Key facts

Nestlé is one of the world’s largest Beverage and Food Company with more than 2000 brands that range from brand icons to local favorites. The firm has a vast global presence with its branches in more than 191 countries around the globe. The company traces its history to 1866 with the foundation of the Anglo-Swiss Condensed Milk Company. Nestlé was formed in 1905 after the merger with Anglo-Swiss and the company founded by Henry Nestlé (Nestlé, 2017). Since then, the firm has undergone significant growth and expanded to many nations around the globe. The purpose of Nestlé is to enhance the quality of life and contributing to a healthier future by helping shape a better society. The company also seeks to inspire the people in leading a healthier lifestyle, which plays an essential role in the long-term success of the community and the firm. Nestlé aims to conduct its business in a manner that will influence the society positively while still increasing its profitability (Nestlé, 2017).

The ambition of the company entails helping over 50 million children lead a healthier life and improving 30 million livelihoods in communities that are directly connected to Nestlé’s business activities. Furthermore, the company also strives to ensure that there are no adverse environmental impacts in its operations. To achieve all these, the business practices of the organization must observe fair dealing, integrity, honesty, and full compliance with all the laws surrounding its operations (Nestlé, 2017). For such concerns, it is crucial to evaluate the company’s code of conduct and identify if the entity lives up to its conduct. Recommendations will be developed to ensure that the corporate culture and business practices support the corporation’s code of conduct and ensure that actual or potential failures are corrected.

Summary of Code of Conduct

The implementation of the law of ethics by the company has allowed its reputation to remain the most critical asset. The code of conduct prescribes the values and principles that Nestlé has committed to worldwide (Nestlé, 2007). The presence of this system aids in the continuous implementation of the corporate business principles by establishing specific non-negotiable standards of behavior in critical areas. The code is designed to present a framework of reference against which all the organizational activities are measured (Nestlé, 2007). Also, the values allow the employees to seek guidance when they are in doubt about the proper course of action that they should take in a particular situation (Nestlé, 2007). The code of conduct requires all the employees within Nestlé to behave in such a way that they fulfill all their responsibilities without delegation. The employees are urged to avoid any behavior that could result in damage or risk Nestlé’s reputation. Thus, they need to act honestly and legally, and always put the company’s interests ahead of personal interests.

Compliance with Laws, Rules, and Regulations

The code asserts that the law binds the company and all the employees. The company is bound to the compliance with all the applicable laws and regulations. Also, the employees are required to adhere to the internal rules and regulations developed by the management. The internal laws are company-specific and may go beyond the statutory laws (Nestlé, 2007).

Conflict of Interest

A conflict of interest is likely to occur when the interests of an employee or a third party align with the corporate interest. In such a situation, the code requires the employee to act only in the interest of the company. In case the employee faces or is involved in a conflict, he is obligated to notify the management of a solution to be developed to avoid or correct the issue (Nestlé, 2007).

Outside Directorships and other Outside Activities

This code states that no activities shall be pursued outside of Nestlé if they will interfere with the employee’s responsibilities, or if they create a risk for the Company’s reputation. Also, outside activities that will result in a conflict of interest with Nestlé should be abandoned. Such functions are acceptable only in case the employee has authorization from a member of the Executive Board, for example, an officer, employee, partner, board member, and consultant. The approval is withheld in case the activity or position is likely to conflict with the employee’s responsibilities and Nestlé’s interests. Unless the employee receives prior authorization from the management, he/she shall pursue the outside activity at his or her own risk and cost and within their spare time (Nestlé, 2007).

Families and Relatives

Nestlé Company provides that the relatives or families of the employees and partners can be hired only if the appointment process is based on their qualification, experience, and skills. Also, there should be no direct or indirect reporting relationship between the relative and the employee. These principles are meant to ensure that there is fairness within the workplace in all aspects of employment including promotions, compensations, and transfers. However, precedence may be given to the children of Nestlé employees concerning training, internships, work during holidays, and other short-term engagements (Nestlé, 2007).

Corporate Opportunities

The employees of Nestlé shall not compete with the company or take any personal advantage of business opportunities that they discover during the employment unless they receive express permission from the Company (Nestlé, 2007). In case an employee is interested in pursuing an opportunity, he should inform the line manager who shall seek the advice of the management (Nestlé, 2007).

