Human Resource Management in the FMCG Industry
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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. Company output increase if the management can hire more experience well qualified candidate. 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 increasing consequently the investment in FMCG industry is increasing. FMCG Sector in India is estimated to grow at a very high rate by 2012.
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 very popular brand in all over the world. It basically supplies packaged food. It was established and has headquartered in Vevey, Switzerland. Nestle was established in 1905 when the two companies was merged. The first company was established in 1866 by Page Brothers to produce milk products and their company name was Anglo-Swiss Milk Company in Cham, Switzerland and the second one was Farine Lactée Henri Nestlé Company to supplies an infant food product set up in 1867 by Henri Nestlé. Nestlé's have a trademark (birds in a nest), derived from Henri Nestlé's personal coat of arms, evoke the values upon which he founded his Company. Nestlé's have their no. of brands which are well-known worldwide; list of all the products has made the company a international market master. Some of their famous products are coffee, chocolate, ice cream, 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 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. Nestle people played a major role for his success. Nestle people give the equal respect and dignity to each other and 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. Nestle 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 to develop an organizational culture, to improve organization performance and that fosters flexibility, innovation, and sustainable competitive advantage is called. HRM practices of an organization give its an edge over its competitors, thereby leading to strategic human resource management.
KEY FACTORS OF SHRM PROCESS
- The outcomes of the Strategic Human Resource Management (SHRM) process - which should be evaluated both qualitatively as well as quantitatively.
- The business strategy - it alters 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
HUMAN RESOURCE MANAGEMENT WITH BUSINESS OUTCOME
STRONG AND FOCUSED VISION
CHALLENGES AND ADVENTURES
SHARING OF INFORMATION
SHAPING THE WORKING CULTURE
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.
Currently human resource is the term which is in demand of every organization. By using the HR policies companies are able to describe the combination of organizational management personnel functions with achievement, Knowledge, relation between employees, employees experience and how to utilize resource at different levels.
By using the HR policies an organization can be transparent with their employees on
Employee expectation from the company
Company expectation from their employees
What are the company policies and how the polices apply.
What are the acceptable behavior
What is the behavior of the workforce that can't be accepted?
The policies are basically used to help an organization to explain that it reach the requirements for training, variety, principles. If an Organization want to fire any employee in this case it may be necessary for the organization to show the reason of the complaint with the employee contract and also all the others legal documents.
HR management policies are important for those companies that do not want and personnel issues in future. Complete HR solution which covers human resource policy solutions, evaluation services, professional human resource advice and job description writing given to the customers.
Common Sense would seem to dictate the necessity of having written policies and procedures covering all aspects of the employee/organization relationship. Yet, there are organizations with few or no written policies. In fact, there are organizations that have never considered developing policies and procedures-written or otherwise. There are organizations with written policies and procedures that read well but have no relationship to the needs of the organization/company or employees. There are organizations with elaborate sets of policies and procedures that no one seems to read, let alone follow, and there are organizations that appear to use their policies and procedures primarily as rules for identifying and punishing infractions.
In actuality, HR policies-
Provide clear communication between organization/company and its employees regarding conditions of employment.
Form a basis for treating all employees fairly and equally.
Are a set of guidelines for supervisors and managers.
Create a basis for developing employee handbooks.
Establish a basis for regularly reviewing possible changes affecting employees.
To fulfill all these purposes and objectives, Policies should:
Be clear and specific, but provide adequate flexibility to meet changing conditions.
Comply with all appropriate federal and state laws and regulations.
STEPS FOR SHRM
Recruitment & Selection
Training & Development
Rewards and Incentives
JOB DESIGN: Job design refers to the way the tasks are combines to form a complete job. Job design is a process which joins the intrinsic and extrinsic relationship, tasks, and the candidate experiences and educations required like knowledge, qualification, skill and capabilities for every type of task that meet the requirements of organization and employees.
The job design under NESTLE is a very detailed and based on strategic process.
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.
- Nestle HR policy- Nestle group used this policy to covers those rules which create a sound basis for well-organized and active HR Management around the world.
2. RECRUITMENT & SELECTION: Recruitment is the process of developing and maintaining adequate manpower resources. Recruitment is basically a process to select the interested candidates and divide the candidates in different- pool of prospective employees, so that the recruiters are able to select the right candidate 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.
Selection-Combination of written test, GD & interview (Interviews for top Management posts).
3. TRAINING & DEVELOPMENT: 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 upgrades 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.
Nestle people development review- this policy throws light on Nestlé's culture and core values, different training programs and life of employees after work.
- Nestle leadership and management principles- it describe the management style and the corporate values of the Nestlé Group, specifically in the area of interpersonal relations.
4. PAY STRUCTURE: Pay Structure is basically used to set the salary structure of the employees according to the level of job, or group of jobs and also consider basic salary, overtime and bonus. We can also call pay structure as salary structure.
- 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.
5. BENEFITS: Nestle offers no. of benefits to their employees to fulfill their expectation like Health insurance for his and his family members, PF, reimbursements (Car, Phone) etc. Take all the necessary steps for the protection of the employees during work 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.
6. 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.
7. 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 to encourage the employees to generate new ideas in improving the workplace productivity 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.
A) 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 Multinational Corporation.
- Nestle has a open culture & upward communication especially in case of grievance redressal.
- 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).
B) SAFETY & HEALTH: Risk assessment must be required in an organization to identify any type of miss happening or danger in the workplace and should be able to identify or known the steps to be taken to handle the condition.
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.
- 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.
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 continuous services to the organization.
Nestlé, maintain their essential principles and fundamental value from their past historical experience from village operation to the international leading food company which is important for long-term achievement and success. Nestle used HR policies from the last many years and as the company size is growing, increase the difficulty to a dimension which make the demands of research and development of its organization. Nestle motivation is depend upon the willingness to understand and to put query about what & why it is doing it, along with respect to Nestlé values, will guarantee its victory.
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