In the current intensively competitive corporate environment, maintaining a competitive edge is becoming more and more complicated for companies. Companies have to put up highly qualified and committed workforces in order to differentiate their positions in the market. Competitive advantage is not only about differentiating corporate products or services but it also encompasses the art of tapping special skills to support rapid growth and better customer satisfaction. It is also critically important to monitor competitors’ moves and the management has to be able to consolidate upcoming technologies so as to remain competitive at all times. In simple terms, attaining a competitive advantage requires the ability of management to integrate core production skills and competences that empower individual business units to perform to their maximum and to adapt to changing environments.
In this study, the essence of components of strategic human resource management (SHRM) will be discussed in the above regard using a case study of PepsiCo. These vital elements are strategic human resource planning (SHRP) and strategic human resource development (SHRD). These elements of HRM play a major role in the economics of an organization and in the achievement of business goals and objectives. They account for the greater part of a company’s competitive advantage and alignment to corporate direction. This is in contrast to the traditional belief that a company stands in good ground against competitors with other transferable resources such as equipment. In fact, it is increasingly being recognized that SHRP and SHRD contribute significantly to the achievement of organizational objectives. A high quality workforce enables an organization to compete with respect to market responsiveness, product quality, customer satisfaction and technological integration/innovation.
SHRM will be assessed in this report with a focus on PepsiCo Inc., a food and beverages company with international presence. The use of SHRP and SHRD at PepsiCo will be assessed to highlight the ways in which the company has utilized these elements to attain its market position and international recognition. PepsiCo has had a turbulent past as far as global presence is concerned but the company managed to achieve some of its business objectives nonetheless. In fact, the company has upheld its corporate principles in all its units of business especially in the arm of human resource management. Strategic planning and development in HRM will therefore be discussed in this study as has been used by PepsiCo to promote business growth and to gain a competitive advantage.
PepsiCo Inc. is an American multinational dealing in the manufacture, marketing and distribution of beverages, processed snacks and a range of other food products. The company was founded in 1965 after it a merger with Pepsi-Cola and Frito-Lay to form PepsiCo. Other acquisitions by the company include Tropicana in 1998 and Quaker Oats in 2001. These mergers and acquisitions have given PepsiCo and added advantage as new brands are integrated to its product portfolio. The company is operational in over two hundred countries globally and has achieved major milestones to become a world leader in the food and beverage industry. It boasts of more than $60 billion in revenue and close to three hundred thousand employees worldwide. PepsiCo is the largest in the industry in North America and the second largest in the world (iStockAnalyst, 2010).
PepsiCo’s vision is to continually improve the world in all aspects; from environmental to social and economic aspects, and create a better tomorrow. As a result, the company implements programs focused on environmental stewardship and activities that benefit the society. It is committed to building its shareholder value by becoming a truly sustainable company. The mission is to be the global premier company in consumer products focusing mainly on convenient foods and beverages. The company seeks to produce financial rewards to investors and provide employees, partners and the communities with growth and development opportunities. Working for PepsiCo is a unique experience that captures and conveys the excitement of being part of a dynamic, result-oriented organization. The company goes for top talent in order to sustain its powerful brands and support business growth. Additionally, PepsiCo ensures a culture that empowers people to develop skills needed for success.
SHRP with respect to business objectives of PepsiCo
Strategic human resource planning is a vital component of strategic HR management that aligns human resources with corporate organizational plans. Strategic plans act as a guide for an organization to successfully realize its mission. Thus, strategic human resource management helps in the integration of decisions about people with decisions regarding the goals and objectives of an organization. Companies that successfully align their human resource management with business mission achieve this through integrating strategic HRM into other planning processes. This entails putting more emphasis on activities that support business goals and building strong and sustainable HRM relationships. Strategic planning therefore means putting down on paper where a company is, where it wants to go and how it plans to get there. Nonetheless, planning does not bear fruits if the plans are not acted upon. Strategic HRM requires the strategic implementation of HRM and performing activities that focus on accomplishing the strategic goals of an organization (US Office of Personnel Management, 1999).
The relationship between HR executives and subordinate staff in management holds the future of planning and implementation of HR strategies. Traditionally, a contention existed between the two regarding the role of each and the HR executive roles were thought to be law enforcement and management of rules and regulation. However, in the current strategic HRM situation, the core focus is on achieving organizational objectives and to produce desired results. Therefore, top and subordinate HR management must work together to enhance an organization’s ability to achieve its goals. This will create an impact on company decisions to foster business development. The increasingly changing business environment demands that SHRM be a core function of human resource management in relation to the achievement of business objectives. This calls for strategic human resource forecasting, strategy formulation and excellent human resource planning.
