In September, Laxman Narasimham was named the next CEO of Starbucks, making him a member of a club. This club includes the CEOs of some of the largest and best-known companies in the United States, such as Target CEO Brian Cornell and McDonald’s CEO Chris Campkins. Chris Kempczinski, Delta Air Lines CEO Ed Bastian, Visa CEO Alfred F. Kelly Jr., Petco CEO Ron Cow Ron Coughlin, Dick’s Sporting Goods CEO Lauren Hobart, Albertsons CEO Vivek Sankaran, Ulta Beauty CEO Dave Kimbell, Foot Locker CEO Mary Dillon and Pernod Ricard North America CEO Ann Mukherjee.
What do these leaders have in common? They’ve all been with the same company for a long time, and they’ve all started from the ground up. But surprisingly, they didn’t come from “academic companies” known for developing leadership skills, such as Procter & Gamble, or high-profile technology pioneers known for their management culture.
These CEOs’ leadership skills came from selling soda, hummus, and potato chips at PepsiCo.
In 1965, Pepsi-Cola merged with Frito-Lay to form PepsiCo. An analysis by Fortune magazine found that PepsiCo has produced 16 current CEOs of Fortune 500 companies. We analyzed which companies have former employees who currently lead at least five Fortune 500 companies and found that PepsiCo is one of the best at developing leadership, second only to management consulting firm McKinsey ( McKinsey) and General Electric. There are also hundreds of “PepsiCo” executives in Fortune 500 companies, and companies outside the Fortune 500 that have CEOs born of PepsiCo, such as Petco or Boston Beer Co.
In other words, PepsiCo, with an annual turnover of US$80 billion, is an out-and-out CEO factory.
What is the secret behind PepsiCo’s ability to cultivate so many leaders? The key, says Ronald Schellekens, PepsiCo’s chief human resources officer, is that the company has a highly sophisticated, well-run system for identifying and vigorously developing “high performers” within the company. Internally at PepsiCo, these employees are called “high performers,” and the company provides them with rich training sessions, extended assignments around the world, mentoring, and opportunities to try new things and even fail. Many companies invest in management and leadership training, but few have developed leadership as systematically as PepsiCo. That system is key to the company culture that has enabled PepsiCo to sustain decades of healthy revenue growth, which is expected to rise 12% this year.
PepsiCo’s portfolio includes brands such as Gatorade, Mountain Dew and Quaker Oats. The company’s training and leadership development infrastructure goes back decades. In fact, in PepsiCo’s 57-year history, every CEO has come from within the company, including current CEO Ramon Laguarta and former CEO Indra Nooyi.
Bob Eichinger, a well-known industrial and organizational psychologist who worked for PepsiCo from 1978 to 1986, further perfected this leadership development mechanism. He made a name for himself using psychometric tests to assess how executives behave, how they influence others and how they can be more effective as leaders. This move made PepsiCo a top “academic company.” Yale School of Management professor Jeffrey Sonnenfeld coined the term in the 1980s.
PepsiCo’s high performers may now dominate the Fortune 500, but it’s not the first company to be lauded as a talent pool. Macy’s, Walmart, Target, Novartis, Lockheed Martin, Microsoft and JPMorgan Chase are also consistently considered excellent Academy Company.
Shelkens was interviewed at the company’s sculpture-filled campus in Purchase, New York. At PepsiCo, he says, “we take care of everyone. But we pay special attention to the top 20 percent performers, who get extra love and attention from the company.”
Jane Stevenson, global head of CEO succession at organizational consultancy Korn Ferry, says showing a clear path for budding executives is not a good idea in any company. common. “In most companies, it’s a ‘black box,'” she said. “How do you become CEO? How do you get to the top? You have to figure it out yourself.”
no bragging rights
While the company has a clear path for high performers to develop, what’s striking about PepsiCo’s plan is that high performers can only guess at whether they’ll be selected for the fast track. Sure, high performers might feel clues as to why they would otherwise attend a weeklong business seminar at Wharton School, but the company won’t formally inform them of the actual situation. “The fact is, if you’ve been offered certain jobs, or if you’ve been prioritized for various training sessions, you know you’re thought of well within the company,” says Petco’s Coughlin, Shelkens explains. , The reason why the company keeps it secret is to ensure the morale of the team and keep the strivers vigilant: no one wants to create conflicts among employees, or form a hierarchical system within the company, or let the rising stars show off. A better approach is for a supervisor to observe a person in action.
