HUMAN RESOURSES STRATAGIES IN FOOD CAMPANIES – A CASE STUDY OF NESTLE

A PROJECT SUBMITTED

AS A PART OF INTERNAL EVALUATION OF

COURSE: STRATEGIC MANAGEMENT

PROGRAMME: M. COM, UNIVERSITY OF MUMBAI

FIRST SEMESTER 2015-16

SUBMITTED BY

MS. JEEVA R. NADAR

ROLL NO. 31

UNDER THE GUIDANCE OF

DR. RAMRAJ T. NADAR

GURU NANAK COLLEGE OF ARTS, SCIENCE AND COMMERCE

G. T. B. NAGAR, MUMBAI - 400 037

Declaration

i

I hereby declare that the work embodied in this project entitled “Human

Resource Strategies in Food Companies – A Case Study of Nestle” forms my

own original contribution which has been carried out under the guidance of Dr.

Ramraj T. Nadar at Guru Nanak College of Arts, Science and Commerce,

G.T.B. Nagar, Mumbai – 400037. This work has not been submitted for any

other degree of this or any other University. Whenever reference has been

made to the work of others, it has been clearly indicated and included in the

Bibliography.

Signature of Student

(Jeeva R. Nadar)

Certified by

Signature of Internal Guide Signature of External Examiner

College seal Signature of Principal

INDEX

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CHAPTERS CONTENTS PAGE NO.

DECLARATION ii - ii

ACKNOWLEDGEMENT iv - iv

CHAPTER – 1 INTRODUCTION 01 - 03

CHAPTER – 2HUMAN RESOURCE STRATEGIES – A

REVIEW04 – 10

CHAPTER – 3 NESTLE - A HISTORICAL REVIEW. 11 – 22

CHAPTER – 4HUMAN RESOURCE STRATEGIES IN NESTLE

– AN ANALYSIS23 – 35

CHAPTER - 5 CONCLUSIONS 36 - 37

ANNEXURE

BIBLIOGRAPHY 38 – 38

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CHAPTER 1: INTRODUCTION

1.1: INTRODUCTION TO THE STUDY

HR is multidisciplinary. It applies the disciplines such as Economics, Psychology, Sociology and

Law. The strategies adopted in this area should be unique as well as acceptable in the long run,

because the human resource in any organization is the most important resource due to its

vulnerability of changes due to the changing scenarios in globalised business. The strategies

should be embedded within the work of all managers, and most individual contributors due to the

need of managing people (subordinates, peers and superiors) as well as teams to get things done.

A high-potential organization is one that has clearly defined performance measures. Top leaders

influence employees in the importance of workplace behaviors that affect the success of the

company. HRM strategies support leaders in the planning of activities to foster an organizational

culture where employees enjoy working and are appreciated. In a high-performance

organization, employees are recognized for high performance levels and creative ideas. Clearly

designed HR strategies are declared as the winning strategies for the success of any organization.

Nestlé, over its long historical development from a small village operation to the world's leading

food Company, has demonstrated an enviable capability to adjust to an ever changing external

environment, without losing its fundamental beliefs and core values, so important for long-term

success. Over the years to come, this capability of using HR as a strategic partner in

implementation of company's activities will continue to be challenged even more as Nestlé is

growing in size and complexity up to a dimension which demands a continuous evolution of its

organization and of the way in which it is run.

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1.2: STATEMENT OF THE PROBLEM

HR management is a highly critical function in every organization. Its effectiveness depends on

the different strategies adopted by a company in various areas such as recruitment, selection,

training, motivation, compensation, welfare measures, promotion, transfer, retrenchment and

dismissal.

Nestle is a very large multinational corporation. It has around 3,39,000 employees. Managing

such a big number of people is really a challenge. Considering this challenge, the study is

conducted to understand the implications involved in its HR management.

1.3: IMPORTANCE OF THE STUDY

This study will enable to summarize the critical areas of strategic HR management. It will help to

understand the importance of HR strategies adopted by the multinational nestle. The study will

also highlight the impact of various HR strategies adopted by the company.

1.4: OBJECTIVES OF THE STUDY

1. To know the different aspects of human resource strategy.

2. To understand the background of nestle company.

3. To analyse the different HR strategies adopted by nestle.

4. To evaluate the impact of HR policies of the company on its growth/functioning.

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1.5: RESEARCH METHODOLOGY

The data for the study will be collected from secondary sources such as reference books,

published articles in journals and internet materials. Statistical tools such as charts, tables and

diagrams will be used to present the data effectively.

1.6: LIMITATIONS OF THE STUDY

The study does not use any primary data due to the time and cost constraints.

It does not have any comparative study of the HR Strategy followed by other companies.

It does not attempt to evaluate country wise differences in the applications of HR policies.

Study does not include trend based analysis of its HR strategy improvements.

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CHAPTER 2: HUMAN RESOURCE STRATEGIES – A REVIEW

Human resource strategy is designed to develop the skills, attitudes and behaviors among staff

that will help the organization meet its goals. Human resource strategy consists of principles for

managing the workforce through HR policies and practices. It covers the various areas of human

resources functions such as recruitment, compensation, performance management, reward and

recognition, employee relations and training.

HR strategy must be aligned with the organization’s vision, mission and goals. In developing an

HR strategy, the company must analyze the characteristics of its industry, determine its

competitive advantage, and identify key processes and key people. Creating different strategies

for all groups of people in the organization may be necessary, depending on their skills,

knowledge and responsibilities. The strategy must look at the organization's culture, structure,

people and systems.

