Leadership Approaches, Skills & Competencies of PepsiCo - Case Study Example

CREATE A DEGREE OF CHANGE IN PEPSICO Name: College: Course: Tutor: Date: Create a degree of change in PepsiCo Leadership approaches and theories that should be used at PepsiCo and why? PepsiCo is situated in a rapidly changing and highly competitive business environment, which requires leadership that is not only able to help the company to navigate the complexities of globalization, internationalization, multiculturalism and divers customer needs but also make the company flexible and adaptive enough to perform effectively in such a fluid environment (Schreyögg and Sydow 2010). In addition, the company needs to transform from the toxic hierarchical-heroic paradigm to become a more flexible and adaptive organization that is able to respond to the needs of its customers promptly while encouraging its employees to perform beyond expectation while remaining loyal alongside (Haeckel 2013). Therefore, the leadership of PepsiCo, including its chief executive officer, line managers and team leaders should employ transformational and situational leadership approaches. These leadership style choices are guided the kind of organization PepsiCo aspires to become and the kind of workforce it intends to have as well. From the words of Jorge Rubio, the company’s consumer strategic insights director, it is intended that the business units of PepsiCo and its workforce be fast, flexible, efficient, customer-centric, trustworthy, and motivated. To this end, transformational leadership the advantage of sharing the vision of the company, allowing contributions from followers and creating an inclusive atmosphere in organizations. In addition, its creates an atmosphere where more than one leader emerged in a team, is proactive oriented, emphasizes on the needs, morals, ideals and values of the followership, and is suited for turbulent environments such as the one experienced by PepsiCo (Boies, Fiset and Gill 2015). This is unlike transactional leadership style, which is currently in employment at the company, which provides for one individual as the ultimate leader, employs bureaucracy rather than charisma when dealing with followers, reacts to the organization environment, and focuses of relations with employees, making it suitable for a stable, settled and predicable environment. Therefore, to PepsiCo, transformational leadership can help bring out the best from employees while encouraging them to pursue professional and personal development in order to improve and even exceed their performance in the organization, considering that the workers at PepsiCo operate within strict limits. By leading by example, the leadership of the company would benefit from employing the transformational leadership style because they would not only endear trustworthiness and loyalty from the employees, which is lacking in the company currently, but would also help make the employees more responsible for their performance while having a high focus on customers as well. Specifically, by practicing transformational leadership, the leadership of PepsiCo would elicit specific behavior and reactions in the followership that are characteristic of the transformational style (Bjugstad et al. 2006). Specifically, four components of transformational leadership, which including idealized influence, individualized consideration, inspirational motivation and intellectual motivation, would be desirable for PepsiCo executives, business unit managers and line managers (Daft 2013). First, the leadership would exert idealized influence on the employees by acting as a role model to the followers and thus eliciting the admiration of the followership in return (Carsten 2010). Secondly, PepsoCo leaders would offer inspirational motivation to workers by inspiring, exciting and motivating the followership through charisma. This would help the employees take more responsibility of their actions and professional development to improve their position at PepsiCo rather that just focus on their tasks as recommended by transactional leadership. Thirdly, PepsiCo leaders would offer individualized consideration by exhibiting genuine and authentic concern regarding the feelings and needs of the every member of the company’s workforce with the aim of bringing out the best of the followership (Northouse 2016). In this case, the leader would be cognizant and sensitive towards the individual differences among the followership, which in turn enables the leader to mentor his or her followers and thus advance their growth and development (Gong, Huang and Farh 2009). Finally, the company leaders would provide intellectual stimulation by challenging his or her followers to be creative and innovative so that they can achieve high performance levels (Cheung and Wong 2011). In this case, the leader would be willing to guide his or her followers in identifying and utilizing new approaches to old problems and thus arriving at solutions that are rational and practical, and even encouraging them to take up leadership roles in the company as well (Riggio, Chaleff and Lipman-Blumen 2008). Transformational leadership would also make PepsiCo proactive to the business environment rather than reactive. Therefore, this style would be recommended for PepsiCo, which needs to undergo a change in the current