Video Case

PepsiCo: More Than Just Personnel

How does a company with a massive international presence, doing business in multiple time zones and languages, manage its employees? PepsiCo does it with a Values Statement and Code of Conduct that spells out what the company stands for, the rules it lives by—and Strategic Human Resources Management. The Values Statement—which reflects the company’s aspirations—and the Code of Conduct—which provides the operating principles to achieve those goals—apply to every PepsiCo ( pepsico.com) employee and to every business transaction the company makes worldwide. Chairman and chief executive officer Steven S. Reinemund believes the company’s continued success comes from its employees’ dedication to these principles.

At PepsiCo, Strategic Human Resources Management (SHRM) develops strategies that contribute to company expansion and innovation. It is fully integrated into the organization, “partnering” with every division of PepsiCo’s business, and must produce hard line results.

One mode of SHRM divides the work into four “quadrants”:

  • Administrative Experts manage basic human resource functions like paying employees, dealing with their benefits, ensuring they are treated fairly, and more.
  • Employee Champions represent the employees’ perspective to management with a view to maximizing their contribution to the company
  • Change Agents develop systems and processes to facilitate change within the organization.
  • Strategic Business Partners devise strategies for growth in the organization.

Let’s look at SHRM in action. Darryl Claiborne, a human resources director for Frito-Lay, a PepsiCo snack division, sometimes heads out on field trips. “There’s times that I actually jump on a route truck and spend a day with an employee. As we ride we talk about understanding the business and how to drive the numbers,” he says.

In a conventional company, human resource personnel rarely leave their offices. But PepsiCo believes that it is important for HR managers to achieve a more complete integration into the organization’s various departments, to everyone’s benefit. For example, employee retention has improved as a result of this type of direct communication between managers and employees in the trenches.

When a sales rep asks Darryl about career advancement, Darryl suggests he first meet the obligations of his current job—improving sales figures and establishing a rapport with his customers—before taking advantage of the company’s self-nomination procedure which allows employees to inform management they are interested in promotion. In some cases it could mean following an established progression of advancement before moving into management.

PepsiCo recognizes the value of a human resource function that goes beyond the basics to delivers strategies and measurable hard-line results that contribute to the company’s success.

It judges employee performance according to the person’s contribution to company results and is committed to equal opportunity for all employees and job applicants. PepsiCo’s focus on SHRM helps the company grow and innovate—keys to flourishing in todaycompetitive corporate environment.

Critical Thinking Questions

1. What challenges do human resource organizations face in today’s competitive business environment? How is PepsiCo meeting those challenges?

2. Strategic Human Resources Management refers to an integrated personnel/human resource function. Describe the components of the SHRM planning process and how each one contributes to PepsiCo’s corporate development and growth.

3. PepsiCo believes in an integrated human resource function, even sending senior human resource personnel out into the field. What important benefits have resulted from this unusual activity?

Sources: Adapted from the video case, “Human Resources Management—PepsiCo”; Society for Human Resource Management (SHRMOnline) (October 15, 2005); Lin Grensing-Pophal, “First Day Impressions Set Stage for Retention,” White Paper for The Society for Human Resources Management, CareerJournal.com, (October 15, 2005); PepsiCo corporate Web site, (October 15, 2005).