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It all began from a little venture by a Swiss pharmacist, Henri Nestl, to develop an alternative for infants who cannot be breastfed, with a combination of milk, wheat flour, and sugar. Not only did this formula help reduce infant mortality from malnutrition across Europe, but also formed the basis for the worlds largest food and beverages company. To this end, Nestl soon added chocolate, milk, and Nescafe coffee to its line of items through mergers and research. Nestl kept increasing the length and width of its product lines to cater to a wide range of consumer needs. As Nestl was making its operations global, it found an eager market in Pakistan. Nestl has been serving Pakistani consumers since 1988, when its parent company, the Switzerland-based Nestl SA, first acquired a share in Milkpak Ltd. Few of the milestones achieved by Nestl Pakistan and Milkpak Ltd. are mentioned in Exhibit 1.
Global Structure
At the international level, the world is divided into four parts, each reporting to the world headquarters in Switzerland. Nestl employs bottom-up as well as top-down reporting. For yearly budgeting, each territory reports next years forecasted sales to its Area Manager who after gathering all these reports sends a summary for his area to the Regional Manager. Regional and Zonal Manager do the same process until National Sales Manager has the forecasted sales for the entire country. Target sales are then reported down to each zone, from where it is sent to each region, and the process continues until each territory has its target sales (Exhibit 2).
Organization Structure
Nestl Pakistan follows a flat, matrix organizational structure (Exhibit 3). The departments are divided function-wise and product-wise. All the products use different functional departments, and all the functional departments have specific product departments within them. The span of control is wide, as each department head has many direct and indirect reporting relations with his subordinates. Also, as in a pure matrix form, nearly all employees have two or more departments to report to, directly or indirectly. The Managing Director of Nestl Pakistan reports directly to the Head Office in Switzerland, and gets guidance and objectives from them. Directly under the Managing Director are different functional departments: Business Executive Managers Head of Human Resource Department Head of Sales Department Head of Supply Chain Head of Food Services Department Head of Technical Department Head of Finance Department Head of Corporate and Legal Department
The following departments have an indirect reporting relationship with the Managing Director:
The first two departments are required to report directly to the Head Office, while the UNDP Project comes under the United Nations. Since this paper aims to analyze the Human Resource Function and the Brand Function in detail, the following is the departmental structure of the aforementioned functions.
Shared Services
Shared Services are responsible for data and record collections of all the employees of Nestl Pakistan. They handle the payrolls, division of provident funds, medical allowances, travel allowances, and all other administration of the employee funds.
Centre of Expertise
The Centre of Expertise is the department responsible for recruitments, remunerations and organization development through Nestls training programs, both local and international.
Business Partners
The Business Partners form the link between different human resource activities of the organization, and the functional departments they are working with. The Human Resource ManagerCommercial is a Business Partner for Sales and reports to the Head of Sales Department. He is supposed to form a link between the Human Resource Department and the Sales Department, making sure all decisions made by the Sales Department are in line with the Companys goals and policies.
Brands Department
The department for Brands has been subdivided into departments for each product line that Nestl produces. Each of these product lines comes under a Business Manager, who has two Brand Managers under him. Each Brand Manager is responsible for specified products under a certain product line, and has two Assistant Brand Managers reporting to him.
In each of the units that are under the Business Managers, there is a Category Manager, who is equivalent in position to the Brand Manager. A Category Manager reports indirectly to the Business Manager, and directly to the Head of Sales Department.
Dairy
Dairy is the chosen product line for the project. Dairy is divided into four different product lines, which are further divided into units each headed by a Business Manager. The product lines of dairy are: Child Nutrition Tea Creaming Adult Health and Wellness Chilled Dairy
The first two are responsibilities of one Business Manager and the last two of the other. The Category Managers job is to form a link between the Brand Manager and the Sales Manager from the Sales Department.
Mission Statement
At Nestl, we believe that research can help us make better food so that people live a better life. Good Food is the primary source of Good Health throughout life. We strive to bring consumers foods that are safe, of high quality and provide optimal nutrition to meet physiological needs. In addition to nutrition, health and wellness, Nestl products bring consumers the vital ingredients of taste and pleasure. As consumers continue to make choices regarding foods and beverages they consume, Nestl helps provide selections for all individual taste and lifestyle preferences. Research is a key part of our heritage at Nestl and an essential element of our future. We know there is still much to discover about health, wellness and the role of food in our lives, and we continue to search for answers to bring consumers Good Food for Good Life.
