Talent Development at PepsiCo Freeman F. Dennis Dr. J. A. Anderson, Sr. Talent Management – HRM 532*201004 July 19, 2011 Introduction. At PepsiCo talent management is taken very seriously. From the CEO on down, all level are involved in the reviews of high potential individuals. With this level of involvement, the talent that is attracted to the company is developed and trained so well that many of them go on to be top level executives at other major corporations. Discuss how PepsiCo uses its talent to sustain a competitive advantage in the marketplace.
The first thing that PepsiCo did was to ensure it had the “the right people, in the right place, at the right time, doing the right work, the right way. ” (Silzer, 2010 p. 618). With this philosophy, the organization is achieving talent sustainability. PepsiCo realizes that for talent to be developed properly and in a sustainable way there must be ownership of the talent to direct the development of the talent. The company therefore has decided that the corporation takes ownership of the top “several hundred roles”. The other much greater pool is owned by the division.
This enables the corporation to train and utilize these talents across the full spectrum of the enterprise rather than solely within the division or function where they work. This also ensures that there is commonality of language used as well as the development of the talent. The company has four elements it utilizes to this end: • Talent Acquisition which is finding the right talent and ensuring the talent is given the right experiences through the entire process of bring the talent into the company. • Talent Management and Development where the company gives the talent the training nd development needed for the talent to be ready to assume critical leadership position when required. • PepsiCo University in which the talent is given the training in an accessible learning environment that will give the talent global capability. • Inclusive Culture. PepsiCo’s culture and the behavior that the organization expects from its leaders for the present workforce as well as the future workforce. Talent at PepsiCo is nurtured and trained also through on the job training. A career goal and development path that is aligned with the company’s strategic goals is set for the individual to ensure that s/he is ready for the next level.
Discuss three key elements of PepsiCo’s career growth model. At PepsiCo, to be considered for the career growth model (CGM), an individual must have demonstrated results in both business and people management and development. The results are measured from the performance management process. Results in people management and development are just as important at PepsiCo as business results. A second element in CGM is leadership capability. PepsiCo looks for the competencies and behavior in the individual it expect from its leaders.
There is one set of values the company expects from all it employees as well as different sets for leaders and mangers depending on the leader or manager level in the hierarchy of the company. The competencies and behavior grow in significance as the individual rises in the organizations. A third component is functional excellence which is considered the “basic building blocks of knowledge for any given role. ” (Silzer, 2010 p. 621). Employees are to gain functional competency through training curriculum in fields such as sales, marketing and finance.
It is expected that this knowledge will be gained early in the individual’s tenure with PesiCo through job rotation. As the individual advances in the organization, leadership skills rather than functional skills are emphasized and to ensure that s/he can transition from “divisional capability and talent ownership” (Silzer, 2010 p. 621) to senior-level talent management practices. Another component, is for the individual to know the business cold, or in other words, having an in depth comprehension of the organizations numerous business models.
The last element is critical experience. PepsiCo firmly believes that one of the most effective methods of talent development is providing the individual with the right encounters. To the organization, it is important that everyone utilizes the same nomenclature and so it has developed a set of what is termed critical experiences which includes working in the three major product areas – beverages, snacks and food – to ensure that leaders can move within the business areas as need and understand how the business is conducted.
The leaders must also have an understanding of the three distribution systems used by PepsiCo. It is realized that not all chosen CGM will succeed equally for each and every assignment. It is also emphasized that the position being coveted may already be taken when s/he I ready. CGM is for long term career growth but the planning may have to be altered as changing circumstances arise. Discuss three key elements of PepsiCo’s talent management model. The first of the three elements is the identification of the talent who has the capability to move up and take on more responsibility in the organization.
PepsiCo does this through its people management process. In this process, talented individuals are constantly reviewed and their development path adjusted to fit the organizations strategic goals, by each level of the organization all the way up to the CEO. In the second element, develop readiness, PepsiCo believes that there are three parts to development; • On the job or in the present position where 70 percent development takes place • 20 percent from coaching, feedback and mentoring • And the final 10 percent from formal training.
The organization uses this format for development planning for its key talent. One of its most effective programs, current senior leaders – developing in their current position – receives 360 degree feedback through the Hogan Assessment Suite. The results from that are used in a follow up program with follow up approved coaching from external coaches. The third element of PepsiCo’s Talent Management Model is movement. This element involves the organization planning for filling positions.
Whether a position becomes vacant through promotion, voluntary or forced exit, not only does that position has to be filled, but the vacancy that occurs below or alongside it, when it is filled internally, a second position needs to be filled. The organization spends time looking at moves and planning moves for talents for them to gain the experiences they will need to progress in the company. This might also involve moving someone who has stagnated in a position so that a developing talent can take the position to gain the necessary experience.
