Human Resource Management Practices at Nestle - Term Paper Example

Human Resource Management at Nestle Lecturer TABLE OF CONTENTS 0 CURRENT MISSION, VISION AND GOALS 3 1 Mission ment 3 2 Vision 3 1.3 Objectives 4 3.0 CURRENT SITUATION OF THE PERSONNEL INSTRUMENT 6 4.0 DESIRED SITUATION FOR PERSONNEL INSTRUMENTS 8 5.0 HRM BENCHMARKING 9 6.0 HRM PLANNING FORECAST THE HR SUPPLY AND DEMAND 12 6.1 Demand Analysis 13 6.2 Supply Analysis 14 6.3 Gap Analysis 15 6.4 Implementation Plan 17 7.0 CONCLUSION 18 REFERENCES 19 1.0 CURRENT MISSION, VISION AND GOALS 1.1 Mission Statement Nestle has no official mission statement. Instead, it has a clear set of principles and values which guide the business and corporate decisions (Nestle, 2014). One thing that is clear is that there is a feeling within Nestle that a condensing the Nestle mission into a sentence may not capture all that it stand for and aspires to achieve. Therefore, Nestle has ten key principles which are; Nutrition, health and wellness, Quality assurance and product safety, consumer communication, human rights in business activities, leadership and personal responsibility, safety and health at work, supplier and customer relations, agriculture and rural development, Environmental sustainability and water. Therefore by abiding by all this principles, Nestle is sure to create value to the society. 1.2 Vision Nestle has a vision to provide its customers with food that provides a sources of nourishment and satisfaction, one that gives them pleasure, health happiness and peace of mind (Nestle, 2014). To achieve these, innovation has to be at the heart of operations of the company. Products being produced should be ones that satisfies the ever changing tastes of the customers. A lot of changes are happening around the lives of customers, pushed by their changing work patterns and technology and the way they interact. Given how competitive this industry is, the way to survive is to have the company fitting in within these changes and not expecting the customers to fit in the company’s practices. To achieve this, the company must continuously innovate so as to meet its visions. 1.3 Objectives Nestle, as a company has several core objectives which are being pursued by all its affiliates across the world. These include: To achieve compatibility with international standards Build mutual trust with governments, business partners and consumers Ensure continuous improvements of products Establish benchmarks for good performance 2.0 STRATEGY OF THE COMPANY Nestle has three core strategies. The first strategy is to be a leader in Nutrition Health and Wellness (Nestle, 2014). This means that there is a commitment by this company of giving their customers unique experiences with their products which will make them coming back for some more. It has to be remembered that Nestle operates in a very competitive industry with several large scale players such as Kraft Foods and Mars Inc. Competition is very stiff and to remain at the top of the chain, the organization would really have to be at its best. These are companies with good brand recognition and a sizeable market share which puts them in a good position to go head to head with Nestle. Therefore Nestle is actually promising its stakeholders that as a leading brand, it would always endeavor to maintain that position through continuously offering high quality products. The second key strategy of this company is to be an industry reference for financial performance. It is therefore promising its good returns for its shareholders who, technically speaking are the owners of the company. It has to be noted here that Nestle is a publicly traded company with shareholders spread across various European countries and the United States. To return fair returns for the shareholders, it means that the company would really have to record high levels of sales. However, this is only possible if it can get more and more people to consume its products. Besides the company would have to come with new and innovative products which can earn it more revenue. Hence, research and development has to be taken seriously in terms of funding and participation of a wider cross section of employees. The last core strategy of this company is to be a brand that can be trusted by all stakeholders (Nestle, 2014). To win the trust of stakeholders and particularly customers, the company will have to be consistent in achieving good returns. It has to compete against itself, exceeding its own targets and beating its rivals in terms of profitability, market share and innovation. This plays well within what has already been noted. Customers’ expected more values for their money. Hence, they have to be provided with innovative products that satisfy their changing lifestyles so that they can have Nestle products all the time throughout their lives. This is only possible if the company is able to achieve higher levels of satisfaction so as to gain their loyalty. On the other hand, shareholders will only keep their money with the company if they are getting good returns. This is possible with good performance. Profitability will keep share prices high and minimize losses to investors. All in all, we can say that the company has a well defined path to be followed so as to maintain its dominance in the market. It has to be remembered that this company has a rich history going back to 1865 when it was established. However, it is not too big to fail. To maintain its dominance will surely task all employees at all levels. As seen before, this market segment is a competitive one with several international, regional and local powerhouses who are also challenging for a pie of the nutrition health and wellness industry. 