Executive Summary
Nestlé is a large international company, leader in food and drinks retail sector. The organization is adopting aggressive growth strategy, which involves product line expansion in the Middle East and larger brand presence. The goals of the strategy will be achieved through organic growth as well as M&A. That said HRM strategy is central to the company.
Nestlé employs Total Reward Management (TRM) system, Balance Scorecard and incentive-based approach to employee compensation. Importantly, Nestlé believes that retention and motivation of employees are grounded on the personal bonds between the company´s culture and employee. With that, Leadership and Management development places an important role in the overall HRM strategy. Candidate recruitment and selection process is based on a multi-stage approach, involving MBTI testing, interview and case study methods of evaluation of the candidates. Similarly, job analysis process involves mix techniques, ensuring a clear understanding of professional and personal attributes, required to hire a successful individual.
While the current approach and situation in the company reflect a healthy balance between regional ME strategy and HRM policies, the company could benefit from developing more comprehensive international rotation program on junior management level, implementation of the Virtual Learning Space (VLS) and increasing the feedback session frequency in Performance Appraisal Process.
Introduction
Nestlé is one of the most remarkable companies in the world. The organization has gone through numerous transformations and strategic changes to ensure that it survives and excels in the contemporary business environment. The analysis of the organizational strategy and Human Resource Management (HRM) policies allows understanding how Human capital can contribute towards building the strong and resilient company with the focus on innovation. This report will examine the strategy and HRM functions of the company and share the recommendations which the author finds adequate for the potential improvement in the future (Sims, 2007).
Background and History
Nestlé is one of the most remarkable companies in the world. The company is a Swiss multinational organization operating in food and beverage retail sector since 1866. The company is one of the largest producers of food in fast food, baby food, bottled water, breakfast cereal, coffee and tea, among other renown foods and drinks. Nestlé Middle East takes it roots in the first back 80 years ago, while the consolidated operation was established in Dubai only in 1997, covering under ME umbrella 220 men population of the region (Nestlé, 2015). Today, the company is represented by 13 brands, including Nesquick children foods, Purina pet foods, dairy products, Coffee-Mate coffee among other brands (Nestlé, 2015). The Nestlé Middle East is an employer for over 11,000 individuals in the region and is the leading nutrition and health and wellness organization in the ME region, operating 18 factories.
Business Strategy
The organization pursues the aggressive mixed business-level strategy, which involves the expansion of the product line in different countries, utilizing “global thinking and local acting” approach and inorganic growth through Mergers and Acquisitions (M&A), such as Israeli food making Osem Company (Swanson and Elwood, 2009; Halligan, 2016). Importantly, the recent economic crisis and oil price slump have had the significant impact on the company in the region. Nestlé ME declared a USD $2.4 in revenue in 2015, this represents 8.9% decline relative to the same period 2014 (Halligan, 2016). Considering the organizational ambition and the challenges, which the company must face in view of increasing local and international competition, the strategic direction, chosen by the management and involving mixed growth strategy in the region, is focused on the development of R&D capabilities and scale and scope economies through product variety and geographical presence.
HRM Strategy
Nestlé HRM strategy is an integral part and, at the same time, the enabler of the generic strategy goals. The company is concerned with developing the “unmatched” product and geographic presence as well as R&D capabilities which provide responsiveness and agility on the market at the time of crisis and relative peace (Nestlé, 2015). People management and development of leadership capabilities, which can support the growth through effective change and diversity management, therefore, are central to the organization (Wilson, 2006). Nestlé ME strategy is centered specifically around R&D and Corporate Social Responsibility (CSR), where social justice and employment relationships build on brand equity and reputation among primary and secondary stakeholders (Nestlé, 2014).
HRM Functions
Job Analysis Process
The HRM department at Nestlé places a lot of emphasis on job description and analysis. The company adopts the transparent policy with regards to the type of profiles and professional capabilities, which are required to fulfill the specific positions. The job analysis at Nestlé ME involves interview and observations, which allows identifying the gap between the desired and actual job performance and helps to complete the job description and candidate profiles, which be the best fit for the company. Moreover, it is possible to argue that the company employs Competency Model for job analysis, which focuses on individuals as the tool for high performance (Swanson and Elwood, 2009).
Recruitment Process
Recruitment process at Nestlé involves several steps. The analysis of existing job postings and evaluation of the HR strategy in the company allows highlighting the following framework (Hit, Ireland and Huskisson, 2007):
Recruitment planning;
Strategy Development for recruitment channels and approaches;
Searching of potential candidates;
Screening of the candidates;
Evaluation and control mechanism for the recruitment function.
Selection and Testing Process
The selection process in the company is grounded on the personal and professional scanning and testing. Nestlé works with Myers-Briggs Types (MBTI) for identification of personalities for all the pre-selected candidates (Honaker, 2003). Once the candidates with the most suitable profiles are chosen, the HRM department uses the mixed technique, which involves structured interview process and case studies, imitating real life situations.
Candidate Interview Process
An interview process is a structural approach to the analysis of specific skills and capabilities of the candidates, which were found and further pre-selected through MBTI test and HRM interviews. The interview process involves several stages. First, the HRM department conducts the phone interview for the candidates, which were attracted. The second stage in the interview process is the persona interview with the HRM department, followed by the MBTI test. The second interview is conducted by the hiring management to examine the candidate in more depth and understand the fit between the company and the candidate. Finally, the third interview is organized by the hiring manager along with the head of the department or member of the Board, depending on the level of the position, which Nestlé is seeking to fulfill. At this stage the number of candidates is limited to two or maximum three candidates and the choice is based on the final elements and personal preferences of the management between the fully suitable candidates.