Insider Trading

The Company prohibits the sale or purchase of shares that is based on internal information that is not yet disclosed to the public. Non-compliance may result in both disciplinary and criminal charges to the perpetrator (Nestlé, 2007).

Antitrust and Fair Dealing

The company is prepared to compete fairly in the current business environment and ensure that it conducts its operations by all fair dealing and antitrust competition laws. As such, all employees are required to ensure that the commercial prices and policies are set independently without any formal or informal agreement with competitors. Furthermore, the territories and customers are never allocated between Nestlé and its rivals but are the result of fair competition (Nestlé, 2007). Additionally, all employees, particularly the ones in the fields of sales and marketing and are in direct contact with the competition are required to adhere to the applicable competition laws (Nestlé, 2007).

Confidential Information

The success of the company is because of its confidentiality and non-disclosure policies. Unless required by law or requested by the management, the employees shall not disclose any confidential information to competitors or any third party. Also, the employees must avoid unintentional disclosure by applying special care when transmitting or storing sensitive information (Nestlé, 2007). Failure to comply with these laws may lead to termination of employment and criminal prosecution (Nestlé, 2007).

Fraud Protection of Company Assets and Accounting

The employees shall not engage in any fraudulent activities or be dishonest while conducting their duties. The use of the company property, assets, and financial reporting should be done by the organizational policies as well as the external reporting standards. Any misuse of company assets and property or misrepresentation of the financial reports may attract disciplinary action and criminal prosecution. Nestlé’s financial statements are used by various stakeholders and are the basis for fulfilling the obligations of the organization. As such, all the financial records must be accurate and in line with the accounting standards and external reporting standards (Nestlé, 2007).

Bribery and Corruption

All the employees must never promise or offer any financial or personal advantage to obtain a business or any other benefit from a third party. Also, the employees must not accept such benefit from a third party. As such, the company prohibits the offering and receiving of improper benefits by employees, the management, or any third party. Any member found in violation of this code is subject to disciplinary action or criminal charges (Nestlé, 2007).

Discrimination and Harassment

The company respects the privacy and personal rights of all the employees and shall ensure equity in the workplace. All employees are required to respect others irrespective of their gender, origin, religion, ethnicity, age, race, or sexual orientation (Nestlé, 2007).

Failure to Comply

Each employee is accountable for ensuring that he/she is complying with all the provisions of the code of conduct and seek guidance where necessary (Nestlé, 2007).

Reporting illegal or non-compliant Conduct

All employees are required to report any actions or inappropriate practices based on the provisions of the code to the line manager or the appropriate member of the human resource management (Nestlé, 2007).

GAP Analysis

Discrimination, Harassment

The code that highlights discrimination and harassment does not include how the employee achieves fairness and avoids bias. Lack of fair opportunities is a common vice in the workplace, and many people have fallen victim to unfair practices and discrimination. Employees are concerned with managerial favoritism, equal recognition, and unfair pay systems (Komodromos, 2014). Many leaders struggle with fairness issues, and it is essential to include it in the code of conduct. Komodromos (2014) notes that it is important to focus on the employee perception of organizational justice since it influences the attitude and behavior of the employees. Komodromos (2014) underscores that the concepts of employee’s understanding of trust, fairness, and management change are crucial and should be part of the code of conduct. Different research has extensively analyzed an employee’s perceived organizational justice. The researchers have concluded that corporate fairness has a positive impact on various outcomes. As such, an organization will operate more effectively and maintain its competitive advantage by managing the fairness of employees more effectively using techniques that facilitate trust and minimize resistance within the organization (Komodromos, 2014).

One approach that can be applied to enhance fairness is reaffirming that all employees will receive an equal opportunity to be recognized. Enhancing equality is particularly challenging when dealing with an organization with different branches, such as Nestlé. The management may face a challenge in ensuring fairness especially during the annual employee’s award events (Erb, 2017). The other approach is creating the sense that promotions are handled fairly within the organization. The best approach is to ensure that all employees are eligible for a promotion irrespective of their nationality, race, gender, or sexual orientation. The management also has to ensure that frequent evaluations are conducted on all employees to identify the most qualified person based on performance (Erb, 2017).