3.0 CURRENT SITUATION OF THE PERSONNEL INSTRUMENT Nestle is the world’s leading nutrition, health and wellness company measured by revenue (Nestle, 2014). It sells a range of products from baby food, breakfast cereals, confectionery, dairy products, coffee, yogurt and snacks. This company is headquartered in Switzerland with operations across close to 86 countries with over 500 factories (Nestle, 2014). In order to respond appropriately to the local needs of different countries, the company has a decentralized management system. Therefore, most decisions in various factories are taken by the employees themselves and not from headquarters if Veyvey, Switzerland. This model of management ensures that decisions made by those close to where the action is taking place, and therefore understand the dynamics of the situation. As a result, decisions taken is better that those taken by individuals with little or no knowledge of the situation. As seen above, the company largely depends on its employees to make a most of the decisions. Therefore, the quality and skills of its employees are of utmost importance. Quality of the workforce, in terms of skills and motivation will thus go a long way in fuelling goal of maintaining dominance in the industry through quality and innovative products that enables the organization to maximize its sells and keep costs down. This is an issue that the company takes seriously and has put in place a number of measures to realize this target. For instance, according to Nestle (2011), it creates room where every employee can grow through elimination of all forms of discrimination. As a result, individuals grow within their teams having the passion for their works and this enables the company to get the best out of its employees. Besides, Nestle promotes continuous learning among its employees as a way of creating a skilled workforce which is able to adapt their skills to the changing market environment. This way, employees are encourages to freely share information and seek to learn from others. This model of knowledge sharing is critical in the growth of business by ensuring diffusion of skills is made possible. The only drawback is that it largely depends of personal commitment. Individuals who are not motivated cannot take such a step to learn (Nestle, 2011). Therefore, it requires a largely creative team. With regards to entry criteria, the minimum levels of requirements to work at Nestle are a graduate degree, from where individuals can progress. However, a part from the degree, other metric include individuals who are responsible and can work with minimum supervisions. Such individuals should therefore be independents minded and fast in executing various decisions. However, there is no particular preference. Potential employees just need formal training in their areas of preference. Above all, to sharpen the competencies of the new employees, Nestle has got an in-house training whereby new employees are offered on- the- job training. This kind of training is advantageous because employees are able to learn quickly as they are actually interacting with the real work environment (Nestle, 2014).They are thus able to appreciate the training much better than a theoretical sort of training. It is a fact that Nestle has a good training and development system. On the surface, it would appear that everything is being done just right. However, it would be important to also appreciate that a lot needs to be done. Employees need to be kept motivated in the face of global competition. The biggest challenge Nestle faces is its ability to hold onto to its best employees. The human resource policy also needs to be structured to ensure that a bloated workforce is avoided. 4.0 DESIRED SITUATION FOR PERSONNEL INSTRUMENTS The main objective of Nestle is to be the number one food and wellness company in the world. To maintain this role, Nestle will have to rely on the quality of its humans resources in terms of skills and overall competency. The first thing to consider is the level of innovation among the workforce. Given that the company is operating in a very competitive environment, it is imperative that it has an innovative workforce across the various factories across the globe. This will ensures that it is able to come up with new products which will be well received in the marketing, further helping it to consolidate its market share. The workforce should also be able to enable Nestle adopt creative ways of selling its products. Therefore, even in situations where new products are not being developed, existing ones will continue to do well in the market in terms of sales and overall profitability. This therefore calls for inculcating of research and analytical skills among the employees. This way, they will be able to better understand the market and therefore be able to come up with creative products and innovative ways of marketing both new and existing products. The above cannot be achieved if the employees are not motivated. Measures should be put in place to give employees more autonomy in the work so as to offer them more emotional satisfaction from the achievement of their duties. Satisfied employees are able to give their best to the companies and work improves overall productivity. Teamwork should also be enhanced. Employees must seek to grow as a team and not individuals. Therefore, they should be proud of the organization and be ready to give their best to the organization as they all work for the success of the organizational cohesive team will ensure that the organization is able to achieve its objectives within the outlined time period. Problems are likely to be resolved fast so as to enable the organization respond immediately to arising problems be they with the customers or the general operations. The workforce should also be one that can correctly anticipate the market changes and prepare well to address those changes. The market is dynamic and ability to adapt is key. However, the need to direct those changes cannot be underestimated. By being able to dictate change and the pace of change, the organization will have a thorough understanding of the market. This also depends largely on the caliber of employees. If the team at Nestle can achieve this, then it is given that they will be able to give their competitors a run for their money. Therefore a culture of innovation can be encouraged through establishment of quality circles. 