Meet the nutritional needs of consumers of all age groups from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality. Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country. Nestl milk collection and agri-services will continue to play the primary role in development of the dairy sector in rural Pakistan. Fully integrated systems (Nestl Pakistan, suppliers, customers) ensure efficient business processes. Non-strategic activities and products are outsourced or discontinued.
Consumer Service
Nestl believes in providing efficient consumer service as part of its strategy. And this consumer service is not only limited to handling consumer complaints, rather it revolves around building a long-term holistic relationship with consumers. In fact, for Nestl, the organization chart (Exhibit 5) is upside down. The consumers, and not the managers, lie at the top of the hierarchy. Thus all the activities aim to provide timely and efficient response to consumer needs and fulfilling their wants in the best possible manner. Nestls advanced consumer contact management system CONSO+ helps it in customer relationship management, and forging close, long term and trustworthy ties with its consumers. Apart from the more formal lines of communication, the company also has the human elementthe field staff, which remains in contact with the consumers.
Thus efficient consumer service goes a long way in ensuring consumer loyalty, as well as guaranteeing higher revenues per consumer, from more consumers.
Social Investments
Nestl Pakistan complies with Environment Act (1997), and tries to ensure that at every stage of its operations, the environmental impact is minimal. All Nestl factories are eco-efficient (more production for less resource consumption, waste, and emissions) and have environment committees that manage and review environment issues. Nestl Pakistan responded immediately to the earthquake that struck Northern Pakistan in October 2005 by providing its infra-structure and resources to work in the affected areas in collaboration with Pakistan Air Force to distribute goods worth over Rs. 20 million. Nestle and its employees together also donated about Rs. 36 million for the rehabilitation process. Nestl Pakistan has wide range of activities under its social investment programme. A brief outline of each activity is as follows: Nutrition program for mothers and children Financial support to victims of natural disasters Well and hand pump installation projects Help centre for farmers School rehabilitation and education advancement Research and development initiatives
As explained in the organization structure, this department is responsible for maintaining the data and records of the employees to decide about their pays, allowances etc. The department is also supposed to carry out the performance appraisals (PA) with the help of the line managers. The SS sets guidelines and provides the line managers with tools, systems and processes to evaluate their subordinates. Based on these evaluations, pays and remunerations are decided. (Remunerations are done by the Centre of Expertise). The pay and compensation strategy is tied to the achievement of the business objectives and helps them build a growth-oriented culture. Apart from payrolls, SS is in-charge of administration of employee funds. It is supposed to decide that which employee gets which fringe benefit, and to what extent, for example, medical allowances, travel allowances etc. The provident funds for employees are also calculated by SS. The SS is a vital department for maintaining employee motivation and loyalty to Nestl. It needs to be ensured that all data collection and PAs are done correctly, and in line with the procedures and guidelines set by the organization. It also needs to give enough allowances and leverages to the employees to allow them to balance their personal and professional life. Nestl believes that employees private and professional life should have a good balance. In the same spirit, Nestl encourages flexible working conditions whenever possible and encourages its employees to have interests and motivations outside work. This not only maintains satisfaction with the job, it also increases loyalty, productivity and provides motivation for better performance in the future.
Centre of Expertise
The Centre of Expertise is the department in Human Resource Function which is responsible for recruitments, organization development (training programs) and remuneration.
important to hire the right person, not just for Companys objectives, but to help integrate newcomers in the organization so that their skills and behavior can merge smoothly with the company culture. At Nestl the recruitment is done keeping the objective of diversification in mind. The organization has a global mindset which involves diversity to encourage and foster creativity and new ideas, which forms the unique selling proposition of a business.
Training Programs
Training is seen as an ongoing process. It doesnt only involve training sessions and lectures, but day-to-day interactions with the superiors and fellow employees, absorbing their knowledge and ideas: guidance and coaching by managers is a given. Knowledge also comes through the tasks assigned: simple learning-by-doing and on-the-job training. Apart from that, Nestl is committed to enhancing employee skills and competencies through formal training programs. These are selected according to individual requirements and the job they are working for. The candidates are selected based on their performance, potential and personal development goals and recommendations come from the Head of Human Resource Department and the Business Partners of respective departments. The Centre of Expertise is responsible for designing and providing the requisite training once the candidate and his needs are identified. The programs are not just limited to functional specific training, for example sales training, but also for augmenting interpersonal skills and image building, in short, the softer skills. The training could be local, regional or international, based on need and performance. At the International Training Centre in Switzerland, the trainee has the opportunity to meet managers and leaders from all over the globe, getting training sessions from even the CEO, Peter BrabeckLetmathe.
