Strategic Human Resource Management Of Nestle

1.Introduction

The current report is hovering around the discussion, assessment and evaluation of human resource management policies and practices in Nestle that is a Switzerland based company. The core aim of present study is to evaluate the existing strategic human resource management policies of underlying company with the purpose of suggesting future course of action to the specific company, which in current case is Nestle. The recommendations will be made in the light of study’s findings in order to fill gap between desired human resource management practices and existing policies of the Nestle.

2.Overview of Nestle

Nestle is the transnational food and drink company having headquarter in Vevey, Vaud, Switzerland. The company is one of the leading player in food processing industry and it is earning huge amount revenue. The Nestle is listed among the fortune 500 company at the rank of 72 (Nestle, 2015). Being the leading player of industry, the Nestle has number of unique resources, of which the most important is human resource. The Human resource management report of the Nestle has suggested that people are considered as key source of success in Nestle and their engagement if considered as highly advantageous for the long term competence of company (The Nestle, 2012). The reason for choosing Nestle as the case for current study lies in the fact that company is dealing with diverse range of human resources and is claiming to have effective human resource management system. The closer investigation of human resource management system of company will be of huge assistance in recognizing the human resource polices that are contributing to the success of the company (Wright, Gardner and Moynihan, 2003). Along with this, the information of human resource management of Nestle can be readily availed by the author and it will serve as the basis of finding gaps to recommend improvements in human resource management system of Nestle.

3.Environmental Analysis of Nestle

The analysis of the environment of the company is an important tool for recognizing the competitive position of company in industry (Freeman, 2010)). Being operating at global level, the Nestle is exposed to diverse range of environmental factors both internal and external (Paul and Anantharaman, 2003). The effective inclusion of and dealing with environmental forces is enabling the Nestle to become the leading actor in food processing industry.

3.1 External Environmental Analysis

The external environment refers to the forces that lie outside of the organization and have the potential to influence internal operations of the business (Hunger and Wheelen, 2003). The forces in external environment could include the following; political forces, economic forces, social forces, technological forces, environmental forces and legal forces.

PESTEL Analysis of Nestle: PESTEL framework is considered as a significant strategic tool that can be implied to assess the external environment of the organization (Gupta, 2013)). The PESTEL framework investigates five dimensions of the external environment encompassing the following; political, economic, social, technological, environmental and legal (Freeman, 2010). The table 1 mentioned below is clearly indicating the forces in external environment that are having an impact of operations of Nestle.  Being an international player, the Nestle requires higher level of adaptability in its approach of operating with an aim of complying with cultural variations and standards and regulation of different international markets.

Table 1. PESTEL Analysis of Nestle

Political Forces

Economic Forces

  1. Unstable regulations regarding food standards and actions of market
  2. The internationalization is subject to risk due to changing policies of varying nations.
  3. Foreign trade policies, global trade regulations and global tax laws are important to consider while entering into international market.
  4. Adaptation to various political factors is highly inevitable.
  1. Changing inflation rates, income levels and economic growth of the focal country of operations is important to consider.
  2. Fluctuating budget of consumers and preferences of consumers regarding cost are necessary to consider.
  3. Rising prices of material.
  4. Need to rely on sustainable supply sources.

Social Forces

Technological Forces

  1. Increasing awareness among consumers regarding the usage of healthier products
  2. Changing life style of consumers require easy to cook products.
  3. Consideration of cultural values and preferences is important while offering food items.
  1. The involvement of social media has offered high discretion to consumers to affect the business operations.
  2. Technology is constantly innovating, requiring effective research and development.
  3. Trend of relying on mobile commerce is increasing.

Environmental Forces

Legal Forces

  1. Increasing demand of consumers to consider environmental concerns.
  2. Rapid trend of relating brand image with fulfillment of corporate social responsibility by the firm.
  3. Requires sustainable production, packaging and recycling.
  1. Compliance with global regulations is crucial.
  2. The regulations are constantly changing and require higher level of adaptability.
  3. The regulations in different international markets are relatively different from their other counter parts that demands for flexible approach.

 

3.2 Internal Environmental Analysis

The internal environment of the firm constitutes the resource sand capabilities of the firm that are highly significant for shaping the ability of company to deal with external forces with an aim of competing in the market (Sweller, Ayres and Kalyuga, 2011). The analysis of internal environment of the organization can be carried out by implying SWOT Analysis. The SWOT is an effective strategic tools that is helpful in identifying the combination of resources, and dynamic capability that can help in gaining competitive advantage (Yüksel, 2012). The table 2 mentioned below is successfully presenting the strengths, weaknesses, opportunities and threats of Nestle.

