Employee Compensation Plan at PepsiCo

Employee Compensation Plan at PepsiCo

The success of an organization lies in the productivity and commitment of human resources or the employees working for the organization. The management must ensure the employees enjoy factors such as employee motivation, satisfaction, and engagement. The elements serve to improve the overall commitment of the employees to an organizational vision, mission, and objectives. The employee benefits or compensation plans form one of the main contributors to the working environment of an organization. Successful organizations have established themselves by appreciating the value of the employees. Organizations such as Pepsi have been in business for more than fifty years and have grown to become global companies. The secret to the success of these organizations can be understood by how the human resources in the company are compensated. Employee compensation refers to all the wages, benefits, and salaries that the employees receive for their work. The settlement includes the hourly fees, annual salary, bonus payments, incentives and other benefits, health care insurance programs, and retirement benefits. An employee compensation plan contains all the components of compensation in addition to how the payment is paid and the situational circumstances under which employees receive bonuses, salary increments, and incentives. The compensation plan at Pepsi is relatively average because of the company employees thousands of employees across the world. It, therefore, has to manage all these resources while also competing with significant competitors such as Cocacola.

Compensation Plan at Pepsi

The compensation plan at PepsiCo is designed to provide a fixed income for the employees of the organization and is made up of various compensation policies. PepsiCo is a world-leading food and beverage company that serves more than 200 countries in different regions across the world. It has lots of employees; hence, there is a need to manage compensation plans and ensure sustainability. The compensation is market-oriented, where the plans change based on the market environment. The wages are average wages, and the organization is positioned to promote employee retention and develop networks within the workforce. The organization is relatively well-positioned to recruit more talents to the workforce. The organization also has low costs from high employee turnover, external staffing, and entry-level expenditures as it has a vast talent pool. The compensation plan considers the welfare of the workers and is configured to reward their efforts.

The employees enjoy free catering services, flexible working hours, leaves and vacations, work from home programs, and professional support initiatives. Pepsi also provides commuter checks, company transportation, and wheelchairs to the employees that require them. Such considerations make the employees develop a positive attitude and behavior (Kadir, AlHosani & Fadillah Ismail, 2019). The company provides a base salary, which is reviewed on a regular period. Benchmarking during salary reviews is done based on similar positions, mostly in the competent departments of the organization. The organization also provides an annual incentive compensation scheme to the employees based on the yearly performance. The performance-based compensation benefits are provided under the organization’s Internal Revenue Code System. The incentive is undertaken when the employees exceed their targets, and the top management decides to develop a suitable compensation strategy to provide higher employee satisfaction. The exact amount of compensation at PepsiCo is selected based on the organizations’ financial results, strategic position, and overall performance. The organization has a pay-for-performance compensation program, which is determined by the results achieved by the organization. PepsiCo has long term incentive compensation plans for the employees at the top positions. The Compensation Committee of PepsiCo is responsible for overseeing the designing and administration of the executive compensation programs. The programs are evaluated against competitive practices, legal and regulatory developments, and trends in corporate governance.

The compensation plan at PepsiCo is the most appropriate as allows room for development and also motivates the employees to perform better. The play is based on the skills, contributions, expertise, experience, input, and the performance of the employees at work. Employees who add more value are, therefore, bound to receive adequate compensation based on their information. The plan thus improves employee motivation and satisfaction as they are well rewarded due to the performance. The salary reviews conducted after hitting the target also motivates the different departments in the organization to work harder, which has seen the organization achieve significant growth over the last years. The inclusivity of the compensation plans is also commendable. Employees enjoy additional benefits apart from salaries and wages, including benefits and incentives that not only attract more employees to the organization but encourage employee retention. The latter is evident since the employee turnover is low at the company, and the organization can take control of the compensation costs.

