Human Resource Management at Nestle - Example

Human Resource Management at Nestle Lecturer TABLE OF CONTENTS TABLE OF CONTENTS 2 0CURRENT MISSION, VISION AND GOALS 3 1 Mission Statement 3 1.2 Vision 4 1.3 Objectives 4 4.0 DESIRED SITUATION FOR PERSONNEL INSTRUMENTS 7 Gap Analysis 8 5.0 HRM BENCHMARKING 9 5.1 Implementation Plan 11 6.0 HRM PLANNING FORECAST THE HR SUPPLY AND DEMAND 13 6.1 Demand Analysis 14 6.2 Supply Analysis 15 7.0 CONCLUSION 16 REFERENCES 17 1.0 MANAGEMENT SUMMARY The management of human resources at Nestle should be aimed at consolidating its place as the world’s number one food and wellness company. In essence, the human resources are an essential part in achieving this objective. Having a motivated team which is keen on organizational success is imperative. Moreover, the skills set among employees must enable the company to both produce high quality products and to keep pace with the changes in customer needs, cost structure, regulatory requirements and scientific research. It is thus hoped that Nestle can be able to maintain and even increase its market share and also expand into other regions of the world. 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 Corporate Strategy The strategy of the company can be seen from three perspectives; from the corporate, business and operational levels. At the corporate level, the organizations aimed at retaining its lead position in the Nutrition Health and Wellness industry (Nestle, 2014). The market is very competitive and is important that the industry consolidates its position in the market. It has to be noted that there are several multinationals and local competitors who are all angling for the share of the market. This way, the market share of Nestle is under threat of being sliced by all these players who will have to make Nestle lose a share of its market for them to grow. Another corporate strategy is for Nestle to be a brand that can be trusted by all stakeholders (Nestle, 2014). To win the trust of stakeholders, the company will have to compete against itself, exceeding its own targets and beat its rivals in terms of profitability, market share and innovation. 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. Business Level At the business level, the company aims at achieving efficiency at different functional levels. Marketing and Research and Development functions have the onerous responsibility of ensuring that the company keeps pace with changes in consumer tastes and preferences. This is done by producing products which can appeal to the consumers and give them high levels of satisfaction. Besides, the human resources division should ensure there is continuous training of employees so that the skills set of the workforce is sharpened and improved so that regardless of their various roles, they are able to reach their highest potential. Above all, interdepartmental coordination should be achieved so as to ensure that the organization as a whole is able to achieve synergy. Operational Level At the operational level, the organization should ensure that the highest level of customer satisfaction is achieved. Timely delivery of products, effective resolution of complaints and continuous research on new and improved products should be achieved. The organization relies on its employees to realize this. It thus takes the effort of everyone, even those who are not in direct contact with the customers to give their best in their various roles. They should therefore be motivated, exhibit effective teamwork, and be supportive of each other. 3.0 CURRENT SITUATION OF THE PERSONNEL INSTRUMENT Communication One problem with Nestle is that the management structure relies heavily on different levels working together. However, the problem is that at some points, the various levels of management fail to communicate adequately and constantly with each other (Holbeche, 2012). This has partially been blamed on the formal management structure that creates some kind of walls between the different parties making sharing sharing of information difficult. In some instances, for instance in Nestle U.K, there has been cases where different levels are unaware of what other levels are doing and this has happened spread of knowledge and usage of new technologies. In this time and age where business largely requires faster spread of information and quick decision making, there is need for a review of the relationships between different levels in a way that we communication takes place effectively. Training 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 (Sims, 2007) is made possible. The problem however is that the training has not been effective in imparting skills to employees. The problem might not be the internal training structures, but the need to infuse those structures with new form of thinking. For instance, it will be important to bring on board outside consultants to ensure that they bring a new perspective to the training of employees. Internal training, as in this case, sometimes fails to keep in mind the fast changing world. Multicultural Environment The increasingly multicultural dimension of the workforce across many countries o the world. This has largely been fueled by increased immigration as people look for opportunities for work, live and learn. It thus means that Nestle must rethink its human resource policy. Currently, the company has a policy of non discrimination at the workplace. But this might seem inadequate to manage a multicultural workforce. Managers have to learn to manage a multicultural team, and employees themselves have to learn how to work in a multicultural environment. A cohesive multicultural team is able to spur the company to greater heights in terms of range of ideas and perspectives on different approaches. 