How Pepsi is building its future leadership

Wherever he goes, PepsiCo India’s Chairman & CEO D Shivakumar is accompanied by one of the company’s executives. The executive sits through all internal and external meetings, observing and learning the tricks of the trade.

This is part of Shivakumar’s shadow programme, one of the first things he did after taking over the reins of the food and beverage company’s India operations. Other senior leaders in the organisation have also been included in this programme.

The executive who shadows the boss then submits a report on his or her work style.

“Leaders must set the tone when it comes to mentoring, coaching, learning and development. We would encourage all top leaders in the organisation to do the same. This, I believe, is the best way to learn leadership and the best way to come up to speed. There are many other HR initiatives in that direction which are on the cards,” says Shivakumar, who had done a similar project when he was heading Nokia.

This programme is just one of the initiatives which PespiCo has undertaken to underline Shivakumar’s emphasis on building an organisation with a strong second line of leadership.

“For me, in the next few years, if we are not able to produce 25-30 outstanding leaders, I would consider it to be a personal failure. One of the roles of the leader has always to be able to produce a pipeline of good leaders,” he says.

Big challenges At the core of this is the company’s target to deliver sustained growth through empowered employees. Over the last year, PepsiCo has been facing big challenges from rival Coca-Cola.

With Shivakumar taking charge of the company in December 2013, PepsiCo in India is also reorganising its structure (as per its global strategy called ‘Power of One’). PepsiCo in India earlier had three divisions – food, beverages and NourishCo, the joint venture with Tata Global Beverages. While the joint venture continues in the same manner, it has combined the other two into one organisational structure under the Power of One strategy at PepsiCo. This means the most powerful brands will have good distribution systems and the power of the best people working on them.

The company announced changes at the top level in the management, essentially for functions such as marketing, operations, HR and customer development, among others.

‘Power of One’ plan Shivakumar’s strategy to build leaders fits in with its Power of One plan.

Samik Basu, Chief Human Resources Officer, PepsiCo India, explains: “We are building deeper expertise in each of the functional verticals and, through the Power of One, we are trying to leverage that expertise across both our businesses.

“Shiv, with his variety of experiences and great perspectives across industries, brings a fresh and external viewpoint . He is one of those people who is future-focused and believes in investing in people and development,” Basu adds. As part of this transition, the company’s rejig at the beginning of this year has been announced and a leadership team has been put together. Each of the integrated verticals has been following plans of about 30-90 days to help complete the change management process.

This includes team-building exercises, off-sites, ensuring proper handover and takeover in a planned way, who decides what, who needs to be consulted, role clarity workshops, and so on.

Better leadership Says Kimsuka Narsimhan, CFO, PepsiCo India, who plays an active role in developing women talent within the organisation: “Life has changed; there has been a structural change to a more functional one, and how we interact as a work group across functions. We believe this will help us leverage our strengths.”

Shivakumar spends a lot of his time explaining the new organisation to his employees, urging them to collaborate more effectively and learn much faster than the rest of the world.

The employee engagement levels have gone up in the last four months with Shiv, as he’s popularly known, moving across different office locations to hold town halls at regular intervals compared to the earlier practice of holding one big mega event once a year at a five-star hotel.

“Fundamentally, one of the items on a leader’s agenda must be to ensure there is better leadership than there is today. Stronger, emotionally and strategically as well in terms of execution, as leaders need a combination of that. We are in the process of doing that here,” says the PepsiCo India chief.