PepsiCo has built a worldwide presence since the mid 1990s. The company had established ambitious goals to triple its international revenue of soft drinks in five years. However, the company did not quite succeed in realizing the expected growth and profitability and had to withdraw from some major markets due to losses from beverage products. Its revenues were drastically shrinking as opposed to the aggressively growing revenues of Coca-Cola, its major competitor (Gupta, 2001 p.47). This experience demonstrates that securing a robust global presence is not equivalent to gaining a competitive advantage. On the contrary, it requires systematic analysis, strategic business planning and human resource management. A rigorously discipline approach towards strategic planning is required to realize business objectives successfully and to gain the much needed competitive edge. The major question regarding strategic human resource management is how a company with massive a massive global presence like PepsiCo manages its employees. More so, how the company aligns its strategic human resource management with business objectives is also a major subject matter of this section of the study.
PepsiCo does manage its Strategic Human Resources Management through a Values Statement and Code of Conduct that defines what the company stands for, its rules and what it lives by. The Values Statement reflects the company’s aspirations while the Code of Conduct defines the operating principles that are used to achieve set goals. These elements apply to every PepsiCo employee as well as any business transaction that the company conducts wherever in the world. In fact, employees at PepsiCo are dedicated to these policies and this has contributed to the continued success of the company. On the other hand, strategic human resource planning helps the company to develop strategies that align and contribute to the company’s realization of business objectives. These objectives relate to market expansion and innovation, partnering and decision-making processes. At PepsiCo, administrative experts ensure that the basic human resource functions are achieved in the best way possible (Gitman & McDaniel, 2007 p.303). These include fair treatment of employees in terms of payments and benefits among other functions. This ensures that employee contribution to the company’s objectives is at a maximum and the consequence is improved business performance. Moreover, strategic business partners are roped in by the organization to help devise strategies that sustain the growth of the company.
The function of strategic human resource management is recognized at PepsiCo as a vital component that delivers measurable results with regards to business success. A direct communication structure between employees and management is adopted at the company and has worked to the benefits of employees and the organization as well. Employees’ performance is judged according to their contribution to business results and commitment to long term business objectives. This SHRM and planning approach helps the company to grow and strengthen its innovation which are keys to success in the contemporary competitive corporate environment. The comprehensiveness with which PepsiCo has approached strategic human resource planning has benefited the company in the achievement of its overall strategic objectives. This is visible in the company’s human resource function that fully understands and supports the direction followed by the organization. It captures the people element in its goal to achieve short-term, medium and long-term objectives. These include having the right people in place, the right mix of skills and developing employees in the right way. Furthermore, this strategy articulates clearly some common critical themes that support the achievement of other plans and strategies related to business growth. Fundamental underlying issues are also addressed accordingly by the motivated and committed people that the company has.
Strategic human resource planning does not necessarily translate into a single approach to align with business objectives. The approach used varies from one organization to another. However, an excellent approach includes several steps in the model of HR theory. These include setting the strategic direction, shaping the HRM for organizational success, planning personnel management and the total workforce (Bandt, 2004 p.28). Moreover, generating the human resources required for these processes involves attracting and acquiring the right people needed for the total organization workforce. Organizational progress towards the desired results should also be measured and adjusted whenever necessary. In fact, the competence and performance of individual work groups and teams should be routinely developed and reinforce to synchronize with total workforce of the organization.
SHRD with respect to business objectives of PepsiCo
People are very important for any organization, whether they are workers in an organization or customers to the organization. Either way, an organization cannot do without people. This is therefore the basis of human resource development, to ensure that the organization and its people are bound by one common thing. PepsiCo is in the food industry, specializing in manufacture and distribution of grain based snacks and beverages. The nature of the industry dictates that the company has to have good human resource development so that the company can have as much success and expansion of its reach. It should be noted that the more the company can be in a position to reach out to a larger population, the more profits the organization makes. This means that the organization has to have a well developed and dedicated human resource. This section offers some of the reasons that make it important for PepsiCo to invest in human resource development (Joy-Matthews, Megginson, & Surtees, 2004. p.57).
Human resource development (HRD) helps the company to use innovation, quality and continuous improvement, all which are very important and crucial for expansion of a business. One important thing that should be noted about business growth is the fact that they do not achieve their success through the way they have setup their offices, neither the infrastructure they have but the way they associate with their customers. It is therefore notable that the most important role that the HRD plays is to enhance good relationship between clients and the company.