In addition, the top 20% is constantly changing, and if someone does not meet the requirements or reaches a plateau, they may be replaced by someone who performs well and can impress the company management. (Also, the 20 percent isn’t limited to promising upper-level executives: Truck drivers might be rated as high performers, too.)
Once high performers have been identified, their next job, especially one aimed at the top, is not easy to come by. On the contrary, these employees who are considered to be expected to enter the senior management have to undergo years of rigorous training in various fields of the company, from deep market data analysis capabilities to two-time positions in different fields such as supply chain management and international markets. to three years.
High performers also need to develop the ability to make quick decisions. “Our model starts with taking risks, giving people big jobs that take them out of their comfort zone, and we believe that if we give them a chance, they can thrive,” said Shelkens. Says nobody is fully prepared for big jobs, so why not just throw them in the deep end?
PepsiCo’s businesses are diverse and complex, including food and beverage brands in dozens of countries, and high performers come from a variety of divisions and may hold any position or level of seniority before being promoted. Whether high performers are bottling plant managers, analysts or data scientists, they are usually first discovered through performance reviews by their bosses. They don’t have to be recent college graduates or mid-career strivers looking to succeed. Even older employees can become high performers if they rejuvenate in new roles.
A PepsiCo spokeswoman said the company doesn’t track the demographic profile of high performers because it is constantly changing, but she estimates that at any given time, high performers are representative of the company’s overall diversity. In 2021, about 43% of the company’s management positions will be filled by women. In the United States, according to PepsiCo’s statistics on employee race, about 18% of the company’s managers are black or Latino. She also said that diversity is an increasingly important part of PepsiCo’s high performer infrastructure. The firm offers a Breakthrough Organizational Leadership Development program specifically for Latino and Black managers, including high performers and other employees, who want to acquire new skills.
‘Extra love’ for the chosen few
In PepsiCo, the human resources department has enormous power and is the key to the normal operation of the entire training system. To identify “high performers” and “extremely high performers,” Human Resources refers to managers’ evaluations and performance indicators; through a 360-degree evaluation process, collects feedback from peers and superiors; and personality assessments such as Myers- Briggs personality classification indicator (Myers-Briggs Type Indicator), etc. HR regularly asks managers to learn about top performers, and HR often moves high performers from jobs they excel at to new ones to challenge them, sometimes to the chagrin of their current bosses.
PepsiCo provides training opportunities for all 300,000 employees, but the “extra touches” Shelkens refers to are academic opportunities, such as taking online courses at PepsiCo University, PepsiCo’s learning center, or a business school. They may prove their abilities by taking on a difficult assignment, such as marketing a brand in Latin America, or leading a profit and loss reporting department. High performers also receive mentoring and opportunities to network with senior company leaders.
Coughlin left PepsiCo in 2007 after a 13-year tenure where he oversaw the marketing of PepsiCo and other beverage brands outside the United States. Among his notable accomplishments: helping to diversify the company’s overseas markets, reducing its reliance on sodas and offering a wider assortment of teas, juices and Gatorade. He said the lessons learned at PepsiCo prepared him well for big moves at Petco, such as ending the sale of pet food with artificial ingredients.
During his career development, Coughlin participated in PepsiCo’s vice president training program and had the honor to work with two PepsiCo icons, then CEO Roger Enrico and Steve Reinemund. Sex characters work together for a long time. Coughlin borrowed that program at Petco, offering up-and-coming employees a week of close contact with him and the board and other executives.
Another former PepsiCo high performer, Ann Mukerjee, is now the CEO of Pernod Ricard North America, maker of Absolut vodka. She said PepsiCo gave her room to fail and the opportunity to learn from the experience. Mukherjee became PepsiCo’s chief marketing officer in 2009, shortly after the 2008 financial crisis. In that market environment, she recalls, it was difficult for the company to succeed.
“But honestly, failure was the secret to my success,” she said. “I came out stronger every time I failed. PepsiCo gave me the space to fail and gave me the resources and support to be able to Regrouping and finding solutions to these challenges.” This “ultimately allowed me to unleash my potential,” she says.
