Nestlé’s HR Practices and Operations in India Coursework

Executive Summary

International human resource management is complex and requires business firms to use appropriate strategies to enable them to achieve positive results from their operations. Business firms that operate in different countries need to attain a higher level of operational excellence to ensure their daily functions are aligned with their long term strategic goals.

Managerial functions need to be taken seriously in a firm to enable it to attain its long term goals in a particular industry. This essay focuses on specific cultural and national factors which may affect Nestlé’s operations in India’s non-alcoholic food and beverages sector. It also proposes different human resource practices which the firm needs to institute to strengthen its operations in the industry.

Introduction

India’s non-alcoholic beverages sector has experienced good performance in the last five years. In addition, the country has experienced a lot of changes in the last ten years which have encouraged more multinational corporations to set up operations in different economic sectors.

The non- alcoholic beverage sector has experienced positive growth because more firms have set up operations in the country to take advantage of different opportunities that exist. India is known for its favourable government policies, highly skilled labour, and low cost raw materials and these favourable conditions have encouraged more business firms to invest in different sectors.

In addition, the country’s economy benefits from a strong work ethic because many Indians have positive attitudes towards career development. The number of people who will be consuming food and non- alcoholic beverages in the next three years is expected to rise by 16-19% (Budhwar & Varmas 2011, p. 79). This shows the sector has a lot of growth opportunities for firms that seek to establish their operations in the country.

Business Environment of India

Nestle Foods and the Pestle model will be used to analyse different factors in the country which impact on the overall business environment.

Political Factors: India is the largest democracy in the world. Its government formulates fiscal policies which affect investments in different economic sectors. However, different business regulations which are enforced by the government are likely to have a significant impact on the firm’s local operations.

Deregulation allows commercial enterprises to conduct their operations with minimum government interference (Budhwar & Varmas 2011, p. 83). Lastly, India enjoys relative political stability which allows different economic activities to proceed without unnecessary disruptions.

Economic Factors: Factors that need to be looked at are; economic growth rates, foreign exchange rates, levels of inflation, interest rates and the cost of doing business.

The government’s decision to allow companies to obtain capital from foreign sources has increased foreign direct investment and this has led to positive economic growth rates, which were estimated at 6% in 2009. The country also experiences low rates of inflation, low interest rates and stable foreign exchange rates. As a result, these positive economic indicators have reduced the cost of doing business in India.

Social Factors: India is a culturally diverse country with a population of more than 1.1 billion people. The country has a strong workforce which enables it to achieve its economic goals easily. More than 60% of the population comprises of people aged 15 to 60, most of whom are well educated and possess different types of skills (Budhwar & Varmas 2011, p. 96).

Technological: In many places, there is high quality infrastructure for 3G internet, making it easy for people to communicate and share ideas with one another. More importantly, many people in the country use technological solutions for different purposes in their lives.

Legal: There are specific labour laws which business firms that operate in India are expected to comply with in their operations. Moreover, the minimum wage in the country was increased three years ago and discrimination of people living with disabilities is outlawed. Health and safety, monopolies and intellectual property laws are other business concepts which are covered by the country’s legal framework.

Environmental: Business firms are required to adhere to high quality environmental standards to prevent them from polluting the environment. In addition, zoning laws are enforced to ensure residential areas are located far away from manufacturing zones. Business firms are required to show the government their waste disposal plans and they are also subjected to a lot of scrutiny by environmental lobby groups.

Nestle has a strong reputation of complying with legal and ethical requirements in different countries where its operations are based. This has enabled the firm to implement policies that address the wellbeing of its employees. As a result, the firm uses localisation strategies to make sure that its overall goals and objectives reflect the aspirations of different stakeholders it transacts with.

Therefore, Nestlé’s strategy in India needs to focus more on developing products which are appropriate for the needs of its customers in the local market.

This approach will help the firm to use appropriate cross cultural management strategies to address the needs of its employees and customers in the Indian market (Brewster, Sparrow & Harris 2005, p. 957). Consequently, this will enable the firm to implement an appropriate human resource management strategy that is responsive to conditions that exist in the local food and beverage industry.

Evaluation of the Main HRM Theories

The recruitment practices of Nestle in different places it operates focus on hiring highly skilled individuals who are able to perform different responsibilities in the organization satisfactorily. The firm uses different recruitment strategies to hire new employees who are selected based on their qualifications and capabilities.

It has its own job site which is linked to its online social media accounts to enable interested candidates to apply for different vacant positions that exist in the firm. As a result, Nestle maintains links with potential candidates that are interested in working in the firm who are taken through vital components of its organizational culture before they apply.