HR strategies need to simultaneously focus on building skills, motivation and behavior for a

successful business strategy. HR strategy affects what employees feel and do. It manifests in

work-productivity outcomes such as customer satisfaction, product quality, errors, accidents,

down time and employee retention. These outcomes, in turn, affect company finances. Poor

customer service, for example, can reduce company sales. An effective HR strategy benefits the

company's bottom line. It improves employee motivation and satisfaction. Employees also

benefit by realizing their full potential and developing their own careers.

There are no two opinion that people alone determine the fate and future of an organization. Prof.

W.E .Deming wrote, “abundance of natural resources is not a requirement for prosperity. The

wealth of a nation depends on its people. This is equally true in case of companies. The survival

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and success of a firm depend upon a quality, of its people .therefore, a firm must frame personnel

or employees related policies in order to motivate the employees, which in turn would lead to its

success.

Large firms often focus on building systematic HR practices that improve employees’ motivation

and skills. A Cornell University study of small and medium-sized enterprises showed that their

HR practices are informal and reflect company values. Their HR strategy tends to focus more on

selecting the right employees to do the job, managing their activities and motivating them to stay

with the company. Smaller organizations often develop employee loyalty by creating a family-

like culture.

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The HR department must find ways to attract, select and retain employees in an increasingly

competitive market. The globalization of the workforce requires more complex and diverse

human resource strategies that will adapt to each country’s labor laws, economic structure and

staff expectations. The HR professional must play a strategic role in adapting the company to

diverse environments while keeping down costs and working with fewer resources. This involves

proactively partnering and consulting with line managers.

Senior management often leads in defining the organization’s human resource strategy. The HR

department plans and translates the strategy through HR policies and practices. This requires

reviewing the organization’s current practices and analyzing critical issues such as high turnover,

declining sales or production delays. HR can refer to best practices in successful organizations.

For a successful human resource strategy, managers must be active partners with HR and HR

staff must facilitate and coordinate the process.

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The various personnel strategies are:

1. Recruitment and selection strategy :

A firm needs to frame strategy regarding the sources of recruitment depending upon the

nature of job. For instance, a firm may consider only internal sources of recruitment for

lower level executives.

A firm may frame strategy relating to selection procedure including the types of tests,

interviews, etc. to be conducted depending upon the natures of job. a firm may also have a

policy for centralized selection in respect of managerial position, and decentralized selection

for non managerial position.

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2. Training strategy :

Training is an important personnel area. Training is provided not only to impart knowledge,

and to develop skills, but also to develop positive attitude towards the organization and work.

There is a need to frame proper training strategy in respect of:

- Methods of training, on the job, or off the job methods.

- Training period, Training faculty- internal or external.

- Funds to be allocated for training.

- Personnel to be trained.

3. Performance appraisal strategy :

It is a systematic description of employees job relevant strengths and weakness. It is always

advisable to review or appraise the performance of the employees. Proper feedback must be

provided to employees on their performance, so that they correct there weakness and

consolidate on there strengths. Therefore, performance appraisal policy need to be framed in

respect of :

- Whether to undertake performance appreciable yearly or half yearly or quarterly.

- Who should undertake performance appraisal- whether superior, subordinate,

professionals, or all of them.

- Technique of performance appraisal such as ranking methods, rating scale methods, role

analysis methods, assessment centers, etc.

4. Promotion strategy :

An organization need to be frame strategy in respect of promotion of employees. Different

firms may adopt different promotion policy such as :

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- Merit as the basis of promotion, especially for higher level jobs.

- Seniority as the basis of promotion, especially for lower level job.

The promotion strategy should also indicate as to who should be involved in final decision of

promotion of employees at all levels. A disputes settlement procedure must also be decided

in advance to settle the disputes relating to promotion.

5. Transfer strategy :

a firm must frame proper transfer strategy .transfers should be effected not to harass the

employees, but in the interest of the organization as well as that of the employees . transfer

strategy would involve :

- The jobs, which are subject to transfers.

- The timing of transfers.

- The duration and number of transfers.

- The authority to transfer employees.

6. Compensation/motivation strategy :

Employees are compensated by way of salaries, and incentives compensation motivates the

employees to improve their performance. Therefore, there is a need to frame compensation

policies in respect of the following matters :

- Salaries and wages – whether to be paid on the last date of month or every fortnight or some

other date.

- Bonus- whether to be paid yearly or half –yearly and the rate of bonus.

- Leave travel compensation-whether to be availed every year or once in two years, and

whether only to the native place of the employees or any other place as well.

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- Medical benefit- whether to be applicable only to the employee or also to depend family

members, the maximum amount of medical; benefits per employees during a year, and other

such matters.

- Employees incentives-whether individual incentives or group incentives the amount of

incentives, the types of incentives, etc.

- Employee stock option-where employees are offered shares of the company at lower rate

than market price with lock in period. The firm must decided about the numbers of shares to

be offered to certain category of employees, and the lock- in period of such shares.

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CHAPTER 3: NESTLE - A HISTORICAL REVIEW.

