Determine the correlation of the images of PepsiCo

The purpose of this paper is to determine the correlation, if any, between the images of PepsiCo as a diversity company, which it wants to convey, and the images reflected in objective views of the society. In order to determine the relationship between these two images, the information from open sources was collected and analyzed. The theoretical literature was studied and it was found out that experts identify nine leading practices of diversity management. These practices are (1) commitment to diversity as demonstrated and communicated by an organization's top leadership; (2) the inclusion of diversity management in an organization's strategic plan; (3) diversity linked to performance, making the case that a more diverse and inclusive work environment could help improve productivity and individual and organizational performance; (4) measurement of the impact of various aspects of a diversity program; (5) management accountability for the progress of diversity initiatives; (6) succession planning; (7) recruitment; 8) employee involvement in an organization's diversity management; and (9) training for management and staff about diversity management.[1] PepsiCo Inc. was analyzed according to these leading practices. The analysis was started from the company's profile.

Company's Profile

PepsiCo, Inc. is a leading multinational company, which works in 200 countries of the world and produces, markets and sells soft drinks, snacks, cereals and various foods[2]. It is the second world manufacturer of beverages, going after the Coca Cola Company, its main competitor.

It was founded in 1902 and in 1965 there was a merger of the Pepsi Cola Company and Frito Lay. After that the company started to develop very quickly due to a wide range of products. It expanded its business to Great Britain, Spain, Portugal, Mexico, Brazil and Russia.

Nowadays PepsiCo owns 18 brands such as Pepsi Cola, Mountain Dew, Quaker Oats, Gatorade, Lay's, Cheetos, SoBe, Tropicana and others. It employs 168,000 people worldwide and its net revenue totals $13.3 billion[3]. 17% of PepsiCo's middle-level managers are colored people, while women comprise 29 % of company's personnel[4]. The three divisions in the company are PepsiCo Americas Beverages, PepsiCo Americas Foods, and PepsiCo International.

PepsiCo's mission is ‘To be the world's premier consumer product company focused on convenient foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.'[5]

In 2005 Diversity Journal name PepsiCo the winner of the 2nd annual International Innovation in Diversity Awards. In 2008 it earned ‘Corporation of the Year” Award from the National Minority Supplier Development Council and the Workplace Excellence Award for ‘historic and continuous commitment to advancing LGBT rights in their workplace and setting an example for others to model'[6] from DiversityInc.

Diversity Management Culture in PepsiCo

1. Top level management commitment

In order to analyze the top-level management commitment into diversity PepsiCo's policy statements, official web site, newsletters and CEO' speeches were considered.

It was found out that diversity management and commitment of top management began with PepsiCo CEO Walter S. Mark in 1940, who decided that it was possible to use a high potential of Afro-American market in the USA. He asked the group of Afro-American sales managers to research the market. The group succeeded in their studies and Pepsi managed to boost sale and beat the Coca-Cola Company for the first time even in the states where the Caucasian population prevailed. They offered a marketing campaign where Afro-Americans were depicted as entertainment-loving middle class customers. An advertising campaign was launched in mass media under the slogan ‘Leaders in their Field'. The advertising featured the Afro-American students of one of the leading university. Another advertising campaign was at a point of sales. An Afro-American family was centered there. The campaign had a great success and later it turned out that a boy from these adverts grew up and became a US secretary of commerce.

Nowadays PepsiCo and its executives are still the leaders in diversity management. In 2006 an Indian woman Indra K. Nooyi became the CEO of PepsiCo. Under her supervision several diversity programs were launched. One of these programs is ‘Performance with Purpose', which is based on returning of some profit into the countries where the company works. ‘This includes meeting consumer needs for a spectrum of convenient foods and beverages, replenishing the environment through water, energy and packaging initiatives, and supporting its employees through a diverse and inclusive environment that recruits and retains world-class talent'[7]. Another program initiated by Indra Booyi is called Opportunity and Diversity/Inclusion, the main aim of which is to attract women, who left jobs because of children and family, back to work.