Nestlé’s careers page contains vital information about different types of trends in the food and beverage industry to make prospective employees aware about expectations they need to satisfy (Ramamurti & Singhs 2009, p. 87).

In general, the ‘jobs’ section of Nestlé’s website is categorized into two main categories; professional opportunities and internship for students. Nestlé’s also relies on other external recruitment organizations to headhunt skilled professionals who are able to carry out different responsibilities in the firm.

In addition, it allows its potential employees to find out more about its corporate identity and how it is influenced by its organisational culture and values. Employees who apply for technical jobs are taken through aptitude tests to find out if they can perform different functions that are related to their areas of training (Ramamurti & Singhs 2009, p. 91).

Afterwards, all employees who are recruited into the firm have to undergo additional training programs to make them understand how to execute important processes that are related to their duties.

Rodger’s seven point plan can be used to analyse selection processes which are used to assess the suitability of potential employees before they are hired. Physical makeup requirement is used to assess the general demeanour of an employee to find out if he or she has a good dress code.

This requirement is also used to assess if an employee’s personal appearance, communication skills and physical health enables him to execute responsibilities assigned to him effectively.

Attainments: During the selection process, applicants’ levels of education are assessed to determine if they have the required set of qualifications to perform duties that relate to the job description of a particular vacant position in the firm satisfactorily.

In addition, previous professional experience is assessed to find out more about an applicant’s previous professional history and how it can be utilised to enable the firm to achieve good results (Wright, Snell & Dyer 2005, p. 875).

General Intelligence: This factor is used to assess a candidate’s social, cultural and professional background to find out how it is likely to impact on his performance in the firm after he has been hired.

Special Aptitudes: Every job position has its unique criteria which candidates are required to satisfy before they are hired. Manufacturing jobs are technical and require interviewees to go for aptitude tests and practical demonstrations to show supervisors what they are capable of doing

. Financial and accounting interviewees have to demonstrate their knowledge of different electronic financial systems and this enables the organisation to measure their competence levels (Wright, Snell & Dyer 2005, p. 876).

Interests/Intellectual: Other external activities which are not related to a candidate’s professional duties are assessed to find out if he or she is a member of any other professional body. This enables the firm to find out if there are other ways in which an employee can be utilised to bring long term benefits to its operations.

Disposition/Acceptability: This factor enables the selecting panel to find out if there are other individual qualities which a prospective employee can rely on to achieve good outcomes from different responsibilities he is assigned. Issues such as self motivation, personality, individual aspirations and reliability are given consideration to find out if the candidate selected is able to achieve good results in his workstation.

Circumstances: The selecting panel assesses other issues that may prevent a particular candidate from performing duties assigned to him in the firm as expected. The willingness of an employee to work long hours, to travel away from the workstation and to perform other special responsibilities that are related to his duties is evaluated by the firm (Thompson & McHugh 2009, p. 81).

Effectiveness of HR Strategies

The human resource management strategies which are used by Nestle have helped the firm to make a positive impression on its employees. The firm offers its employees a positive working environment which allows them to explore their talents to enable them to perform different tasks effectively.

The firm has a talent management team that makes it possible for employees who attain high levels of performance to be assigned more complex responsibilities in their workstations. As a result, employees are allowed to use their own creative instincts to solve different problems they face in their workstations to attain positive results.

Nestlé’s human resource division has flexible working plans which allow employees to work on international assignments in different countries to expand their skills (Pudelko & Harzing 2007, p. 537). This exposes the firm’s employees to new working cultures that are observed in other countries making them more competitive in their duties.

The learning and development team has enabled the firm to implement practical learning programs which enable employees to acquire new skills in multiple disciplines. As a result, employees from different departmental backgrounds are encouraged to form teams to achieve specific goals which contribute to the organisation’s long term performance in the industry.

They are encouraged to come up with interventions to different challenges they face in their respective workstations to make them more competitive in their duties (Pudelko & Harzing 2007, p. 540).

This approach has allowed the firm to improve its supply chain, manufacturing and administrative functions because all departments share important information. As a result, this helps all key divisions in the firm to work harder to achieve the set targets in the long run.

All key human resource management functions in the organisation are aligned with the firm’s strategic objectives in the industry. As a result, this allows all employees in the firm to understand how they are connected to its long term vision in different locations where the firm operates.

