BSBLDR805: Organisational Change Culture Review Report - Nestle

This report is a comprehensive analysis of Nestle's change management strategies and organizational culture, examining its capacity to adapt and evolve in the face of market pressures. The report begins with a review of Judge and Elenkov's (2005) article on organizational capacity for change, highlighting the importance of resource-based view (RBV) and organizational change acceptance. It then focuses on Nestle, evaluating its financial performance, attitude towards change, and the impact of its decisions on various stakeholders, including employees and suppliers. The report delves into specific issues such as trustworthy leadership, ethical concerns in supply chains, and instances of middle management misconduct. Furthermore, it analyzes Nestle's organizational climate based on Marin-Pantelescu and Maniu's (2015) criteria, identifying areas for improvement. The report concludes with a discussion of potential strategies to enhance Nestle's organizational climate, offering valuable insights into effective change management practices within a global corporation.

Running head: NAME AND ID OF STUDENT
Change Management
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Author Note:

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Assessment Task 1.
1. Organisational Change Culture Review:
Part 1.
A review of the article titled, ‘;Organizational capacity for change and environmental
performance: an empirical assessment of Bulgarian firms ‘ composed by Judge and
Elenkov (2005) reveals that environment has emerged as one of the main drivers of
organisational changes. The article stands on two concepts namely, resource based view
(RBV) and organisation change acceptance as an evidence of organisational capability. The
resource based view refers to the model which mentions that firms are internally capable of
achieving high levels of performance. The RBV clearly mentions that business organisations are
able to acquire, retain and enhance their competitive advantages in the market owing to their
capabilities to mobilise their resources. The theory also goes to mention that human resources is
one the most important resources whose unique capabilities and skills play pivotal role in
ensuring that organisations achieve high market performances. The theory also recognises the
ability of the business organisations to contribute towards preservation of the environment by
embracing changes in their operations towards sustainability. This leads to the discussion of the
second concept namely, ‘Organizational capacity for change’ or OCC. The OCC is defined as
the capabilities of business organisations to embrace organisational changes. The article then
goes on to mention the eight aspects in the organisational culture of organisations which
attribute them with their respective OCC. They are trustworthiness in leadership, trust between
the management and employees, able leadership, involvement of the middle level
managers, innovative work culture, sense of responsibility, coordination between the
different systems or operations and systems thinking. The article also speaks about the
necessity of a focussed approach to change management between the management members
to ultimately lead to a effective change embracement. The review of the article also brings into
light a few shortcomings in the article. The article does not consider the concepts like corporate
social responsibility and stakeholder management. These concepts could have given the article
a further expanse. The article also speak very little on change management processes which the
management bodies of business organisations can adopt to lead organisations under their
command to embrace changes to achieve sustainability. The article however, can be used as a
base to carry on future researches on RBV and OCC.

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Part 2.
Part a.
The organisation chosen for research for the research namely, Nestle S.A. extremely
capable to embrace changes but its attitude towards changes lacks sufficient appropriateness
befitting its market position.
Capacity to change:
Nestle S.A. is based is the world’s largest food manufacturing company based in Vevey
Switzerland and operates in more than a hundred countries. The company owns some of the
global brands in the food industry like Nescaffe and KitKat. The company generates a very high
profit. The company in 2018 earned net profit after tax of CHFmn 10468 in 2018 compared to
CHFmn 7511 in 2017 (Nestle.com. 2020). The company is listed primarily on SIX Swiss Exchange
and on several other top stock exchanges in the world. The company enjoys a stronger position
in the stock market compared to many of its top competitors like P&G and Coca Cola. However,
one can also point out that the company does face competition from its competitors like Unilever
whose shares hold high prices in the share market compared its shares (Bloomberg.com. 2020).
This shows that the company along with its subsidiaries around the world is financially strong.
Nestle employs thousands of people all over the world and hold several supply chains to feed its
operations. These factors attribute largely to the capacity of Nestle to embrace changes.