5.0 HRM BENCHMARKING As noted earlier, Nestle runs one of the best human resources policies which ensure that it has a constant supply of competent employees who are ready to contribute to the success of the organizations. For instance, it has one of the most diverse employees, given its coverage across the globe. Besides, employees are encouraged to continuously learn their areas, among them more qualified. However, this learning, which is included as part of the humans resource appraisal of the employees, is not treated as additional responsibility and does not attract extra pay (Gitman and McDaniel, 2008). This ensures that learning is not done mechanically, but because one has a commitment to it. Above all, Nestle most of the decisions are decentralized and this gives employees a better say in their work areas. These are some of the issues that have ensured that Nestle remains successful in the market. In this paper, we will seek to benchmark Nestle human resources policies against those practiced at Kraft Foods. Kraft Foods Inc. is also one of the biggest rivals of Nestle in the nutrition and wellness industry though it is smaller in scale, operating in about 50 countries across the world and its workforce almost half what Nestle has. However, it has also being doing well in the market. In terms of human resources policies, Kraft Foods operate just along the same line as Nestle, with a decentralized human’s resources system (Gitman and McDaniel, 2008). In this system, each factory has human resources departments which address issues relating to human resources. It therefore localizes the human resources issues and helps build strong teams by addressing the needs of the employees at the local level. By meeting the needs of employees and addressing their issues on a timely basis, it is possible to maintain the motivation of employees at a higher level and build a cohesive team with higher levels of morale. Aware of the humongous goals of Nestle, there are some practices carried out by Kraft Foods, which if adopted by Nestle, it can lead to a more motivated force, able to adapt consistently to the dynamism in the food and wellness industry in the world market. To begin with, as part of in-house training, Kraft Foods employs a job rotation strategy. This is not present at Nestle, and employees tend to have mentors who help them become better in their line of operations. Job rotation is good because it enables the employee to have a feel of various job areas and therefore make an informed decision of the area that most appeal to him. This therefore may help an individual making an informed choice with regard to career growth and leads to higher levels of motivation. Besides, rotation helps in breaking down monotony and developing employees by imparting them with a variety of skills which may be valuable in the performance of their duties. Another thing Nestle can copy from Kraft Foods is to identify specialized areas. It has to be noted that Nestle largely depends on in-house trainers for all their training needs. However, these trainers may lack the overall picture of the market and the dynamics involved therefore. External trainers would bring on boards technical skills not to be found among internal trainers. This way, employees were bound to benefit from technical skills which are not readily available internally. Inclusion of the external consultants to train employees should be creatively done so as to avoid compromising the culture and ethos of the organization. Lastly is the value of open communication in the organization. As currently constituted, there is a lack of a clear focus communication channels from the headquarters to the factories up to the employees (Gitman and McDaniel, 2008). This is even compounded by the vastness of the organization with over 300,000 employees spread across the world. There is need for employees to be put abreast with any internal changes that are taking place in the organization, even when such changes do not directly affect them. This way, such information is currently reaching employees from third party sources, and sometimes may be distorted. Therefore, a lot can be learnt from Kraft Foods so as to improve performance of the organization looking into the future. 6.0 HRM PLANNING FORECAST THE HR SUPPLY AND DEMAND Human resource planning is the forecasting of organization’s human resources needs to ensure that the organization has the right supply of employees at any given time. A part from the numbers, human resources planning has to ensure that the required skills are in line with the changes in the organisations. Therefore, while forecasting the human resources demand of any organization, it is advisable that the organization considers the existing situations as well as the likely changes in the near future so as to come up with a correct estimate of the requirements. Some of the issues that may affect the needs include structural changes such as expansion or contraction, introduction of new products, changes in customers’ tastes, retirements and severance among others. All these changes will have an effect on the human resources demand. After