The firm’s localisation strategies enable it to adapt its human resource functions to make them well suited to conditions that exist in countries where its operations are based to satisfy the expectations of its employees. Nestle has a strong reward and work relations policy that enables it to address the interests of its employees in different divisions (Thite 2004, p. 62).

Therefore, the firm guides the heads of its regional divisions on how to deal with different issues that affect employees to motivate them to attain positive results from different activities. Employees who achieve good results in their workstations are given incentives in form of bonuses and salary increments after to make them more dedicated to the firm.

From the arguments above, it is clear that Nestlé’s human resource management functions have helped it to attain positive outcomes from both its internal and external functions. The firm has managed to increase the value of its internal operations to make its employees understand its long term vision and how they are connected to it.

Therefore, the firm needs to focus on cross cultural aspects of HR management in India to enable it to achieve its objectives in the industry (Thite 2004, p. 65). It needs to look at the material as well as intellectual needs of its employees to find out how they can be satisfied to enable it to achieve good results in the long run.

Analysis of Approach to Human Resource Management Globally

Business organisations in different global regions have their customised human resource systems which enable them to perform their internal and external functions more effectively. Therefore, many organisations have instituted high quality human resource development systems that equip their employees with high quality skills they need to perform their duties more effectively.

Nestlé uses in house training to make its employees understand how to carry out work responsibilities that are specified in their job description profiles (Gilmore & Williams 2009, p. 71).

Therefore, employees are trained on workplace issues such as: health and safety at the workplace, product specifications, human rights, good environmental practices and customer care. These in house training approaches also enable employees in the firm to learn about important technical skills which are related to functions they are expected to carry out.

The firm also encourages some of its staff to attend seminars and other events to make them more knowledgeable on modern business trends which have an impact on the way they perform their duties. Off the job training methods allow employees in the firm to understand the external industry environment and how it impacts on the firm’s operations.

Additionally, off the job training is used to educate employees in the firm about the importance of embracing diversity at the workplace to make them more tolerant. This enables the firm to encourage its employees to establish good working relationships with people from different cultural backgrounds to help it achieve its strategic goals (Gilmore & Williams 2009, p. 73).

Therefore, this has allowed the firm to transfer positive values to its employees making them well prepared to deal with different types of challenges they may face in their workstations. Consequently, this has enabled the firm to develop an appropriate training manual that is responsive to its operational needs in different countries.

Organisational development frameworks which the firm uses such as training, organisational learning and mentoring have increased its employees’ exposure to competitive working systems. These have strengthened Nestlé’s organisational capabilities making employees working in different departments in the firm to be more satisfied.

In addition, Nestlé’s learning systems have made its internal operations to be more flexible allowing employees to accept different changes they experience in their workstations easily (Engardio 2008, p. 61).

As a result, communications between employees at different levels of the organisation have become more open making it easy for both employees and managers to build and sustain positive relationships. Therefore, this has made it easy for the firm to increase its competitiveness in the global food and beverages industry because its decision making processes have improved.

Relationship between HRM and Organisational Performance

HRM is an important concept which allows a firm to come up with appropriate strategies to enable its employees to achieve positive outcomes from different duties they perform. A firm that has a good human resource management system is able to attract, organise and retain its talented employees and this helps it achieve positive results from its operations.

Therefore, good human resource practices in a firm enable it to benefit from highly motivated employees who are willing to make different types of sacrifices to achieve good outcomes in their workstations (Ericksen & Dyer 2005, p. 917).

In addition, a firm that has competent employees is able to come up with different types of changes in its operations which enable it to strengthen its brand in the market. Consequently, this allows a firm to increase the quality and quantity of its output allowing it to increase its profit revenues in the long run.

Business firms need to have strong values and corporate cultures to enable them to sustain positive performance in their respective industries. For instance, open communications, skills development, career progress and effective staffing strategies help a firm to make its employees more satisfied.

Employee participation is an important part of any human resource management strategy because it enables a firm to encourage its employees to collaborate to enable them to achieve their goals (Schuler, Budhwar & Florkowski 2002, p. 46).

In addition, a positive environment that encourages employees to take on more responsibilities motivates them to use their creative instincts to achieve good results from different activities they are doing. As a result, this encourages them to become more innovative whenever they perform their duties to improve the quality of output they attain.

Nestlé’s internal work practices allow its employees to have a strong self drive to make them more passionate about their responsibilities. As a result, this enables the firm to use encourage its employees to use their own creative instincts to achieve good results in their duties. Therefore, the company needs to offer its employees positive compensation packages to increase their morale to enable them to attain positive results.

