Updated: Jul 25th, 2024

The Nestlé Company’s Human Resources Practices Report

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Table of Contents

Introduction
Impact of Local Rules and Regulations on Human Resources Practices at Nestlé
Employee Rewarding System at Nestlé
Nestlé Rewarding System Issues and Recommendations
Conclusion
Reference List

Introduction

Nestlé is a famous food company that develops and distributes nutritional products of various kinds for consumers worldwide. Indeed, the corporation owns hundreds of brands, operates in more than 180 countries with large subsidiaries in the US, UK, Brazil, Italy, China, and South Africa, and has 300 thousand employees (Nestlé, 2021).

Nestlé produces nutritional milk powder for infants, coffee, beverages, chocolate snacks, frozen products, bottled water, pet food, and other items. Worldwide famous brands, such as Nido, Nescafe, Nespresso, KitKat, Dreyer’s, S.Pellegrino, Purina, and Maggi are owned by the company and are part of the daily lives of billions of people. Nestlé was started in 1867 by Henri Nestlé as a cow milk powder producer for infants in Switzerland (Nestlé United Kingdom, n. d.).

The owner addressed the problem of high child mortality caused by difficulties with proper breastfeeding. Nestlé expanded their product range by merging with the Anglo-Swiss condensed milk factory and obtaining coffee, cacao, and cereals brands, establishing its subsidiaries worldwide (Nestlé, 2021). The company became the largest food manufacturing conglomerate throughout the 155 years of its history.

Nestlé is an appropriate example of an international brand to explore and discuss human resource practices and workforce performance management because the company is a valuable employer in over a hundred countries. Such a global business requires the firm to adjust its operations to labour legislations that are distinct in different jurisdictions. Nestlé must also ensure that the regulations comply with Swiss law, the headquarters’ country (International Labour Organization [ILO], n. d.).

Consequently, analyzing human resources strategies and systems in Switzerland and developed markets such as the US and UK provides a significant foundation for understanding how employment practices might benefit a company. For instance, in the UK, Nestlé has around six thousand employees with various jobs in 19 cities (Nestlé, 2020a). This paper aims to discuss human resources practices of the company’s UK subsidiary, explore the impact of the British labour legislation, critically analyze Nestlé UK employee performance management, indicate the issues, and offer recommendations.

Impact of Local Rules and Regulations on Human Resources Practices at Nestlé

Nestlé is an international conglomerate with European headquarters and subsidiaries in most developed markets such as the British and American ones. Consequently, the company must comply with the regulations of its host country and adjust its strategies and practices to the local legislation.

The UK labor and trade laws are strict and unique and significantly impact how human resources operate in British Nestlé, what salaries they offer and how the employees’ performance is managed (Nestlé United Kingdom, n. d.). Furthermore, subsidiaries must address the Swiss work and legal standards and enable the international teams to function in accordance with the quality expectations and values Nestlé displays through their products.

In Switzerland, the operations of Nestlé are regulated mainly through tax legislation and labor-related laws for the employees. Minimal wages in the country are £20.24, and the working time must not exceed 50 hours weekly without a minimum 25% salary increase (ILO, n. d.). These regulations vary among Nestlé subsidiaries worldwide, and they consider the market value of a country for the company.

Gender equality is an aspect that is also regulated by modern legislation, and in Switzerland, labor law requires companies to pay the same amount for work completed by men or women (Nestlé Switzerland, n. d.). The conglomerate has an average salary range and equal employment conditions; thus, a job at a Nestlé subsidiary is prestigious for many regions with developing economies.

In the UK, all businesses, including international conglomerates, must comply with the wage, working hours, and equality legislation. The salaries nationwide are based on the National Living Wage (NLW), which adjusts to the current economic situation; in 2022, it is £9.50 (The United Kingdom Government, 2022). Thus, the minimum salary in the UK is £9.50 hourly, and an employee cannot work more than 48 hours weekly unless their job is listed as an exception, such as police and emergency services (The United Kingdom Government, n. d.).

Nestlé complies with these regulations by including a flexible work schedule and a stable salary that averages £12 hourly for a middle-range worker. The company also addresses equality practices by offering jobs and wages regardless of a candidate’s gender, and payments may only be increased due to the experience and specific qualifications.

Nestlé supports labour communities’ activities as they help the company timely notice and address the challenges in management and human recourses practices. The British subsidiary collaborates with the GMB and Unite Trade Unions that publish important recommendations, such as workplace safety, and allow employees to fill complaints if their rights are violated (Nestlé, 2020b). Joint communication with such institutions will enable Nestlé to maintain reliability and value in the UK as an essential product distributor and employer.

The International Labour Organization (ILO) rules also influence human resources practices in Nestlé because most countries, including Switzerland and the UK, are members of this alliance. Indeed, the company commits to the International Bill of Human Rights and Declaration on the Fundamental Principles and Rights at Work, presented by ILO (ILO, n. d.). These doctrines allow Nestlé to integrate appropriate hiring, security, equality, performance management, diversity and equality strategies that improve the organization and employees’ conditions in subsidiaries worldwide.

Employee Rewarding System at Nestlé

Nestlé implements various performance management approaches for thousands of its employees, and a reward system is one of the most significant aspects of human resources practices. Indeed, the monetary bonuses and other benefits are considered in the company’s budgeting, and taxation, training and retention events for teams are yearly planned and performed globally online and locally in person.