forecasting demand, the organization has to ensure that it is getting the right people to fill the position created out of the forecasted demands. One option the organisations will have in their hands is to recruit internally. This means that employees are given the opportunity to fill the available vacancy. The need to learn on the job that employees have the skills to fill such vacancy becomes even clearer. Failure to recruit internally means that the organization will have the option of recruiting externally. In the event of severance, whereby for whatever reason employees have to be sacked, it is advisable to ensure that such employees are prepared psychologically for what is about to happen. This may even take the form of counseling. Whatever the case, this is an exercise that should be done with a humane face. 6.1 Demand Analysis Looking at Nestle at the moment, the organization seems stable and the income as more or less peaked with no major movement. The almost stable income in the last three years, shows that the organization is unlikely to grow, something that may require it to employ more staff. Therefore, employment of staff may likely come from natural attrition. This means it would be more about replacing those who are leaving the organization, rather a net increase in the number of employees. It thus means that low number will be employed. To motivate employees, it is important that they be given first priority. This ensures that they are considered first before the organization looks outside for replacement. Indeed, this is in line with the policy of the organization (Gitman and McDaniel, 2008) as a way of encouraging skill development among employees. Another issue that organization will be looking at to boost is performance is the research and development function. In the past two years, the profits of Nestle have fallen marginally. This means that the organization has to find ways of pushing sells into the market. One way of stirring the market is through having more innovative products coming into the market to either fill in gaps in the market or give customers unique experiences with the products which entices them to spend more on the company’s products. Therefore, there is need to have a deliberate policy of encouraging innovation in the organization. The wider participation inherent in the organization, even though is good, would now be backed up by a deliberate policy that encourages innovation. Such may include rewarding employees who are able to give the organization patents through their ideas. What’s more, a revamped innovation department should be given priority. Marketing personnel will also require skills on how to read the market and keep competitors at bay. It has to be noted that a part from the multinational competitors who are also matching Nestle in various global markets, we have several regional and local players who also have the potential to upset Nestlé’s market dominance. Therefore, a strong marketing team, with a very clear vision is important. Such a team should have proper research skills to read the market and anticipate the changes, and put in place measures to address such changes so as to either avoid or minimize any negative effects. Lastly, there is the issue of ethics and morality. The dealings of Nestle across its supply chain should be within the morally acceptable limits. Currently, when looking around, it is possible to come across reports by human rights organizations such as Oxfam and the United Nations critical of the operations of multinationals. Yet, these reports have never has a real threat t the bottom lines of such organizations. 6.2 Supply Analysis Looking at the supply side of things, the organization appears stable enough. Overall, while some factories are making enough profits and expanding, others are in dire straits and have had to lay off staff. However, the overall picture is that of a company that is stable enough and is on a growth footing. Services at the United Kingdom have seen growth in recent times. Nestle U.K is planning to close down its Hayes plant and move production to Tutbury, Derbyshire in a £200 million expansion program (Nestle, 2012). The expansion program is aimed at creating a further 400 jobs and thus will have to comfortably absorb some 230 employees at the closed plant in n Hayes and still need some more. While the U.K plant is experiencing growth out of the restricting, in Germany things are not that good. Due to restructuring of operations at Neuselters in Lohnberg in 2013, some 42 employees lost their jobs (IUF, 2013). Therefore, while the overall picture at Nestle is that of the company on the growth path looked at closely, we have many localized human resource issues to be attended to. What can be said for now is that the company needs proper human resources strictures to deal with such localized issues. Otherwise, if not dealt with correctly, it may have a snowball effect whereby those still in employment will be apprehensive of the company. Such apprehension of the human resource policies may bring about fear of the future. Such a fear may lower the morale among employees, leading to drop in productivity and high turnover rates. 