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Figure 1. Excerpt of the financial statement (December 21, 2018) of Nestle S.A. showing profit
(Source: Nestle.com. 2020)

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Figure 2.Graph showing share prices of Nestle for 5 years against its 3 competitors
(Source: Bloomberg.com. 2020)
Attitude to change:
The attitude to changes which Nestle holds is in general not in the interests of all the
stakeholder groups. This can established by drawing inferences on some of the recent changes
which have come about in the operations of the company. Nestle, in one of its press releases
issued in 2017 mentioned it would move its infant nutrition segment, one of the most profitable
segment, to a strategic business unit which would be be responsible for the management of the
infant nutrition brands (Nestle.com. 2017). Decentralisation enable companies to reduce cost of
operations, transfer a portion of their tax expenditure and make the decision making processes
more dynamic (Hummel, Pfaff and Bisig 2019). The outcome of these changes like creation of
SBUs to cater to specific business segments of the companies is high market performance.
Nestle repeated its strategy of shifting particular business segments under the stewardship of
dedicated SBUs in 2019. It shifted its Nestle Waters business to a dedicated SBU. Thus, in the
light of this change, one can establish that the attitude of Nestle in terms of change management
befits its status of the world largest food manufacturing company. However, the attitude suffers
from certain flaws. The press release issued in 2019 pertaining to the shifting of water business
of the company to a dedicated clearly mention, ‘This move, subject to employee consultation
where required, will help utilize Nestlé’s strong local expertise, better respond to rapidly

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changing consumer preferences, accelerate profitable growth and create synergies.’
(Nestle.com. 2019). However, in reality did not protect the interests of some of its stakeholder
groups including employees and suppliers. In fact, the changes were centred largely on the
interests of the management and the shareholders at the expense of the interests of the
employees and the suppliers. The company in the US, closed operation segments which
included 230 facilities, 1400 trucks and 2000 supply chains when it decided to end its direct-to-
store business model. The decision towards change the business operational methods of the
company led to redundancy of around 4000 employees. This move of Nestle towards embracing
change was however lauded by the management of the company, shareholders and securities
market analysts (Bloomberg.com. 2019). The company in fact, closed eight frozen distribution
centres under its ownership (Medici 2019). One can point out that these two moves of the
management of the company in fact contradicts the claim in the press release of 2019 which
mentioned that the company would consult its employees as a part of its change management
strategies (Nestle.com. 2019). Thus, it can be established strongly, the change management
attitude of Nestle is inappropriate. This is because, it favours one group of stakeholders namely,
shareholders and management at the expense of other groups of stakeholders like employees
and suppliers (Whittle et al. 2016).
Part b.
The following are the key issues pertaining to the following criteria as far as Nestle is
concerned:
Trustworthy leadership, and trusting followers:
The issue which Nestle faces in terms of trustworthy leadership and trusting follower is
the lack of trust and alignment of the actual operations with the values, missions and visions of
the company which appear on the website. The ‘Our vision and values’ clearly mentions that
Nestle aims to benefit its stakeholders and create value to them. One can point out that the
employees and suppliers are important stakeholder groups. In fact, the company should operate
in ways to protect their interests (Kane, Dikeç and Park 2017). However, the ceding of
employees and suppliers which the management of Nestle conducted to cut costs and gain
support of a group of stakeholders including shareholders was unethical (Bloomberg.com.
2019). The decision had in fact, breached the trust of the employees and the suppliers affected.
Thus, one can establish on the basis of this analysis that Nestle suffers from the issue of trust
between the leaders (the management) and the followers (employees).