Korn Ferry’s Stevenson says a culture that allows up-and-coming executives to fail early is critical to avoiding future disasters. “There has to be room for failure,” she says. “Because there is a possibility of failure, and there is no room for failure in the CEO role.”
Of course, success is also important. Mukherjee recalls a success as chief marketing officer at PepsiCo’s Frito-Lay that was crucial to his growth: a decade-long “Super Bowl Doritos” ad featuring fan-made The ad is considered a milestone in marketing focused on millennials. (Mukerjee, as head of the cornflakes brand, later earned the title “Queen of Corn” at PepsiCo.)
Schellekens, originally from the Netherlands, has been working in his second role at PepsiCo for four years. Nobody, he says, can count on a company to manage their career for them. High performers with high aspirations must demonstrate their abilities with a variety of career accomplishments.
PepsiCo wanted potential executives to gain a holistic view of the conglomerate, not just waste time in their own business units or “silos.” High performers should have undergone at least one cross-functional move, usually to a role in a country other than their home country, says Sherekens. He himself has worked for PepsiCo in London, Barcelona, Geneva and Johannesburg. LaGualta, the current PepsiCo CEO, spent 26 years at the company, working in the United States, Europe and sub-Saharan Africa.
Brian Cornell is one of the most successful PepsiCo “alumni” who turned Target around and achieved amazing results. In 2014, Cornell resigned as CEO of PepsiCo Americas Foods to join Target. At the time he was seen as one of Nooyi’s potential successors. At PepsiCo, he said, “I learned a lot about how to run a complex global company, learn from consumers and learn from the competition.”
PepsiCo is still growing by leaps and bounds
Effective leadership development programs have helped companies sustain rapid growth for decades.
culture of learning
Creating an infrastructure for career development and training sounds simple enough. But where there are people, there is contention, and picking out high performers and giving them extra attention can cause problems internally. It makes the company deeply aware of what is most important to the company.
Sometimes that means violating the adage “don’t be self-defeating,” because successful people need new challenges, says Sherekens. “If you’re a manager and your team is doing well, the last thing you want is someone being moved from your team,” he says. “So it’s HR’s job to move people out of their comfort zone. Among other things, he explained, managers should increase the “bench depth” of their teams so they don’t become too dependent on one successful team member.
According to Petco’s Coughlin, this is key to the success of PepsiCo’s academy culture. He said: “Reserving tomorrow’s stars and providing them with opportunities to exercise are the foundation of PepsiCo’s talent training system. In PepsiCo, the Human Resources Department has great power. They are responsible for the career planning of employees. They are working for The development of the company gives advice, and you can’t set too many restrictions on them.”
Committing to developing the next generation of talent will eventually pay off, but it can be an arduous process, and sometimes there may be another company that hires good management talent and steals the fruits of the win.
Shellekens said PepsiCo’s leadership has no regrets about the departure of great PepsiCo employees, saying that Cornell, Coughlin and Narasim, among others, exemplify the company’s investment in talent development programs is worth it. In addition, the number of people who can become the CEO of PepsiCo is, after all, a minority.
Scherekens said the turnover rate at management was “very low.” A focus on developing leadership skills has also allowed the company to sustain rapid growth for decades. PepsiCo’s reputation for developing business leaders also increases the company’s attractiveness for talent, as high performers who leave PepsiCo go on to lead other companies.
“It’s what gets people excited,” says Norm Smallwood of RBL Group, a leadership development consultancy. “People come to companies like PepsiCo that are good at talent development, and they get opportunities that they can’t get at other companies.”
PepsiCo executives
The CEOs of these 16 Fortune 500 companies came from PepsiCo’s rigorous executive leadership program.
Chris Kampczynski, McDonald’s
Vivek Sankaran, Albertson
Michelle Barker, Hershey
Brian Cornell, Target
Dave Kimbell, Utah Makeup
Tom Greco, ADVANCE AUTO PARTS
Alfred Kelly Jr., VISA
Lauren Hobart, Dick’s Sporting Goods
Laxman Narasimhan, Starbucks
Darren Rebez, Casey Universal Retail
Edward Bastian, Delta Airlines
Mary Dillon, Flocker
Tony Salsam, SPARTANNASH
Chen Fuyang, Broadcom
Beth Ford, LAND O’LAKES
David Gibbs, YUM BRANDS (Fortune Chinese Website)
Translator: Biz
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