organizational culture, considering that the company intends to adopt a matrix structure, become an open and learning organization that nurtures and develops creativity, and a flexible organization that can weather changing business environments, which is away from the rigid, conformist and disengaged atmosphere being experienced at PepsiCo. The employment of the situational leadership style at PepsiCo would be recommended, considering that the company is multinational, having a multicultural workforce, and serving diverse customers needs as well. As such, in PepsiCo, leadership should be tailored to fit the task, function or job at hand, and may vary depending on the qualities and abilities of the followership and the situation in which the tasks are to be performed (Parsloe and Leedham 2009). Indeed, by practicing the situational leadership style, leaders at PepsiCo would exhibit flexibility in the leadership styles they employ so that they would suit different situations as they arise in and outside the company. From this premise, PepsiCo ;leadership practicing the situational leadership style would be able to direct, coach, support and delegate, be able to develop the competences and commitment of company employees and colleagues, and be able to induce high levels of self-motivation among the followership as well. Ultimately, the situation leader is highly adaptive because he or she, after evaluating the followers, would weigh the variables characterizing the workplace and consequently opt for a leadership style that provides the best fit for the goals of the group at PepsiCo and the prevailing circumstances (Yukl and Mahsud 2010). However, the leaders at PepsiCo would face some challenges when utilizing the transformational and situational leadership styles. For instance, employing the transformational leadership style at the company would only be effective when leading a receptive workforce or followership with which strong connections have been formed. Specifically, if the PepsiCo workers have become so accustomed to the traditional view of organizational hierarchy employed at the organization and are goal oriented as well, then transformational leadership may not be sufficiently effective. Indeed, the approach of the brain spa at the company is likely to yield highly motivated workers, who in turn would not benefit from transformational leadership (Aguirre-Mar 2013). In the same breadth, employment of situational leadership style runs the risk of being ineffective in a highly mature workforce is involved (Lapidot, Kark and Shamir 2007). Definition of the competencies then skills that are required at PepsiCo Two competencies that would be required by the leadership of PepsiCo are emotional intelligence and collaboration. Emotional intelligence (EI) is defined as the ability of an individual to comprehend and manage his or her own emotions and the emotions of other people in close proximity (Joseph and Newman 2010). As such, emotional intelligence enables leaders not only to understand their own feelings and the meanings of these feelings, but also how these feeling affect the people around them. To this end, emotional intelligence is characterized by five elements, which include social skills, empathy, motivation, self-regulation and self-awareness (Goleman, Boyatzis and McKee 2013). On the other hand, collaboration is the ability to energize and mobilize others to solve problems through the creation of a common vision. Collaborative leaders invest much time listening to the input of others regarding a problem and allocating resources to the problem solving endeavor to facilitate the work of others. From this premise, Bolden (2011) observes that collaborative leadership is best practiced when leadership is distributed among the team in a workplace. Two skills that the PepsiCo Leader requires are communication skills and flexibility. Communication skills comprise of the ability to explain oneself clearly and succinctly in a manner that the message and information is transmitted to and understood by others without ambiguity. Good communicators should be able to communicate verbally and nonverbally as well while being able to decipher verbal and nonverbal cues from other in an accurate manner as well. According to Barrett (2006), business leaders should have core, managerial and corporate communication skills to be able to communicate well in today’s business environment. In addition, flexibility is the ability to cope with changing circumstances and to approach problems and tasks in creative ways. According to Jokinen (2005), flexibility in leadership involves the changing of stance, outlook and commitment when faced with unexpected and sometimes stressing events and circumstances. For rapidly changing business environments in which situational leadership is required, the path-goal theory can explain how specific leadership styles are chosen to fit best the environments in which work and employees are situated (Vroom and Jago 2007). Indeed, followership accepted leadership once the leader’s behavior matched the situation because such leadership helped structure tasks that were otherwise ambiguous, thus enhancing goal achievement. However, in the current environment that PepsiCo is in, which is characterized by international operations, multicultural workforce and customers, and a