Discuss the challenges that PepsiCo faces related to its talent management system. The authors have identified four challenges related to PepsiCo’s talent management system; • Defining High Potential • Metrics to be used for Talent Management • Ensuring Rigor: Getting Leaders to Actually Execute on Plans • Changing Workforce: Meeting the Needs of the Next Generation Talent Management, being more of an art than a precise science, has difficulty defining exactly which individual has high potential.
What the individual has achieved in the past is readily available to be judged. Predicting how that individual will perform in the future in a more responsible and demanding position is a far more difficult task for the talent management specialist. Each specialist has his or her definition of potential and each one uses a different model to predict potential. This further gets complicated by the views and opinions of corporate senior leaders who have their own ideas of recognizing talent.
Then as these leaders change and their places are taken by a new set of senior leaders, the definitions changes to reflect the current views and opinions. Talent managers should also recognize that it takes time for users to familiarize themselves with new models and what the inputs for these models are and therefore as the organization changes models they may find the results the obtain from the new model may not be what they hoped for and this will not be because the model is not good, but because of a lack of familiarity with the model by the users.
As more Industrial-Organizational Psychologists join the talent management team, the variance will diminish as they will bring a greater understanding of the needs and requirements to the organization. The industry has yet to set standards for Metrics for Talent Management. Specialists are having problems defining the metrics to be used as different individuals in the industry stress different sets of metrics. Just how many potential successors (bench strength) for each critical position should there be within the organization is one of the problems being grappled with.
In the absence of standards, human judgment is being used to determine which individual has the capability to assume the next level position. Judgment is a matter of perspective, which then means that there are differing opinions within the organization which individuals should be considered for the promotion. As this process id purely judgmental and opinion based, many time the individual that is set aside for the promotion is not the one who ends up being promoted, but someone who was thought not to have the attributes required for the position.
Frequently, the number of moves within the organization an individual makes is used as a determining metric. The fallacy to this is that the moves may have been made because someone was needed in the position and not as a training/developmental move for the individual in preparation for the promotion being considered. The senior leaders need to think about the development path for the individual so that when the high potential individual (HiPo) is moved, it is a move that will enhance and impact his/her development towards the chose career goals.
It may be necessary for the senior leaders to make tough decisions such as keeping a position open until the right time in the HiPo’s development path for him or her to fill that position or even moving someone out of a position for the HiPo to fill to gain the required developmental experiences. Another metric sometimes used for the building of bench strength, is the planned movement of HiPos, and sometimes other talents, across business operations or between different countries.
With the right experiences planned for the moves, this can be an effective means of building bench strength. Some companies have used quotas, whether it is a certain percentage with in a department, functional area, region or country or even an absolute number, to designate HiPos. This can be very misleading as many of those designated/counted will not have the capacity for the top positions. Worst, it is giving a false reading of the real number of HiPos within the organization. Another major problem is Ensuring Senior Managers will Execute the Plan.
For the plans to be successful, it is necessary for HR to become a full partner in the strategic planning of the company. When HR is involved in the strategic planning, they will be able to add succession planning and the needs and requirements to ensure the designated successor(s) have the right development plan to be ready when the time arrives for the move to be made. Once senior leaders approve the succession plan as a part of the organization’s strategic plan, it will have a higher probability of being acted upon and carried out.
The final challenge for PepsiCo is one that is being faced by all organizations at this time. How does it Talent Management System Meet the Needs of the New Generation. The current systems have been built and modeled with the boomer generation, but they are now leaving the workforce. The newer generations that are either already in it or entering the workforce have very different needs, aspirations and values to what the boomers had. The new generations have a greater need for transparency, openness and inclusiveness in decisions that affect their future.
Organizations will have to change to reflect this. There is also the desire by the new generations for more flexibility in their lives which will require a different approach to work schedules and work locations. Organizations may have to increase the amount of remote/virtual work to be able to retain top talent. The old belief that when the company say move, the individual moves, even to another part of the world, no longer holds true for the new generations.
Companies will have to recognize this is a new workforce and adjust their approach to accommodate their lifestyle aspirations if they wish to retain their competitive advantage. Those who do not will lose out on the HiPos of the future. Conclusion. As can be seen from the PepsiCo experience, Talent management and development is a very difficult and multifaceted process that has to be undertaken with much care and fore thought.
PepsiCo is having success with its process because there is a strong commitment from the very top management. This commitment ensures that the process is embraced by all within the organization and so it is executed well and consistently across all divisions. The process at PepsiCo, although working well is continually evolving and preparing for the future generation of workers.
Reference Silzer, R. & Dowell, B. (2010), Strategy-driven talent management. A leadership imperative. San Francisco, CA: Josser-Bass.