CEO SPECIAL...................... CONNECTING PEOPLE TO PERFORMANCE

CONNECTING PEOPLE TO PERFORMANCE





In his first 15 months as chairman of PepsiCo India, D Shivakumar has made himself accessible to everyone managers, employees, customers and bottlers. He is trying to charge up PepsiCo by energising the people who make the brand

D Shivakumar, chairman and CEO of the Rs 12,000 crore plus PepsiCo India writes an email to his employees every week updating them of what he has learnt and the battles he is fighting. He also posts pictures of product innovations and puts the spotlight on employees who have done a great job.This habit, the 55-year-old chairman says, is a good way of letting the organisation know his thoughts and also set standards.

Shivakumar also holds a town hall meeting every month where he and the top management interact informally with employees for an hour. “Barriers are falling and employees are asking tougher questions. They are now holding leaders accountable,“ says Shivakumar.

Once a quarter, Shivakumar meets with about 250 top managers -called the steer leaders -to discuss three areas, namely collaboration, execution and ownership.

He gets juniors to shadow him and encourages feedback. All this, he says, is having a direct impact on performance.

Shivakumar also travels extensively, meeting stakeholders such as customers, partners, advertising agencies, recruiters, bottlers and distributors.

“Whenever there is a problem, even if it is as basic as a vending machine, I call or text Shivakumar directly. His team swings into action to fix it,“ says Rajeev Varma, CEO of fast food chain Burger King. There are two big reasons why Shivakumar is making himself easily accessible to everyone.

First, he wants to charge up PepsiCo India by energising the people working on the brand. This, he believes, is the best way to make PepsiCo mean.

Second, when Shivakumar joined as chairman in December, 2013, the fizz was missing in PepsiCo. Growth had slowed down to single digits; the company was losing market share; both its beverages and snacks businesses were under pressure; employee morale was low and the abrupt exits of top leaders, foods CEO Varun Berry and chairman Manu Anand, had hurt.

“Before improving market share and volumes, Shiv's immediate task was to connect with and motivate the team,“ says an official who works with him closely. “What the team needed most was stable and accessible leadership.“

Shivakumar is bringing in a leadership culture which places a premium on learning and agility . “The earlier approach was somewhat rigid and hierarchy-based... more of an army command-and-control type,“ he adds.

Can Shivakumar rejuvenate PepsiCo India? “It is still work in progress,“ the chairman admits.

External stakeholders are waiting still. “Shiv is fairly people-oriented. But relentless operations, sales execution and brand buoyancy are critical to the business,“ says the CEO of a top consumer goods company . “In snacks, local competitors are leaner in the market place, while PepsiCo has huge fixed costs.“

Adds an official from one of rival CocaCola's bottling partners: “Shiv is a people's person who carries his employees along. But there's a lot of ground (for him) to cover on operations... managing supply chain within the bottling network is a huge task and we believe this is where we compete very aggressively in the market.“ The official requested anonymity since he is not authorised to speak to media.

The Worst is Over

There is some evidence that things are getting better for Pepsico India. “We are witnessing positive effects (since Shivakumar took charge),“ says Samik Basu, VP, HR and chief people officer. “We had a decent 2014 and are off to a good start this year. There is increased transparency in the system and the larger organisation has a say.“

In an earnings call late last year, PepsiCo Inc chairman and CEO Indra Nooyi said the emerging markets business has proven to be resilient with high single digit organic revenue growth year-to-date, including double-digit growth in Egypt and India. PepsiCo India's revenue grew in double digits for nine months ended September 6, 2014, making the country amongst the fastest growing emerging markets for the global beverages and snack giant. India is now a high priority market, Nooyi said.

Shivakumar and Nooyi share a good rapport. The two had met in November 2013, at the latter's home in New Jersey. The two IIMC alumni bonded over Tamil and South Indian delicacies after which he left her home as the soon-to-be chairman and CEO of Pepsico India. Nooyi has already visited India twice since and may come again in May 2015.

On market share, however, data by research firms Nielsen and Euromonitor indicate that not much has changed, though FMCG officials say gaining market shares takes years.

Coca-Cola's brands across sparkling categories-colas, lime and orange- have historically been ahead of PepsiCo. Coca-Cola India, which sells Thums Up, Coke, Sprite and Fanta, accounts for 55% of the `14,000-crore Indian soft drink market. PepsiCo, whose products include Pepsi, 7UP and Mountain Dew, accounts for 32%, according to two industry officials quoting Nielsen data.

In snacks, PepsiCo's power brands, Kurkure and Lays, have maintained their lead over rivals, though it has been facing the heat from local players such as Gujarat-based Balaji Wafers and Haldiram. Bigger rivals like ITC and Parle are also gnawing away at PepsiCo's share.

New Intent

One of the first things Shivakumar did soon after taking charge was meeting cola veterans across the country. Many of them had long left the cola industry and were since, in unrelated industries. Yet, the learning would be invaluable for him, he thought. So he sought perspective from top honchos such as Vinita Bali, Suman Sinha and Ramesh Chauhan.

In January 2014, PepsiCo made sweeping changes in its senior leadership structure. Beverages and foods were clubbed into an integrated entity, with functions of marketing, operations, HR, finance, legal, corporate affairs and R&D being brought together under common heads. Three chief operating officers heading foods, company-owned bottling and franchisee bottling, report directly to Shivakumar.

Internally, the structure is changing from a business unit-based organisation to an integrated `power of one' function - a strategy led by Nooyi. Pepsico units in key global markets such as Russia and China follow this model.

“We had two distinct organisations that specialised in snacks and beverages individually. Now both are aligned,“ says Basu. “We moved from being a business unit organisation to a functional organisation. This offers more depth, but it needs higher collaboration among employees,“ he adds.

A collaborative approach with stake holders, focus on strategy, motivating and empowering employees and push ing innovation are sharp areas Shiva kumar wants to cover to get PepsiCo on track.

“Shivakumar is a sound leader and focused on objectives. While PepsiCo was going through changes in top leader ship, Coca-Cola was cruising along with a stable management,“ says the head of a top consulting firm. “Shiv has to cover lost ground.“

At least three cola industry veterans say one big challenge the company has been facing for a couple of years is cutting-edge advertising it was earlier synonymous with. `Nothing official about it', `Yeh dil maange more', and `Yehi hai right choice, baby' are some of its earli er, popular campaigns. PepsiCo has now brought back two industry veterans to steer marketing and advertising: Vipul Prakash, with the firm since 16 years to head marketing at PepsiCo, (he moved from PepsiCo Dubai) and ad industry veteran Anuja Chauhan at its long standing agency -JWT. She joined back JWT last year as creative consultant, and is part of PepsiCo's `power of one' team at the agency .

Another challenge is the balance of power with Ravi Jaipuria, PepsiCo's leading bottler in South East Asia. Ever since Jaipuria acquired PepsiCo's bot tling operations entirely in the North in November last year, industry grape vine feels Jaipuria has the upper hand over PepsiCo. Shiv is unper turbed. The brand matters more, he says.

“Shivakumar is easy to talk to,“ says Jaipuria. “There's an inherent sense that one can R, reach out to him whenever required.“

But Jaipuria's recent acquisition of PepsiCo's plants in North India seem to have triggered employee unrest.

About 900 managers and factory workers have been asked to become RJ Corp's employees. Production is stalled in some plants, though company officials in sist it's because of the transition and not because of any employee unrest.

Kala Vijayraghavan and Ratna Bushan

ET19MAR15