Seven out of fourteen members of PepsiCo's board and five out of 10 executives are either women or minorities[8]. ‘Having a diverse board is critical to fostering a diverse and inclusive culture for many reasons. One, because the board must be fully engaged in this strategic priority that is important to the company. Also, it's important for both external and internal audiences to know that company leadership is passionately committed to a diverse agenda so that it can attract the kind of people who want to be part of such an organization, not one that recognizes it's just a nice thing to do, but one for which diversity is an absolute strategic imperative,[9]' former PepsiCo's CEO Steve Reinemund said.

It is possible to conclude that PepsiCo's executives traditionally take the diversity seriously and manage to convey a clear message to its employees and consumers.

2. Diversity in the strategic plan

Diversity management is considered one of the main goals of PepsiCo's strategic plan. It demonstrates commitment to equal opportunities for workforce. It ensures that the employees will not be subject to any unlawful discrimination, harassment or victimization on the grounds of their sex, gender reassignment, pregnancy, age, marital status, disability, sexuality, race, color, religion or belief, ethnic or national origin. The two pillars of their strategy are ‘women representation and differently-abled employees, as diverse markets necessitate a diverse employee base that can appreciate and serve diverse customer needs'[10]. Efforts are now being made on searching and ‘employing differently-abled people in executive positions'[11]. ‘A plan to hire ex-servicemen from the armed and para-military forces is also on the drawing board'[12].

However, in reality PepsiCo was accused of ‘sexual harassment and unfair dismissal of eight women workers'[13] and ‘violations of trade union rights'[14] at Frito Lay Poland Ltd. The eight fired workers were either the victims or witnesses to plant's supervisor's sexual harassment for over two years. When they complained the HR management asked them to sign a letter of resignation. They were threatened that if they did not sign it they would be ‘subjects to disciplinary dismissal'[15]. In that case it would be very difficult for them to find any other employment. The reaction of Pepsi was to fire workers rather than investigate the matter. The trade union tried to protect the dismissed women and insisted on arresting the supervisor. The management at Frito Lay Poland Ltd revenged themselves upon the trade union members for it. They violated trade union rights and collected information about workers' membership in the trade union, fired the trade union leader for supporting the fired women and asked all employees to stop their membership in the trade union. The case received publicity and the supervisor was arrested. Although being in prison he got the salary from PepsiCo and was provided with an advocate. The fired women were neither reinstated at their work nor paid any compensation.

Several other cases of sexual harassment were reported at PepsiCo and its divisions worldwide. There was a case at the South Beach Beverage Company (SoBe) in the USA and PepsiCo was forced to pay $1.79 million.

From all mentioned above it is possible to draw a conclusion that PepsiCo violates its principles of conduct stated in the strategic plan that is ‘providing a workplace free from all forms of discrimination, including sexual and other forms of harassment'[16]. It is in also mentioned in the company's documents that ‘enterprises should respect the right of their employees to be represented by trade unions'[17] and ‘engage in constructive negotiations, either individually or through employers' associations, with such representatives with a view to reaching agreements on employment conditions'[18]. These principles are not followed by PepsiCo as well.

3. Diversity linked to performance

As far as the diversity linked to performance is concerned PepsiCo believes that that ‘diversity in its people at all levels from managing executives to entry level employees provides a better understanding of its clients, and customer needs'. PepsiCo states that ‘a commitment to a strong diversity and inclusion mission provides the company a ‘competitive business advantage'.

One of the examples of this commitment was the Latino Employees Network which helped to develop the Doritos Guacamole Flavored Tortilla Chips. The product earned $100 million during the first year. ‘The fact that one of our diverse employee groups helped to make this product so successful is one example of just how we leverage diversity to drive business results,'[19] says the Vice President of Global Diversity and Inclusion Department of PepsiCo, Amy George, in her interview.