Remuneration
Nestls remuneration is benchmarked against other organizations and surveyed on a regular basis to ensure that it remains competitive and fair. The policy needs to be framed keeping local market, individual performance, skills and potential for development in mind. This is what they call the Total Competitive Remuneration. The managers task is to ensure that the remuneration structure facilitates the implementation of flat organizational structure and be flexible so as to be able to adapt to the evolution. It is also the managers task to evaluate remuneration of each staff member taking into account her/his professional performance and her/his specific responsibilities. These specialists need to know about stock options, and how to compare and compensate the employee payroll system. They need to make regular changes in their strategies and find new ways of operating to increase the efficiency of the whole organization. This helps ensure not just the companys growth, but motivation for individual growth as well.
Tasks and Responsibilities of the Manager Chain of command and Span of control
Mr Janjua is a two boss manager in the matrix structure. He has a dual chain of command and reports to the Head of Human Resource Department and the Head of Sales Department. Two people report directly to him. He also shares targets with the recruitment centre and can be held accountable for its actions. He comes to the forefront as the first line of contact person for the Shared Services and recruitment.
In contrast to the Centre of Expertise which requires specialists, Mr Janjua is a generalist; he doesnt have to be an expert but has to be aware of everything that is going around in the organization.
Providing Guidance
His role also focuses on providing guidance to the employees when needed e.g. that when opinion surveys had to be filled out for all the employees; he provided them with an orientation to ensure there were no confusions as regards to the survey.
Market Research
Mr Saqibs job description also requires him to carry out market research on a regular basis. This helps in identifying the changing consumer demands and tastes. This also enables the company to review their strategy so that it synchronizes with the companys goals and objectives. In this era of fast changing trends it has become almost impossible for an organization to survive without being aware of the consumers needs. Market research helps to serve the organizations purpose in this regard.
Shopper Segmentation
An interesting task that is performed by the Category Manager is to analyze the shopper segmentation i.e. evaluating various customers according to their status, nutritional needs, age, gender etc and which channel are they prone to buy from. For instance, a huge percentage of population buying from the grocery stores such as H. Karim Buksh and Al-Fatah are working mothers. Thus products that cater to the needs of working mothers should be distributed to various grocery stores. Moreover, keeping in view the short shelve life of dairy products it becomes vital to distribute appropriate products to each channel, which meet the needs of each channels ultimate consumers.
Promotion Design
Moreover, the Category Manager also being responsible for analyzing the success of promotional activities has to evaluate the pre-promotion and the post-promotion scenario. This enables him to analyze the potential of a particular promotional activity and the impact it has on the sale of products, thus making certain that the promotional activity is not detrimental to the profitability of the product.
He says, The strategy is not to find the solution to the problem but to find the person who has the solution. The idea is then to sit down and come to a mutual decision on how to go about solving it. One should have an open mindthe fault can be at your own end too.
The Category Manager is not directly involved in the planning management function. Though he is involved in collecting data that helps develop strategic plans but his role in the planning function is limited. The Category Managers role as an organizer is essential. He needs to allocate human and nonhuman resources to various channels. To ensure that no stock outs occur he needs to arrange his resources in a manner so that each product is available at each channel. Moreover, an excellent coordinator and communicator are essentials of a Category Manager. He coordinates with the sales, finance and the marketing department constantly. Moreover, to ensure that everything is running smoothly at each channel he needs to maintain regular contact with the relevant person at each channel. Since there are not much people working under Mr Saqib, the leading management function doesnt really come into play. But still he has to guide people on how to analyze each area and how to collect the data relating to each region. The Category Managers role as a controller is vital. He makes certain that each activity being carried out is in conformance with the organizations requirements and standards. He has to ensure that efficient allocation of funds is being made. Moreover, he has to control human resources so that each individual is working in the best interest of the organization and for this purpose he provides guidelines to each employee.