1.1 An Overview Of Nestle
Nestlé is a multinational parceled food company established and headquartered in Vevey, Switzerland. Nestle is the result of a 1905 merger between the 1867 Henri Nestlé Corporation set up by Henri Nestlé for the production of infant food merchandise and the 1866 Anglo-Swiss Milk Company, which produced milk products, and was set up by the Page Brothers in Switzerland. (Nestle, 2011)
About this time, Switzerland was undergoing harsh times, as it was marred with high infant mortality rates. As such, Nestle literally helped save many infant lives. Nestle introduced the infant milk formula, which happened concomitantly with the advent of its symbol, the bird’s nest. This symbol depicted motherhood, family, tradition, safety, love and nourishment. Accordingly, this became Nestle’s corporate identity and culture. (Business Standard, 2011) This culture is extended to all the branches of the Nestle Company worldwide. Nestle’s existence in multiple countries throughout the world offers awareness of the prevalence of cross-cultures and the diversity of cultures in a given business. A specific company’s adoption and practice of a specific culture offers vital changes and variations in its approach with regard to production, market share, sales and other crucial operations. As such, culture largely affects communication and performance in the organization as a whole, primarily in its operation and maintenance, especially in an international company like Nestle.
2.2 Brands Under Nestle
2. Milk & Nutrition
3. Chocolates & confectioneries
4. Prepared dishes & cooking aids
2.3 Why Nestle?
Nestle is an apposite company when studying the open culture and ethics of a company. Nestle strongly believes in adapting to the ever-changing world but still upholds the fundamental foundations it instituted at its inception. Hebert (2009) asserts that Nestle is reflective of fairness, a general receptive attitude for people, and honesty.
Consequently, the concern of interest is how Nestle manages the dialectic between having well-ingrained core values, and concomitantly according respect to national cultures.
2.4 Purpose of the paper
This paper aims at highlighting the role played by culture and its impact on the Strategic Human Resource Management Practices adopted by a MNC, particularly the Nestle’ Corporation. Additionally, it focuses on its two regional branches, specifically, Nestle’ India and Nestle’ S.A. Moreover, it seeks to suffice readers with understanding and familiarity of the existence of considerable differences of practices in business, between the two branches of Nestle, which may utterly affect the production volume and quality of the products, its approach to customers, as well as, the growth of internal culture and communication among organizational members.
As such, the common and concise information concerning the selected multinational company (Nestle) and its two chosen branches is offered in the paper as a background to the reader. The setbacks and the prevailing situation are discussed in the findings section, with comparison and disparity of Nestle S.A and Nestle India.
The conclusion of this paper highlights and explicates the impacts of cross -culture to the entire corporation, whereas the recommendation of the paper underscores the distinguished suggestion s and recommendations of the author as regards the situation. Such propositions would be affirmed using external sources, such as journals, books and articles.
Categorically, this paper recommends on the necessity of proposing and implementing diverse activities for individual, group, team and cultural building in both branches for effectual cultural interaction and enhanced interactions, in order to prevail over cultural issues within the company, in order to center on the consumer’s needs and wants.
Nestle S.A-Nestle Switzerland
S.H.R.M-Strategic Human Resource Management
3.0 Literature Survey
Presently, the diverse changes occurring in the society are the cause for many organizations registering momentous changes in their internal environments. Increase in globalization is responsible for many corporations and organizations restructuring their workforce, in order to incorporate an assortment of diverse cultures and languages in a particular branch of the company, especially in multinational corporations, for instance Nestlé.
This case study is founded on a series of consultations with outstanding Nestle managers, who are occupied in fortifying Nestlé’s principal values. The vice president to the public affairs of Nestlé asserts that though 98% of the company’s operations are outside Switzerland, the company still started off in Switzerland. As the company’s corporate headquarters are in Switzerland, it is given that, a few Swiss cultural ideals are an essential part of Nestlé’s elementary values. Numerous Swiss values are entrenched in the leadership standards and General Management of Nestlé, as well as, the corporate business principles of Nestle, which reflect its central corporate values and the realistic, result-oriented nature of its principles.
3.1 Nestlé corporate business principles
The Nestlé Company is committed to the business principles herewith stated in all countries of operation, vis-à-vis culture, local legislation and religious practices. The principles are as stated below:
Nestlé’s business intent is to produce and market its products in a way that ensures creation of and sustained value for the long term, for the sake of its customers, employees, shareholders, business partners, and the great number of national economies within Nestlé’s operations.
The Nestlé Company favors durable business developments over short-term profits. However, Nestle identifies with the need to make profit each year, so as to finance its investments and to sustain the support of the fiscal markets.
Nestlé deems, as a general rule, legislation is vastly valuable in safeguarding ethical conduct. However, in particular areas, supplementary assistance in the form of charitable business principles to the management and the employees is favorable, so as to ascertain that the utmost standards are met in the entire organization.
