In a February article in Fortune, reporter Betsy Morris sang the praises of Indra Nooyi, PepsiCo’s sophomore CEO. The piece 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.”
While it’s fashionable for folks in the C-suite to proclaim their commitment to corporate responsibility, such talk often rings hollow. Nooyi told Fortune that PepsiCo is different: “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,” she says. “Companies today are bigger than many economies. We are little republics. We are engines of efficiency. If companies don’t do [responsible] things, who is going to? Why not start making change now?”
She’s made changes, but not the kind she’d hoped for.
Flash a few months forward to the recent financial meltdown, and headlines now announce that PepsiCo is slashing 3,300 jobs in a $1.2 billion cost-cutting drive. So what’s wrong with that? Plenty.
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. But then, in a moment of real candor, she added the following: “We have to stop and ask ourselves the question, is it prudent to do something radical to deliver [earnings forecast] numbers? And the answer is no. Because we are running the company for the long-term. You never run a company where you burn the furniture for the short term.”
How is it that pink-slipping 3,300 people isn’t a “radical” attempt to deliver earnings results? It’s certainly radical for the more than three thousand people who were fired. I fail to see how mass layoffs are consistent with one of PepsiCo’s core values: “treating people with dignity.”
Of course, it’s unfair to single out only PepsiCo, which has a stellar record of promoting women into its management ranks and building a diverse workplace. It’s hardly the only multi-national that’s laying off 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 cuts more than 3,000 people loose, it’s no wonder that big corporations and the people who run them are widely regarded as selfish and uncaring, and the brand called capitalism is suffering.
I’m glad to see that PepsiCo, under Nooyi, has set out to become a responsible business. But on the matter of truly valuing its most important asset—its people—PepsiCo has thus far failed to live up to its own Pepsi Challenge.