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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 individuals 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 doesnt know how hes 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 organizations standards. Performance appraisal forces managers to confront those whose performance is not meeting the companys 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. Thats 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 employees 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

1.3. Kleynhans (2006: 162) point out that clearly defined performance standards are the most basic feature of a good performance appraisal. In light of the statement above critically discuss Clearly Defined Performance Standards at PepsiCo and the importance of strategic Congruence. (15 Marks)