Nestlé is aware that the success of an organization is reflective of professionalism, the conduct and moral values of its administration and employees. As such, enrollment of the right people and constant training and development are imperative.
Nestlé is acquainted with the fact that consumers have a justifiable concern in the corporation behind the Nestle brands, and the mode of operation of the Nestle Company.
Though fundamental values can be transmitted across a multicultural corporation in manifold ways, Nestle implements particular approaches that are typical of it. Nestle has used these strategies regularly for a substantial duration of time, notwithstanding the fact that its principles have been penned only recently. One critical approach Nestle frequently adopts is the cautious and thorough selection of staff. Prospective employees are evaluated as to whether they have the needed aspects that would enable them to perfectly fit in Nestlé’s way of life. They are also assessed on their ability to eventually integrate into Nestlé’s culture entirely
This selection procedure has been quite effectual, evident in the actuality of most of its employees pursuing a lifetime career with the company. Some of the employees at Nestle work for the company for over 30 years, which means that they totally imbibe and adopt the company’s core values in their operations.
To boot, fresh recruits get broad coaching and training to ensure they understand the core values of the company. Essentially, the documents containing the Management and Leadership Doctrines, as well as, the Corporate Business Principles of the Nestle Company contain personal messages from the Chief Executive Officer of Nestle. The CEO and the superior managers lucidly state that, the entire workforce subscribe to and execute the core values of the company. To encourage the execution of this directive, the high-ranking officials adopt and live by the core values, as well.
Additionally, the Nestle Company uses its international management cadre to spread its core values. Affiliates of this cadre set out to diverse Nestle Branches in different countries functioning as managers, in an effort to ascertain that Nestlé’s core values are institutionalized in the entire Nestle locations. In their capacities as managers, they are predisposed to exerting due influence in all these branches. This is accentuated by virtue of all the managers at Nestle sharing similar core and cultural values.
At the preliminary stages of their vocations, Nestle employees from the entire world attend month-long residential training programs in Vevey, Switzerland, which emphasize on the necessity of the employees adopting Nestlé’s core and cultural values, and to realize that irrespective of their origins and backgrounds, they collectively share all the core values. (Nestle, 2011)
Although these core values are the rock upon which the entire Nestle Company is rooted on, the company is also receptive to local cultures. (Igor, 2004) The CEO of Nestle, Brabeck, asseverates that since the days of its inception, the Company learned to accord respect to the political, social and cultural customs of all the countries it deals with. According to Brabeck, the Company aims at being a decidedly decentralized populace and product oriented Company, and not a systems oriented company.
4.0 DATA ANALYSIS AND FINDINGS
4.1 Methodology Adopted
1. Primary Data, amassed by way of an Interview program with Ms. Bhawna Sikka (Food Services and Vending Manager, New Delhi)
2. Secondary data collected by way of Nestlé’s company’s website and supplementary sources.
Nestle India is one of the most prominent branches of Nestle in Asia. The parent company mounted its operations in 1912 in India as a trading company. Initially, it began as a manufacturing company at the Moga factory in 1961. The production of dairy products commenced with the production of Milkmaid. Consequently, its assimilation in the manufacturing operations in India became established in 1978. Presently, Nestle India manages six countries located all over India, specifically at Ponda, Nanjangud, Samalkha, Choladi, Bicholim, and Moga. (Nestle India, 2011) It is engaged in the production of cereals, confectionaries, milk and chocolate products. It employs over 3100 employees, and is deemed as a most respected company in the prime Indian wealth creators.
The other branch of the Nestle Company on focus is the Nestle S.A Company, aptly herewith aforementioned.
Reports indicate that Nestle India has shown strict adherence to the business objectives of the parent company, which is, manufacturing and marketing products that uphold and create worth for the customers, employees, business partners, stockholders and India’s economy for a considerable amount of time.
A propos this, Nestle India is aware that its success reflects professionalism, the conduct and moral values of the whole management and staff of the company. It aims to ensure that the operations and processes of the company are characterized with impeccable and accountable ethical standards. Additionally, Nestle India’s distinctive characteristic is discernible in its management and leadership principles. Based on its business principles, it is palpable that its business practices are exemplified by typical Asian practices, traditions and beliefs. Being naturally Asian, Indian workers at Nestle work collectively, evident in other Asian Nations, which increases their interactions with each other and embrace group participation.
Conversely, being Western, the business culture in the division of Nestle’ S.A may be distinguished from the culture of Nestle’ India. This is due to the open-minded, independent and individualistic nature of the employees at Nestle S.A.
Due to their individualistic and independent natures, employees at Nestle S.A need minimal interaction from colleagues, unlike the employees at Nestle India. The employees at Nestle S.A are goal-oriented and performance-driven. As such, they do not embrace chatting as a way of interaction during working hours. The overwhelming success of Nestle S.A accentuates the need for seriousness in the working environment.