In Switzerland, the home country, the system includes total rewards, product discounts, educational opportunities, health insurance, and employee vesting options (Nestlé, n. d.). Salaries are calculated annually, and the bonuses are also indexed as a yearly payout. Nestlé’s reward system is geocentric and polycentric because most employees are local citizens, and their wages are based on their country’s requirements.

Nestlé strives to value its employees worldwide; thus, the reward system is generous in most countries where the conglomerate operates. Indeed, in the UK, total rewards are higher than average because the company’s revenue is high in the local market. Compared to the Swiss offices, the British department has fewer events or community-based initiatives to benefit their employees. However, Nestlé UK offers the same structure for the total rewards system – a performance-oriented variable that depends on the individual contribution, which adds to an annual salary (Nestlé, 2022).

Team bonuses are not in the company’s human resources practices; however, when brands or subsidiaries launch initiatives, their success is paid out. British Nestlé provides the employees with health and wellness benefits, covers maternity leaves, and, after the COVID-19 pandemic, offers flexible office hours without salary deduction (Nestlé, 2022). Although the reward system is similar to the home country’s, the financial investment in workforce motivation and development depends on the company’s potential in the local market.

Nestlé applies the unique Total Rewards system and Nestlé in the Market principles to calculate employee bonuses and consider their local requirements and legislation. The system is individually added to the base salary, which differs in the countries. For instance, according to minimum wage, the base salary in Switzerland is around 20% higher than in the UK; thus, the rewards at British Nestlé are lower than at its headquarters (Nestlé, 2021).

The company mostly employs local citizens; therefore, foreigners receive individually calculated salaries and bonuses, with the currency and wage differences considered. The condition is appropriate for Nestlé in the Market principles that adjust compensation to the revenues received from local production and distribution (Nestlé, 2020a). In the UK subsidiary, employees receive non-monetary bonuses, such as health insurance, product discounts, and educational opportunities related to their job or broader skills.

Nestlé Rewarding System Issues and Recommendations

Nestlé’s reward system is globalized and sustainable in countries with different political and economic regimes; however, various issues negatively influence their human resource practices efficiency. In the UK subsidiary, more than seven thousand employees work in functional, managerial, and executive positions; they have diverse backgrounds, needs, experiences, and education levels. Therefore, they value the offered rewards differently, and Nestlé UK misses the motivational aspect for their workers, risking the turnout rate increase. Another issue is the lack of direct feedback, as Nestlé mostly relies on sustained global practices and delegates addressing the local issues to the other institutions, such as trade unions (Nestlé, 2020b).

For instance, COVID-19 safety measures were taken from the GMB union, and in emergencies, employees could not report and influence their company’s decisions directly. Lastly, Nestlé UK does not provide the teams with additional rewarding options for initiatives’ realization (Nestlé, 2020a). This limits the local representatives’ influence on their daily operations and is unproductive for Nestlé’s integration into the community environment.

Recommendations

Three recommendations are developed based on the issues that disrupt the Nestlé UK reward system’s efficiency. Firstly, the difference in needs should be addressed by conducting a survey about the employees’ perception of the motivational and rewarding techniques (Jekiel, 2020). The results can proceed within a quarter, and, as a result, Nestlé may present a program as effective as the Total Rewards the company utilizes globally.

Secondly, feedback gathering requires enhancement that can be achieved by assigning responsible managers who could receive complaints and recommendations, conduct one-on-one meetings, and proceed with the information to improve operations. For instance, the UK subsidiaries may integrate this human resources practice and enable the executives to report the results every three months to understand if it is productive (Jekiel, 2020). The main cost of that recommendation is the salary for managers involved and the equipment for gathering data and conducting meetings.

The third recommendation is to adjust the reward program toward prioritizing motivating the local teams to offer improvement and launch initiatives. The seven thousand employees of Nestlé UK work in different regions, and a contest for the most influential idea can be presented with a fixed deadline, such as six months (Dessler, 2020). The costs would vary depending on the initiative; however, the overall attention to employees’ opinions would be beneficial for their performance.

Conclusion

Nestlé is a large food manufacturing and distribution conglomerate with subsidiaries and employees in over 180 countries. The company developed effective human resources practices throughout its 155 years of history. Switzerland is the home country for Nestlé, and local legislation influences salaries, taxes, and employment conditions for the citizens who work there. The subsidiaries, such as the UK offices, combine the Swiss regulations of international taxation and local laws that determine working hours (48 hours a week maximum) and minimal wages (£9.50 per hour).

In the UK, Nestlé applies its employee performance management practices, such as Total Reward payouts and bonuses calculation based on the local market revenue and contribution. The salaries are lower than in Switzerland due to the economic differences, legislation regarding working conditions and wages. Equality is addressed by paying the same amount for the same volume of work regardless of gender. Nestlé UK provides its employees with benefits such as annual rewards, health insurance, training, and educational opportunities.

The British subsidiary operates under the Nestlé global regulations; thus, local aspects lack attention and result in human resources management issues. Evidence suggests that three problems disrupt the rewarding programs’ efficiency, and recommendations were offered to make changes. First, specific needs of diverse workers are not considered, and conducting surveys about their perception of rewarding options would identify what requires addressing.

Second, feedback-gathering practices are indirect in Nestlé UK, and the recommendation to assign managers responsible for collecting data and arranging meetings could solve the problem. Thirdly, employees’ motivation is low although they work in an international conglomerate. To address this problem and decrease the risks of increasing turnout rates, it is appropriate to launch contests of influential initiatives. These recommendations are not costly; however, they require time and effort from Nestlé human resources managers willing to improve their practices.