Such products as a wasabi-flavored snack, Mountain Dew and Code-Red Gatorade Xtreme were also developed by diverse employee groups and aimed at meeting needs of diverse customers.

Summing up, PepsiCo's diversity programs are connected with its activity and the diverse workforce may help to improve performance, expand services and fully meet consumers' needs.

4. Measurement of diversity program impact

Once the diversity programs are launched, it is essential to define their effectiveness. PepsiCo's management studies and analyzes the information on its ‘workforce to evaluate the effectiveness of the organization's diversity management efforts and the progress it is making in those efforts.'[20] The annual Harvey C. Russell Inclusion Award was introduced in order to encourage those workers who achieved a lot in diversity programs.

They also assess the profit they get from the investments into the diversity training programs.

PepsiCo works out three stages in evaluating these training programs. One of them is an Ethnic Advisory Board, which deals with career opportunities and development of minorities.

Annual surveys are conducted among employees to find out what workers' understanding of company's culture and their opportunities within the company are. They are asked about a ‘company's climate, organizational commitment, promotions, job satisfaction, supervision, and performance evaluations.'[21]

In conclusion, PepsiCo employs different measuring procedures to indentify the impact of diversity programs.

5. Accountability

Accountability of managers of all levels is an important element which ensures that they take an active part in company's diversity programs. ‘PepsiCo's executives demonstrate their commitment to diversity by holding themselves accountable'[22].

The Vice President of Global Diversity and Inclusion Department of PepsiCo, Amy George, in her interview says ‘This sort of executive commitment and accountability ensures that no group of employees is left behind and that everyone is being equally represented at the executive table.‘[23]

PepsiCo creates affinity groups of workers, which consist of people of the same race and gender and who share the same interest. The company is sure that such groups help to provide an inclusive culture in the company, where each employee feels free to report his/her ideas. The line managers collect diversity ideas from all the departments and transfer them to the executives. The main aim is to be aware of all the employers' complaints and opposition to the executive's plans, ‘turning the varied perspectives of employees into a competitive edge over rivals'.[24]

For example, once a manger addressed the audience of black workers standing on the step of the stairs above them. Later he got a mail from one of the works, which he wrote that the way how the manager addressed them reminded the slaves on the plantation. It became clear for the management that workers from different ethnic groups have different association. After that a new practice was introduced. ‘Each executive in the company is responsible for the development and growth of different groups of the employees[25]'. One executive deals with the Black personnel, another with Latinos and so on. For example, PepsiCo's general counsel, Larry D. Thompson, who turns out to be black, is in charge of white community.

‘These executives hold themselves accountable for understanding the workplace issues of the diverse employee population face'[26]. ‘They work to identify the key talented individuals in the groups and often serve as their voice to the rest of the executive committee and the CEO'[27]. ‘Every year all of the executives share with the rest of the committee the biggest concerns of their groups, identify the support needed by the groups, and articulate their plans to address the concerns faced by these diverse groups'[28].

To sum up, PepsiCo's management accountability is the key element of its diversity programs.

6. Succession Planning

Succession planning is an essential strategic process which helps to introduce the executives' diversity initiatives into the company and find and train people who have a potential to be the leaders of the company. PepsiCo ‘focuses on identifying particular individuals as possible successors for specific top-ranking positions and engage in broad, integrated succession planning and management efforts that focus on strengthening both current and future capacity.'[29] The company claims that it uses ‘succession planning and management to achieve a more diverse workforce, maintain their leadership capacity, and increase the retention of high-potential staff.'[30] PepsiCo's HR Department encourages the employers to submit applications for higher positions. After that it discusses the candidates and selects those who meet the requirement of the position. The company considers ‘the development of potential successor employees for executive leadership roles as a stage in the succession planning process.'[31]

The company, indeed, does everything possible to diversify its workforce. It even violates the race and gender discrimination law, employing minorities, in order to be among 50 best places for minorities to work. There was a case of a reverse racial discrimination when PepsiCo's worker Patricia Steffes won $ 2.6 million in court. She worked for all her life in the company and was promised a promotion as she was well qualified for the position and had degrees in accounting and finance. But PepsiCo employed a less qualified black employee, saying that ‘the company needed a minority in that position to maintain its ranking as a "top employer of minorities'[32]. It turned out that ‘Steffes did not fit into PepsiCo's aggressive minority promotion program'[33]. PepsiCo was so willing to promote minorities that violated the rights of a white woman, Patricia Steffes, lost profit because of employing a less qualified worker and ruined their reputation as a diversity company.

