

The Methods which has adopted to train their salespeople are:

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

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

O High-tech training methods: Computer interactive details can also help as training Iactors.
Pepsi` recently upgraded its soItware and hardware capabilities, so it had to train its staII and
managers with the up to date technologies.



INCENTIVES AND COMPENSATION

Incentives and gain sharing are compensation approaches that reward speciIied outcomes.
Incentives usually link individual perIormance and rewards, where as gain sharing unusually
embraces groups oI employees.

Pepsi gives yearly bonuses to its employees at the middle and lower levels oI the hierarchy,
whereas Ior the upper level they have proIit sharing.

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

Insurance: health, accident, disability etc.

Paid vacations.

Paid leaves: sick leave, maternity leave.

Retirement plans.

Educational assistance.

Personal use oI company car.

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



RECOMMENDATIONS

As Iar as Training and Development is concerned they should emphasize more on INFORMAL
TRAINING which is along the way, when doing Iieldwork, working in the oIIice a salesperson
is continually getting training. This is inIormal training, or more commonly understood as
experience.

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

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

The theory suggests that a salesperson should be evaluated by looking at the overall
perIormance oI the sales person.

CONCLUSION

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