Nestle is the world's leading Nutrition, Health and Wellness company. It is a Swiss multinational

food and beverage company headquartered in Vevey, Switzerland. The Company was founded

in 1866 by Henri Nestle. Its mission of "Good Food, Good Life" is to provide consumers with

the best tasting, most nutritious choices in a wide range of food and beverage categories and

eating occasions, from morning to night. It is the largest food company in the world measured by

revenues, and ranked #72 on the Fortune Global 500 in 2014.

Nestle’s products include baby food, bottled water, breakfast cereals, coffee and tea,

confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twenty-nine of

Nestle’s brands have annual sales of over CHF1 billion (about US$1.1 billion), "Nestle:

Tailoring products to local niches". CNN, 2 July 2010 including Nespresso, Nescafé, Kit Kat,

Smarties, Nesquik, Stouffer’s, Vittel, and Maggi. Nestle has 447 factories, operates in 194

countries, and employs around 339,000 people. It is one of the main shareholders of L’Oreal, the

world’s largest cosmetics company.

The logo that Nestle used until 1966.

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A 1915 advertisement for "Nestles Food", an early infant formula

Corporate affairs

Nestle is the biggest food company in the world, with a market capitalisation of roughly 231

billion Swiss francs, which is more than 247 billion US dollars as of May 2015. In 2014,

consolidated sales were CHF 91.61 billion and net profit was CHF 14.46 billion. Research and

development investment was CHF 1.63 billion.

Joint ventures

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Joint ventures include:

Cereal Partners Worldwide with General Mills (50%/50%)

Beverage Partners Worldwide with The Coca-Cola Company (50%/50%)

Lactalis Nestle Produits Frais with Lactalis (40%/60%)

Nestle Colgate-Palmolive with Colgate-Palmolive (50%/50%)

Nestle Indofood Citarasa Indonesia with Indofood (50%/50%)

Nestle Snow with Snow Brand Milk Products (50%/50%)

Nestle Modelo with Grupo Modelo

Corporate social responsibility

World Cocoa Foundation

In 2000, Nestle and other chocolate companies formed the World Cocoa Foundation (WCF). The

WCF is an international membership organization representing more than 100 member

companies across the cocoa value chain. It is committed to creating a sustainable cocoa economy

by putting farmers first, promoting agricultural & environmental stewardship, and strengthening

development in cocoa-growing communities.

Sustainable Agriculture Initiative

In 2002 Nestle, Unilever and Danone created the Sustainable Agriculture Initiative (SAI)

Platform, a non-profit organization to facilitate sharing of knowledge and initiatives to support

the development and implementation of sustainable agriculture practices involving the different

stakeholders of the food chain.

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The SAI Platform has more than 60 members, which actively share the same view on sustainable

agriculture seen as "the efficient production of safe, high quality agricultural products, in a way

that protects and improves the natural environment, the social and economic conditions of

farmers, their employees and local communities, and safeguards the health and welfare of all

farmed species.”

Among the latest deliverables produced, the SAI Platform developed (or co-developed)

Principles and Practices for sustainable water management at farm level; recommendations for

Sustainability Performance Assessment (SPA); a standardized methodology for the dairy sector

to assess green house gas emissions; an Executives Training on Sustainable Sourcing; and many

more. A case of Nestle's impact on sustainable agricultural practices has been documented in

academic literature.

Creating Shared Value

Creating Shared Value (CSV) is a business concept intended to encourage businesses to create

economic and social value simultaneously by focusing on the social issues that they are capable

of addressing. In 2006, Nestle adopted the CSV approach, focusing on three areas – nutrition,

water and rural development – as these are core to their business activities.

Nestle now publishes an annual progress report on its goals.

Nestle CEO Paul Bulcke describes CSV as follows: “Creating Shared Value, these three words,

are the fundamental way we want to behave as a company, and by nature, also as persons; it is

the fundamental way we want to go about our activities; it also is linked with the conviction that

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in order to be meaningful and successful, a company must intersect with society in a very

positive and constructive way.”

Nestle has also established the Creating Shared Value Prize, which is awarded every other year

with the aim of rewarding the best examples of CSV initiatives worldwide and to encourage

other companies to adopt a shared value approach. These initiatives should take a business-

oriented approach in addressing challenges in nutrition, water or rural development. The winner

can win up to CHF 500,000. Nestle was an early mover in the shared value space and hosts a

global forum, the Creating Shared Value Global Forum.

Nestle Cocoa Plan

In October 2009, Nestle announced "The Cocoa Plan." The company is working to get 100

percent of its chocolate portfolio using certified sustainable cocoa. For third-party certification,

Nestle has partnered with UTZ Certified to ensure that best practices are being used. Many of

Nestle’s efforts are focused on the Ivory Coast, where 40 percent of the world’s cocoa comes

from. The company has developed a higher-yielding, more drought- and disease-resistant cocoa

tree; and they have given 3 million of these super trees to farmers thus far and plan to give away

12 million of them in total. They are also training farmers in efficient and sustainable growing

techniques, which focuses on better farming practices, including pruning trees, pest control (with

an emphasis on integrated pest management) and harvesting, as well as caring for the

environment. In addition, they have built 23 new schools so far and plan to build 40 in total by

2015.

Another important part of the plan has been to address child labor. Nestle says that according to

U.S. statistics, there are about 800,000 children who work the cocoa supply chain. With this in

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mind, Nestle approached the Fair Labor Association to map out strategies to help curb child

labor in the cocoa sector, and these efforts – including community education and the building of

schools – have become a focus of the Cocoa Plan.