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Capable champions:
The issue which Nestle faces in championing in the global market is ethical issue in its
supply chains. The company procures palm oil, one of the main raw materials for its products
from suppliers in Malaysia who allegedly practice forced labour (Whoriskey 2019). Thus, one
can ratify that though the company claims to champion trustworthiness and ‘enhance people’s
lives’ in all aspects of operations, it fails to actually implement it (Nestle.com. 2020).
Involved mid-management:
The issue which involved middle level management in Nestle is the issue of sexual
discrimination against an employee which was legal issue. As per the US Equal Employment
Opportunity Commission, a female employees named Dawn Bowers employed at Nestle Waters
North America, was refused promotion based on her gender. In fact the company promoted a
less eligible male employee. This action of the middle level management contravened Title VII of
the Civil Rights Act of 1964. The company had to pay a penal charge of $300000 for breaching
the law (Eeoc.gov. 2017). Thus, it can be established that the middle level management of
Nestle was involved in an activity which amounted to an issue of legal t turpitude.
Innovative and accountable culture:
The company exhibited gross lack of accountability and lack of innovative stakeholder
management capabilities by ceding closing the supply chain which it owned. Nestle by closing
the supply chains affected around 2000 supply chains and 4000 employees, thus exhibiting lack
of accountability (Bloomberg.com. 2019). This strategy of Nestle clearly exhibited the issue of
lack of corporate governance by taking the decision to close down the supply chain. Moreover,
the company could deployed the employees and supply chains to cater to its new business
requirements instead of laying them redundant. Thus, this again lack of corporate governance
and innovative change management in the global food company (Tian, Shen and Liu 2017).
2. Manifestations of Organisational Culture
Review of article:
A review of the article titled, ‘The Importance of the Organizational Culture. Case Study:
Assessing the Organizational Climate Factors inside a Four Stars Hotel from Romania.’,
authored by Marin-Pantelescu and Maniu (2015) reveal several aspects about the importance of
organisational culture in the Romanian hotel industry. The very introductory statement mentions
that the companies operating in the particular markets come heavily under the influence of the

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macroeconomic conditions prevailing in the particular countries in which they operate. The
article article then goes on to mention the growing tourism markets in succinctly to provide a
strong substratum to the two main concepts namely, organisational culture and its
‘manifestation, organisational climate. The paper then goes to introduce the thirteen constituents
which make up the organisational climate briefly but clearly. However, the review of the article
also reveals that the authors did not establish the actual role of organisational culture and
climate in ensuring employee performance.
Part a. Analysis of the organisational climate of Nestle against 13 organisational climate
criteria:
The 13 aspects of organisational culture as per Marin-Pantelescu and Maniu (2015) are
clear objectives and tasks, positive interpersonal relationships, stimulating motivation,
performance support, effective leadership, objective assessment, organisational fairness,
identification with the company, quality of decisions, organisational learning and
stimulating activity, work overloading and personal security. An analysis of the
organisational climate of Nestle on the yardstick of these criteria would show that the company
strongly qualifies the criterion clear objectives and tasks. This is evident from the decision of the
management of Nestle to shift its significant business segments like infant nutrition and water
business under SBUs (Nestle.com. 2019). However, the company does not qualify on the other
parameters. This is because the decision of promoting a less eligible personnel at the expense
of a more eligible employee on grounds of gender clearly exhibit the lack in the interpersonal
relationships which exists in the organisational climate of the company (Eeoc.gov. 2017). The
company taking the decision to close its supply facilities rendered large number of employees
and supply chains which clearly establish that it does not qualify the last 11 criterion ownership
(Medici 2019).
Part b. One method to improve to organisational climate in Nestle:
The management of Nestle can improve on each of the thirteen criterion by taking a
more responsible towards decision making which would protect the interests of all the
stakeholder groups, to the extent possible. The company should consult its different stakeholder
groups prior to taking decisions in order to ensure that the outcomes of its strategies do not
benefit one group of stakeholders at the expense of the others to the feasible extent (Garcia-
Torea, Fernandez-Feijoo and de la Cuesta 2016).

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3. Learning Organisations:
Part a.
The two discipline areas which would be chosen from Senge (1990) to explore the ability
of Nestle to accept would be:
Systems thinking:
Nestle, in order to accept the changes it would embrace in order to sustain in the
extremely competitive business environment should adopt the system thinking approach. This
aspect of systems thinking should take both the top management, the middle management and
the employees into its ambit (Thite and Bhatta 2019).
Building shared vision:
The management of Nestle should emphasise on building shared vision in order to boost
its change management capacity. The management of the company should ensure this by
taking into account the interests of the different stakeholder groups and ensure protection of
their interests to the feasible extent (Du et al. 2019).
Part b.
Nestle would derive several advantages by applying each of the aforementioned
discipline areas. First of all, by applying systems thinking in its operations, the company would
be able to integrate the operations of its different functional units. The second advantage which
the company would be able to increase the efficiency of its operations.
The first benefit which Nestle would be able to enjoy by establishing shared vision would
be gaining support of its stakeholders including both the internal stakeholders and external
stakeholders. The second benefit which the company would be able to reap by establishing
shared vision would be increased competitive advantage owing to increased support of the
stakeholders.
4. Explain change management models and current best practice:
The change management model proposed by Kurt Lewin stands on three main key
elements namely, Unfreeze, change and refreeze.
Background of the model:
The change management model proposed by Kurt Lewin stands on the concept that
business organisations require to embrace changes in a smooth way. The model provides a
framework to the management of the business organisations to drive organisational changes in

