Evaluating Nestles Corporate HR strategy Using Michael Armstrongs Model
Strategy determines the direction in which the organization is heading in relation to its environment. It is the process of defining intentions and allocating or matching resources to opportunities and needs, thus achieving strategic fit between them. According to Bratton and Gold (1999), Corporate strategy describes a corporation's overall direction in terms of its general philosophy towards the growth and the management of its various business units. Such strategies determine the types of business a corporation wants to be involved in and what business units should be acquired, modified or sold. Linking this state with Nestlé a 140 years aged UK multinational packaged food company, it is clearly seen that the company has practiced different strategies for expansion from it's exisitance. As example, It resulted from a merger in 1905 between the Anglo-Swiss Milk Company for milk products established by the Page Brothers in Cham, Switzerland, in 1866 and the Farine Lactée Henri Nestlé Company set up in 1867 by Henri Nestlé to provide an infant food product. However, today, the business strategies practicing by different organisations are changed and expanded up to great extent and accordingly, art of managing people of corporations are identified as key strategy to achieve organisational goals. Accordingly the strategic Human resource management became a demanded topic in current business discussionsStrategic Human Resource Management (SHRM)
SHRM is all about integrating human resource management with business outcomes through shaping the working environment, human resourcing, shared understanding, performance accountability and continuous learning. Basically, it is the amalgamation of human resources with strategic goals and objectives of an organisation in order to improve business performance and develop an organizational culture that encourages innovation, flexibility and sustainable competitive advantage. There are considerable number of concepts and models available in current HRM literature with regard to SHRM. Ulrich (1997, P 89) viewed the process of SHRM as a kind of process linking HR practices to business strategy' Also, Bamberger and Meshoulam (2000, p. 6) identified SHRM as 'the process by which organizations seek to link the human, social, and intellectual capital of their members to the strategic needs of the firm'. However, among the models of SHRM the Armstrong (2003) model which introduced three strategic HRM models is quite impressive.Armstrong's Model
The three models introduced by Michael includes; High performance management, high commitment management and high involvement management. Through high performance management, it is envisaged to make an impact upon the organisation through its employees in relation to areas such as productivity, quality, customer service, growth, profits, etc. This is achieved through vision and leadership which will be focused at enhancing the skills and engaging the enthusiasm of employees. High involvement management is where employees are treated as partners of the organisation by respecting their interests. Through mutual relations, communication and involvement, the management and their teams engage in focusing on organisational mission, objectives and values through this strategy. One of the defining characteristics of HRM is its emphasis on enhancing mutual commitment. High commitment management can be described as a form of management which is aimed at eliciting a commitment so that behaviour is primarily self regulated rather than controlled by sanctions external to the individual, and relations within the organization are based on high levels of trust.
Concerning above three models Michael Armstrong introduces five basic components for implementation of strategy and the plans includes, Basis, content, Rationale, Implication Plan and cost benefit analysis. The detailed discretion of above five components is tabulated under the analysis of Nestle Human Resource Management Strategy.Nestle
When analysing the status of Nestlé business strategy, the Nestle is known as kind of organisation whose business principles are bound with their basic responsibilities to stakeholders. Nestlé employs almost 7,000 people across 23 sites in the UK and Ireland. The company is structured into Nestlé UK Ltd, Nestlé Ireland, Nestlé Purina Petcare, Nestlé Waters, Cereal Partners UK and Lactalis-Nestlé Chilled Dairy Company Ltd (Nestle, 2010a). For extended period of time the company openly state that they favour long term business development over short term profit.
Although, the continues change of world vision regards to businesses and their existence, realized the company that there are more to be achieved to become the world's foremost nutrition, health and wellness company rather than only making profits. This leads Nestle to move from a traditional organisation to a network organisation, and accordingly encourage establishing inspiring management, flat and flexible structures, long term development strategies, dynamic compensation and lifelong learning capacities as pre-requisition for their development process. More, importantly, the company has identified the long-term success of the Company depends on its capacity to attract, retain and develop employees able to ensure its growth on a continuing basis. Accordingly, there were drastic changes were taken place in relation to company human resource management strategy over last two decades which could be analysed based on Armstrong's SHRM model as below.Armstrong's SHRM ComponentsDescriptionAnalysing facts
Business needs in terms of the key elements of the business strategy
Environmental factors and analysis (SWOT/PESTLE)
Cultural factors and essential background for the organisation's HR Strategies.
Very long history (over 140 years)
Operates factories in 77 countries (all six continents), a truly global company.
Considered the innovation leader in the global food and nutrition sector (3500 scientist in the company R&D network)
Well known traditional business
Very strong workforce
Details and Principles of the proposed HR strategy
for the business
Plan consists of four steps including, inspiring people, adding value, opening up and dealing with others.
The programme is conducted considering HR as a business partner.
