A report on the performance management

and appraisal system of Nestle

Section – “B” Udit Divyanshu

Group – 2 Rahul Bhagat
Rohan Paliwal
Aman Srivastav
Thanshali Narzary
Ankita Sinha
Siddharth Kumar
Introduction
• Nestle is a Swiss multinational nutritional and health-related consumer
goods company headquartered in Vevey, Switzerland.

• Nestle’s products include baby food, coffee, confectionery, bottled water,

breakfast cereals, dairy products, ice cream, pet foods and snacks.

• . Nestle has around 450 factories in 86 countries, and employs around

328,000 people all around the world.

• With a market capitalization of $ 200 billion, Nestle ranked Number 13 in

the FT Global 2011.
Organizational Structure
• Nestle Company is a decentralized organization that is organized according to
the matrix structure.

• Nestle’s decentralized organization permits its subordinate branches to enjoy a

proportionately high-level of independence.

• Although it still makes major strategy decisions at the headquarter level, daily
operations are left up to subordinate branches to derive and perform.

• The organization structure of Nestle shows that the management is divided

into 3 types : top-level management, middle level of management and low-
level management.
Performance Management System
Performance management system at Nestle consists of the following steps:

• Defining Vision Statement

• Planning performance

• Implementation

• Performance review and monitoring

• Assessment and reward

Defining Vision Statement

Nestle’s vision statement is “to be a leading, competitive,

Nutrition, Health and Wellness Company delivering improved
shareholder value by being a preferred corporate citizen,
preferred employer, preferred supplier selling preferred
products.”
Planning Performance
At Nestle, the goal setting is done through SMART performance
management system.

The main definition of SMART is an acronym for the five components of an

effective goal.

An effective goal should be:

• Specific
• Measurable
• Attainable
• Realistic
• Time-oriented
Implementation
In implementation, Nestle communicates the goals and objectives to the
employees of different departments.

Performance Review and

Monitoring
At this point, a half-yearly review is done to find out performance of the
employees regarding their competencies and goals.

Finally at the end of the year, the employees are evaluated based on a few
methods :
360 degree performance appraisal

The 360 degree performance appraisal system is a way to make sure the appraisal is
done in a full-fledged way considering all the elements surrounded to the employee

Balanced Scorecard system

Nestle uses this performance measurement framework as it adds

strategic non-financial performance measures to traditional financial
metrics to give managers and executives a more 'balanced' view of
organizational performance.
Remarks and Suggestions
Remarks

Nestle’s performance management system brings the following advantages for

the organization:

• Ensuring that the employees understand the importance of their

contributions to the organizational goals and objectives.

• Develop job knowledge and skills that help them thrive in their work, take
on additional responsibilities, or pursue their career aspirations

• Ensuring proper aligning or linking of objectives and facilitating effective

communication throughout the organization
Suggestions

The setting of goals could be done in a way where managers and employees together identify, plan, organize, and communicate goals.

Nestle should add Psychological Appraisals to its performance management system. Psychological appraisals come in handy to determine the hidden potential of
employees.
THANK YOU