Meeting the Diversity Challenge at PepsiCo

Company Name : PepsiCo
Company Address :
City :
Country : USA

By The Steve Reinemund Era, Caitlyn Paige, Management 391

PepsiCo was formed in 1965 with the merger of Pepsi-Cola and Frito-Lay, Inc. PepsiCo has a number of products that are highly successful, such as their line of soft drinks, sports drinks and snacks. Today, PepsiCo reports over $50 Billion dollars in annual revenue, and is one of the top members in the fortune 500. Though PepsiCo has been highly successful financially, they have also made great strides to constantly improve diversity within the organization. This was essential because the diversification of their products in new markets would demand a great breadth of cross-cultural knowledge.

PepsiCo was one of the first companies to recognize the importance of people of color within the workplace and target market. PepsiCo hired and appointed their first African-American, Hispanic, Asian, and woman executives all before 1970. Today PepsiCo operates in over 200 countries, and continues to focus on diversity and inclusion at all levels of the corporation. These successes have largely been credited to top executives, particularly the CEO of PepsiCo.

Steve Reinemund was the first senior leader at PepsiCo to focus on diversity and inclusion from a perspective of changing the entire culture of PepsiCo. Reinemund recognized that the workforce that PepsiCo had did not successfully represent that demographics that they were marketing their products to. To combat this growing gap, Steve Reinemund appointed a new vice president of human resources to help promote diversity within PepsiCo. In the year 2000, Steve Reinemund and his vice presidents developed the first Hispanic Advisory Board, and creating new metrics to ensure that diversity goals in terms of hiring were met.

These new metrics were met with great resistance, as diversity of the workforce became part of the forefront of hiring and promotion decisions. Many people were angered because they viewed the new policies as potentially promoting someone based on the fact that they were diverse, when they could be less qualified. Resistance was further met when, in 2002, PepsiCo did not meet its diversity goals. Steve Reinemund had previously attached diversity initiatives to bonus compensation, and due to the goals not being met, limited the bonuses, sending a message to his staff that everyone was being held responsible for executing the companyís diversity strategy.

Throughout his reign as CEO at PepsiCo, Steve Reinemund not only made PepsiCo more profitable, but also significantly increased the diverse climate of PepsiCo. It was measured successfully through raw figures of increased diversity in hiring, and through implementation of inclusion training programs. The impact of inclusion training was measured through the annual Pulse Survey, where from 2003 to 2005/6 there was a 38.8% increase of employees indicating that they felt the culture of PepsiCo was more inclusive.

Announcing his retirement and naming Indra Nooyi as his successor raised many questions for the future of diversity in PepsiCo. Though Indra Nooyi was exceptionally qualified for the position of CEO, holding several other senior positions over her career at PepsiCo, she has yet to find her own voice within the company. Taking her background into account, Nooyi will have to make a number of changes to further push the diversity inclusion strategy, responding to the billions of consumers.

One difference that Indra Nooyi brings to the table is her experience with rising to the top as a minority. This knowledge allows her to have a first-hand experience of how her minority status as both a woman, and a person of color plays out in the corporate climate of inclusion. Furthermore, as a person that is Indian-born; she possesses potential knowledge about different cultures that can be integrated into PepsiCoís global strategies.

The fact that Nooyi is Indian-born and a woman also allows for her to have several disadvantages. Both identities have a history of being marginalized in corporations, and at many times, she will be the minority, yet making decisions for the majority. She will also face the potential stigmas that go along with being a woman. Some people may view her appointment as having to do with the fact that she is a minority. It is likely that she will encounter several cross-cultural obstacles throughout her time as CEO. Nooyi should hold to the established set of norms that Reinemund left behind, as they are improving the climate and are successful. However, it is important for her to make her own name in the company, so she will have to further push the envelope. She is well qualified, with am impeccable record of promotions, indicating that she is indeed highly qualified to be the CEO of the company.

One way that she could improve on Reinemundís strategy is by further decoding cultural norms and expectations and making inclusive decisions a crossed all countries that PepsiCo is involved in. Developing successful diversity in all countries and in all areas of the PepsiCo organization will be pivotal for success. Reinemund was very successful with his program in the United States, now Nooyi needs to expand these ideals exponentially, making diversity a worldwide priority.

In the approach for a global diversity strategy, I would recommend that the goals become more aggressive. I would suggest that the goals remain easily interpreted and clear, but the percentages of specific groups be more aggressive. One particular area I would recommend focus on is the progression of women in countries outside the United States. Women represent 50% of the population, however, a very small percentage of women are at the top of companies. Using a mentorship program and monitoring measures that Reinemund put in place, Nooyi can ensure that women in other countries become strong and successful leaders in PepsiCo. Nooyi can also accomplish this by creating specific Advisory Boards such as that for African-Americans, and Hispanics, for other minorities like women.

I would recommend that these Advisory Boards be expanded, become more inclusive to all members, and be restructured so that specific people from all departments are contributing their input. These advisory boards need to be directly reporting to the executive board so that necessary changes can be made. The advisory boards will not be successful in accomplishing their goals if they do not have the access to the higher executives who can make changes in the company and make diversity more integrated in the culture of PepsiCo.

Another issue that Nooyi can focus on is getting the Pulse survey to have exceptional results. Currently, Reinemund turned the company from an unsatisfactory environment for inclusion to an acceptable inclusive environment. Nooyi can then take this a step further and get it into a high percentage where inclusiveness becomes part of the cultural norms at PepsiCo. This has many benefits for the company, as it will make PepsiCo a better place to work, and helps keep PepsiCo in a desirable position with the surrounding community and stakeholders.

Overall, PepsiCo is a company that has made great strides for diversity before it was required. They had several diverse executives before the famous civil rights acts were put into law. Through the 1990ís and early 2000ís PepsiCo became even more dedicated to several different cultures. They diversified both their products and workforce to cater to all different consumer markets. Steve Reinemund left huge shoes to fill, but Indra Nooyi has the potential to make PepsiCo a leader in diversity and inclusion a crossed many cultures, and nations.