It is possible to draw a conclusion that the PepsiCo's activities do not correspond to their goals to diversify the workforce.

7. Recruitment

Recruitment policy in PepsiCo is to be conducted due to employment legislation. Pre-employment screening and identity checks should be done to ensure the suitability and integrity of new recruits.

‘An employee is required to read the Contract of Employment, including his/her Individual Terms, contractual sections of the Handbook and Compliance Manual, and the non-contractual policies and procedures set out in the Handbook, all of which establish the conditions of employment and standards of conduct expected by the Company.'[34] All such documents are given to the employee when she/he starts working with the Company.

‘Line managers are responsible for explaining the Company's standards for job performance and conduct to their employees and for ensuring that their employees observe them.'[35]

PepsiCo is ‘committed to providing equal opportunities in employment'.[36] It is in PepsiCo's policy that ‘all employees and all job applicants will receive fair employment opportunities regardless of race, religion, color, nationality, ethnic or national origin, sex, sexual preference, (including gender reassignment), marital status or disability (including physical, sensory and mental disability).'[37]

[1] Sherrie St. Amant and Marilyn Mays, “Ten Tips for Diversity Best Practices”, Wellesley,

Mass.: Northeast Human Resources Association, 2002.

[2] Official site for PepsoCo.

[3] Ibid.

[4] Embracing Corporate and Boardroom Diversity in association with Heidrick & Struggles, heidrick.com/NR/rdonlyres/.../0/CBM_BoardDiversity2006.pdf

[5] Official site for PepsiCo.

[6] ‘Who Were the Big Winners at the 2008 Out & Equal Awards Conference?', DiversityInc staff, Sep 22, 2008, http://diversityinc.com/content/1757/article/4389/?Who_Were_the_

Big_Winners_at_the_2008_Out__Equal_Awards_Conference

[7] Official site for PepsiCo.

[8] Embracing Corporate and Boardroom Diversity in association with Heidrick & Struggles, heidrick.com/NR/rdonlyres/.../0/CBM_BoardDiversity2006.pdf

[9] Ibid.

[10] PepsiCo Annual Report, 2008, http://www.pepsico.com/Annual-Reports/2008/index.html

[11] Ibid.

[12] Ibid.

[13] Complaint against PepsiCo International for violations of the OECD Guidelines for Multinational Enterprises, iufdocuments.org/www/.../OECDPepsiCosexualharassment.pdf

[14] Ibid.

[15] Ibid.

[16] PepsiCo Annual Report, 2008, http://www.pepsico.com/Annual-Reports/2008/index.html

[17] Official site for PepsiCo.

[18] Ibid.

[19] Robert Rodriguez ,Diversity Finds Its Place, HR Magazine, 0806, Vol. 51, No.8.

[20] Official site for PepsiCo.

[21] Ibid.

[22] Robert Rodriguez ,Diversity Finds Its Place, HR Magazine, 0806, Vol. 51, No.8.

[23] Ibid.

[24] Leadership: The New Diversity: In a Global Economy, Carol Hymowitz, The Wall Street Journal, Nov 14, 2005

[25] Robert Rodriguez ,Diversity Finds Its Place, HR Magazine, 0806, Vol. 51, No.8.

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29] Official site for PepsiCo.

[30] Official site for PepsiCo.

[31] Ibid.

[32] Case 18 - White, Female PepsiCo Employee is Wrong Color!, adversity.net

[33] Ibid.

[34]

[35]

[36]

[37]

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