Performance Management System of Nestle - Case Study Example

Performance management system Name: Lecturer: Course: Date: Introduction Performance management consists of activities targeted at ensuring that an organisation’s goals are consistently efficient and effective. It also refers to processes by which an organization aligns its resources towards the corporate objectives (Martinez 2001). Therefore, the key focus of performance management is on employees, a department or the entire organization. This report focuses on performance management system of Nestle. It examines how Nestle works together with employees to identify and improve weaknesses in their performance with the view of making them more productive. Situation analysis Situation analysis refers to the analysis of the significant factors essential for future development of a company’s management. Nestle is currently a leader in the manufacture of health, nutrition and wellness products in Australia. Started in Switzerland in 1866, the company is today a global brand (Nestle 2013). In Australia, the company is a major food manufacture with 11 processing plans distributed in Queensland, Victoria and New South Wales. Nestlé’s total sales average AU$2,657, with the total number of full time equivalent employees estimated at 4,220 (Nestle 2011). Nestle is one of the largest food processing company with over 500 factories scattered in some 86 countries. The company manufactures more than 500 food products. Nestle has over 280,000 employees. Nestle products have experienced great demand in the last five years with researches indicating that the company’s target market and retailers in Australia are willing to buy more of the product than what the company currently offers. With some 8 million households, Australia represents one of the world’s largest consumers of processed food products. However, several factors such as technology and competition affect the company’s product sale and their life cycle (Nestle 2012; Pulendran, Speed & Widing 2003). With a growing competition in the Australian food industry, the company should seek to increase its customer base and to stay competitive. This also means that the company has to concentrate on increasing distribution to enhance more sales. Additionally, the company has to improve the quality of its product. Improving employee productivity and quality of work is hence essential (StrategicManagementInsight 2013). The company’s leadership and management principles are aligned to Nestle Corporate Business Principles, where personal responsibility and leadership are distinguished as the major operational principles. Additionally, they are aligned with the company’s code of business conduct that emphasises non-negotiable minimum standards of employee performance and behaviour in key areas. The company’s philosophy is based on the premise that for a business to be successful, it has to create value for its consumers, shareholders and the society (Nestle 2011). Objectives of Nestle’s performance management Nestle Group has distinct practices aimed at promoting interpersonal relations through its corporate values and management styles. The company aims at promoting organizational culture through encouraging its employees to adopt specific desirable attitudes that is aligned to the corporate objectives (Nestle 2011). In all, Nestle used a democratic leadership style, where employees are given autonomy. The primary policy of the HRM is to hire employees and to develop its growth consistently, in a way that enables the company to achieve its long-term objectives (Anon n.d.). Nestle’s prioritises on the protection of its employees as it regards them as key organizational assets. In order to maintain its global standards, Nestle’s key focus with this regards is to ensure safe working environment for its employees (Nestle 2011). The company has proffered to also ensure that its contractors and visitors have a safe environment through implementing health and safety practices. The working objectives of the company include: Providing a safe workplace to employees; Minimising risks to employees and contractors; Meeting the legislative, health and safety objectives of its employees. Nestlé’s performance management A key function of performance management at Nestle is to ensure fulfillment of goals effectively and efficiently. Additionally, it oversees organizational performance and production process (Gilbert 2007). Competency based assessment Line managers and the human resource department assess the employee’s performance formally once each year to obtain feedback of their performance. The criteria used for assessing employee performance are based on the performance indicators enlisted by employees. Further, divisional managers may intervene in case of unfair assessment (Anon n.d.). Management by objectives (MBOs) Remuneration structure and the criteria for promoting employees are based on individual performances. The human resource department is obligated to assist the management in outlining the training programs. Effective training programs are created at the level of each working division that makes maximal use of the available local, regional or global of that group. The company also provides e-learning as an alternative to formal training programs (TAS 2013; Rasoava & Russell 2003). Competency profile mapping at Nestle For Nestle, competencies comprise success factors essential for obtaining desirable results in a particular task. Success factors comprise the attributes, knowledge and skills