Table 2. SWOT Analysis of Nestle

Strengths

Weaknesses

  1. The Nestle has strong cultural values that are based on its integrated management approach and high commitment to stakeholder’s concerns.
  2. Highly competitive strategic position based of customer satisfaction, sustainability and quality.
  3. High commitment to corporate social responsibility.
  4. Extended brand portfolio and strong brand value.
  5. Globally recognized.
  6. The Nestle has an estimated brand reputation of $ 7 billion.
  7. Highly trusted and have gained loyalty of consumers.
  8. High reliance on team work that has offer employee satisfaction and commitment.
  1. Nestle has faced criticism for its products. For instance; Instant Maggie Noodles of Nestle have been criticized in India.
  2. Increasing awareness among consumers regarding health have reflected that company needs to reshape its product to fit with the mission of “good food and good life”.
  3. The Nestle has faced negative public relations due to baby milk scandal.

Opportunities

Threats

  1. Ability to emerge in new market at international level, specifically emerging economies.
  2. Opportunity to emerge in new growth spots that is BRICS (Brazil, Russia, India, China and South Africa).
  3. Immobile and inimitable capabilities of Nestle can offer competitive advantage in new markets.
  4. The Nestle can integrate backward with its supplier to gain control over availability of raw material.
  5. Developing highly innovating distribution channels.
  1. Increasing level of buying power within industry.
  2. Huge level of variability in raw material prices.
  3. Increasing level of dynamism in external environment of the Nestle.
  4. Highly changing technological interventions.

 

3.3 Jackson and Schuler Framework of Global HRM

The model of Jackson and Schuler is significantly important for understanding of linkage between internal and external factors in the context of human resource management (see figure 2). The environment of Nestle is significantly important for managing human resources in the effective manner. The culture and structure of Nestle has greater flexibility to adjust with the changing environmental conditions that is being backed up by the leadership and strategic capability of the company. The human resources are considered as an important asset and their management is carried out for satisfaction of the key stakeholders of the company (Ahmad and Schroeder, 2003). The practice of the human resource management is based on an integrated process that is significantly important for overall satisfaction of community, customer, employees and society as a whole (Boxall and Purcell, 2011). Given, the model of Jackson and Schuler, it can be argued that Nestle has maintained a substantial link between internal and external factors to foster its growth at global level.

Figure 2. Jackson and Schuler framework of HRM

4.Strategic Human Resource Management of Nestle

4.1 Resource Based View

It has been highlighted by the researchers that humans are the most important resources of the organization and attraction, retention and development of employees contributes to the long term growth of business organization (Wright, Gardner and Moynihan, 2003). The resource based view presents that human resources come under the category of intangible resources that are inimitable and they cannot move across industry (Zacharatos, Barling and Iverson, 2005). The Nestle has maintained that their aim is to establish and maintain long term association with the employees based on its standard of professional development. It has been indicated by the human resource management report of the Nestle that their workforce contributes to sustainable development of high quality culture which is based on continuous improvement approach of the company. The continuous training and learning environment of nestle has fostered them to maintain workforce that is highly competent and possess skills’ set which cannot be imitated by relevant others. Therefore, the human resources of Nestle are contributing in current competitive position of the company and they are likely to offer long run competence to the company as well.

4.2 Nestle - A Pure Human Company

The Nestle has been termed as a pure human company as it is relying on practices that are highly advantageous for the people. The Nestle is relying on three models that are considered as noteworthy for effective management of human resources (Nestle, 2015).  These three models include; high performance, high commitment and high involvement. The Nestle is focusing on improving working conditions for the employees around the world with an aim of increasing their satisfaction and level of commitment (Seibert, Silver and Randolph, 2004). The belief of Nestle rests in the fact that highly committed employees are substantially involved in organizational approaches. The Nestle is well convinced by the argument that human resources are strength of the company and excellence depends largely on the commitment and energy of employees (Nestle, 2015). Along with this, the Nestle has offered discretion to its employees to access the necessary information about company with an aim of enhancing their involvement in organizational activities (Li, 2015). The employee involvement has also been fostered through open communication that has enabled the company to enhance the commitment level of its employees. Therefore, it can be maintained that Nestle has significant reliance on high performance, high involvement and high commitment.

4.3 Human Resource Management Practices of Nestle

Talent Acquisition: The acquisition of talent is an important strategic function that requires significant commitment of organization to choose the highly talented and skilled workforce (Paul and Anantharaman, 2003). The ability of strong talent acquisition of organization serves as the basis of enhancing capabilities of organization to deal with complex market situations. The recruitment process in Nestle is carried out by considering higher level of compliance between the values of individuals and culture of the organization (The Nestle, 2012). The aspects of dynamism, loyalty, hard work and honesty is also considered as an important aspect while carrying out recruitment (Ramsay, Scholarios and Harley, 2000). Due to reliance on effective recruitment process, the Nestle has become able to attract highly talented workforce that has enhanced the skills inventory of the company.

Training and Learning: The training of employees can be referred as the way of bridging the gap between actual and desired performance of employees (Collins and Clark, 2003).  The training and learning is the educational process which is aimed at developing the knowledge and skills of employees to improve their performance (Datta, Guthrie and Wright, 2005). The culture of Nestle has considered learning as an integral part of its culture and human resources at Nestle are encouraged to systematically enhance the level of their learning by offering them necessary assistance through learning programs. The training and learning opportunities of employees are being determined by the management and the training programs are executed by shared efforts of employees, line managers and human resource management departments (The Nestle, 2012). Among the primary learning sources, on the job training plays significant role which is well supplemented by coaching and guiding of employees (DeNisi and Pritchard, 2006). The employees of Nestle are engaged in sharing knowledge among organization. The company is relying on approach of lateral professional development, extension of responsibilities, and enrichment of job contents and widen accountability. The Nestle is also relying on corporate leadership programs that is helping the company to hire and retain highly talented employees. The Nestle also Rive-Reine program that is responsible for carrying out strategic learning of the workforce.

