Strategic Hrm At Nestle Business Essay
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.
Strategic management of human resources facilitates creation of competitive advantage for the organization over its rival by building unique human resource based competence. An organization’s recruitment, selection, training, performance management process and compensation practices can have a strong influence on employee competence. The workforce will be more capable if a firm can successfully identify, attract, and select the most competent applicants. Performance appraisal takes in account the past performance of the employees and focuses on their improvement for the future performance of the employees through counseling, coaching or training.
The human resource strategy of a business should reflect and support the corporate strategy. An effective human resource strategy includes the way in which the organization pans to develop its employees and provide them with suitable opportunities and better working conditions so that their optional contribution is ensured. This implies selecting the best available personnel, ensuring a ‘fit’ between the employee and the job and retaining, empowering and motivating employees to perform well in the direction of corporate objectives.
STATEMENT OF PURPOSE
Consumer packaged goods (CPG) Organization, alternatively called as FMCG industry mainly deals with the production, marketing and selling of consumer packaged goods. The FMCG or “Fast Moving Consumer Goods” are those goods which are generally consumed at a regular interval by the consumers. FMCG industry has some of the main activities like financing, selling, purchasing, marketing etc. The industry also contributes or also involved in general management supply chain, operations and production.
FMCG industry gives a variety of consumables and consequently the amount of money is very high which is circulated against FMCG products. Day by day the competition between the FMCG producers is increases which increasing the investment in FMCG industry is also increasing, specifically in India. Estimated to grow FMCG Sector in India is a very high rate by 2010.
PRIME FMCG PRODUCTS
Some general FMCG product categories include dairy products and food, drinks, coffee, tea, tobacco and cigarettes, glassware, paper products, pharmaceuticals, dry cells, electronics, prepacked food products, plastic goods, watches, greeting cards, soaps, printing and stationery, household products, detergents, photography, drinks etc.
In FMCG industry some of the features which made this organization as a strong distribution networks, are small operational cost, as a prospective one, presence of renowned FMCG companies. Population growth is also one of the major factors behind the success of this industry.
GOOD FOOD, GOOD LIFE
NESTLE is a multinational packaged food company founded and headquartered in Vevey, Switzerland. Page Brothers established the Anglo-Swiss Milk Company for milk products in Cham, Switzerland in 1866 merger in 1905 with the Farine Lactée Henri Nestlé Company set up in 1867 by Henri Nestlé to provide an infantfood product. Trademark of Nestlé’s is birds in a nest, derived from Henri Nestlé’s personal coat of arms, evoke the values upon which he founded his Company. No. of Nestlé's brands are globally renowned, which has made the company a global market leader in different product lines, including chocolate, confectionery, milk, pet food & bottled water.
FAMILY OF NESTLE
Family of NESTLE consists of products related to:
Milk & Nutrition
Prepared dishes & cooking aids
Chocolates & confectioneries
NESTLE is one of the well known FMCG company. In the Every part of the world, the Nestlé name represents a commitment or promise to the customer or consumer that the product is of high standard and safe. NESTLE support the UNGC (United Nations Global Compact’s). UNGC guiding principles on human rights, their aim and labour to offer an example of better labour practices and human rights’ all over his business activities. Our people played a major role for our success. We give the equal ant respect and dignity to each other and we expect from the every employee to share and contribute their opinions and views to improve Company personal development and results and also promote a sense of personal responsibility. We recruit motivated and competent people, who know and respect our values, provide equal opportunities for their advancement, development, protect their privacy and do not tolerate any form of discrimination or harassment.
Human resources of an organization can provide it with a reasonable advantage over its competitors in the fast changing environment. This calls for the strategic management of human resources for the accomplishment of corporate objectives. STRATEGIC HUMAN RESOURCE MANAGEMENT is called as the linking of strategic goals with human resources. No. of objectives in order to enhance or develops an organizational culture, improve organization performance and that fosters flexibility, innovation, and sustainable competitive advantage is called.
KEY FACTORS OF SHRM PROCESS
- The outcomes of the SHRM process – which should be evaluated both
qualitatively as well as quantitatively.
- The business strategy – it alter and is altered by the SHRM process and which provide the business a good thought of direction.
- The external environment – which is flexible and dynamic in the present global business scenario.
- The internal environment – The general culture and the organizational context which is prevalent in the organization.
VISUAL DEPICTION OF THE SHRM PROCESS
STAGES OF STRATEGIC HRM PLANNING PROCESS
Strategic human resource management is the process by which managers design the mechanisms of an HRM system to be reliable with each other, with the organization's plans and goals and with other essentials of organizational architecture. The main role of strategic HRM is the improvement of an HRM system that increases an organization's awareness, worth, invention, and productivity to customers. Strategic human resource planning (SHRP) involves four distinct stages:
- Situational analysis/environmental scanning.