It should allow its employees to form small work teams to enable them to acquire high quality skills so that they can execute complex work tasks more effectively. In a team setting, workers who have different types of skills find it easy to collaborate and share ideas and this helps them to become more competitive in different activities they are required to do in an organisation (Schuler, Budhwar & Florkowski 2002, p. 51).

In a nutshell, the firm needs to implement appropriate organisational learning models which are responsive to cultural factors that exist in India. This approach will enable the firm to make its internal processes more valuable in the long run.

Analysis of National and Cultural Issues that Affect HRM Strategy

Reward systems in any organisation have an impact on human resource management strategies which are used by an organisation in its operations. They affect the manner in which an organisation relates with its employees to ensure they have all the necessary conditions they need to attain positive performance.

The concept of performance management allows an organisation to institute specific policies which help it to achieve positive performance in its operations (Holloway 2009. p. 392). Therefore, an effective performance management system needs to be aligned with the organisational culture of a firm to make it more competitive in the long run.

This enables a firm to set high standards of excellence which all departments are required to adhere to. In addition, a suitable performance management system needs to consider cultural factors that are likely to impact on the way employees carry out their responsibilities.

A large multinational with operations in different parts of the world needs to have a proper rewards system which takes into consideration different cultural practices that are observed by employees in different countries. This requires a firm to identify specific trends that are likely to impact on its operations in the industry to ensure it comes up with a performance appraisal system that addresses its needs.

Many organisations opt for performance management models which improve their decision making functions to strengthen work relationships between managers and their subordinates. Additionally, performance appraisal procedures enable an organisation to identify the contribution of each individual employee to its long term business objectives in an industry (Holloway 2009. p. 396).

India’s population comprises people from diverse cultural backgrounds who observe different social practices. Some of the organisational issues that are likely to influence the development of and implementation of human resource strategies in the country include: communication systems, organisational coordination and control practices.

Therefore, the firm will be required to rely on cross national management systems to ensure its human resource practices conform to the national mindset of Indians by taking into account government policies and the country’s education systems.

Since the firm already has strong control systems, it needs to hire employees who are conversant with important cultural factors that influence business practices in India (Wilkinson, Bacon, Redman & Snells 2009, p. 143). Operations in the firm’s main offices in the US, UK and Switzerland need to be integrated with those in India to enable the company to coordinate its global HR processes more effectively.

Hofstede’s cultural dimensions framework can be used to analyse specific cultural issues that are likely to impact on the firm’s operations in India. This is shown through the five main dimensions of cultural integration which Nestle needs to be aware of in its operations in the country. These include:

Power Distance: India has high levels of wealth inequalities which influence the manner in which different people in the country relate with one another. Therefore, people with senior management positions are expected to display their authority to their subordinates to earn their respect. Therefore, the firm needs to take into consideration different social roles that are likely to impact on its operations locally.

Long term Orientation: Respect for traditions and other societal values makes India’s national mindset to be forward thinking. Many professionals in the country have a strong work ethic because they expect to get long term satisfaction from their jobs by being loyal to their employers.

Therefore, Nestle should focus on forming strong relationships with its employees to ensure its engagements with them are influenced by long term value creation (Hofstede 2007, p. 411).

Masculinity: The society has a high masculine dimension and this shows that traditional gender roles are cherished by different people across the country. In addition, men are expected to be assertive and more self driven while women are expected to be modest and submissive in their social interactions.

Individualism: The individualism dimension in Indian culture is not cherished because many people value interdependence and collaboration. Many people prefer being part of a larger collective identity through strong community relations and this makes them more contented with their lives.

Uncertainty Avoidance: The country has a low uncertainty avoidance dimension and this shows that people prefer ideas which are unstructured and less complex. This shows that they prefer a flexible organisational environment where personal creativity is allowed to enable them achieve positive outcomes (Hofstede 2007, p. 416).

All these cultural factors are important and they will influence the manner in which Nestle will carry out its recruitment strategies in the country.

Management Skills Required in International Business

A firm needs to have managers that understand cross national business factors that impact on long term organisational success to help it achieve its objectives. Managers need to understand how prevailing social attitudes influence the general mindsets of employees working under them in different locations.

This understanding allows managers to make good decisions which are responsive to different business trends in a particular industry. Managers also need to form important workplace relationships with their employees to inspire them to work harder so that they attain good results (Brockbank 1999, p. 339).

They need to understand how to encourage employees to collaborate to enable them to acquire new skills which make them more competent in their duties. Lastly, Nestle needs to find out specific opportunities and risks it is likely to experience in India before it sets up its operations in the country.

References

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