Performance Management and employee development: The Nestle is relying on high performance work culture and employees are offered clear understanding that how their work is having an impact on overall working of Nestle (Li, 2015). The responsibility of performance management is shared among employees and line managers with an aim of ensuring that highly challenging and clear goals are formulated and performance is effectively evaluated throughout the performance period (The Nestle, 2012). The high performance is rewarded effectively by the management while the low performers are encouraged to improve the level of their performance. Some of the significant performance tools that are being implied by the Nestle are; Performance Evaluation process (PE), Progress and Development Guide (PDG) and 3600 assessments (Cappelli and Neumark, 2001). The line managers are held responsible for encouraging employees to express career objectives and expectations with an aim of fostering their professional development. The Nestle also offers opportunity to its interested human resources to work on international assignments with the purpose of encouraging diversity in workforce (The Nestle, 2012). The promotions in nestle are carried out on the basis of sustainability of performance both in terms of behavior and results. In this manner, the Nestle believes on succession planning and it ensures that strong successor’s pipeline is ready to fulfil the future requirements. Finally, the human resource managers and line managers are partnered to develop the human resources of organization for long run competence of Nestle.  

5.Recommendations

5.1 Findings and Weaknesses in HRM of Nestle

The findings have suggested that Nestle has well integrated human resource strategy that is combining both internal and external factors for developing an effective human resource management system. The human resource management strategy of the Nestle relies on the notion that attraction and retention of highly skilled employees is inevitable for long term competitive advantage of the firm. The Nestle executes its human resource management strategy through line managers which are offered professional training by human resource managers and teams with an aim of creating exemplary working conditions.

Although the level of employee involvement in Nestle is significant, yet the employees are not fully empowered and they are being closely supervised by the line managers who are their immediate supervisors. The employees at Nestle are not offered full discretion of making decisions regarding their jobs. Moreover, despite of relying on flexible and flat organizational structure, the Nestle is not fostering creativity of employees to the extent which is requires by the contemporary organization. It is of no doubt that there exist a linkage between level of empowerment and employee creativity.

5.2 Suggestions to Improve HRM of Nestle

It is indicated by the current study that Nestle has well formulated human resources management procedures and significant focus has been maintained on attraction and retention of human resources. However, it is of significant importance to note that contemporary human resources are attracted towards organizations that offer them huge empowerment in their jobs (Aguinis and Kraiger, 2009). The modern human resources believe that increasing discretion to make decisions adds positively in their ability to develop and grow in their jobs. The increasing desire of growth and development fosters the employees to look for the organization that offer them opportunity of growth through employee empowerment (Ahmad and Schroeder, 2003). Given these view, it is important for the Nestle that they should maintain their focus on increasing empowerment opportunities for employees. The Nestle can offer higher level of flexibility to its employees in terms of their job responsibilities.  The employees should be given the choice of deciding about the ways of doing job that can offer greater benefits. Along with this, the Nestle needs to offer challenging opportunities to its employees by considering the boundaries of employees, in order to avoid pushing them beyond their comfort zone. Followed by this, the clear communication is also needed by the management with an aim of showing welcoming attitude towards input of employees (Allen, Shore and Griffeth, 2003). The safe failures are needed to be encouraged by the Nestle for enhancing level of newness without putting danger to company’s position. The sense of accountability needed to exist within organization for making the employees aware of consequences of failure.

Additionally, an important suggestion pertains to the increasing encouragement for employee creativity within Nestle. The appreciation of efforts of employees is highly important for fostering the input from employees and generation of new ideas (Boxall and Purcell, 2011). The employee creativity is increasingly important for contemporary human resources. The encouragement by the organization to offer new ideas can not only enhance the satisfaction of employees but it can also increase their commitment and level of their efforts for realization of organizational goals (Burke and Hutchins, 2007). The management of Nestle needs to appreciate the contribution of employees as giving value to employee’s efforts can increase their innovative capabilities. It can add significantly in skills inventory of the Nestle and inimitable resources can be enhanced that can offer competitive advantage in long run.

6.Conclusion

The human resource management practices are highly significant for contemporary organizations as it help in retention of talented employees and strengthen skill base of organization. The current report has provided that Nestle has integrated human resource management system which is well aligned with strategy, structure and culture of the company. The Nestle is engaged in acquisition of highly skilled employees and it is engaged in training and learning of employees in effective manner. Likewise, the importance is being offered to performance management and development of employees at Nestle. The Nestle has reflected lower reliance on employee empowerment and creativity of employees, for which the suggestions have been made in present research.

 

 

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