stated in circumstances where certain behaviours are exhibited through efficient performance. For Nestle, attributes are the features, characteristics and motives that affect the company’s employee behaviour. The company divides competencies into two broad categories, namely personal functioning competencies and functional competencies (Nestle 2011). Personal functioning competencies are the success factors that are not tied to certain work functions. They target emotional intelligence behaviour and leadership at the company. On the other hand, functional competencies comprise the specific success factors within a specific work function at the company (Anon n.d.). Selective Recruitments Current Nestle human report suggests that Nestle has several employees hired whenever there is an urgent need to fill a vacancy such as when an employee resigns or when a position is created. In all recruitment scenarios, the head of department has to obtain consent from the managing director. Afterwards, the Divisional Head fills up a “recruitment and Budgeted Form” once the request is approved. Performance appraisal The departmental supervisor or a corresponding manager evaluates an employees’ job performance through performance appraisal, performance review, employee appraisal and in some cases through development discussion. The aim however is to ensure that employees are highly motivated. Hence, individual employees are valued since the company believes that it is absolutely dependent on the employees’ work quality. Further, Nestle offers incentives to its employees to encourage them to perform better at workplace (TAS 2013). Compensation benefit Compensation is a key feature of Nestle’s reward package that encourages the top performing employees to offer their best. In this way, the company is able to make optimal use of its employees. The company’s philosophy is to afford and sustain closely controlled compensation programs that maintain a long-term relationship with employees at the time of assessing their performance. The company endeavours to offer compensation packages to its employees, such as short- and long-term incentives and benefits and base pay (ABDN 2013). Fit between PMS and company strategy The company’s leadership and management principles are aligned to Nestle Corporate Business Principles, where personal responsibility and leadership are distinguished as the major operational principles (The Times 2013). Additionally, they are aligned with the company’s code of business conduct that emphasises non-negotiable minimum standards of employee performance and behaviour in key areas. Nestle’s recruitment, training and development of workers is done with high standards. The HRM ensures that the company maintains desirable working conditions with relevant growth opportunities (Anon n.d.). Performance appraisal of employees is done frequently on an annual basis. The HRM keeps the records of best-performing employees and provides them with an opportunity for growth. Further, Nestle puts emphasis on personal growth and development. The pay structure planned for employee integrates job enrichment and enlargement. Nestle’s HRM “best practices” approach aligns with company strategy. HRM best practices approach was suggested by Jeffrey Pfeffer (1998). It is based on the concept of best universal GRM practices depending on their situation, where adopting them promotes superior organizational performance. Among the “best practices” suggested by Pfeffer (1998) include selective hiring, reducing status differential, high compensation, maximal information sharing, employment security and self manager teams. Recommendations Communication strategy Nestle should adopt an effective communication strategy. Further, employees should be trained and educated on the changes that occur in the organization. Open meetings and bulletins can be effective in ensuring this (ABDN 2013). Training and development Nestle should have an effective training and development as it plays a key role in ensuring that employees are aligned to the corporate objectives. Indeed, it is a critical part of the corporate strategy. Nestle should have in house trainers who conduct most of the training programs. External trainers can also be useful for specialised training programs (Anderson 2013). Entrepreneurship strategy Each employee should be trained to be an entrepreneur who can think independently and support the organization in building competitive products (Kotler & Keller 2009). Purposeful recruitment Nestle should consistently reevaluate its existing recruitment strategy to identify the defaults in its HR policies. Further, recruitment and development of employees should be done with high standards. Conclusion Nestle’s performance management consists of activities targeted at ensuring that the organisation’s goals are consistently efficient and effective. The company aims at promoting organizational culture through encouraging its employees to adopt specific desirable attitudes that is aligned to the corporate objectives. Nestle’s prioritises on the protection of its employees as it regards them as key organizational assets. In order to maintain its global standards, Nestle’s key focus with this regard is to ensure safe working environment for its employees. The company’s performance system include ccompetency based assessment, management by objectives (MBOs), competency profile mapping at nestle, selective recruitments, performance appraisal and compensation benefit. 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