To boot, other distinguishing characteristics between the two branches are the distinctions in their religions, languages, and cultural beliefs, social, political and economic status. In India, the chief language is Hindi, while that of Switzerland is English. Hindu is India’s main religion, while Christianity is Switzerland’s chief religion. Regarding cultural beliefs, Indian values, practices and morals are deeply entrenched in their religion.
Similarly, the Swiss people’s practices and cultural beliefs are rooted in Christian beliefs. With regard to political, economic and social status, India is deemed as a developing nation, with regard to its population and lifestyle, while the Swiss country is considered highly developed in the world. Consequently, there is a high likelihood that incidences cultural ethnocentrism, discrimination, misunderstanding and cross-cultural communication are in existence.
This means that if a Swiss national works at Nestle India, and vice versa, it would be a safe presumption that problems may be encountered, owing to the disparities of culture, language, and approach to issues. As such, it can be supposed that changes in cross-cultures are liable to affect the business practices of an organization, notwithstanding the influence and direction of the parent company. This is so because each Nestle Company adopts a specific approach when dealing with its customers, based on the tastes, preferences, and needs of its customers.
Consequently, national culture is a highly sensitive issue for any multinational company, as it plays a chief role in determining success or failure in the foreign country. It is a correct fact, that, culture is influencing the design and execution the two Nestle Companies adopt in implementing their strategic HR policies. Nina (2003) states that to ascertain success in the various cross-cultural environments, Nestle Company has adopted the approach of implementing strategic human resource policies.
4.3 What Is Strategic HRM?
Strategic Human Resource Management refers to the process of connecting human resources with strategic goals and purposes, with a view to improving business performance and developing a culture in the organization that promotes novelty, flexibility and a competitive advantage that is easily sustainable.
With regard to Strategic Human Resource Management, the function of the HR is a crucially strategic partner when formulating and implementing the strategies of the company through HR activities. (People Management, 2008)
Essentially, Nestle, in its capacity as a human company has all the aforementioned attributes, which are presently crucial for all managers. However, owing to the changes in globalization, business patterns, the rapidly changing economy and the expansive Nestle Business, the company is changing certain aspects in the role of the HR.
The Nestle HR managers, along with professionalism, practical know-how and outcome must possess the qualities below:
They must be able to encourage and develop people by addressing the aspects that permit others to advance in their work and nurture their capabilities.
Additionally, they should encourage open-mindedness and high interest among their employees in other cultures and lifestyles, as well, with a dedication to progressive learning and improving, as well as, sharing ideas and knowledge freely, especially among colleagues who share different cultures. (Kaminsky, 2011)
Moreover, they should offer global experience and awareness of other cultures, which will train the workers to handle cross-cultural challenges in the international market.
As a result, Nestle has invested in crucial HR practices in order to overcome the challenges posed by cross-cultural differences. The HR practices are highlighted below:
4.3.1 HR practices at Nestle:
-The process at Nestlé is evidently defined. It seeks people with traits like realism, dynamism, pragmatism, trustworthiness, productivity, and honesty.
-Candidates ethics must match with the company’s culture.
-For management levels, recruitment is done at the head office. The employees existing in the company are awarded promotions to higher posts as the requirements dictate. Lateral requirements are not present. Human resource consultancies and campus placements are additional sources of recruitment.
– Only the HR staff holds the decision to hire.
– The Nestlé Management and Leadership Principles elaborate on people management policies, the management style, basic values and standards, as well as, the corporate values of the Nestle Company, particularly with regard to interpersonal relations.
– Nestle has a HR policy that contains the principles which comprise a reasonable foundation for an effectual HR management in the Nestle Company globally.
– The Nestle Company upholds a people development review policy, which enlightens on the culture, core values, training curriculums and lifestyles of employees after work.
Training at the Nestle Company is continuous at all levels, and it ensures professionalism in the entire staff. Each country with a Nestle subsidiary has its training programs, where it provides apprentice programs, literacy training, and local training programs.
-Nestle staff from the entire world gather at Rive-Reine, in Switzerland, which is their International Training and Conference Centre. They engage in training courses and seminars, where they exchange ideas and information.
220.127.116.11 Performance Management
-It entails a yearly, formal evaluation by Line and HR Managers, usually with feedback.
-Subordinate staff can question an unjust assessment.
-The HR department enlists Specific Key Performance Indicators, for instance, achievement within the Nestle Company, following its management and leadership principles. (TenPearls, 2011)
-The Nestlé Company has a promotion standard structure, with a consideration of individual performance.
18.104.22.168 Job Design
-Selection at the Nestle Company entails a blend of GD, written tests, and interviews for the superior management posts.
