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Critique the
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case competition presentation created by our MHRM Case Team
at the Ohio State HR Invitational Case Competition conducted a few years back. The Pepsi sponsored case question centered on ways to reduce turnover of recent new hire graduates into the Pepsi organization.
Specifically, answer the following:
1. What is effective about the slide presentation?
2. What is ineffective?
3. How does it address elements within a Balanced Scorecard and HR Scorecard framework?
4. What was one of the key elements missing in the presentation?
RETENTION OF THE BEST AND
BRIGHTEST AT PEPSICO
Team Red
Claudius M. Hanke
Deboleena Bose
Maham Mukhtar
Frederick Feller
PROBLEM AND STATUS QUO
3/4/
2
014 Dahwan, E. 2012 / PricewaterhouseCoopers 2012 / Robert Half International 200
8
Two core factors drive Millennial retention.
Y
“They’ve seen their
parents get downsized,
rightsized, laid off and
sidelined.” – RHI
“Emotional connection
drives retention.” – PwC
75%
of Millennials in the global
workforce by 2025
12%
current annual
turnover at PepsiCo
2
EMPLOYEE VALUE PROPOSITION
“Meaning is the new money.”
3/4/2014 3 Ericksen 2011
Balancing meaning and money is key to retention.
EMPLOYEE VALUE PROPOSITION:
TOTAL COMPENSATION
3/4/2014 RHI 2008 / Ng et al 2010
Long-term financial security is a key concern.
Job considerations for Millennials:
1) Salary
2) Benefits
Transparency & equity issues are
fundamental for satisfaction.
Benefits are key to retention:
1) Healthcare coverage
2) Paid time off
3) Dental coverage
4) 401k
5) Bonuses
Y
Total
Compensation
$26,699
Avg. expected salary
increase within 5 years
after graduation
4.44
Attractiveness of
better benefits
out of 5
4.63
Attractiveness
of higher pay
out of 5
4
EMPLOYEE VALUE PROPOSITION:
TRAINING & LEARNING
3/4/2014 RHI 2008 / PwC 2011
Professional & personal advancements are crucial.
Define PepsiCo-specific human
capital development targets
Proactive educational
opportunities satisfy learning
drive and aid retention
Age-neutral workplace:
resolve stereotypes and
improve sense of belonging
Y
Training
&
learning
73%
of Millennials would
consider leaving for
educational
opportunities
34%
of Millennials consider their
personal drive intimidates
older generations
5
EMPLOYEE VALUE PROPOSITION:
SUPERVISOR GUIDANCE
3/4/2014 RHI 2008 / PwC 2013
Face time instead of FaceTime.
Role of supervisors changes
from knowledge center to
career guide.
Personal contact remains key.
“Generation Nintendo”:
Constant feedback &
recognition of performance
Performance appraisal: Who
are the best and brightest?
Transparency is crucial
Y
41%
of Millennials expect
performance feedback
very frequently
Supervisor
guidance
96%
of Millennials want
career discussions
face-to-face
6
EMPLOYEE VALUE PROPOSITION:
UNIQUE LEADERSHIP DEVELOPMENT
3/4/2014 Brack 2007
Meaningful work trumps unattractive locations.
“PepsiCo’s firefighter initiative”:
A-players rotate among
troubled facilities
Participants enjoy great
autonomy and ownership
Addresses desire for
challenging and significant
opportunities
PepsiCo’s leadership pipeline to
exploit key traits and foster
career progression
Y
PepsiCo’s
firefighter
initiative
7
30%
of Millennials consider
meaningful work as
most important
EMPLOYEE VALUE PROPOSITION:
UNIQUE LEADERSHIP DEVELOPMENT (CONT.)
3/4/2014 Brack 2007
Selection of firefighters is a corporate-wide task.
How to ensure common
understanding of an A-player
across all PepsiCo-facilities?
