Leadership & Change Management in Pepsico


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The intensifying demand for high performance and increased competition for resources are creating more pressure on firms and has made them more focused. Organizations are finding that such initiatives require capable leaders and efficient skills in them to manage the challenges for organizations and help to build an effective manager throughout the firm in today's business environment. The global world is experiencing immense amount of cultural, political, social and organizational transformation that build challenges as well as opportunities for companies. Leadership in companies needs an overall thoughtfulness about the fast paced changes of both the internal and external business environment to efficiently respond with the changing needs.

Leadership is significant factor for any of the system to begin respond sufficiently to the present and build up future requirements to review and recalibrate with the current realities of business. The leaders of today need to disappear from previous modes of providing directions and would need tools to understand the prevailing market situations and skills to deal with it. Leaders of today should possess both the skills i.e. diagnosis and analysis, as it will provide them an ideal platform to discover issues in order to make strategic decisions in the vision of organization and understand others as well .

Change management is a structured concept mainly used to transform individuals, groups or an organization from an existing state to a desired future state in order to accomplish or implement any vision and strategy. It is an organizational process focused to empower employees to accept the changes and embrace in the current changed environment. Change in organizations is always designed with a vision, whether it is external i.e. economic, social or political or internal factors i.e. policy, operations or structure of management designing a change program with a vision will clarify the direction for it and assist in encouraging those who are influenced to take appropriate decision in right direction .

 Historical, Classical and Contemporary Approaches to Leadership Theory

Leadership is defined as a process through which an individual can influence others to attain an organizational or groups goal. Leadership is considered as a social process of influencing and cannot exist without a leader and one or more subordinates. The historical approach to leadership theory was mainly followed from the period of 1930 to 1970's and it was believed that leadership qualities depend on one's own blood or genes and leaders are only born. The leadership studies during this time focused that leaders are only born and the behavior depends on one's own nature and different factors determine the character of a leader. Some of the famous theories during this time were Trait theory, Behavioral theory and Contingency theories.

The classical approach focuses on the concept that how leaders and managers should behave to derive the most from their subordinates. It is a useful theory as it helps the leaders to understand how their leadership styles influences the behavior of their team members or subordinates . It is a significant factor to understand about the organizational behavior and enhancing the efficiency of employees. Some of the famous classical theories of leadership are transformation and charismatic theory.

Leadership Approaches Relevant For the 21st Century

In the 21st century severe questions are raised on the aptitude to deal with several challenges of business environment. The leaders of this era are finding it difficult to cope up in the increasingly complex and constantly fast paced nature of organizations. In the present situation where the market is highly volatile and many of the leaders fail to meet the expectations of market in this millennium. A serious question arises that what qualities we require in our present leaders. Many of the reports of analysts say that around 60% of companies globally have changed their CEO at least once since 1995.

Many factors are being considered as issues that creates problems in the leadership approach like increasing pressure from stakeholders, lack of appropriate leaders et. Changes have been observed in the organizational structure since 1980s as management has become more flattened and more fluid and transparent. In this context one of the major organizations that has noticed a drastic change and has applied several leadership theories to attain success is the PepsiCo. PepsiCo is a multinational corporation which was formed in the year 1965 with merger of three companies i.e. Pepsi, Cola and Frito-Lay. It is basically a food and beverage corporation and is having it's headquartering in Purchase, New York, US. The company has expanded its business towards a broader range in food and beverage products.

PepsiCo had its biggest acquisition in 1998 of Tropicana and in the year 2001 merger with Quaker oats that helped it increased the brand portfolio. Till January 2012 the product's of PepsiCo has produced retail sales of more than $1 billion. The goods of this corporation is distributed in more than 200 countries that generates an annual revenue of $43.3 billion approximately. PepsiCo has been ranked as the second biggest food & beverage company and has employed around 2, 97,000 people all around the world.  Since 2006 the chief executive of PepsiCo is Indra Krishnamurthy Nooyi.

Own Personal and Managerial Effectiveness within an Organization

Managerial effectiveness reflects the management utilizes the resources of organizations to meet the goals. The fundamental elements to become an effective manger are leadership, mentoring, appropriate planning and communication, organizational control, possession of skills etc. During the process of striving for the most useful ways to become an effective manager he or she should must obtain effectiveness with efficiency.

One of significant factor that contributes in the managerial effectiveness is leadership. Leadership skills are considered as the ability of an individual to influence, inspire and allow others to contribute in the success and accomplishment of corporate goals. A leader persuades other by setting an example and allowing its team members to create their own individual ideas to attain a task (Leadership and Change Management, 2012). It is being observed that individuals in leadership positions are always looking for a positive vision and support of other team members for the potential success of planned goals.

PepsiCo has noticed several changes in its management and leadership approach since 2003. After appointing a new Indra Nooyi, major changes in various areas were observed. She made the organization to grow and nurture at a larger scale and implemented novel system of strategic planning and skills. PepsiCo has seen drastic changes and earned billions of profit during recent after the appointment of this superstar CEO. In the year 2011, it returned $5.6 billion to its stakeholders and its net revenue grew 14% to $66 billion approximately. Nooyi has reshuffled the management of top executives for a move towards new area. She is being known for a leader with versatile skills, today she is being listed in the world's most powerful business woman.

