Success of any business depends on the business approaches and competitive moves to gain the competitive advantage. Effective utilization of human resource is likely to give organizations a significant competitive advantage (Guest, 1987).
PepsiCo and Coca Cola are selected for the purpose to critically evaluate the contribution of strategic human resource management approach to business performance and competitive advantage. At Coca Cola, the corporate human resource management (HRM) function is charged with providing the glue that binds the diversified cultural groups in to Coca Cola family, and the company achieve corporate HRM functions by propagating a common human resources philosophy within the company, and also by developing the group of internationally minded mid level executive for future senior management responsibilities (Dash & Aswathappa, 2008). PepsiCo international meet the business challenges by providing a base of human resources (HR) practices that are modified to meet countries specific requirements (Jacson, 1992).
Relevant theories and frameworks are used to demonstrate the HR issues, and contrast the existing approaches to strategic human resource management and commentary is also provided on the macro operating environment, considering the fact that the external environmental factors such as political, economical, social, technological, legal, environmental and global factors are in fact, significant to feed all aspects of Human resource planning.
Vision of the company is important in human resource prospective as it identifies that “How can an organization be built that add value to customers, investors and employees” (Dave Ulrich, Prof. “The future of HR”, 2001).
The comparison between both of the companies’ vision statement is given below:
PepsiCo |
Coca Cola |
Responsiblefor continuous improvement in all aspectsof organizational operations (external and internal). |
Guideline to all aspectsof the business by describing what are the needs of the organization in order to continue achieving sustainable, quality growth. |
|
Commitment to build shareholder value by making PepsiCo a truly sustainable company. |
1. Look after a winning network of stakeholders. 2. Great place to work for employees as people are inspired to be the best they can be. 3. Maximize long-term return to shareowners while being mindful of our overall responsibilities. |
|
Activities to benefit society (corporate social responsibility). |
Be a responsible citizen that makes a difference by helping build and support sustainable communities. |
|
1. Focus on environmental stewardship. 2. Our vision is put into action through programs. |
Portfolio of quality beverage brands that anticipate and satisfy people’s desires and needs. |
Mission of the company is important in human resource prospective as it identifies that “What can we do to add value to customers, investors and employees” (Dave Ulrich, Prof. “The future of HR”, 2001).
The comparison between both of the companies’ mission statement is given below:
PepsiCo |
Coca Cola |
|
1. Our mission is to be the world’s premier consumer Products Company. 2. Focus on convenient foods and beverages. |
1. To refresh the world… 2. To inspire moments of optimism and happiness… |
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1. We seek to produce financial rewards to investors 2. Provide opportunities for growth and enrichment to employees, business partners and the communities in which we operate. |
To create value and make a difference |
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Strive for honesty, fairness and integrity. |
The values and commitments of the PepsiCo are to deliver sustainable growth through empowering people, Acting responsibly and building trust. In comparison, the values and commitments of the Coca Cola is to serve as a scope for the performance and explain how we act in the world.
The comparison between both of the companies’ values and commitments is given below:
PepsiCo |
Coca Cola |
|
Selling only those products on which the organization can be proud of. |
Quality in product and all other aspects. |
|
Diversity and inclusion. |
Diversity and inclusion. |
|
1. Care for stakeholders. 2. Speak with truth. |
1.Accountability for every action. 2.Integrity (Being real with stakeholders). |
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1. Balance short term and long term risks and benefits. 2. Respect others and succeed together. |
1.Leadership:The courage to shape a better future. 2.Collaboration:Leverage collective genius 3.Passion:Committed in heart and mind |
Considering external environment is important (Macro environmental factors) before beginning the comparison between Human recourse management activities and approaches. The external environmental factors such as political, economical, social, technological, legal, environmental and global factors are in fact, significant to feed all aspects of Human resource planning.
Political:
Every country has its own political structure that influences both multinational companies. The common areas are such as:-
- Tax policies and Tariffs.
- Employment laws.
- Environmental regulations.