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the organisations they command. The model enables the management take steps to minimise
the internal barriers to change to the feasible extent (Cummings, S., Bridgman, T. and Brown,
K.G., 2016).
Figure 3. Change management model by Kurt Lewin
(Source: Hussain et al. 2018)
Outlining of strengths and weaknesses of Lewin’s change model:
Strengths:
1. The model provides a visual framework to the management of business organisations to drive
organisational changes.
2. The model not only takes into account the quantitative aspects but also qualitative aspects
like stress of employees.
Weaknesses:
1. The model is irrational and cannot be implemented.
2. The model does not take into account the perspectives of the subordinate employees.
Drawing from own experience:
The experience has reflected the selection of the model to a great extent.

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The specific aspects of the change experience which was reflected on the change
management model are that business organisations have to embrace changes and they have to
gain support of their stakeholders in order to embrace changes efficiently.
The area of change which business organisations should consider to enhance change
management would be gaining participation of employees in the process.
5. Change management leadership strategies:
Change management leadership styles:
The two leadership style which support change management are as follows:
Transformational leadership:
The transformational leadership is the leadership style where the managers identify the
changes which have to be embraced. They then form strategies which would lead to the
achievement of the changes and bring about the necessary changes in the current operations in
the direction of the change. They motivate their subordinates to achieve the aimed changes
(Dong et al. 2017).
Participative leadership style:
Participative leadership style is the leadership style in which the managers enable the
subordinates to participate in the decision making process. The leaders empower their
subordinates to participate by providing them with training (Odoardi et al. 2019).
How different leadership styles can support/inhibit change management:
Autocratic leadership and laissez faire leadership styles can inhibit change management
by excess control and lack of control on subordinates respectively both of which are
inappropriate for change management. The charismatic and democratic leadership styles
support change management since both the styles enable participation of subordinates, which
ultimately makes change embracement smoother and efficient (Shamir, Arthur and House
2018).
6. Culturally diverse workplace:
Part a.
The term cultural diverse workforce refers to the workforces which companies employee
from different markets irrespective religion, cultural identify, gender and caste. Froese, Kim and
Eng (2016) mention that multinational companies today employ workforce from different host
markets besides their respective home markets. They even promote employees from their host

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markets to higher positions and even to higher management positions. As far as Nestle is
concerned, the company adopts cultural diversity in its organisation heavily. Cultural diversity
finds use in the very top management of the company which actually shows that importance of
the concept to Nestle. For example, Paul Bulcke, the chairman is of Belgian origin while the
Dinesh Paliwal, the President and CEO of Global Technology Company, one of the members of
the board is of Indian origin (Nestle.com. 2018). This diversity in workplace which Nestle holds
important has several positive impacts on the company like innovation and more accurate
decision making.
Part b.
The management of Nestle should recruit, induct and develop a culturally diverse
workforce by providing them with cultural training. This would enable the company to establish a
strong and culturally diverse work culture.
7. Continuous Improvement and Change Management
Continuous improvement and change management policies of Nestle:
Nestle adopts very strong continuous improvement policies and provides training to its
employees to improve their knowledge and skills. The change management policies of Nestle
are more centred on the management and stakeholders. The implementation processes of
change management policies have resulted in redundancy of 4000 employees in the past which
shows that the company is less responsible to employees while embracing the change
(Bloomberg.com. 2019).
Measurement of effectiveness of both continuous improvement and change management
processes:
Nestle measures the effectiveness of both continuous improvement and change
management in terms of profit earned (Nestle.com. 2018). The company does not take take into
account the qualitative aspects like employee insecurity regarding organisational changes
(Bloomberg.com. 2019).
Best practice model:
Nestle should adopt the best practice model of obtaining employee participation while
adopting continuous improvement and change management strategies (Serban and Iorga,
2016). This would attribute with support of employees and high levels of success (Nestle.com.
2018).