rapidly changing business environment, trust and hard work from the workforce can be elicited by understanding and employing the leader-member exchange theory. This theory underpin how relationships between the management and the workforce are formed and fostered and how a leader seeks to improve the performance of his or her team though mentoring, coaching and training (Erdogan and Enders 2007). Indeed, workforce that is skilled appropriately and is well fitted to the assigned tasks is likely to outperform organizational expectations and thus be more productive. What would make a good CEO for PepsiCo? PepsiCo needs a paradigm shift in its leadership so that it can confront the challenging business environment ahead, which is fraught with fierce competition and a myriad of uncertainties. For a long time, the company has employed a traditional hierarchical leadership structure whereby the chief executive officer (CEO) of the company was placed at a high pedestal in the organizational structure and was rewarded highly at the expense of the workforce motivation. Therefore, the suggested way forward is to change the unhealthy hierarchies in the company to the matrix model whereby the workforce is lined against functional departments and product lines as well. This means that employees report to functional managers and product line managers as well. To effect this structural change at PepsiCo, its CEO should assume the role of a change agent and champion, and as such, should not only employ transformational and situational leadership styles, but should also employ good communication and flexibility skills as well. From this premise, it is pertinent that the leader of the company embraces the skills model of leadership in order to create an environment in which employees develop skills pertinent to enhance organizational performance and spur the company forward in the prevailing business environment (Boies, Fiset and Gill 2015). According to Mumford and colleagues (2000), the skill-based model proposes that the performance of a leader is influenced by the possession of complex problem solving skills, solution construction skill and social judgment skills. With this model, a leader should be able to conceptualize the problem and its solution, from which planning can be effected. The leader should ensure that the plans and proposed solutions are appropriate to the situation in which the organization is, and if not, appropriate amendments should be made. Thereafter, the leader should rally the workforce to work towards the proposed solutions with unity of purpose. For this process to be effected efficiently and effectively, the leader needs to exercise the 4 C’s of leadership, which are character, competence, collaboration, and courage (Komives and Wagner 2016). Transformational leadership helps the CEO of PepsiCo to use his or her character and lead by example to as to endear the followership towards the attainment of the organizational goals. In addition, the CEO should have sufficient competence in order to inspire confidence in the workforce of the company and champion pursuit of skill proficiency among the workers of the company. However, due to the huge diversity of the workforce and customers as well, the CEO needs to exercise both emotional and cultural intelligence to ensure that every single member of the workforce is included in the change strategy (Rockstuhl et al. 2011). The collaborative skills of the CEO would be facilitative in ensuring inclusivity in this case. Indeed, such collaboration can be achieved if only the views of the workforce are incorporated in the problem-solving process. The Delphi method of communication that can be employed at the brain spa that has been developed at the company would facilitate the collection and consolidation of the varied views of the participants and guarantee the arrival to a consensual solution (Hsu and Sandford 2007; Yousuf 2007). In this aspect, the communication skills of the CEO will prove to be valuable in ensuring that the vision of the company and the strategy to be followed are well understood by all the members of the workforce at the company. Fitness to organizational situation is paramount in ensuring that the strategies and leadership styles employed by the CEO of PepsiCo are effective in directing the desired organizational change process (Sims, Faraj and Yun 2009). Already, the situational leadership style was found pertinent for responding to different situations at the company, in turn, facilitating flexibility in the leader. However, the business environment in which the organization operated is more dynamic rather that static, and often experiences rapid, disruptive and discontinuous change. In this aspect, the contingency theories of leadership would helpful in explaining the extent at which a situation influences the effectiveness of the CEO of PepsiCo. According to the contingency theory, the effectiveness of a leader is influenced by the manner and extent at which situational factors, and the traits and behaviors of a leader interact (Nohria and Khurana 2013). Ultimately, if the CEO of PepsiCo employs both transformational and situational leadership styles, and uses his communication and flexibility skills, he would be able to change the company into a dynamic, flexible and responsive organization that is not only