Committed to Health Care and Nutrition

In September 2010, Nestle announced to invest more than $500 million between 2011 and 2020

to develop health and wellness products to help prevent and treat major ailments like diabetes,

obesity, cardiovascular disease and Alzheimer’s, which are placing an increasing burden on

governments at a time when budgets are being squeezed. Nestle created a wholly owned

subsidiary, Nestle Health Science, as well as a research body, the Nestle Institute of Health

Sciences.

Member of Fair Labour Association

On 29 February 2012, Nestle became the first food company to join the FLA. Building on

Nestle's efforts under the Cocoa Plan, the FLA will send independent experts to Côte d'Ivoire in

2012 and where evidence of child labour is found, the FLA will identify root causes and advise

Nestle how to address them in sustainable and lasting ways.

Rural Development Framework

In 2012, Nestle developed the Rural Development Framework, which supports farmers and

cocoa growing communities. It is an investment program aimed at improving infrastructure,

increasing access to safe water, address financing and market efficiency gaps and improving

labor conditions.

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Partnership with IFRC

In 2014, Nestle renewed its long-standing partnership long with the International Federation of

Red Cross and Red Crescent Societies (IFRC) to increase access to safe water and sanitation in

rural communities. Over recent years, the partnership has brought clean drinking water and

sanitation facilities to 100,000 people in Côte d'Ivoire’s cocoa communities. Nestle has

committed to contributing five million Swiss francs over the next five years to the IFRC.

Farm Animal Welfare

In 2014, Nestle also made a formal pledge to improve the welfare of farm animals across its

global supply chain. The company signed an international partnership agreement with World

Animal Protection to help them tighten and improve their welfare guidelines and commissioned

an independent auditor, SGS, to carry out check to ensure these new standards of animal welfare

are met on its supplying farms.

Recognition

In May 2006, Nestle’s executive board decided to adapt the existing Nestle management

systems to full conformity with the international standards ISO 14001 (Environmental

Management Systems) and OHSAS 18001 (Occupational Health and Safety Management

Systems), and to certify all Nestle factories against these standards by 2010. In the

meanwhile a lot of the Nestle factories have obtained these certifications.

In 2009, Nestle Waters earned a sixth LEED certification. The certification was given by the

US Green Building Council's Leadership in Energy and Environmental Design which the

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company become its first recipient. It highlights the environmentally conscious elements of

the facility which enables them to receive the certification.

Nestle Purina received in 2010 the Malcolm Baldrige National Quality Award for their

excellence in the areas of leadership, customer and market focus, strategic planning, process

management, measurement, analysis and knowledge management, workforce focus and

results.

In March 2011, Nestle became the first infant formula company to meet the FTSE4Good

Index criteria in full.

In September 2011, Nestle occupied 19th position in the Universum's global ranking of Best

Employers Worldwide. According to a survey by Universum Communications Nestle was in

2011 the best employer to work for in Switzerland.

For the twelfth consecutive year, Fortune magazine included in 2011 Nestle in their list of

The 10 Most Admired Companies in the World.

The International Union of Food Science and Technology (IUFoST) honoured Nestle in 2010

with the Global Food Industry Award.

In May 2011, Nestle won the 27th World Environment Center (WEC) Gold Medal award for

its commitment to environmental sustainability.

On 19 April 2012, The Great Place to Work® Institute Canada mentioned Nestle Canada

Inc. as one of the '50 Best Large and Multinational Workplaces' in Canada (with more than

1,000 employees working in Canada and/or worldwide).

In April 2012, Nestle obtained an A+ rating from the Global Reporting Initiative (GRI) for

their global annual report on Creating Shared Value. To reach A+ the company provided new

data in their annual report on a number of criteria such as human rights, diversity and gender,

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climate change, biodiversity and corruption. Nestle was the first food and beverage company

to achieve an A+ rating from the GRI for a global sustainability report.

On 21 May 2012, Gartner published their annual Supply Chain Top 25, a list with global

supply chain leaders. Nestle ranks 18th in the list.

In September 2012, Nestle was among the top-scoring companies on the Climate Disclosure

Leadership Index (CDLI)

Nestle was recognized as the top company in the food and beverage category on the 2013

Dow Jones Sustainability Index

In 2013, Nestle retained its number one position in charity Oxfam’s sustainability scorecard,

and improved its ratings on the issues of land, workers and climate.

In June 2014, Nestle was awarded the International Coaching Federation's Prism Award in

Switzerland for outstanding organisational coaching.

Nestle, and assessment provider Capp & Co, were awarded the Best Apprentice/School

Leaver Recruitment Strategy award at the 2014 Recruiter Awards for Excellence in May for

Nestle’s Fast Start Scheme in the UK

In November 2014, the Carbon Disclosure Project (CDP) named Nestle as joint lead in the

consumer staples sector for its deforestation efforts. In its 2014 report on global forests, the

environmental sustainability ratings agency commended Nestle, among 152 companies, for

its comprehensive assessment of risks and for the quality of its work to build capacity in the

supply chain.

In 2014, Nestle received the Henry Spira Corporate Progress Awards for altering its policies

and practices to minimize adverse impacts on animals.

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In February 2015, Nestle was named Fortune magazine’s most admired food company in the

world for the tenth year in a row.