Understanding Principles of Change and the Organizational Change Process

Change management is a formal process for building up corporate change that includes a systematic approach and application of wisdom. Change approach defines and adopts various corporate strategies, structures, policies, procedures and technologies to manage within the changing stemming in extreme internal and external conditions. It is a critical part in accomplishing any of the projects that leads, handles and enables people to understand and get acquainted with the new process, technologies, systems, procedures, structures and values. It is a set of activities that aids people to transform into present form of working to the ultimate desired form of working .

Implementing change in organization needs certain points due importance in order to make the people resist in change. The principles of change states that it is a basic skill in which most of the leaders and managers need to be knowledgeable and capable enough to manage the diverse workforce . Whenever leaders are planning to implement change there are certain principles that need to be paid attention, some of them are as follows;

Every people react in a distinguished way to change - It states that every individual in an organization comes from a diverse workforce, so during the process of change reacts in a different manner. In this context PepsiCo pays too much attention towards its employees, as it is a multinational corporation and people from diverse region work in it. So during enforcing change the leader paid focus on it and managed the change process.

Every individual has a fundamental need that need to be accomplished - While change occurs many of the prevailing situations changes and people need to acquaint with the new processes, but in this lieu leaders need to understand that everyone has a basic fundamental need that must be fulfilled. PepsiCo also made lots of diversification and changes have been made in several areas but it also gave information about it to its people and gave them time to express their views and support in the decision making process.

Change generally involves a loss, and people go through the loss curve - Many a times it is being noticed that whenever change occurs in organization people might not accept it easily, this ultimately raises a situation where either employee leave the job or attains dissatisfaction with the company. In case of PepsiCo as it is having a competent leader Nooyi who gave enough space to its people and identified places that might replace the loss and will help to cope up in the changing environment.

Change Theories, Tools and Techniques

In the 21st century leaders have realized the importance of change in corporate and focuses on bringing new perspectives, confronts and seeks new solutions towards the unpredictable external and internal situations. Changes in life are inevitable and the one who attains success in life need to deal in various adverse circumstances.  It makes life challenging and without any new incident life sometimes become boring and it is also very important to monitor small changes so that bigger modifications could be easily accepted. There are several change theories available to implement in this competitive business world. One of the most famous models for change is by provided by John Kotter, the model is divided into eight major steps and each of them is associated with each other. The first stage includes the factor to create urgency for change in the organization, at this point the leader need to make aware its people about the market demand and motivate them to get involved into it. The second step involves creating strategies for forming a guiding coalition, in which new business opportunities should be developed and proper communication need to make with each member.

Moving on further in this model the third step is to create a vision, means the organizational new values and areas of development should be framed at this point of time. The fourth stage includes communication of vision among every employee as it will help in to focus on the improved vision of change.The fifth step is considered as the most crucial one because at this point actual change starts and the leader need to be very much focused to achieve the aims. Sixth step is the point at quick wins should be created; means if small changes have also resulted positively then it should be communicated and shared with everyone as it will motivate the team. The seventh stage is building up of change i.e. after attaining the targets it should be reviewed that what is achieved and what is not and how it happened, other than this sustainability is required to persist in the change. Finally the last step involves institutionalization of change that means stick to change and develop new policies and values to reinforce the process.

Implementation of the Change Process Including Resistance to Change

Organizational changes are considered as the process that makes enhancement in business and it is the only factor that is constant in life. But in this context problem arises in the implementation process of change and it becomes difficult for leader when people does not respond it positively, the probability of failure is very much high during the process of change. There are several reasons available for loss of process therefore; a suitable method should be designed in order to implement the change process (Change Management Implementation, n.d). The process is as follows;

  • Implement the system to follow the diverse sources for corporate change, one of the most significant parts is to assess the time when to make changes and what need to be done. It appropriate things are evaluated at the right time; half way of the process could be covered.
  • Design a plan for implementation of change, as it will present a roadmap for successful change process. It should include some of the important factors like what, when and how to modify .
  • Assess probable issues that will cause resistance to change; these measures will help in manage the adverse situations that may arise during the process.  
  • Minimize the influence of factors that will cause resistance to change in the initial beginning of process. In this way, a good recommendation from the team members of organization could be received that are generally not included in the proposal process.  
  • The organizational process of modification should be implemented and all the planned activities need to revise to overcome resistance to change.  
  • The successful process should be celebrated with the employees as it will motivate them for establishing another process at much faster pace.
  • Evaluation of results is also a crucial factor because the changing process after implementation cam impact on the performance of business (Kornberger, Pitsis and Clegg, 2004).