sensitive to the needs of its clientele but also accommodative of its workforce in a manner that maximizes their performance potential (Raisch and Birkinshaw 2008). Evidently, PepsiCo needs a CEO who would not only navigate the company through a challenging and complex business environment but one that can gain market leadership by creating competitive advantage over its rivals. References Aguirre-Mar, M., 2013. Global Structural Design and Results: PepsiCo Case. Journal of Strategic Leadership, 4(2), pp.6-13. Bass, B.M., 1990. From transactional to transformational leadership: Learning to share the vision. Organizational dynamics, 18(3), pp.19-31. Bjugstad, K., Thach, E.C., Thompson, K.J. and Morris, A., 2006. A fresh look at followership: A model for matching followership and leadership styles. Journal of Behavioral and Applied Management, 7(3), p.304. Boies, K., Fiset, J. and Gill, H., 2015. Communication and trust are key: Unlocking the relationship between leadership and team performance and creativity. The Leadership Quarterly, 26(6), pp.1080-1094. Bolden, R., 2011. Distributed leadership in organizations: A review of theory and research. International Journal of Management Reviews, 13(3), pp.251-269. Carsten, M.K., Uhl-Bien, M., West, B.J., Patera, J.L. and McGregor, R., 2010. Exploring social constructions of followership: A qualitative study. The Leadership Quarterly, 21(3), pp.543-562. Cheung, M.F. and Wong, C.S., 2011. Transformational leadership, leader support, and employee creativity. Leadership & Organization Development Journal, 32(7), pp.656-672. Daft, R. L., 2013. Leadership (5th Edition). South Western: Cengage Learning. Deborah J. Barrett, (2006) "Strong communication skills a must for today’s leaders", Handbook of Business Strategy, Vol. 7 Issue: 1, pp.385-390. Erdogan, B. and Enders, J., 2007. Support from the top: supervisors' perceived organizational support as a moderator of leader-member exchange to satisfaction and performance relationships. Journal of Applied Psychology, 92(2), pp. 321-330. Goleman, D., Boyatzis, R. and McKee, A., 2013. Primal leadership: Unleashing the power of emotional intelligence. Harvard Business Press. Gong, Y., Huang, J.C. and Farh, J.L., 2009. Employee learning orientation, transformational leadership, and employee creativity: The mediating role of employee creative self-efficacy. Academy of Management Journal, 52(4), pp.765-778. Haeckel, S.H., 2013. Adaptive enterprise: Creating and leading sense-and-respond organizations. Harvard business press. Hsu, C.C. and Sandford, B.A., 2007. The Delphi technique: making sense of consensus. Practical assessment, research & evaluation, 12(10), pp.1-8. Johansen, R., 2012. Leaders make the future: Ten new leadership skills for an uncertain world. Berrett-Koehler Publishers. Jokinen, T., 2005. Global leadership competencies: a review and discussion. Journal of European Industrial Training, 29(3), pp.199-216. Joseph, D.L. and Newman, D.A., 2010. Emotional intelligence: an integrative meta-analysis and cascading model. Komives, S.R. and Wagner, W., 2016. Leadership for a better world: Understanding the social change model of leadership development. John Wiley & Sons. Lapidot, Y., Kark, R. and Shamir, B., 2007. The impact of situational vulnerability on the development and erosion of followers' trust in their leader. The Leadership Quarterly, 18(1), pp.16-34. Millmore, M., 2007. Strategic human resource management: Contemporary issues. Pearson Education. Mumford, M.D., Zaccaro, S.J., Connelly, M.S. and Marks, M.A., 2000. Leadership skills: Conclusions and future directions. The Leadership Quarterly, 11(1), pp.155-170. Nohria, N. and Khurana, R., 2013. Handbook of leadership theory and practice: An HBS centennial colloquium on advancing leadership. Harvard Business Press. Northouse, P.G., 2016. Leadership: Theory and practice (7th Edition). London: Sage. Parsloe, E. and Leedham, M., 2009. Coaching and mentoring: Practical conversations to improve learning. Kogan Page Publishers. Raisch, S and Birkinshaw, J., 2008. Organizational Ambidexterity: Antecedents, Outcomes and Moderators. Journal of Management, 34(3), pp. 375-409. Riggio, R.E., Chaleff, I. and Lipman-Blumen, J. eds., 2008. The art of followership: How great followers create great leaders and organizations (Vol. 146). John Wiley & Sons. Rockstuhl, T., Seiler, S., Ang, S., Van Dyne, L. and Annen, H., 2011. Beyond general intelligence (IQ) and emotional intelligence (EQ): The role of cultural intelligence (CQ) on cross‐border leadership effectiveness in a globalized world. Journal of Social Issues, 67(4), pp.825-840. Schreyögg, G. and Sydow, J. 2010. Crossroads: Organizing for Fluidity? Dilemmas of New Organizational Forms. Organization Science, 21(6), pp. 1251–1262.  Sims, H.P., Faraj, S. and Yun, S., 2009. When should a leader be directive or empowering? How to develop your own situational theory of leadership. Business Horizons, 52(2), pp.149-158. Vroom, V.H. and Jago, A.G., 2007. The role of the situation in leadership. American psychologist, 62(1), p.17. Yousuf, M.I., 2007. Using experts’ opinions through Delphi technique. Practical assessment, research & evaluation, 12(4), pp.1-8. Yukl, G. and Mahsud, R., 2010. Why flexible and adaptive leadership is essential. Consulting Psychology Journal: Practice and Research, 62(2), pp. 81-93. Read More