In March 2015, Nestle ranked second in Oxfam’s Behind the Brands scorecard, where the

NGO ranks the world’s ‘Big 10’ consumer food and beverage companies on their policies

and commitments to improve food security and sustainability. Nestle assumed the number

one ranking for land rights, while the company also outperformed its peers on transparency

and water.

Nestle improved its ranking as one of the world’s most attractive employers for university

students, ranking 18th on Universum’s 2014 list of the World’s Most Attractive Employers,

based on Universum’s national student surveys of more than 240,000 business and

engineering students in the world’s twelve largest economies.

Controversy and criticisms

Child labour by suppliers (2005)

In 2005, after the cocoa industry had not met the Harkin–Engel Protocol deadline for certifying

the worst forms of child labour (according to the International Labor Organization's Convention

182) had been eliminated from cocoa production, the International Labor Rights Fund filed a

lawsuit in 2005 under the Alien Tort Claims Act against Nestle and others on behalf of three

Malian children. The suit alleged the children were trafficked to Côte d'Ivoire, forced into

slavery, and experienced frequent beatings on a cocoa plantation. In September 2010, the US

District Court for the Central District of California determined corporations cannot be held liable

for violations of international law and dismissed the suit. The case was appealed to the US Court

of Appeals.

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The 2010 documentary The Dark Side of Chocolate brought attention to purchases of cocoa

beans from Ivorian plantations that use child slave labour. The children are usually 12 to 15

years old, and some are trafficked from nearby countries. The first allegations that child slavery

is used in cocoa production appeared in 1998. In late 2000, a BBC documentary reported the use

of enslaved children in the production of cocoa in West Africa. Other media followed by

reporting widespread child slavery and child trafficking in the production of cocoa. In September

2001, Bradley Alford, Chairman and CEO of Nestle USA, signed the Harkin–Engel Protocol

(commonly called the Cocoa Protocol), an international agreement aimed at ending child labour

in the production of cocoa.

NESTLE's relationship with India dates back to 1912, when it began trading as The NESTLE

Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished

products in the Indian market. After India's independence in 1947, the economic policies of the

Indian Government emphasized the need for local production. NESTLE responded to India's

aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab,

where the Government wanted NESTLE to develop the milk economy.

Progress in Moga required the introduction of NESTLE's Agricultural Services to educate,

advise and help the farmer in a variety of aspects. From increasing the milk yield of their cows

through improved dairy farming methods, to irrigation, scientific crop management practices and

helping with the procurement of bank loans. NESTLE set up milk collection centres that would

not only ensure prompt collection and pay fair prices, but also instill amongst the community, a

confidence in the dairy business. Progress involved the creation of prosperity on an on-going and

sustainable basis that has resulted in not just the transformation of Moga into a prosperous and

vibrant milk district today, but a thriving hub of industrial activity, as well. 

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NESTLE has been a partner in India's growth for over nine decades now and has built a very

special relationship of trust and commitment with the people of India. The Company's activities

in India have facilitated direct and indirect employment and provides livelihood to about one

million people including farmers, suppliers of packaging materials, services and other goods.

NESTLE India is a responsible organisation and facilitates initiatives that help to improve the

quality of life in the communities where it operates.

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CHAPTER 4: HUMAN RESOURCE STRATEGIES IN NESTLE – AN ANALYSIS

The Recruitment Services team in the UK is recognised within Nestle globally as the

benchmark in leading recruitment practices. That’s because we don’t just fill jobs. Instead, we

work with the business to proactively identify and fill their talent gaps. We constantly stand back

and work out new ways to attract the very best and keep ahead of the competition, but it is n’t

always easy.

As a member of the Talent Management and International HR Team, on the other hand, one

will focus on developing the potential and careers of all our employees, particularly those with

high levels of performance and potential who are likely to be Nestle leaders of the

future. Working with the global Nestle business, one will develop the framework and processes

which enable us to identify and develop the potential of our employees. As part of this, the team

will support individuals with a clear career development plan to go on international assignments

out of the UK to locations such as Nestle’s international headquarters in Vevey, Switzerland, or

to other Nestle markets around the globe.

As a member of Reward and Employee Relations Team, an employee will join one of two

expert sub-teams, each with specific responsibility for business-wide strategic and operational

remits. As part of the Employee Relations sub-team, he provides business-wide advice and

guidance to line managers and the HR community on individual employee relations matters and

to HR Business Partners on broader employee relations and change management issues, as well

as developing and implementing our policies and procedures in this area and undertaking

relevant project work. As part of the Reward sub-team, on the other hand, a member will focus

on maximising the return on investment to deliver Reward that will motivate the employees to

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perform at the highest level as well as managing our overall Reward principles and processes

including base salary, incentives and Flexible Reward.

A shared responsibility

Line managers have the prime responsibility for building and sustaining an environment where

people have a sense of personal commitment to their work and give their best to ensure our

Company’s success. They care for and develop the leaders of tomorrow. Line managers decide

on all people matters under their influence, within the boundaries set by the policies and

principles, acting as the final decision makers The Human Resources (HR) structure enables and

empowers them in establishing business needs and their corresponding people requirements

Therefore, the mission of HR managers and their teams is to provide professional guidance to

line managers aiming to deliver superior business results by optimising the performance of our

people, while ensuring exemplary working condition With a ‘Nestle in the Market’ (NiM)

approach, HR has adopted a streamlined approach to ensuring functional leadership and the

highest level of focus, clarity, and efficiency. Our structure is based on three dedicated areas

which provide specialized services (Centres of Expertise) deploy HR strategies within a specific

business (Business Partners) and perform transactional activities (Employee Services).

