Read the article below and answer the questions that follow:

Performance Appraisal at Pepsi-Cola International

Pepsi-Cola International (PCI), with operations in over 150 countries, has devised a

common performance appraisal system that focuses on motivating managers to achieve

and maintain high standards of performance. Administrative consistency is achieved

through the use of a performance appraisal system of five feedback mechanisms -

instant feedback, coaching, accountability-based performance appraisals, development

feedback, and a human resource plan. The common system provides guidelines for

performance appraisal yet allows for modification to suit cultural differences. For

example, the first step of instant feedback is based on the principle that any idea about

any aspect of the business or about an individual’s performance is raised appropriately

and discussed in a sensitive manner. The instant feedback message can be delivered in

any culture; the important thing is not how it is done but that it is done. The purpose of

instant feedback isalways to improve business performance, not to criticise cultural

styles. Using this system, PCI tries to balance the cultural and administrative

imperatives of successful managing the performance of a diverse workforce.

objectives Performance appraisal:

• To review the performance of the employees over a given period of time

• To judge the gap between the actual and the desired performance.

• To help the management in exercising organizational control.

• Helps to strengthen the relationship and communication between superior –

subordinates and management – employees.

• To diagnose the strengths and weaknesses of the individuals so as to identify the

training and development needs of the future.

• To provide feedback to the employees regarding their past performance.

• Provide information to assist in the other personal decisions in the organization.

• Provide clarity of the expectations and responsibilities of the functions to be

performed by the employees.

• To judge the effectiveness of the other human resource functions of the

organization such as recruitment, selection, training and development.

• To reduce the grievances of the employees.

Practices of Performance Management

Providing Feedback. Providing feedback is the most common justification for an

organization to have a performance appraisal system. Through its performance

appraisal process the individual learns exactly how well he/she did during the previous

twelve months and can then use that information to improve his/her performance in the

future. Encouraging Performance Improvement. How can anyone improve if he doesn’t

know how he’s doing right now? A good performance appraisal points out areas where

individuals need to improve their performance.

Motivating Superior Performance. This is another classic reason for having a

performance appraisal system. Performance appraisal helps motivate people to deliver

superior performance in several ways. First, the appraisal process helps them learn just

what it is that the organization considers to be ‘‘superior.’’ Second, since most people

want to be seen as superior performers, a performance appraisal process provides

them with a means to demonstrate that they actually are.

Counseling Poor Performers. Not everyone meets the organization’s standards.

Performance appraisal forces managers to confront those whose performance is not

meeting the company’s expectations.

Determining Compensation Changes. This is another classic use of performance

appraisal. Almost every organization believes in pay for performance. But how can pay

decisions be made if there is no measure of performance? Performance appraisal

provides the mechanism to make sure that those who do better work receive more pay.

Encouraging Coaching and Mentoring. Managers are expected to be good coaches to

their team members and mentors to their proteges. Performance appraisal identifies the

areas where coaching is necessary and encourages managers to take an active

coaching role.

Supporting Manpower Planning. Well-managed organizations regularly assess their

bench strength to make sure that they have the talent in their ranks that they will need

for the future. Companies need to determine who and where their most talented

members are. They need to identify the departments that are rich with talent and the

ones that are suffering a talent drought.

What about relationships between employees and the company?

So Pepsico is managing to do “the old way” what many organizations try to do with lots

of technology and ambitious programs. “Yes, it works without tools provided the

manager/employee relationship is good“. That’s why Pepsico is investing that much on

the quality of human relationships and management quality.

At Pepsico, individual objectives are 50% business related, 50% personal. So delivery

and behavioral skills are equally valuated. Each employee can define with his manager

a personal objective which, if met, would make the coming year a sucessful year for

him. It could be “starting playing tennis again”, “pick up my kids at school on Thursday”.

It helps manager to understand employee’s expectations and priorities, what makes

sense, and play an active part in helping the employee to reach the objective. For

example by not scheduling any meeting on Thursdays after 4.00 pm for the one who

wants to pick-up his kids... “All these things contribute to bring trust and well-being into

relationship

QUESTION BELOW

1.2. Evaluate the type of Practices of Performance Management in relation to

Pepsico more specifically to coaching and mentoring. (10 Marks)