At PepsiCo, the Secret Ingredient is Culture

BILL COFFIN: Hi, everyone!

Today, we are
taking a close look

at how PepsiCo has built a
world class culture of ethics

and has maintained it for
more than two decades.

I'm your host, Bill Coffin,
and this is the Ethicast.

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Earlier this year, PepsiCo
received World's Most Ethical

Companies Honors for an
astonishing 18th time in a row,

something only a handful of
other companies have achieved.

But long-term success like this
doesn't just happen by itself,

or easily, or overnight.

The secret of Pepsi's success
here is no secret at all,

really.

It comes from a substantial and
sustained campaign with support

from across the
enterprise at all levels,

feeding into a robust
culture that puts

ethics and integrity first.

With us today to discuss some
of these strategic and tactical

decisions that inform PepsiCo's
culture of ethics and business

integrity efforts is Craig
Pederson, Director, Global

Compliance and Ethics
Program at PepsiCo.

Craig, thanks for joining us.

CRAIG PEDERSEN: Hey, Bill,
thanks so much for having me.

I appreciate the opportunity.

BILL COFFIN: PepsiCo is an
18-time World's Most Ethical

Companies honoree.

Can you talk about some of
the hallmarks of your ethics

and compliance
program that signify

not only your organization's
dedication to business integrity

but the kind of hard work that
goes into maintaining an E&C

program at such a high
level of excellence?

CRAIG PEDERSEN: Yeah, sure.

I think-- well, I'll start with
that is even beyond the ethics

and compliance
program, ethics is

embedded in PepsiCo's
overall values, which

we refer to as the PepsiCo way.

The PepsiCo way is made up
of seven core behaviors,

two of which are act with
integrity and voice opinions

fearlessly.

And they both tie nicely into
the ethics and compliance

agenda.

The ethics and
compliance program

has evolved over time
into what we believe

is a very mature program.

But even with a
mature program, I'd

say the one key
hallmark has to do

with the focus on
continuous improvement.

No matter how
mature a program is,

there's always room
for improvement.

Regulatory expectations change.

Other internal and external
factors, business pressures,

et cetera are always changing.

So it's critical to always
evaluate and enhance

the compliance program which is
something we do here at PepsiCo.

BILL COFFIN: Every year, the
world's most ethical companies

ethics quotient questionnaire
changes to reflect

the evolving nature of ethics
and compliance best practices.

What are some of
the ways that you

feel that your
program is evolving

in areas that perhaps the ethics
quotient doesn't touch on?

CRAIG PEDERSEN: So the first
thing that comes to mind here

is our recent focus on
increasing use of technology

to build efficiencies into our
ethics and compliance program.

Within the past year,
we created a task force

that we refer to as our
digital center of excellence.

And that's tasked with
furthering that technology

agenda.

Building efficiencies makes
our day-to-day work easier,

which frees up time that we can
use for other more impactful

initiatives to help promote
ethics and compliance agenda

and overall ethical culture.

Some of the initiatives
that this team has worked on

include the
development of Power BI

dashboards to streamline
reporting and analytics.

We've also developed
some automation

of attendance tracking
at live training sessions

through the use of a QR
code and back end reporting.

We've also implemented
a robotic software tool

to automate some of the
redundant data entry

tasks in our hotline
case management system.

BILL COFFIN: You recently
underwent a formal culture

assessment with Ethisphere.

Can you talk about what your
expectations for that were

and what value you feel this
has helped to build for PepsiCo,

and perhaps, one or two data
points from the experience

that you found to be especially
helpful or enlightening?

CRAIG PEDERSEN: So this
is actually the third time

that we conducted the
formal culture assessment,

and our plan is to continue
to do so on a two-year cycle.

We truly believe that we have
a strong ethical culture.

And the assessment is
really a great tool

to gather hard data,
to validate that belief

and also identify potential
areas of opportunity

to improve the culture.

Also when conducting
the assessment

every two years on
an ongoing basis,

we have the ability to monitor
changes in the culture over time

which is a great tool.

About the assessment
itself, we feel

there's a lot of great
things about it, which is why

we've used it three times now.

The questions themselves
are meaningful and relevant.

And they're organized
in a great way

to provide insight
across the eight

distinct categories or pillars.

The ability to see results
across different demographics

in the organization is
also super valuable to us.

One thing that we found really
helpful this time around

is the--

Ethisphere made some
great improvements

to the reporting and analytics
and benchmark data that's

available with the
survey results.

So this really allowed
us to analyze the results

across the organization
in a great, robust way.

BILL COFFIN: PepsiCo is a
global brand with massive reach

and influence.

Clearly, a culture of integrity
matters a great deal to you.

But can you talk about some
of the specific initiatives

you carry out that help to
create a global culture that

also allows local or regional
teams the autonomy and identity

that they want and need.