Change Agent within an Organization

Change agents in organizations are considered as those factors that help to facilitate strategic transition. In this context we need to clear the path on our own side firstly, especially when we have to make strategic changes. To incorporate a successful change within a corporate it requires a psychological wisdom of what exactly to change and it requires the capacity to create and utilize power in the changing process. One of the significant factors that a change agent should possess is power. Leaders could found throughout the organization that have a major role in their job titles and are considered as the key people to manage change.
Business leaders understand the need of organization and the first and foremost critical action required in this lieu is to recruit a team to organize the change initiatives. The leader need to possess a six sigma quality i.e. no defects in the process and work should be divided among the team members to handle the change issues efficiently (Tan and Kaufmann, 2010). While implementing change in the organization three factors must be given due importance by the change agent i.e. Right knowledge, right skills and right attitude.

These qualities are a must to be possessed by the agent.

The Right Attitude - Agents cannot succeed without ample amount of persistence. It is a complex and labor intensive process that initiates additional feelings and emotions. In case of PepsiCo when change was implemented many employees became frustrated and conflicts rose up and unforeseen problem acted as a hindrance in setting up the change. But in this situation leader was having the right attitude which helped in attaining success with firm determination towards achievement of set goals. The change agent should be fully committed to attain the projects through team work, one of the effective ways to ensure such pledge is to hire individuals who are enthusiastic and have the potential for development .

The Right Skills - Agents need to be able to operate during the time of uncertainty and instability, as they have to manage priorities and major deadlines. Change agents are responsible for guiding the organization through ample amount of challenging transformations. All these factors cannot be attained without having right skills for work.  They should must learn to participate and manage the systems through novel methods and then determine the final status . Right skills include team building, strong interpersonal relations and effective method of communication in groups. In order to succeed a strong sense of identity and mutual ownership to resist in change should be designed by understanding and acknowledging the change.

The Right Knowledge - Change agent should possess appropriate knowledge with a general understanding about the business. In an organization it is the leader who understands the work of business in which they are actually involved. The work requires know how about the market and product development activities with other aspects of business. In this context it could be said that change agent must be well-connected throughout the entire organization and focus should be given to maintain active relationship in every area that are important in efficiently  communicating with shareholders and developing a successful rollout.

 Management of Change with Other Business and Management Disciplines

To manage change effectively in an organization it is required to attend the wider influence of these modifications, management of change is a broader term that covers wide area as well as from company to company and from project to project. Many corporate consultants subscribe for formal change management process because it provides checklists and a developed plan regarding the requirements to manage change successfully. Managing change focuses on people and ensures a thorough and smooth process to be implemented (Ricketts and Ricketts, 2010).

The first and foremost concern for a leader is employee management because effective management and leadership skills of employees help in to accomplish the organizational goals. It aids in to capitalize on the strengths of other potential employees and their capability to contribute in the achievement of work aims and objectives. Change management and leadership promote employee motivation, development and retention process. Organizational change occur over the time period in a variety of ways, for instance companies may grow from sole trader to partnership and the individual organization.

Management of change is an internal process that is accordingly affected by the external factors. Companies mainly change in response to external environment as well as with the help of development of competitive strengths within the corporate. External environmental factors include five main issues i.e. social factors means change occurring in demography and buying behavior of customers.

Second factor is legal that forces corporate to comply with the laws by responding to external legislation. The third factor is economic i.e. related to booms and slumps in general economic activity and modifications in rates of interest and inflation (Northouse, 2009). External factors also involve analysis of political issues that is related to wider changes in political economy and the role of state in society. The last factor include technological factor is related to new development in technology.


From the above discussions it is evident that leadership is a significant factor that involves change and it determines how the aims and objectives of the changed vision would be attained and people will be managed in order to incorporate their efforts. Each of the process needs leader to actively plan, share, communicate and implement change in the management. Whenever, change is implemented in organizations the most important factor is the ability of leadership that will lead and the nature of changes that employees have regarding competence, ability and credibility of senior and middle level management.

In companies an approach should be built in which leaders must be faithful as it will motivate the workforce and they will look towards their leader for numerous reasons. During implementation of change employees want a sensible planning and effective decision making process that helps in to complete and regulate the process. In this context the best method to summarize is that there should be a climate of trust among leader and its team members, as it will aid in development of trust for future uncertain situations that enable them to compete in changing work environment.


Books, Journals and Articles

  • Aitken, P., and Higgs, M., 2009. Developing Change Leaders: The Principles and Practices of Change Leadership Development. Routledge.
  • Anderson, D., and Anderson, A. L., 2010. Beyond Change Management: How to Achieve Breakthrough Results Through Conscious Change Leadership. 2nd ed. John Wiley & Sons.
  • Beerel, A., 2009. Leadership and Change Management. SAGE.
  • Boost, M. W., n.d. Masters of Change. 2nd ed. Ben Leichtling.
  • Gill, R., 2002. Change management--or change leadership?. Journal of Change Management,
  • Hargreaves, A., and Fink, D., 2012. Sustainable Leadership. John Wiley & Sons.
  • Jelinek, S., 2010. The Impact of Management Practices and Organizational Structure on Firm Performance: A Cross Country Empirical Analysis. GRIN Verlag.

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