1. Continuous performance
appraisal at local facility
2. Outstanding candidates are
invited to PepsiCo’s HQ
3. Central HR-Committee
conducts assessment center to
select firefighters
Alignment of A-players with
PepsiCo’s corporate goals
Highlight differences in quality of
performance appraisal
Y
25%
of Millennial seek
personal accomplishment
in their jobs
PepsiCo’s
firefighter
initiative
8
FINANCIAL PROJECTION
Cost of doing nothing: $9,720,000 annually
Year 0 cost:
Training & learning ($360k) + Supervisor guidance ($20k) +
PepsiCo’s firefighter initiative ($90k) = $470,000
PepsiCo’s WACC: 4%
Net Present Value: $2,201,740
Return on Investment: 38.29%
3/4/2014 9 WACC: stock-analysis.com, 2/22/2014
Implementation of the model is financially advicable.
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
(470k) (470k) (830k) (830k) (830k) (830k)
— — — 810k 2,230k 6,480k
Turnover decrease (from 12%): -1% -3% -4%
METRICS & MEASURES
Metrics for successful retention
Satisfaction of A-players/of regular employees
Turnover of A-players/of regular employees
Trend analysis of exit interview content
Success rate of “PepsiCo’s firefighter initiative”
Acceptance rate among target facilities
Learning outcomes
Performance outcomes
Final cost per employee
3/4/2014 10
What gets measured, gets managed.
THANK YOU FOR YOUR ATTENTION.
Do you have any questions?
3/4/2014 11
Team Red:
Claudius M. Hanke
Deboleena Bose
Maham Mukhtar
Frederick Feller
Y
PepsiCo’s
firefighter
initiative
Supervisor
guidance
Training
&
learning
Total
Compensation
REFERENCES
Brack, J. (2007): Maximizing Millennials in the Workplace. UNC Kenan-Flagler Business School. http://www.kenan-
flagler.unc.edu/executive-development/custom-programs/~/media/DF1C11C056874DDA8097271A1ED48662.ashx
Dhawan, E. (2012): The Gen-Y Workforce And The Workplace Are Out Of Sync. Forbes Online.
http://www.forbes.com/sites/85broads/2012/01/23/gen-y-workforce-and-workplace-are-out-of-sync/
Ericksen, T. (2011): Meaning Is The New Money. Harvard Business Review Blog Network.
http://blogs.hbr.org/2011/03/challenging-our-deeply-held-as/
Ng, S.W., Schweitzer, L. & Lyons, S. (2010): New Generation, Great Expectations: A Field Study of the Millennial
Generation. Journal of Business Psychology (25), pp. 281-292. http://link.springer.com/article/10.1007/s10869-010-
9159-4/fulltext.html
PricewaterhouseCoopers (2008): Managing tomorrow’s people: Millennials at work – perspectives from a new
generation. http://www.pwc.com/en_M1/m1/services/consulting/documents/millennials-at-work
PricewaterhouseCoopers (2011): Managing tomorrow’s people – Key findings. http://www.pwc.com/gx/en/managing-
tomorrows-people/future-of-work/key-findings.jhtml
PricewaterhouseCoopers (2013): PwC‘s NextGen: A global generational study. http://www.pwc.com/en_GX/gx/hr-
management-services/pdf/pwc-nextgen-study-2013
Robert Half International (2008): What Millennial Workers Want: How to Attract and Retain Gen Y Employees.
http://www.accountingweb.com/sites/default/files/generationy_robert_half
Stock-analysis.com (2014): PepisiCo Inc. (PEP) Financial indicators. http://www.stock-analysis-
on.net/NYSE/Company/PepsiCo-Inc/DCF/Present-Value-of-FCFF
Image sources:
Slide 1 PepsiCo image (edited): http://davemosher.com/blog/wp-content/uploads/2010/07/pepsi-cola-300×225
Slide 2 Brain (edited): http://4.bp.blogspot.com/-
rEs5nLBq0M4/Twhp9dSCiOI/AAAAAAAAAhg/QIgxditbb2g/s200/02brainfromabove991907.gif
3/4/2014 12
