Principles of Leadership & Management Report

This report analyzes various leadership theories and their application within PepsiCo's transition to a more flexible organizational structure. It examines the essential leadership skills and competencies required for success in this new environment, focusing on traits theory, behavioral theory, leader-member exchange (LMX) theory, authentic leadership, and servant leadership. Each theory is evaluated for its advantages and disadvantages in the context of PepsiCo's goals, highlighting the necessary skills like managing change, risk-taking, communication, mindset development, vision setting, problem-solving, and relationship management. The report concludes by emphasizing the need for a leadership style that fosters delegation, close relationships with employees, and aligns with the company's vision for a flexible and competitive organization. The report also includes a table of contents and a comprehensive list of references.

Principles and Practices of Leadership
and Management

Table of Contents
INTRODUCTION...........................................................................................................................3
Main body........................................................................................................................................3
Most important leadership skills and competencies for PepsiCo...........................................3
Skill 1......................................................................................................................................3
Skill 2......................................................................................................................................5
Skill 3......................................................................................................................................5
Skill 4......................................................................................................................................6
Skill 5......................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES.................................................................................................................................9

INTRODUCTION
Flexible organisational structure can be advantageous for the business in today's
competitive environment. This not only promotes flexibility in the organisation but also
encourages the workforce to find new ways to do their tasks. The research report includes the
case study of PepsiCo, which is an American multinational company (Pepsi organisational
structure, 2016). The director of the company is planning to change the structure of the
organisation from MRD (Marketing Research Department) into more flexible style CSI
(Consumer Strategic Insights). They have been planning to adopt the working environment of
Google which gives their employees more freedom and flexible working hours. It will allow the
company to gain strategic advantage and it will become more competitive. In order to
accomplish this PepsiCo has change its leadership style to introduce the change. PepsiCo is the
largest revenue earning business in food and beverages segment with its product distribution
across 200 countries. The PepsiCo has adopted flexibility in the organisation and its structure.
The report contains an analysis of different leadership theories and its competencies for the
implementation of flexible organisation structure.
Main body
Most important leadership skills and competencies for PepsiCo
The Director of PepsiCo Jorge Rubio has decided to introduce flexible organisation
structure, which will give more freedom to the workforce. A flexible organisation has no
hierarchy and there are no rules and regulation for the employees. This improves efficiency and
competitiveness of the company (Akers, 2013). The employees are in a better situation to face
challenges and this brings innovation to the organisation. The PepsiCo needs an effective
leadership style that supports their flexible organisation structure. There are different theories of
leadership but it is essential to carefully evaluate each one of them before adopting it. The
leadership theories that PepsiCo can implement in their organisation are. The skills and
competencies develops a framework that helps a leader to know what he has to do and what is
expected from him The PepsiCo is planning to develop a flexible organisation and they want
their office to appear as an independent market research company. They want their employees to
be proactive and as such they want a leadership style that has the required skills and
competencies to attain the objective.

Skill 1
Leadership competencies are essential in developing and supporting the leaders. PepsiCo
has the intention to create the flexible organisation and they need leaders that can support their
mission. They want a matrix like process and they want their every employee to become self-
responsible, proactive and flexible (Patterson, 2015). Skill means an ability of a person to
accomplish a particular task. PepsiCo needs a a leader who has all the essential skills to help
them in creating a flexible organisation.
Traits Theory
The trait theories define the essential characteristics or traits that a leader should possess.
These traits include personality, skills, communication, vision and social relationship (Barrick
and et.al, 2013). These set of characteristics differentiate a leader from others and it also helps in
the overall development of the organisation.
Advantages and disadvantages:
The traits theory can be useful for PepsiCo, as it will defines the characteristics that is
needed for becoming a leader. PepsiCo has decided to adopt a flexible organisation structure and
the traits theory can help in creating an effective leadership style for the organisation (Frick ant
et.al, 2014). But PepsiCo would need time in analysing the traits that are required. Furthermore,
these could be temporary in nature and won't reflect the future. The leaders would only get the
generalised view as the situational factors are overlooked.
Skills related to the organisation:
 Managing change skills: The leader in Pepsi should be competent enough to mange all
the changes in the organisation. The structure of the company is changing into a flexible
form whereby giving more opportunities and freedom to the employees (Morgan, 2013).
It is very important for the leader to incorporate all these changes in the organisation. The
use of authentic leadership can be helpful in accomplishing this. The leader should give
the proper motivation and guidance.
 Taking risks and innovation skills: The management of PepsiCo has given the right to
their employees to try new things. They want them to come out of the rigid processes and
produce more creative ideas. So the PepsiCo also needs a leadership style, which is
aligned to this. A leader should give ample of opportunities and freedom to its followers.
They should be encouraged and a close relationship needs to be established with them