Discretionary Benefits at PepsiCo

PepsiCo is an established organization and is bound to attract talent due to the ability of the organization to offer additional discretionary benefits for the employees. Discretionary bonuses are provided as a strategic policy to attract and retain skills in the organization and establish the organization as an employer of choice. Discretionary benefits entail all the employee benefits that are not mandated by the law. The benefits range from health insurance, sick leave, maternity leave, vacation leave, pension plans, life insurance, and prescription drug insurance (Klonoski, 2016). The choice of discretionary benefits is often left to human resource professionals to decide. PepsiCo is known for giving its employees what they deserve, and they have an excellent benefits package that appreciates the efforts of their staff. PepsiCo employee benefits include healthcare plan, 401 (K) match, which is 50% up to 4%, 14-21 days of paid vacation, six weeks paternity leave, life insurance, and free snacks. All PepsiCo employees are also eligible for benefits on their first day at work. The company has no probation or waiting period, and this aspect has garnered it a lot of praise. The employees also receive food and beverages while at work. The company also has paid interns who enjoy free meals and mileage reimbursement for any driving they do on company time. Employees tasked with deliveries and sales can get a company vehicle for use while working. The organization is also hailed for offering a tuition reimbursement program. The program helps combat the national problem of student loans. Such programs make the employees feel more engaged with the company and become less anxious about the future.

Employee Sponsored Retirement Plan and Health Insurance Programs

An employer-sponsored plan is a benefit plan that employers offer at relatively low costs or no costs at all. The policies cover a variety of areas, including retirement savings and healthcare. Employees who enroll in employer-sponsored programs enjoy discounted services. PepsiCo has a multitude of employer-sponsored programs that increase the desirability of the organization as a potential employer. The 401 (K) plan benefit at PepsiCo is such that the organization will match 50% of the employee contributions for up to 4% of the salary of the employee. The organization also offers health insurance coverage, which is standard with reasonable premiums for the employees. The health insurance program also includes dental insurance, which covers dental check-ups and cleans of the employees. Vision insurance is also offered and entails affordable co-pay for glasses, contact lenses, and eye examinations. The health insurance program also extends to life insurance, where the families of the employees are compensated in the event of the death of an employee.

The major global competitor for Pepsi Co is the Coca-Cola company. The competitor has established itself as a reputable beverage company in the worldwide market. Employees at the Coca-Cola company enjoy various compensation plans that determine the organization as another preferred employer. The organization offers comprehensive employer-sponsored retirement and health insurance programs for the organizations’ employees. The package includes a health and welfare package that covers medical insurance including dental, accidental death and dismemberment, dependent life insurance, flexible spending accounts, business travel accident insurance, group life insurance, short-term disability, long-term disability, survivor benefits program. The organization also provides an employee assistance program with explicitly confidential counseling services. The medical and dental health insurance coverage extends to all eligible dependents, including same-sex domestic partners and on-site medial services clinic. The retirement plans at Coca-Cola include a 401 (k) plan where the company will match up to 3%, choice of funds, and a defined benefit plan entirely funded by the organization. The organization has partnered with Wells Fargo in the United States, which is known as a leading retirement and income solutions service provider to implement the 401 (K) program for its employees. The prizing and size of the program are significant and have assets exceeding 500 million and still growing. The plan has an extensive portfolio of funds for employees. The Coca-Cola company has a company supplemental pension plan. It is enjoyed by a select group of the management or employees who receive high compensations. The compensations are typically not payable or cannot be provided under the terms of the tax-qualified retirement plans by the organization. The program entails an unfunded supplemental retirement plan for the eligible employees and their beneficiaries.

Recommendations for PepsiCo

Pepsi Co has a well-structured and attractive compensation plan but can focus on incorporating and improving their plans and programs for the benefit of the employers. Being a global employer, changing particular patterns, and developing the compensation plans will set the direction for how different corporations treat employees. One of the things that PepsiCo should do is accept diversity and sexual orientation of the population hence support the LGBT community in their programs. Same-sex marriage in some countries is legal, and the employee benefits when applicable, should also apply for such circumstances. The latter will improve how the LGBT community is treated in society and allow other companies to end discrimination against the group (Noe, Hollenback, Gerhart & Wright, 2017). PepsiCo should also appreciate entry-level workers or average workers in the workforce. The organization appears to have exclusive and attractive packages for the management and should do the same or improve the available packages for the other employees to bring fairness in the organization.

References

Kadir, A. A., AlHosani, A. A. H. H., & Fadillah Ismail, N. (2019). The Effect of Compensation and Benefits Towards Employee Performance.

Klonoski, R. (2016). Defining Employee Benefits: A Managerial Perspective. International Journal of Human Resource Studies, 6(2).

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.