CHAPTER $1$: Managing Human Resources

$27$

MANAGING TALENT

Frito$-$Lay to Employees: You're "Going Places"

If you hear "PepsiCo" and think of salty snacks, you must know that one of the soft$-$drink company's key businesses is Frito$-$Lay, owner of brands including Cheetos, Doritos, and Ruffles. Frito$-$Lay North America, headquartered in Plano, Texas, operates more than $30$ manufacturing facilities in North America, along with more than $200$ distribution centers, from which truck drivers deliver snacks directly to stores. PepsiCo's largest product line by volume is soft drinks, but the largest share of its profits comes from Frito$-$Lay snacks. Snacks also are posting faster growth than soft drinks.

Frito$-$Lay's strategy for attracting and retaining talent includes being known as a desirable company to work for. Frito$-$Lay has developed an "employee value proposition," a short description of the value a worker receives by working for the company. Its latest version of the proposition is $"$We are going places." To develop this tagline, the company gathered feedback from its employees and learned that they are particularly motivated by a sense of belonging, drive to excel, and pride in their work. The tagline is intended to express that Frito$-$Lay offers such experiences. The company has been gathering stories from employees to share on its website and social media as examples of "going places."

Frito$-$Lay's chief HR officer, Patrick McLaughlin, sees the employee value proposition as a necessary part of the company's strategy for success. Companies have struggled to find and keep enough qualified employees for several reasons. A relatively large share of workers have been retiring in recent years, and the numbers of new workers entering the workforce have not made up for them. The COVID$-19$ pandemic intensified the challenge, and as the pandemic eased, the United States saw a sudden surge in spending that Frito$-$Lay, like other employers, struggled to keep up with.

According to McLaughlin, these challenges have especially hit the trucking industry, where wages rose an average of $12\%$ in $2021$ alone as the growth in the number of drivers lagged behind the demand for them. FritoLay employs almost $20,000$ truckers, making it one of the largest privately owned fleets in the United States. The company, which says its retention rate of drivers exceeds that of the industry, is working to remain an "employer of choice." It sets up routes so that most workers can complete most trips within the same day, claiming

that it leads the industry for the amount of time drivers have at home. The company meets or exceeds market pay and offers new hires a sign$-$on bonus. Employees also are eligible for such benefits as retirement savings plans, health insurance, mental$-$health services, and assistance with vocational and college tuition. McLaughlin notes that mental health is an especially important consideration, given the stresses of economic and health uncertainties in recent years.

To fill jobs with qualified drivers, Frito$-$Lay has gotten creative about recruitment. The company has its own apprenticeship program for truck drivers, combined with a strategy to promote from within. It also has contributed to funding a community program called BridgeBuilders, which provides driver education in South Dallas. FritoLay sees this support as socially responsible but also a practical way to increase the pool of workers licensed to drive commercial vehicles.

Recently, however, PepsiCo has become concerned that it needs to prepare for an economic slowdown. Inflation initially resulted in consumers spending more for its products, but as it has persisted, consumers are expected to switch away from the company's brands to lower$-$priced alternatives. PepsiCo announced that it needed to "simplify" the organization to make it more efficient and so would be eliminating hundreds of jobs. The cuts were expected to be concentrated in the beverage division, with a smaller number at Frito$-$Lay. McLaughlin and his team will have to reconcile the company's ongoing need to produce and deliver snacks with the pressure to keep costs low.

Questions

Which HR functions $($see Table $1\mathrm{.}1)$ should come into play for addressing issues described in this case?

Do you think Frito$-$Lay's recent layoffs signal that the company needs to change its employee value proposition again? Why or why not?