This programme identifies two axis to work on for development as session planning for corporate key positions and management of talent pool.
Always review the feedback for future improvements.
The business case for the strategy against the background of business needs and environmental /cultural factors.
Carried out considering zones, business external benchmark, departments, positions.
Consider external benchmark
Consider the business units and functions
Evaluate using the nature of the contribution rather than rating
Responsibility for each stage
Proposed arrangements for communication, consultation, involvement, training and change management
Project management arrangements
(The arrangements for making sure that the proposed strategies become properly embedded )
Implement under two main categories targeting new and existing normal employees and management staff separately.
Attract normal employee :600 hiring per year, international graduate programmes employer branding and surveys
Management: Development centres, development guide, Corporate leadership programmes.
Target 1200 positions for success planning and aim 2 successors per position (2400 successors)
Evaluate talent pool over 5 years
Conduct 70 meeting for planning and implementation in 2005
Follow up and progress measures 12-18 months
Costs and benefits analysis
An assessment of the resource implications of the plan (costs, people and facilities) and the benefits that will accrue, for the organization as a whole, for line managers and for individual employees. As far as possible these benefits should be quantified in terms of value added.
(The advantages of the proposed HR strategies for the organisation,s managers and for individual employees)
54% changes proposed in group talent pool and mentioned that 26% could be achieved with is more than 50% from proposed
15% increase of cross zone transfers
60% group talents moved between 2004 and 2005
Considering the basic needs for a healthy HR strategy, it is clearly seen that the strong background of Nestle is supportive towards this aim. For example, the company has a 140 year history and a strong goodwill and therefore maintains a good image among different stakeholder groups including employees. Similarly, operating in 77 countries the company covers a wide area of the world food business. Also, the company is known as a leader in the global food and nutrition sector and employees the services of 3500 scientists in their research and development network who constantly carry out research to develop innovative products and expand market power. Most importantly, the company has a very strong workforce.
Nestle seems to have a broad and a matured plan that would make them a network organisation. Hence, this plan consists of four steps includes, inspiring people, adding value, opening up and dealing with others. Nestlé aims to increase sales and profits but, at the same time, to raise the standard of living everywhere it is active and the quality of life for everyone. Nestlé is also convinced that it is the people who form the strength of the Company and that nothing can be achieved without their commitment and their energy, which makes people its most important asset. Involvement of people at all levels starts with appropriate information on the Company's activities and on the specific aspects of their work. Through open communication and active co-operation, everyone is invited to contribute to improvements enhancing Company results and personal development. Also, quite appropriately the programme is conducted considering HR as a business partner. This ensures that the company business goals and objectives are kept in view as the HR strategy is implemented.
Since Nestle is an expanding multinational network organisation, the rational of HR development strategy need to be consistent to the propagation of the company units. As part of fulfilling this requirement, the current HR strategy of the company is carried out considering business units, departments, functions and zones etc. In addition the plan is especially concerned of external business benchmarking which is considered as a need to survive in the current intensive business background. Also the evaluation has been carried out based on contributions which is assumed as suitable for the company with a massive multi duty work force.
Also, it is clearly seen that Nestle has a well panned implementation plan for their HR strategy development. Mainly, the plan target two main employee categories and separately train managerial and non-managerial employees which facilitate them to give appropriate training taking into account the differences in knowledge, experience and skills. Further this plan, targets different positions and is aimed at identifying successors under each and every position which is assumed as important to motivate the entire organisational staff. Most importantly, this plan includes periodic evaluation and progress measures which is a key requirement for the success of any strategy development method.
The final requirement of Armstrong's model requires cost benefit analysis of overall achievements. Considering the facts given for Nestle, it is practically difficult to identify clearly the quantified cost and the benefits in terms of value added. However, the company used "nature of contribution" rather than "rating" for the performance evaluation of proposed HR strategy and also does not encourage any financial rewards scheme as a part of the strategy. In that sense a proper measuring and evaluation method of the contribution made through the strategy implementation is required. Hence, the company forecasts percentage wise achievements such as 26% could be achieved from 54% of proposed changes and 15% increase of cross zone transferred could be done. Also the report says 60% group talents moved between 2004 and 2005. Further, the report mentioned that the company has been conducting leadership awareness surveys and progress measurements and follow-up programmes. Yet the quality and effectiveness of such programmes are further questionable as a cost benefit evaluating tool comparing the targets with achievements. This situation further proves the statement of Gratton et al (1999) that state, the problem that more often exist is a gap between what the strategy stated and what will be achieved or what actually happens to it.
By summing up, it is to say that the overall HR strategy of Nestle is designed on the grounds of rich company attributes and holds better content and implementation plan. Even though, it is still difficult to measure the advantage of proposed HR strategies and evaluate the value added and is difficult to do cost benefit analysis.
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