- Trade restrictions and reform.
Legal:
PepsiCo and Coca Cola are influenced by what is happening with changes to legislation.
- Employment laws.
- Access to materials.
- Quotas.
- Resources.
- Imports/ exports laws.
- Taxation.
Technological:
Continuous change in the technology that influence both multinational companies such as:-
- Innovation in communication and advertisement system.
- Innovation in distribution system.
Economic:
The changing’s happening within the economy that influences both of the companies for example:-
- Economic growth/ decline.
- Interest rates.
- Exchange rates and inflation rate.
- Wage rates.
- Minimum wage.
- Working hours.
- Unemployment.
- Credit availability.
Sociological
: What is occurring socially in the markets in which both multinational companies operate or expect to operate?
- Cultural norms and expectations.
- Health consciousness.
- Population growth rate.
- Age distribution.
- Career attitudes.
- Emphasis on safety.
- Global warming.
Environmental:
Both companies are influenced by what is happening with respect to environmental aspects. Most of these factors are economic or social in nature.
HR Practices
Both multinational companies (PepsiCo and Coca Cola) are committed towards a mode of management that aims at building a workforce that is motivated and aligned to organizational objectives. HR practices are used for the employees, but these practices can be categorized on the basis of
Financial Practices and Nonfinancial Practices( Sharma & Verma, 2008).
Financial HR Practices:
Following are the financial HR practices that are identical in both PepsiCo and Coca Cola:-
- Reward and Recognition for above expectation work at job site.
- Scholarship Program for the encouragement of the employees and their family.
- Training, Retraining and employee development facilities to enhance the efficiency and effectiveness of workers as well as organization
- Gifts and bonus schemes on special events such as Christmas, Easter, Eid, Holi etc (Depends according to the cultures of the countries).
- Annual free medical checkup for the health care of the employees and their families.
- Same uniform system for the employees, considering the fact that all employees are treated equally and have equal opportunities.
Non Financial HR Practices:
Following are the Non financial HR practices that are identical in both PepsiCo and Coca Cola:-
- System of Quarterly, half yearly and annual performance appraisal.
- Employee Recognition and appreciation system.
- Health, Safety and environment related Training following ISO standards.
- Sports day, annual day and Birth day celebration of employees.
- Consistent and reliable employee communicationinformation system (Management information system, Employee information system etc).
- Idea Acceptance Award to encourage and motivate employees.
- Recognition and reward system for employee of the month, Quarter and year.
- 360 degree performance assessment system.
Best Practice Approach
In best practice approach, Human resource is typically responsible for the tools and processes associated with successful succession planning. Business or line units are generally responsible for the “deliverables” i.e. they use the system to manage their own staffing needs (Fulmer, 2005).
Key best practices used by both multinational (PepsiCo & Coca Cola) companies are:-
- Usage of a big picture, roadmap or model to guide the efforts of the organization.
- Making sure the practical involvement by the CEO and the other senior management.
- Usage of competency framework to simplify what type of talent the organizational management wants to build.
- Developing and putting into practice an effective and efficient performance management system.
- Usage of personality development plans to narrow developmental gaps.
- Developments of the images of values and ethical standards required for the assessment of the people relative to those as well as competencies.
- Building a point of view that high potential talent is a common asset of all the organization rather than owned by particular management.
- Usage of strong, efficient and effective leadership development efforts to built shared competencies, which can be required for the future.
(Sources: William Rothwell, 2005)
Four key best practice identical in PepsiCo and Coca Cola:-
- Identification of efficient and effective candidate in the organization by using reliable, purposeful criteria.
- Assessments of candidates’ strengths and weaknesses compared to what ever is needed by the organization.
- Providing the accurate development to build competencies in the business.
- Monitoring the succession process for the purpose of building leaders over the time.
