PepsiCo Flunks the Authenticity Test

PepsiCo Flunks the Authenticity Test

In many ways, authenticity is a synonym for integrity. A company that aspires to be authentically good says what it’s going to do and then does it. And when it stumbles along the way (stumbling is inevitable, as I well know), it doesn’t try to greenwash or explain away its mistakes—it exposes its setbacks and works urgently to fix them. It sounds so simple, and yet it’s surprising how often companies get it so wrong. Take PepsiCo.

Early last year, Fortune reporter Betsy Morris sang the praises of Indra Nooyi, PepsiCo’s CEO. Morris described PepsiCo’s new motto under Nooyi, “Performance with Purpose,” which strives to balance “the profit motive with making healthier snacks, striving for a net-zero impact on the environment, and taking care of your workforce.”

Sure, it’s fashionable for folks in the C-suite to proclaim their commitment to corporate responsibility. Nooyi told Fortune that she meant what she said: “If all you want is to screw this company down tight and get double-digit earnings growth and nothing else, then I’m the wrong person. If companies don’t do [responsible] things, who is going to? Why not start making change now?”

Nooyi made changes, but not the kind she hoped for. When the financial crisis hit, PepsiCo’s response was sadly predictable. It slashed 3,300 jobs in a $1.2 billion cost-cutting drive. (Contrast this with FedEx’s actions, which I described in yesterday’s post.) Some will argue that from a fiscal standpoint, PepsiCo acted responsibly. But it certainly didn’t act authentically.

In an interview with Jonathan Birchall of the Financial Times, Nooyi said that PepsiCo was “facing challenges that are really out of our control, and affect others as well.” That’s typical CEO-speak for explaining layoffs—and a pretty clear example of PR puffery. (An authentic—or at least honest—response would be, Management messed up and our employees are paying the price.) But then Nooyi added the following: “Is it prudent to do something radical to deliver [earnings forecast] numbers? And the answer is no. You never run a company where you burn the furniture for the short term.”

Perhaps pink-slipping 3,300 people really isn’t a “radical” attempt to deliver earnings results (though it’s certainly radical for the people who were fired). But mass layoffs are clearly inconsistent with one of PepsiCo’s core values—“treating people with dignity.”

Of course, it’s unfair to single out PepsiCo, which has a stellar record of promoting women into its management ranks and of building a diverse workplace. It’s hardly the only multi-national that’s firing thousands of workers during these tough times. But when Nooyi claims that part of PepsiCo’s newfound mission is “taking care of your workforce” and then summarily cuts more than 3,000 people loose, her lofty talk about performing with purpose rings a little hollow.

Jeffrey Hollender

President and Chief Inspired Protagonist of Seventh Generation, Jeffrey is a well-respected leader in the socially and environmentally responsible communities. An entrepreneur at heart, his first business ventures were rooted in adult education.

Note: This Perspectives Blog post is written by a guest blogger of The opinions expressed on this post do not necessarily reflect the opinions of Dr. Greene or, and as such we are not responsible for the accuracy of the information supplied. View the license for this post.

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