Training and Development
Nestlé is focused on the development of leadership and management potential from within the core of the company. Nestlé aims at extensive and 360-degree training of the employees, including Nutrition Quotient (NQ), environmental awareness, professional job specific skills and other elements, which enable attractive, motivating and safe work environment (Nestlé, 2012). This policy is applied on the international level and the Middle East organization is not an exception.
Performance Appraisal Process
The process of performance appraisal includes several stages:
Discussion setting of the personal and professional goals between the manager and employee;
Formalization of the Balance Scorecard and performance appraisal goals through the system;
Mid-year review of the employee´s performance and mutual feedback;
End-year review of the performance appraisal and mutual feedback;
Formalization of conclusions in the Performance Appraisal system and approval by the mentoring manager.
The above process is done with the support of the Balanced scorecard, where an employee has measurable and specific targets for each of the objectives, discussed and agreed with the manager. Such approach allows personalized and accurate approach to the management of individual performance, which also includes the specificity of the ME culture and national dimensions (Nestlé, 2012; Nestlé, 2013).
Compensation and Benefits
Performance appraisal management is based on the performance level of individuals for a variety of targets and goals. These goals are derived from higher level objectives of the company and department as well as on the objectives, relevant for a specific individual. Importantly, the company´s HR is concerned with personalizing the performance management system to the global and local reality, which makes individuals strive for excelling in personal and professional goals and aim at high performance (Mercer, 2013). That said the company applies Total Reward Management (TRM) approach as the critical element of its competitive advantage.
Personal Reflection
Nestlé is a solid and diversity focus company, which can offer several opportunities to individual o different levels of organizational hierarchy and their stage of career development. As an international company with strong Corporate Social Responsibility (CSR) expertise and focus on people as the central asset for long-term competitive advantage, Nestlé can be considered an extremely attractive place to work. As a candidate, I would appreciate an opportunity to join this organization and learn together with it. Importantly, the respect to cultural differences and the “sympathy approach” to each employee also contribute towards my choice of the employer. I can argue that Nestlé values and strategic goals are aligned with my personal life and career objectives.
Recommendations
It is identified that Nestlé has a strong and solid reputation as the employer. TRM and visionary approach to building innovation culture contribute towards the attractiveness of the company as a place to work. Moreover, the examination of the current situation allows noting that the organization adopts the multi-stage approach to the recruitment and selection process, which ensures more accurate choice of the candidates, selection process, and, consequently, retention levels in the company. While the above is central to effective HRM strategy, there are several small improvements, which should be considered by the company to improve the current indicators. First, it is recommended to implement international rotation on junior level Management Development program. This will ensure that employees become more internationally-minded and diversity aware in the beginning of their career. Moreover, it will bring higher creativity and innovation potential (Hitt, Ireland and Hoskisson, 2007). Secondly, it is recommended that performance management approach involves trimester feedback sessions with direct management to encourage open dialogue and emphasize the focus of the TRM on reward rather than punishment of poor performance. Finally, it is recommended that the company invests in Virtual Learning Space (VLS) to encourage self-learning and development opportunities (Sims, 2007)
Conclusion
Nestlé is an exemplary company, focused on the development of long-term strategy centered around people and leadership capabilities. Importantly, the company recognizes the potential, contribution to the knowledge and expertise to the building its rare and inimitable capabilities in the highly competitive market environment. Current HRM policies and practices reflect the organizational strategic needs and will support the growth of the company in the future. Nestlé´s long-term strategy demonstrates that the company is aiming to grow through organic methods, by product expansion as well as through M&A strategy I Middle East. With that one of the potential improvements comes from the development of diversity awareness and international mobility of its employees on the “leading self” and “leading others” levels. This can be achieved through the facilitation of international rotation, VLS implementation and encouragement of more frequent feedback sessions as part of the performance appraisal.
References
Sims, R.R. (2007). Human Resource Management. Contemporary Issues, Challenges, and Opportunities. Charlotte: Information Age Publishing.
Swanson R.A. and Elwood F.H. (2009). Foundation of Human Resource Development. 2nd Edition. San Francisco: Barret-Koehler.
Halligan, N. (2016). Slimming down: Nestlé Middle East CEO Yves Manghardt. Arabian Business [Online]. Retrieved 6 January 2017, from http://www.arabianbusiness.com/slimming-down-nestl-middle-east-ceo-yves-manghardt-645052.html
Wilson, J P. (2006). Human Resource Development: Learning & Training for Individuals & Organizations. London: Kogan Page.
Nestlé (2012). The Nestlé Human Resource Policy. Nestlé Corporate Website. Retrieved 5 January 2017, from http://www.nestle.com/asset-library/documents/jobs/the_nestle_hr_policy_pdf_2012.pdf
Nestlé (2015). Nestlé Middle East. About Us. Nestlé ME Corporate Website. Retrieved 5 January 2017, from http://www.nestle-me.com/en
Nestlé (2014). Nestlé in Society. Creating Shared Value and Meeting Our Commitments in 2014 Middle East. Nestlé ME Corporate Website. Retrieved 5 January 2017, from http://www.nestle-me.com/info/documents/nestle-csv%20report2014-eng.pdf
Hitt, M., Ireland, D. and Hoskisson, R. (2007). Strategic Management: Concepts and Cases. (7th Edn). London: Thomson Publishing.
Honaker, S. (2003). True Colors. New Implications from convergent validity research with the Myers-Briggs Type Indicator. National Career Development Conference, Westminster, Colorado June 27, 2003
Mercer (2013). Talent Reward at Nestlé. More than Just a Policy. Mercer Corporate Website. Retrieved 7 January 2017, from https://www.mercer.com.hk/content/dam/mercer/attachments/global/Talent/Engage-TotalRewardsatNestle.pdf