(Mendenhall and Osland, 2012). The traits and behaviour of the leader should match with
this objective.
 Communication skills: A flexible organisation structure cannot run without proper
communication (Shek and et.al, 2013). There would be less formal and structured
channels of communication in PepsiCo. As such the leader has to make sure that the
employees are not hesitant and proper communication is established. All the theories of
leadership define communication as an essential element.
Skill 2
Behavioural Theory
The behavioural theory defines the behaviour and set of actions that the leader would
undertake in the given situation. It takes into consideration the importance of reward and
punishment on the individual (Leroy and et.al, 2015).
Advantages and disadvantages:
The PepsiCo can develop leaders who would have the experience of different behaviours.
It would also be helpful in understanding the reinforcement actions like rewards and
punishments and their effects on the individual. But this theory is considered as one-dimensional
and limits the learning of a person. The learning, which is apart from reinforcement gets
overlooked.
Skills related to the organisation:
 Mindset skills: The leader should be open-minded and should involve the employees in
the decision-making. An autocratic leader or leader who takes all decisions by himself
would not be suitable for PepsiCo. The company wants every employee to become fast,
flexible, efficient, motivated and customer oriented.
 Setting vision and plans: The leadership style at PepsiCo should be visionary and the
leader should formulate plans for the future. Though the company is trying to be flexible
but there should be a proper vision and plan in front of the workforce (Zori, 2015). It will
act as a guide to them and they would know the direction in which they are heading.
 Open minded and flexible skills: A leader should be open minded so that the employees
can interact with him (Thorn, 2012.). PepsiCo is giving freedom to its employees and
there is also a need of a leader who would support the employees and builds a brand
strategy.

Skill 3
Leader Member exchange theory (LMX)
The leader builds good relationship with all subordinates. Each of them is given
opportunities, roles and responsibilities. This type of theory gives rise to two groups within the
organisation. The in-group is the one in which the leader is highly involved (Avolio and Mhatre,
2012). The subordinates of the In-group share more information with the leader as he influences
them. While the out-group is the one which is less compatible with the leader. They come to
work and after finishing the work goes back. They have no challenges and growth opportunities
in the organisation. The work of out-group is restricted and they have very little access with the
manager. The two groups are crated on the basis of trust, loyalty and skills. The in-group are the
ones whom the manger trusts the most (Liden and et.al, 2014). The leader gives them more
opportunity and challenges to grow. In this way the talented people are separated from the
others.
Advantages and disadvantages:
The LMX theory can be useful for PepsiCo as it lays the foundation of a positive
organization and also defines the importance of communication. Using this theory can also
identify the talented and highly motivated groups.
But the problem with the LMX theory is that the PepsiCo would appear unfair and discriminated
(Rockstuhl and et.al, 2012). This would in fact make the whole environment negative and the
people of the out-group would feel alienated.
Skills related to the organisation:
 Problem Solving skills: The leader should have the ability to solve various problem of the
organisation creatively and with innovative ideas (Daft, 2014). The PepsiCo also has the
organisation structure, which requires employees to solve problem on their own. The
leadership theories like authentic leadership, servant leadership gives the employees an
opportunity to take decisions on their own.
 Social judgement skills: He should have the capacity to understand people and their
behaviour. The understanding of the social system, behavioural changes and perspective
of people is essential.
 Technical skills: Technical skills involve the knowledge of the process or an activity. The
specialized competencies ans analytical ability that a person possess.