Joining Nestle

The long-term success of the Company depends on its capacity to attract, retain and develop

employees able to ensure ongoing and sustainable growth. This is a primary responsibility of all

managers. The Nestle policy is to hire employees with personal attitudes and professional skills

enabling them to develop a long-term ationship with the Company. Therefore, special attention

will be paid to ensure there is a strong alignment between a candidate’s values and the Nestle

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culture Only relevant skills and experience and adherence to the Nestle principles will be

considered in employing a person. No consideration will be given to a candidate’s origin,

nationality, religion, race, gender, disability, sexual orientation or age. Whilst adequate

recruitment tools may improve the hiring process, the decision to hire a candidate remains in the

hands of the responsible manager, supported by the HR team.

Total rewards

Attracting new hires and keeping current employees engaged is not only about remuneration and

benefits based on solid performance. It is also about the hard earned value and trust that our

name brings to those who work with us; the relationships with our lin managers and fellow

workers; recognition and experiences enjoyed while working for a diverse global company; and

possibilities to learn and grow. These are as a whole, the Total Rewards a member will receive

Nestle, therefore, focuses on Fixed Pay Variable Pay, Benefits, Personal Growth and

Development and Work Life Environment as the key elements that define Total Rewards. In the

spirit of developing a high performance culture, those elements need to correspond to what is

valued by employees in each and every market and which demonstrate how Nestle is committed

to giving each employee the opportunity to grow involve and contribute.

Employment and working conditions

We are committed to providing our employees all over the world with good working conditions,

a safe and healthy work environment, and flexible employment possibilities that support a better

balance of private and professional life consistent with one’s ambition as a leading Nutrition,

Health and Wellness Company As such, we provide flexible working conditions whenever

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possible and encourage our employees to have outside interests especially community

involvement. Those with line management responsibilities are required to take personal

ownership of safety and health within their area of responsibility and are encouraged to develop

their capability in this area. Nestle’s commitment however goes beyond its own employees.

Therefore, managers are committed to build and sustain, with their teams, an environment of

mutual trust. HR ensures that a respectful dialogue is present and the voice of the employees is

heard.

Training and learning

Learning is part of the Company culture. Employees at all levels are systematically encouraged

to consider how they upgrade their knowledge and skills. Company determines training and

development priorities. The responsibility for turning these into actions is shared between

employees, line managers and the Human Resources Experience and on-the-job training are the

primary source of learning. Managers are responsible for guiding and coaching employees to

succeed in their current positions. Nestle employees understand the importance of continuous

improvement, as well as sharing knowledge and ideas freely with others. Practices such as lateral

professional development, extension of responsibilities, and cross functional teams are

encouraged to acquire additional skills, enrich job content and widen accountability. Nestle also

offers a comprehensive range of training activities and methodologies to support everyone’s

learning and growth.

Attending a programme should never be considered as a reward but as a component of on-going

development. Additionally, corporate leadership programmes help us develop and retain the

best-qualified management. Leaders have the opportunity to attend either international training

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courses at Rive-Reine, which build integrated business understanding and solidify and reinforce

Nestle values and principles, or programmes conducted by our strategic learning partners.

Talent, development and performance management

At Nestle, a high performance culture supported by differentiated rewards and development is

key to the delivery of individual and business objectives This is driven by the alignment of clear

and challenging responsibilities and ensuring that employees are aware of how their work

impacts Nestle. The line manager and employee work together to ensure that challenging

objectives are set and effectively evaluated throughout the year. This further enables managers to

acknowledge high performance and reward employees accordingly, while ensuring low

performance is properly managed with integrity.

Employees receive regular feedback on their performance and career aspirations through a

variety of tools and processes such as the Performance Evaluation process (PE), the Progress and

Development Guide (PDG) and 360° assessments. Each manager dedicates the necessary time to

the monitoring of objectives and regular coaching of employees through the year. Each

employee, supported by the line manager, is in charge of her or his own professional

development, whereby the employee is encouraged to express career objectives and expectations

in an open dialogue.

At Nestle, promotions are based on sustained performance from a results and behavior

standpoint, as well as future potential. The Company undertakes an active and rigorous

succession planning process at all levels of the organisation to ensure that there is a strong

pipeline of successors ready to meet future needs. We are committed to ensuring sustainable

conditions for a gender balanced and diverse company. As such, Nestle has focused on removing

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barriers to career progression for women and men by developing a more flexible work

environment, initiating mentoring schemes, having flexible career paths and providing dual

career support. HR management provides the support for implementing the necessary tools, and

partners with line managers to prepare the resources necessary for the continued development of

people and the Company.

Employee relations

Since its founding, Nestle has built a culture based on values of trust, mutual respect and

dialogue. Nestle management and employees all over the world work daily to create and

maintain positive individual and collective relationships and are expected to do so as a core part

of their job Nestle not only upholds the freedom of association of its employees and the effective

recognition of the right to collective bargaining, but also ensures that direct and frequent

communication is established in the workplace While dialogue with trade unions is essential, it

does not replace the close relationship that our management maintains with all employees.