-Nestle incorporates the practices of Job Enlargement and Job Enrichment to encourage employees and distract monotony within the workforce. An instance of job enlargement is when a correspondent works in the brand management and sales departments.
22.214.171.124 Pay Structure
-Nestle endeavors to provide just remuneration.
-The changeable component of the wage is reasonably big, in order to compensate individual performance.
– In the higher administrative level, the variable part of the salary is tied to personal and group target accomplishments.
126.96.36.199 Rewards & Incentives
– Nestle offers Long-service Awards that salute staff who have worked with the company for 30 years
-‘Nestle Idea Award’- This award awards employees with the most innovative and implementable ideas.
Nestle offers its employees numerous benefits, without partiality. These entail, Retirement Gratuity Scheme, Conveyance Reimbursements, Provident fund, Group Insurance & Accidental Insurance Scheme, Children Education Assistance Scheme, residential accommodation and a personal and medical leave. (Golding, 2006)
188.8.131.52 Employee Relations
-Nestle offers a very conducive working environment, which ensures a very high commitment
level to its employees. The Nestle HR policy document imparts a sense of importance on the
– Nestlé’s open culture encourages communication, especially in case of grievances.
– Nestle Family’ yearly occasions are planned by their Human Resource department, whereby
employees and their families are invited.
-The Nestle Policy on Health and Safety at Work emphasizes on employee safety.
184.108.40.206 Safety & Health
Nestle has an Operational Safety, Health and Risk- Management Strategy document that shows Nestlé’s dedication to a safe working environment. (Thompson Solicitors,2007)
Given the countless concerns that can be experienced due to the incidence of cross -cultures in an international business corporation, it is recommendable that certain solutions with regard to strategic HR policies must be suggested and applied. This is with a view to ensuring efficient serving of customers, superior product quality and guaranteed financial success. Due to having a distinctly heterogeneous workforce, Nestle India and Nestle S.A must engage in frequent activities that promote cultural, personal and team building, in order to enhance communication and better interaction.
Consequently, I would strongly recommend that both Nestle S.A and Nestle India engage in superior HR policies in:
- Communication strategy-Nestle must adopt a valuable communication strategy to foster productive relationships between the two branches.
- Efficient training and development-Nestlé’s approach to training and development is critical, as it will foster cross-cultural interaction between the employees of both branches by giving them chances to attend the international training programs. By adopting this strategy, Nestle India and Nestle S.A will overcome the setbacks of cross-cultural differences.
- Entrepreneurship strategy-Every employee must adopt an independence stance, especially in the business environment. This allows them to engender innovative ideas and implement them, using the company’s resources and support. Nestle has constantly encouraged its employees to be innovative, and it offers its support to all its customers, regardless of their cultural background.
6.0 ANALYSIS AND CONCLUSION
Numerous problems are likely to be encountered, with regard to cross-cultural communication between the two Nestle Company branches. Principally, setbacks of discrimination, racial maltreatment, inequality language barrier and culture shock can be encountered. In terms of cross-cultural communication, culture shock and language barriers are huge impediments, as both are prone to causing grave consequences to the company, such as lack of progression in organizational interaction and team development. As such, the members of staff in the company do not bond, thereby causing deprivation of a peaceful co-existence.
To ensure success in the cross-cultural environments for instance at Nestle India and Nestle S.A, Nestle adopts a people-oriented approach in these two companies, as well as, in all its global branches. Nestle, as a human company, aims to offer response to individual requirements of their staff throughout the world, with a definite concern for the interests of its employees and its consumers, as well. This is seen in its approach and sense of accountability towards people. In so doing, Nestle S.A and Nestle India have adopted the three models of high involvement, high performance and high commitment.
This is because Nestlé principally aims to augment sales and proceeds but, concomitantly, raising the living standards of both their customers and employees locally and internationally. Nestle believes that the strength of the company stems from the people, and nothing is achievable without their dedication and their vigor. Nestle is aware that to get people involved at all levels, it is imperative that they be aware of the company’s objectives and activities. It ensures this by promoting open communication and lively co-operation, where it invites everyone to add to developments that enhance personal development and Company results.
The overall conclusion of this research asserts that Nestle is exceptional, in the sense that it has fruitfully instilled its business objectives and core values to its employees and customers as well, both in the parent company and its subsidiaries as well. This culture of business allows for transparency and freedom in the company. Its insistence on recognizing and rewarding individual accomplishments is evident in the pay structure for its employees, designed by the HR
Nestle has constantly demonstrated the desirable capacity to adjust to a continually changing external business environment without abdicating its core beliefs and values, thus overcoming the problems posed by cross-culture and concurrently ensuring long-term success. Nestle is aware of the need to constantly adopt and use strategic HR policies, and this will ensure that Nestle upholds its core values, hence assuring its success.