Strategic Hrm At Nestle Business Essay

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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 organizations
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 organizations 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 organizations
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.

INTRODUCTION
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 Lacte Henri Nestl Company set up in 1867 by Henri Nestl to
provide an infantfood product. Trademark of Nestls is birds in a nest, derived from Henri Nestls
personal coat of arms, evoke the values upon which he founded his Company. No. of Nestl'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
Beverages
Prepared dishes & cooking aids
Chocolates & confectioneries
NESTLE is one of the well known FMCG company. In the Every part of the world, the Nestl 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 Compacts). 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

Nestl 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. Nestl 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 Companys 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.

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, pragmatism, hard work, honesty and reliable.
- Match between candidates values & companys 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 Nestl Management and
Leadership Principles describe the management style and the corporate values of the Nestl 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 Nestl Group around the world.
Nestle people development review- this policy throws light on Nestls 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 employees 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 Nestl is continuous. Nestl 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
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. 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 Nestls 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).

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
illustrates that:
- 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. Nestles 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.
Nestl, over its long historical development from a small village operation to the worlds 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 companys
activities will continue to be challenged even more as Nestl 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 Nestl values, will assure its success.