In PepsiCo, human resource development would be important so that management of time and customer service is enhanced. In fact, it is worth mentioning that the company will rely more on the way it interacts with its clients, and therefore if these are improved even further, it is would increase the client base for the organization (U.S. Office of Personnel Management, 1999 p. 5). Additionally, it is important to point out that when an organization puts the wheels rolling for activities that improve human resources, in HRD, the employees of the organization align more towards the goals and objectives of the organization. The final word that could cap the effects of HRD is therefore rightly gaining competitive advantage. That is the importance of all efforts fixed on human resource development.
As has been indicated, it is important for the organization to employ some human resource development exercises in order to meet its objectives. There are several ways that this can happen which includes training. One of the best ways that employees in an organization helps in the improvement and development of an organization is through training, which is thus a major role of the human resource department. When employees receive training, they get skills that are needed in their line of work, very important because companies are always performing researches on how to improve their services, and therefore employees receive this and apply it in their work. Furthermore, employees get relevance in the work they do. The more an organization has competent workers, the better the services and products and therefore an organization like PepsiCo has to use this towards making themselves the market leader in their line of production.
An organization may need to improve not only its production but also its customer service, and this by employment of new technology. Since the staff in the organization cannot just be laid off since they are not conversant with the technology, they are offered this training so that they can handle equipment with new technological advancements. The best candidates for executive positions in an organization such as PepsiCo are employees who have moved with the organization through times and not new employees hired due to their intellects (Strategic Human Resource.com, 2008). Unfortunately, these employees may not have the best qualifications and knowledge of holding positions as executives in the organization, which therefore means that the organization can make the best use of the person by subjecting him to relevant training to take up the roles of the executive.
Human resource management is vital for the image that the company projects to the client and the satisfaction of customer share. This means that in the event that the organization has already been up and running, to gain its competitive advantage and in order to ensure that it remains the market leader, it should employ HRD strategies that are as dynamic as the situation may demand. Additionally, it is notable that employees have to realize the exact goals of the organization, the direction it is heading and the position it has to the market share. The company is what it is because of the workers. If an organization such as PepsiCo has all the necessary and up to date equipment for use in production, then there is no telling that would be a market leader in production and marketing of the products from grains. Unfortunately, this can only happen if the employees have qualities that march with the equipment. If they are not well trained, efficient and dedicated, then there is no way that they can make to compete with the dynamic market.
It goes without saying that at this time when everything has been digitalized and computerized that any organization that intends to improve its HRD must look at the compatibility of the move they are making to the ICT as well as the fact that they also need to ensure that they have the best software that can keep up with the dynamism present in the system. As this is the case, there are three main areas where the organization needs to look at to attain its goals and objectives (Fulmer, 2007 cap.2). This includes core competencies which reflect the goals and objectives, as well as future projections of the organization, the functional competencies which ensures that the employees in an organization understand exactly what they are supposed. This means that training for the roles and functions of each individual in the organization especially when there is need for change. Lastly, the organization must also look at behavioral competencies where the employees have to show a certain conduct in order to improve the image of the company. A company that has all this taken care of is good to go and on its way to success. These are the strategies that PepsiCo should take.
The importance of Strategic Human Resource Planning and Development (SHRP and SHRD) has been demonstrated through the case study of PepsiCo. The report has illustrated ways in which the company has integrated strategic planning in its human resource operations to maintain its market position and beat competition particularly from its major counterpart, Coca Cola. The company has been able to achieve its business objectives especially in market penetration and financial performance. In implementing a strategic planning initiative, an employee-oriented approach is appropriate since human resources are the core drivers for business progress. It is unfortunate that most organizations implement strategic planning only when moving from traditional policies to contemporary ways of doing business. This contradicts the fact that strategic planning is a continuous process as demonstrated by the continued innovation of PepsiCo. It is like a learning curve and should continually support the achievement of varied business objectives. PepsiCo has successfully adopted this strategic approach in its human resource management practices and it has been considerably beneficial to the organization.
The keys to the implementation of strategic planning and development in human resources as discussed in the report show that an all-round approach is required to realize the desired outcomes. A full and active executive support is also appropriate for successful strategic planning. This means that executives and senior managers need to be largely committed whether in departmental level or the entire organization. Executives should lead, support and guide the outcomes strategic planning and development processes. Otherwise, SHRM is bound to fall short of business expectations. In simple terms, full commitment of the entire workforce of an organization is vital for achieving business objectives as far as strategic planning and development are concerned. PepsiCo Inc. has been seen as a champion of enhancing communication in workflow processes. This is an appropriate strategy that has seen the company expand its horizons and gain a competitive advantage in the food and beverages industry despite the stiff competition.