4.0 DESIRED SITUATION FOR PERSONNEL INSTRUMENTS The company needs to engage employees in a number of activities to breakdown the formal culture which creates a subtle boundary between different levels of management. If this is achieved, then the different levels will freely share information and keep each other informed of the different developments in the company. Faster information flow means faster and better decisions are able to be made and thus the organization can better adapt to its environment, and cut down on wasteful spending. More dynamic training of employees would be required so as to impart necessary skills needed to handle the dynamic business environment that Nestle operates in. Therefore, there is need to incorporate the current in-house training with external consultancy so as to bridge the gap in the current training needs. This way, the organization will have a workforce that is has the skill sets to operate at the highest level of their potential. 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. Gap Analysis There exists a member of gaps which have to be bridged if the company is going to realize its expected goals. To begin with, the training mode at the company will have to be aligned to the current needs of the market. The current training methodology has to be infused with current market trends. The gap that exists is how to ensure that the training employees undergo at Nestle gives them the skills required to operate in the current dynamic environment. If possible, outside consultancy should be engaged in sharpening the skills set of the workforce. Another gap existing in the company now is the need to restructure organizational communication among various levels. Efficiency demands that various levels should be able to effectively communicate so that information flows quickly to make employees informed. Besides, information is needed to make decision making faster. One way of doing this may be a number of team building activities aimed at breaking down the barriers erected by the formal culture of the organization. There is also a critical need for Nestle to ensure that it restructures its human resource policy to capture the multicultural outlook of the current situation. This is key in ensuring proper management of the multicultural workforce, which is becoming common place. 5.0 HRM BENCHMARKING Strengths and Weakness of Nestle Strengths Weakness Criteria to benchmark against (Kraft Foods) Strong Brand Well established research and development function Wider distribution network Bigger market share Poor communication between various levels. Training is mainly in-house Absence of multicultural policy Job rotation External consultants in training Open communication Multicultural policy Benchmarking 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. 5.1 Implementation Plan The first stage will stage will be to know what to benchmark. In this case, areas of interest include how to keep employees motivated. Specifically, how Kraft Foods applies job rotation to achieve higher levels of motivation among its employees. Besides, another thing to look out will be how effective communication among different levels of management is achieved at Kraft Foods. Moreover, integration of external consultancy with in-house trainers to achieve higher results in training should also be considered. The next stage will be to determine current performance gaps between these two organizations in those key areas. Substantial gap means there is a case for benchmarking against Kraft Foods. Consequently, there will be a need to project the desired performance levels to be achieved as as a result of this benchmarking process. After this, the employees have to be communicated to to win their support. We can have benchmarking champions, who are basically employees tasked with the role of reaching out to their colleagues and promoting the idea. Any fears within the employees should be allayed. After that, an action plan will have to be drawn up on how the process will be implemented. This involves determining how long the plans will be implemented and setting targets to be achieved. Lastly, the progress will have to be monitored to ensure that performance targets are achieved. 5.2 HRM Theory to be used at Implementation Stage The HRM theory to be used in this implementation process is the contingency management theory. In applying this theory, the manager driving the process has to consider the existing situation and figure out how to manage in that situation. Therefore, approach to issues will tend to change from one division of Nestle to the other. For instance, while implementing the process, the various managers would have to consider how best to engage their subordinates so as to achieve their objectives. Issues bringing the differences in approaches may include the size of the group, cultural background of group members and skills levels. This method is advantageous and promises good results because it allows managers a free hand to adopt approaches that will best work in their various situations. Therefore, employees are likely to be won over and engaged in a way that makes them support the course of the organization. 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 organizations. 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 organizations 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. 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 Holbeche, L. (2012). Understanding Change. Chicago: Routledge. 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 Sims, R. R. (2007). Human Resource Management: Contemporary Issues, Challenges and Opportunities. London: IAP. Snell, S., & Bohlander, G. (2012). Managing Human Resources. New York: Cengage Learning. Read More