Skill 4
Authentic Leadership
The Authentic leadership promotes positive thinking and build positive environment in
the organisation. They are completely aware about their strengths, weaknesses and emotions.
They present their real selves to all the employees and rules in an honest manner (What is
authentic leadership, 2016). These leaders have a long-term mission in mind and they motivate
the followers to achieve it. The leader tries to build a trustworthy relationship by valuing their
opinions and feedbacks.
Advantages and disadvantages:
It can help PepsiCo to build a trustworthy environment in the organisation. It also
provides a guideline for those who are looking to become authentic leaders in the near future
(Hakanen and van Dierendonck, 2013). But the problem of using this theory is that the followers
may not like the behaviour of the leader. A leader may appear rigid, judgemental and over
critical at times.
Skills related to the organisation:
 Knowledge skills: The leader should have the power to accumulate and organize all the
relevant information (Kaur, 2015). The employees at PepsiCo are also encouraged to
demand for the training that increases their efficiency. This not only motivates them but
help them in attaining more knowledge, which makes their tasks easier.
 Developing others skills: The leadership style adopted for the flexible structure should
ensure that all the employees are benefited from it. There should be all round
development of the employees (Laschinger and et.al, 2014). The management of PepsiCo
also wants their employees to take challenging positions and responsibilities. They need
to have their own vision, which is aligned with the company's vision.
 Human skills: Ability and knowledge about how to work with other people in the
organisation (AlMazrouei and Zacca, 2015). Furthermore, Assisting other members and
building a trustworthy environment with others.
Skill 5
Servant leadership
Unlike other leadership styles, the servant leadership shares power with its followers. The
whole power in not limited with the leader himself. The followers are placed first than the

outcomes that may arise (Servant leadership, 2013). This type of leadership works where the
leader has empathy and has strong motivation to convince others. This not only makes the
followers happier but it very helpful in bringing societal changes. It is essential that the
employees of the organisation have long-term perspective and ethics.
Advantages and disadvantages:
The Servant leadership helps in managing diversity in the organisation and in the
formation of high performing teams (Daicoff, 2012). The servant leadership would help in
building a trustworthy relationship in the organisation. It would increase the productivity, loyalty
and diversity among the employees. But PepsiCo would lose the authority, as there is no proper
structure in the organisation. A manager may not get the chance to explore new opportunities,
which could be detrimental for the business.
Skills related to the organisation:
 Managing relationships skills: The PepsiCo needs to ensure that an effective relationship
is developed between employees and the management. There would be no proper as such
importance should also be given to relationships with the employees.
 Team building and organisation skills: Team building is also an important factor for the
success (Lachance and Oxendine, 2015). The leader should be competent and should
form teams to do tasks. PepsiCo wants the manager to act as a guide and not like a
commander or inspector. The employees are free to work in teams and work in their own
creative ways that they want.
 Conceptual skills: It includes the mental capacity to understand the polices, vision, and
plan of the organisation.
CONCLUSION
The PepsiCo has adopted a new organisational design, which is more unstructured, and
freedom oriented. The management has adopted it to ensure that the employees are ready to face
the challenges that may arise in the future. According to Katz 3 skills approach, a leader should
have technical, human and conceptual skills. These skills are important as more higher level
would need more conceptual skills and vice versa. While Mumford skills model has taken into
consideration five components essential for a leader. They are individual attributes,
competencies, leadership outcomes, experience and environmental influences. PepsiCo needs a
leadership style that will accommodate their organisational structure and help them in

implementing it. They need a leader who delegates more responsibilities to its followers and
maintain a close relationship with them. The leader should also possess all those skills and
competencies that would enable PepsiCo to establish the new structure in the organisation. In
modern times also, the involvement of employees are taken into consideration. Many companies
like PepsiCo are adopting more flexible type of organisation structure to gain the competitive
edge.

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