6.3 Gap Analysis Nestle has had a number of challenges which brings its humans resources in to a sharp focus. This is because it is the human resources who are largely responsible for the success of the company. They come up with ideas and participate in the implementation of these ideas. Therefore, if there is a problem with regard to performance of any brand or implementation of a given strategy, then the buck stops with them. This may necessitate a review of their skills levels or motivating factors. One of the key failures of Nestle has been the introduction into the marketed of LCI Yoghurt. Before, Nestle had built a history of innovating and successfully launching products in the market. But the recent setback with regard to launch of LCI, yoghurt was telling. It might be an indication of the saturation of the market. This means that the employees’ skills levels have to be upgraded to deal with the new realities in the market. However, it is also important that extensive training be done to reorient the focus of employees so that t takes the new market dynamics. Therefore, the failure of LCI to become a huge success but had claimed to be should be a wakeup call of the need to change the skills levels and perand market perspectives of the employees. Another issue to look at is the organic food sector. This is one sector the organization stands to benefit immensely and grow its market share. However, Nestle lacks any tangible showing in this market segment. It has to be noted that from 2008, the food industry grew 8.9 % in the United States (Oxfam, 2013). Yet, Nestle failed to substantially increase their market share during this period. It has to be noted that the only area that promises growth for Nestle is the organic food segment because it is not saturated and has been showing very strong growth rates in recent times. Nestle should thus look for skills levels either among current employees or from outside the organization to enable it enter this market segment and increase its profitability. The perception among various industry stakeholders that Nestle is largely focused on profits (Oxfam, 2013). Such stakeholders are of the opinion that Nestle products are overpriced on account of its strong brand positioning. As a result, strong Nestle brand users may become discouraged, thinking that they are being exploited by the manufacturer. This perception also has the potential of being a nuisance in the organization and if not handled well, it may become a weakness in later years. It must be noted that employees will also want to connect well with customers and the society. If this connection in bloated by this perception, then we may have a problem in future, and motivation levels of employees may be affected. Nobody would want to work for an employer who is perceived to be exploiting his customers. It is true for other organizations as it is true for Nestle. 6.4 Implementation Plan Nestle clearly has challenges which needs to be addressed as a matter of urgency, especially looking into its long term performance. Clearly, the marketing function of the organization appears to have settled within its comfort zone and there is need to get it out. If anything, the failure of the LCI Yoghurt was an important signal that a lot needs to be improved. There is a need to train the marketing team so as to align their focus with the dynamics of the market. The preferred training course for these executives should be the Advanced Strategic Marketing course offered by the American Management Association. This training should offer new dimensions to executives of how to relook at the market and understands it better. With the marketing skills to boot, the organization should seek to venture into organic food industry so as to attain a higher growth in sales and profitability and expand its market share. The most important part will be to research the market and come up with a strong knowledge of its dynamics. This way, the Nestle will be able to produce products that will revolutionalize the market and help it establish itself as a better alternative. Understanding this market segment is very critical in designing entry strategies that will surely realize instant results and motivate employees and earn value to the company. The perception that the company is exploiting its customers should also be worked on for long term benefits to the organization. Nestle should thus adopt a number of initiatives to change this perception. One obvious thing to do is to set a budget to donate to various causes such as cancer research, provision for destitute and homeless and so on. This will help it connect emotionally with its external publics and help undo the bad publicity around this issue. Reducing prices at this moment would only make the problem worse; as if vindicating such claims. 7.0 CONCLUSION As noted earlier, employees are an indispensable asset. They play a key role in the success of the organization. Therefore, the organization must have a solid human resource planning so that to develop the employees for the future. As the technology grows, the market becomes very competitive, and the organizations must position their employees to compete for the future. Sound human resource policies would motivate employees, thus leading to low turnover rates so that employees can retain most of the skills within its workforce. REFERENCES Gitman,L. and McDaniel, C. (2008). The Future of Business: The Essentials. London: Cengage Learning IUF ( June 20, 2013). Restructuring at Nestle Waters Germany. http://cms.iuf.org/?q=node/2635 Nestle.(2012). Nestle Announces Further 200 million Investment and Restructure of its Coffee Factories in the UK. http://www.nestle.co.uk/media/pressreleases/further%C2%A3200millioninvestmentandrestructureofscoffeefactoriesintheuk Nestle. (2014). Our Vision http://www.nestle.com/randd/ourvision Nestle (2014). Graduates. http://www.nestle.co.za/careers/graduates Nestle. (2011). The Nestle Management and Leadership Principles. http://www.nestle.com/asset-library/documents/library/documents/people/management-leadership-principles-en.pdf Nestle. (2014). Strategy-Nestle Roadmap to Good Food, Good Life. http://www.nestle.com/aboutus/strategy Oxfam. (2013). Behind the Brands. http://www.oxfam.org/sites/www.oxfam.org/files/bp166-behind-the-brands-260213-en.pdf Read More