In the spirit of continuous improvement, we encourage two-way dialogue with our employees

that goes beyond the traditional aspects of collective bargaining in order to share knowledge and

to jointly find opportunities related to important matters such as Creating Shared Value the

health and safety in the workplace and our concern for the environment The Company and

employee representatives are expected to make all necessary efforts to develop fair and

constructive dialogues, overcome the difficulties that they might encounter, reach sustainable

agreements and implement them.

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A dynamic organisation creates a climate of innovation and allows people to think from different

perspectives. Mistakes may be made but there is always a willingness to correct and learn from

them. The scope and brand strength of a global company combines with the creativity and

knowledge of a local business. As a result, people can have far-reaching influence every day and

explore their full long-term potential, propelled by continual support and a collaborative

approach by line managers and employees.

Human resource management (HRM) is that part of management process which makes,

enhances, manages and develops the human element of the enterprise measuring their

resourcefulness in terms of talents, abilities, total skills, creative, knowledge, and potentialities

for effectively contributing to the organizational objectives. Human resources are precious and a

source of competitive advantage. Human resources may be tapped most effective by mutually

standard policies which promote promise and foster an inclination in employees to act flexibly in

the interests of the adaptive organization's pursuit of excellence.

Human resource policies can be joined with planned business and used to reinforce appropriate

culture. Human resources play a critical role in enabling the organization to effectively deal with

the external environment challenges. The human resource management has been accepted as a

strategic partner in the formulation of organization's strategies and in the implementation of such

strategies through human resource planning, employment, training, appraisal and rewarding the

personnel.

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HR PRACTICES

RECRUITMENT: Recruitment is the process of developing and maintaining adequate

manpower resources. Recruitment refers to the attempt of getting interested applicants and

creating a pool of prospective employees so that the management can select the right person for

the right job from this pool.

The recruitment process at Nestle is clearly defined.

- People with qualities like dynamism, realism, loyalty, hard work, honesty and reliable.

- Match between candidate's values & company's culture.

- Recruitment for management levels takes place in the head office and all others at the branch

level. The existing employees are promoted to higher posts as per the requirements. There are no

lateral recruitments. Another source of recruitment is campus placements and human resource

consultancies.

- Nestle human resources policy- This policy encompasses those guidelines which constitute a

sound basis for efficient and effective HR Management in the Nestle Group around the world.

Nestle people development review- this policy throws light on Nestle's culture and core values,

different training programs and life of employees after work.

PERFORMANCE MANAGEMENT:

Performance management includes all standard procedures used to appraise contributions,

potentials and personalities of group members in a working organization. It is a process which is

important for making accurate and impartial decisions on employees for secure information. At

Nestle performance appraisals of Employees are done in order to understand each employee's

abilities, competencies and relative merit.

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- Formal assessment by Line Managers and HR once a year with feedback.

- Subordinate can question an unfair evaluation.

- Specific Key Performance Indicators have been enlisted by the HR department.

- One of the important key performance indicators is achievement following the Nestle

management and leadership principles.

- Remuneration structure and promotion criteria take into account individual.

TRAINING:

Training is a major and also an important part of organized activity for increasing the skills and

knowledge of people and also to understand the deep knowledge of task that what they have to

perform or for a definite purpose. It involves systematic procedures for imparting technical

know-how to the employees so as to increase their knowledge and skills for doing specific jobs

with proficiency.

From the Company floor to the upper management, training at Nestle is continuous. Nestle

people provide this training and it is constantly appropriate to the professional life.

Nestle provides the following-

- Literacy training-to upgrade essential literacy skills, especially for workers who operate new

equipment ('Mission-directed Work Team Approach'). Employees are also sent abroad to study

markets, consumer tastes etc.

- Nestle Apprenticeship Programmes.

- Local Training Programmes-on issues ranging from technical, leadership, and

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communication and business economics. Employees are also sent abroad to study markets,

consumer tastes etc.

JOB DESIGN:

Job design refers to the way the tasks are combines to form a complete job. Job design is a

process which integrates work content ( tasks, functions, relationships), the reward ( extrinsic

and intrinsic), and the qualifications required (skills, knowledge, abilities) for each job in a way

that meet the needs of employees and the organization.

The job design process under NESTLE is a very detailed and strategic process.

- Selection-Combination of written test, GD & interview (Interviews for top Management posts).

The company incorporates practices like Job Enrichment and Job Enlargement, to motivate

employees and to break the monotony of their job tasks. The correspondent herself works in both

sales and brand management departments, which is an example of job enlargement.

PAY STRUCTURE:

Pay structure is generally the pay ranges and levels or hierarchy of job. It set out the different

level of pay for different types of employees. It may mean the structure of the total wage of a

worker or group of workers is composed;

- Nestle strives to offer fair remuneration. Remuneration level is above the average in industry.

- The variable component of the salary is comparatively big to reward individual Performance.

- In case of higher management level, the variable part is linked to individual & team target

achievements.

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REWARDS & INCENTIVES:

It consists of a variety of modules that can be presented to reward employees and identify unique

performance. The structure is based on consistent, delivering equitable and fair rewards to a

differentiated group and consists of the following non-financial and financial rewards.

- 'Passion to Win' awards- These quarterly awards have been institutionalized to reward those

who over-achieve their targets.

- Long-service Awards- To recognize employees who have been with the company for more than

30 years.

- 'Nestle Idea Award'- It was found from the correspondent that the company institutes Nestle

Idea Award every quarter to recognize and award employees who come up with relevant and

innovative ideas which have the potential of being implemented at Nestle.