- Estimating demand for human resources.
- Analyzing the supply of human resources.
- Developing action plans to close any gap between human resource demand and supply.
The first stage of HR planning is the point at which strategic planning and HRM interact. HR planners anticipate sources of threats and identify and should drive the organization's strategic planning and opportunities with the help of Environmental scanning. The strategic ideas or plan implement to environmental circumstances, and HR planning is the mechanisms that an organization can use to accomplish this adaptation process.
The second stage, forecasting demand, requires estimating not only how many but also what kinds of employees will be needed by the organization. The demand for employees should be closely tied to the strategic direction of the organization. Forecasting yields advance estimates of the organization's staffing requirements. This is a difficult task, especially for organizations in rapidly changing environments. Four forecasting techniques include expert estimates, trend projections, statistical modeling, and unit-demand forecasting. Estimate by no of expert, a group of experienced or expert provides the organization with demand estimates based on subjective assessments of available economic, intuition, prior experience, and labor force indicators. Trend projection involves forecasting which is based on a previous relationship between the employment and a factor related to employment (e.g. sales levels). Statistical modeling techniques (e.g. regression analysis or Markov analysis) are more quantitative forecasting and sophisticated techniques. Unit-demand forecasting requires the unit managers (e.g. department head, project team leader) to analyze the present and future job-by-job, people-by-people needs.
The third phase involves studying the number and types of current employees in terms of the training and skills necessary for the future and also the supply of capable workers in the outside labor market. The skills inventory is a major tool used to assess the internal supply of employees. A skills inventory is a list of names, skills and characteristics of the people currently working for the organization. The list of skills coded into the skills inventory should be tailored to the needs for the organization, but might include such factors as level and field of education, knowledge of a foreign language, professional qualification or certification, or licenses held. The organized inventory provides a way to acquire these data and makes them available as needed in an efficient manner. Also important is the need to maintain the inventory so that information is kept current. With regard to the external labor market, the entire country (or world) may be the relevant labor market for highly skilled jobs. For unskilled jobs the relevant labor market is usually the local community.
After the HR planning system has analyzed both the supply of and the demand for future workers, the two forecasts are compared to determine what, if any, actions are necessary. If a discrepancy exists between the two estimates, the organization needs to choose an appropriate course of action designed to eliminate the gap. The organization has a number of options available when the demand for workers is greater than the supply of workers. The organization might elect to use overtime work with current employees, increase training and promotions of current employees, or recruit new employees. In tight labor markets, the availability of labor is limited (i.e. demand exceeds supply), driving up the price of those employees who are hired, and limiting the extent to which the organization can be selective in its hiring procedures. In a loose labor market, qualified employees are abundant. When the supply of workers exceeds demand, alternative solutions include attrition, early retirements, demotions, layoffs, and terminations.
STRATEGIC HRM AT NESTLE
Nestlé aims to increase the business, list of customers, profits and sales but, at the same time, to improve the Standard of living everywhere it is active and the quality of life for everyone. Nestlé is also convinced that nestle employees is the strength of the Company and it is impossible to achieved without their energy and their commitment, which makes people its most important asset. Involvement of people and also showing their interest at all levels starts with the basic and appropriate information on the Company’s activities and also on the specific aspects of their work. Through shared their views, ideas and communication and focused vision, everyone is invited to share and contribute there opinions and views to improvements enhancing Company personal development and results.
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, pragmatism, 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.
People management policies, basic values & principles elaborated in-
- Nestle management & leadership principles- The Nestlé Management and
Leadership Principles describe the management style and the corporate values of the Nestlé Group, specifically in the area of interpersonal relations.
- Nestle human resources policy- This policy encompasses those guidelines which constitute a sound basis for efficient and effective HR Management in the Nestlé Group around the world.
Nestle people development review- this policy throws light on Nestlé’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.
- 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 Nestlé is continuous. Nestlé 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
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
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. We can also say it as a salary structure. 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.
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.
3.3.7 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
- Conveyance Reimbursements
- Residential Accommodation
- Monthly health check-ups & free consultation for self & family etc.
3.3.8 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 Nestlé’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
- 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
3.3.9 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.
3.310 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
- Nestle is dedicated to safe & healthy work environment.
- Regular safety assessments & audits take place by internal & external bodies.
CONCLUSIONS AND RECOMMENDATIONS
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.
Need to develop consultation/awareness program to assist the employees for their better understanding of the policies.
More incentives should be offered to the employees who provide services to the organization for more than two years continuously.
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. 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 Nestlé values, will assure its success.
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