Nestles HR structure and why is it so?

From an organizational design perspective, Nestle is a matrix organization. It splits the globe into three
zones with respective reporting hierarchies: Zone AOA Africa Oceania and Asia; Zone Americas North
and South America; Zone Europe Western, Central and Eastern Europe. Whilst majority of its
businesses are organized within this structure, it also has a number of businesses with global mandates
and structure such as Nestle Water and Nestle Nutrition.

Moving to Nestle HR organization, at a macro level, it looks like a classic three-box model. However, in
order to take into account the complexity of business structure, and the complexity added by operating
within the global footprint of 84 countries, the HR organization in operation has a series of three-box
models within a macro three-box model. The structure is explained below:

Three Boxes at Nestle

Shared services or centers of scale

Some of the Nestles shared services operate globally within a structure called Nestle Business Service
(NBS). Payroll would be a good example for this. Other services operate at zone level or local (market)
level, such as personnel administration.

Centers of Expertise

The centers tend to be organized at a local or regional level, but they are coordinated globally.

Operational HR

HR business partners are organized locally, but they are coordinated throughout hierarchy, and so are
coordinated zonally or globally, dependent on the organization.

Corporate HR

Operational Centers of
Management Expertise 3rd
NBS
Party
Employee
Services

Operational Centers of Local Shared

Management Expertise Service

Nestle in the market HR

This model may seem complex, but it is based on some very specific design principles to ensure that this
model can be implemented in a flexible manner, dependent upon each Markets size, complexity and
structure. Operating this design maintains a lean and efficient HR organization. The key design principles
are:

1. To be consistent and simple, where there is no competitive advantage in being different and
complex.
2. People management must be a managerial responsibility
3. The maximum amount of information must be available at the lowest possible level.
4. Local HR technique sits with operational HR administrators, and is to be created in conjunction
with the pertinent components of Corporate Strategy and Market/Business HR
5. Business/Operational Unit Heads and factory/DC managers do not necessarily need to have a
dedicated HR Manager. The decision on the nature and organization of these resources should
be taken according to the size, complexity, and geographic location of the concerned units and
sites.
6. Employee services and HR centers of expertise are centralized and provide services to all
businesses operating in a Market unless by exception it makes sense for them to be
localized.
7. Where NBS organization operates, it is independent from any particular business in the
market, and must offer competitive advantage with regard to alternative providers.

Underpinning these global design principles, there are global development programs that ensure
consistent level of HR capability.

The HR structure that Nestle has followed is Hybrid. It is a blend of brought together centralized
authority and local empowerment. In the hybrid system, the worldwide official positions and worldwide
director positions are completely integrateddrawing upon all locations. It needs a strong system of
training and promotion to ensure that managers from all out locations would have the opportunity to
rise through their local ranks to move into the integrated manager and executive ranks. Global
integration and local optimization are two goals that are attainable through global technology platforms,
and proper role and process definition. Global consistency and standards ensure efficiency and scale;
local flexibility drives agility, growth, and employee engagement. Both global consistency and local
flexibility are necessary to develop an HR organization that is globally fit for purpose.

Why is it so?

A common global technology platform supports the global HR organization and offer easy-to-use
self-service capabilities to managers and employees.

Establishes a core set of services for HR administration and talent communities of expertise.
Encourages communities of expertise to learn from local business partners to determine leading
practices in the field.

Once global processes, roles, and expectations are created, expand the team to include
communities of expertise and let local HR leaders create, customize, and deliver local programs.
They leverage the corporate infrastructure and standards to optimize talent strategies and HR
programs in each business and geography, driving impact at the country level.

Reduces the need for HR generalists and move them into the role of HR specialists, focused on
recruiting, organizational development, employee relations, and compensation. These
 specialists are located in or assigned to the business and operate as a network of expertise,
sharing skills with each other.

Each member knows how to use all tools and data and feels connected to the larger community
of leading practices and new ideas in the marketplace. Deep expertise belongs in HR no less
than in other functions.