BENEFITS: Nestle offers a comprehensive and competitive benefits package designed to meet

the varying needs of employees. These benefits are an integral part of total compensation

package and provide employees and their families valuable protection during employment with

Nestle.

The following benefits are provided to all employees, with no discrimination-

- Leave-Personal & Medical (fixed no. per year)

- Children Education Assistance Scheme

- Provident fund

- Retirement Gratuity Scheme

- Group Insurance & Accidental Insurance Scheme

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- Conveyance Reimbursements

- Residential Accommodation

- Monthly health check-ups & free consultation for self & family etc.

EMPLOYEE RELATIONS:

Employee Relations involves the body of work concerned with maintaining employer-employee

relationships that contribute to satisfactory productivity, motivation, and morale. Essentially,

Employee Relations is concerned with preventing and resolving problems which arise out of or

affect work situations.

Nestle provides a very healthy working environment which is one of the reasons why Nestle's

employees state their commitment level to be very high.

- Employee turnover is less than 5%., which is considered to be very low for a Multinational

Corporation.

- Nestle has a open culture & upward communication especially in case of grievance redressal is

encouraged.

- Work/Life balance is given importance, as illustrated in the Nestle Human Resource Policy

document.

- 'Nestle Family' annual events are organized by their HR department whereby employees along

with their families are invited.

- Emphasis is laid on safety of employees (Nestle Policy on Health and Safety at Work).

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CHANGE MANAGEMENT

- Nestle has adjusted to the ever-changing external environment for the last 140 years since its

inception 1866 without losing its fundamental views and fundamental values. It manages Change

and drives sustainable profitable growth by following the policy of making gradual changes

instead of making drastic and risky changes.

- ERP implementation- In June 2000, Nestle SA signed a contract of $200 million with SAP with

additional $80 million for maintenance and consulting to install an ERP system for its global

enterprise to maintain centralize a multinational that subsidiaries in 80 countries and have owns

200 operating companies. While the ERP system was likely to have long-term benefits, the

project touched the corporate structure and culture.

The structure was decentralized, and it tried to centralize it. This was initially opposed by

employees but with subsequent measures taken by the HR like training etc., this has been

successfully implemented.

SAFETY & HEALTH:

Every employer is required to carry out a risk assessment for the workplace which should

identify any hazards present in the workplace, assess the risks arising from such hazards and

identify the steps to be taken to deal with any risks.

The Nestle Operational Safety, Health and Risk-Management Strategy document illustrates that:

- Nestle is dedicated to safe & healthy work environment.

- Regular safety assessments & audits take place by internal & external bodies.

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CHAPTER 5: CONCLUSIONS

Nestle, over its long historical development from a small village operation to the world's leading

food Company, has demonstrated an enviable capability to adjust to an ever changing external

environment, without losing its fundamental beliefs and core values, so important for long-term

success. Over the years to come, this capability of using HR as a strategic partner in

implementation of company's activities will continue to be challenged even more as Nestle is

growing in size and complexity up to a dimension which demands a continuous evolution of its

organization and of the way in which it is run. Its motivation based on willingness to learn and to

question what it is doing and why it is doing it, combined with its long standing respect for

Nestle values, will assure its success.

The Model employed by Nestle is one of High Performance, High involvement and high

commitment. Nestle is unique in the sense that it has been able to successfully inculcate its

business objective as well as its core values, consistently in its employees day-to-day activities

starting from recruitment till continuous performance appraisals. Like, open and flexible culture

is ensured by way of providing training programs to employees at all the levels.

This kind of culture is also supported by decentralized structure of Nestle. Transparent

performance appraisal systems and the freedom given to them to question their seniors benefit

not only the employees but even the organization as a whole. Nestle's emphasis on individual

achievement is evident from the kind of pay structure HR has designed for its employees.

Its HR strategies are very strong and dependable. That is why, it is able to manage its very large

force, about 339000 people, effectively, and create success. There is no doubt that the HR

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strategy it adopts helps the organization’s employees contribute at the highest level possible and

improve the bottom line.

To meet its ultimate goals, including productivity, quality and customer satisfaction, the

company helps its employees to improve their skills, attitudes and behavior, and decrease labour

turnover. The policies and practices for building the right skills, eliciting the right behaviors and

achieving the right outcomes helps to govern its business strategy.

The various HR strategies which it adopts can also be thought of as principles for managing the

workforce. As an HR professional, one can translate these principles into specific policies and

practices for building the right skills, eliciting the right behaviors and achieving the right

outcomes for one’s firm. Of course, what is right for one company may not be right for another.

But certainly, one can conclude that Nestle’s sound HR strategy can add value to a firm in

transforming and managing effectively in the globalised marketplace.

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BIBLIOGRAPHY

Books:

Sorab Sadri , Jayashree Sadri , Nitin Nayak (2009), A Strategic Approach To Human

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4. Datta, D. K., Guthrie, J. P., & Wright, P. M. (2005). Human resource management and labor

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topics-and-strategy/strategic-hrm/Documents/HR%20Strategy%20EPG-%20Final

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3. All About NESTLÉ, https://www.nestle.in/aboutus/allaboutnestl%C3%A9 viewed on

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4. Presence Across India, https://www.nestle.in/aboutus/presenceacrossindia, viewed on

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5. The Nestlé Human Resources Policy, http://www.nestle.com/asset-library/documents/

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