CRAIG PEDERSEN: We are a very
large organization with over

300,000 employees worldwide.

But one of the great parts
about our ethics and compliance

program is that
it's one dedicated

team of resources
embedded in the business

all around the globe.

But we all report up, directly
to our global chief compliance

and ethics officer.

So this allows us to create
one global agenda that can be

tailored and executed locally.

And that could be in the form
of our communication efforts,

training programs,
risk assessment

processes, and other ethics
and compliance initiatives.

We also have strong
relationships

with senior leaders across the
organization at the sector level

and at the regional level.

And we have
compliance committees

across the globe that
include representatives

from core functions such as
HR, legal, control, finance.

These relationships at these
levels and with these functions,

we feel, are critical to
creating and maintaining

a strong ethical culture
across the globe.

BILL COFFIN: For companies
that don't have quite as mature

a program as PepsiCo, can
you offer some insights

or some advice on participating
in programs like the Ethisphere

culture assessment and the
World's Most Ethical Companies

Program?

CRAIG PEDERSEN: Let's start
with the culture assessment.

And there's a few
key things that I

would recommend that you focus
on during the planning phase,

especially.

First, I think it's important
to spend time thinking about how

you want to analyze the
results of the survey

once it's complete,
so then you can

build in the right
demographic points.

For example, if you
want to slice and dice

the data by geography
or employee level,

tenure, function,
et cetera, you need

to build that into the
survey before it launches.

So that's critical.

Another critical component is
during the planning process

is communication.

It's important to promote the
survey within the organization

before it launches so your
employees understand what

the purpose of it
is, what value it's

going to add to
the organization,

and to encourage participation.

Moving on to the World's
Most Ethical Companies

program, I'd say,
first of all, it's

wonderful to receive
the recognition.

We're always very proud
and happy every year

when we get the notification
that we made the list.

But even beyond
that, there's a lot

of value just in completing
the ethics quotient survey.

Take it seriously.

Spend time to complete
it thoroughly.

And I promise you, it
will take a lot of time.

It's a very thorough
questionnaire.

It's a great way to
evaluate the compliance

program to determine your
strengths and opportunity areas.

Even after participating in
the program for 18 years,

we do a deep dive every year
into the ethics quotient

and look for and always,
always find something

that we can work on to
improve the program.

For both exercises,
I would say it's

imperative to take advantage
of the tools and the data

that's available afterwards.

I mentioned earlier
that there's great

reporting available in relation
to the culture assessment

with great benchmark data.

There's also great
benchmark data

available for the World's
Most Ethical Companies

program using the sphere tool.

Data related to your own company
is valuable in and of itself,

but the availability
of that benchmark data

makes it that much
more powerful.

So I recommend highly to
take advantage of that.

BILL COFFIN: In an age where
enterprise reputation means

so much and has become
so fragile online,

what makes you the proudest
to work for PepsiCo?

And how does PepsiCo contribute
to the global ethics economy?

CRAIG PEDERSEN: Yeah, one
thing I'm very proud of

is something we call
PepsiCo Positive, which

is our core business
strategy that

guides how the business
will grow in the future

while also having a positive
impact on the planet and people.

It addresses everything from how
we source our ingredients, how

we sell our products, the
agricultural practices

that farmers use that grow
some of the products we use,

as well as the packaging
used in our iconic brands.

It's, in my opinion, this is a
great contribution to the ethics

economy globally.

And there's a lot of information
about PepsiCo Positive

on our website, pepsico.com.

So I encourage people,
if they're interested,

to check it out.

BILL COFFIN: Well Craig, thank
you so much for joining us

and for offering so much
detail on how you and your team

are maintaining and advancing
such a high standard of business

integrity at PepsiCo.

CRAIG PEDERSEN: Thanks, Bill.

I really appreciate the
opportunity to be here.

BILL COFFIN: To learn more about
PepsiCo's business integrity

efforts, please
visit pepsico.com.

For their global code of
conduct and information

on their governance
practices hit the Who

We Are tab on the home page.

And for details on PepsiCo's
ethics and compliance program,

go to the Our Impact
tab on the home page

and hit the link for
ESG Topics A to Z.

To learn more about the 2024
World's Most Ethical Companies

honorees, visit
worldsmostethicalcompanies.com.

And be sure to check out our
special World's Most Ethical

Companies issue of
Ethisphere magazine

publishing at the end of June
at magazine.ethisphere.com

I'm Bill Coffin and this
has been the Ethicast.

For more episodes, please visit
the Ethisphere YouTube channel

at youtube.com/ethisphere.

And if this is your first
time enjoying the show,

please make sure to and
subscribe on YouTube,

Apple Podcasts, and Spotify.

Thanks so much for joining us.

And until next time, remember,
strong ethics is good business.

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