(HR practices model for Pepsi cited at: Sharma & Verma, 2008)
HRM approach
(American view vs European view)
The evidence suggest that in Europe there is a tendency towards labour market deregulation, more extensive training and development of the staff, increased flexibility, ever greater line management influence, increasing individual communication and reducing trade union membership (Brewster, 2007). Considering both (PepsiCo and Coca Cola) of the companies it is difficult to assess that if any company is having a specific (American or European) HR practices approach to follow.
The Harvard framework can be applied to both of the organizations, which is based on the belief that problems of the historical personal management can only be solved when general management develop a view point of how they wish to see employees involved in and developed by the enterprise, and of which HRM policies and practices may achieve those goals (Michael Armstrong, 2003).
Stakeholder interests:
The stakeholder interests recognise the importance of ‘Trade offs’ either explicitly or implicitly, between the interests of owners and those of employees, organizations and the unions (Bratton and Gold, 2001).
PepsiCo has a generalized approach (Corporate website analysis) to keep the stakeholders interested, taking care and creating commitment to build shareholder value by making PepsiCo a truly sustainable company. The values of PepsiCo are being truthful to stakeholders.
Coca Cola, on the other hand, has rather specified approach (Corporate website analysis) to keep the stakeholders interested, as they look after to a winning network of stakeholders by making great place to work for employees as people are inspired to be the best they can be, for the purpose of maximizing long-term return to shareowners while being mindful of our overall responsibilities. The values of Coca Cola are not only being truthful to stakeholders but also accountable for every action.
Situational factors:
The situational factors influence management choice of HR strategy. This normative model incorporates workforce characteristics, management philosophy, labour market regulations, societal values and pattern of unionization, and suggests a meshing of both ‘product market’ and ‘socio cultural logics’ (Evan and Lorange, 1989).
PepsiCo has a mission to provide opportunities for growth and enrichment to employees, business partners and the communities in which we operate. Coca Cola, on the other hand, the focus is to build a great place to work for employees as people are inspired to be the best they can be.
HRM policy choices:
Human resource management policy choices emphasize that management decisions and actions can be appreciated fully only if it is recognised that they result from an interaction between constraints and choices, and the Harvard model depicts management as a real actor, capable of making at least some degree of unique contribution within environmental and organizational parameters and of influencing those parameters itself over the time (Beer et al, 1984).
Both multinational companies (PepsiCo and Coca Cola) are committed towards a mode of management. The focus of both organizations, is very much identical (Corporate website analysis) towards traditional HR activities that aims at building a workforce that is motivated and aligned to organizational objectives.
Human Resource Outcomes:
The human resource outcomes are high employee commitment to organizational goals and high individual performance leading to cost effective product or services (Bratton and Gold, 2001).
Both multinational companies (PepsiCo and Coca Cola) have considered HR as one of the integral part to create sustainable advantage.
Long term consequences:
At an individual employee level, the long terms outputs comprise the psychological rewards worker receive in exchange for efforts and at the organizational level increase effectiveness ensures the survival of the organization, in return, in the societal level, as a result of fully utilizing people at work, some of the society’s goals are attained (Bratton and Gold, 2001).
Business activities of PepsiCo and Coca Cola are aimed to benefit society (corporate social responsibility). The Coca Cola business is focused more specifically to be a responsible citizen that makes a difference by helping, building and supporting sustainable communities.
Conclusion
Coca Cola and PepsiCo are among top soft dink companies of the world and both companies are effectively utilizing human resource management to gain maximum share and competitive advantage.
Considering both (PepsiCo and Coca Cola) of the companies it is difficult to assess that if any company is having a specific (American or European) HR practices approach to follow. As through critical analysing of both companies vision statement, there is some signs of different HR approaches, for example the PepsiCo has a vision of being responsible for continuous improvement in all aspects of organizational operations (external and internal) which seems to be more influenced by the presence of senior management which is likely to support American view of HRM. Coca Cola, on the other hand, has a vision of building Coca Cola family and the vision statement itself is Guideline to all aspects of the business by describing the needs of the organization in order to continue achieving sustainable quality growth. This supports the evidence of more flexibility in all aspects of the business which is likely to support European view of Human resource management.