The company should also include the need for transparency and commitment to equity in the payment structure. The compensation system should be transparent, and Nestlé must ensure it is committed to promoting equity in the remuneration system. The HR department is encouraged to develop a compensation document for the employees at all levels. The manuscript should communicate each employee’s total compensation, including items such as medical coverage, bonus, paid time off, base salary, overtime payment, and other important factors (Erb, 2017). Additionally, the management should ensure the presence of a fair appeal process. Such an initiative will inform the employees that they have a fair opportunity of having their complaints and grievances heard by the management. One approach is creating an Employee Advocate Program that will be responsible for receiving and hearing all claims and appeals by the employees. This approach will allow individuals and teams to voice their concerns or constructive criticism to another employee outside his/her regular communication channel (Erb, 2017).

Friedman (2010) underscores that employees are discriminated based on their religion and culture indirectly. The management should ensure that each employee’s right of fellowship/worship is upheld. As such, Muslims may be excused from working on Fridays, and Christians on Sundays based on each employee’s religion. The inclusion of the various components that will be used to promote fairness will motivate the employees to be more open as they can air their grievances. The current system does not include ways in which the management will avoid discrimination and promote fairness. The presence of these rules will ensure the integrity and easy management of a diverse workforce.

Compliance with Laws, Rules, and Regulations

The code of practice fails to include the organizational policies and procedures that should be followed by the employees within the firm. The presence of these policies and procedures will indicate the internal rules that the employees within the organization are subjected to as well as the expectations of the management. The policies and procedures provide clarity to the employee pertaining the organizational requirements as well as activities that are of critical importance to the organization, such as legal liability, health and safety, regulatory requirements, and issues that have serious consequences (Oehl, Floyd, & Fowler, 2010). There have been some changes in the food and safety regulations owing to the increasing awareness campaigns (Oehl, Floyd, & Fowler, 2010). The food and beverage agencies have introduced stringent laws that aim to protect the consumers. Furthermore, the various regulatory bodies have introduced a new framework for monitoring the food safety and protecting the consumers (Oehl, 2010).

In addition to the health standards, the safety laws should also be included in the policies and procedures. The food service industry is exposed to various risks, including contamination of products, fire hazards, and other potential dangers (Kasim & Scarlat 2007). The company must include the procedures as well as the safety measures in the code of conduct to ensure that all employees are aware of the requirements. The situation will reduce the number of accidents in the kitchens and reduce the amount spent in paying medical bills for employees harmed in the workplace (Kasim and Scarlat 2007). Also, the policies should include food handling techniques to avoid contamination. Additionally, the environmental laws should be included in the code. They should include the process of handling waste and waste disposal by employees. Nestle is committed to the conservation of the environment, and all employees should be aware of the policies regarding waste disposal. The initiative will also promote the cleanliness of the facility and prevent food contamination due to safe and waste disposal systems. All employees should know about waste handling and have the proper equipment to ensure that waste is disposed correctly and avoid contamination (Kasim and Scarlat 2007).

The introduction of the organizational policies and procedures will keep the employees informed of the standards that they should meet as well as the health regulations that they must observe. For instance, the policies and procedures should highlight the safety standards that must be observed in the workplace and the dress code. Such actions will ensure that all the health regulations and requirements are met to avoid any violations of the statutory rules. On a similar note, Oehl (2010) reiterates that the health and safety standards are subject to change, and the management should review the policies and procedures to ensure that they are up-to-date. All the employees must be informed of any changes in such regulations and measures taken to ensure that they are implemented. The presence of such policies and procedures in the code will ensure that the employees are aware of the laws that they should follow, which limits the violation of corporate and statutory laws (Oehl, 2010).

Recommendations and Conclusions

Recommendations

We recommend the establishment of an engaging business culture that supports the individual and professional objectives of the employees as well as the corporate goals. The business culture can be created through improved engagement with the employees by introducing a better communication structure between them and the management. Communication is vital for any organization, as it will encourage the collaboration between all the stakeholders within the firm. The process can be boosted by creating a forum or program for the employees in which they can express their challenges as well as offer suggestions to the management. The employees at Nestle have direct communication with the employees, and their insight may be invaluable in turning things around to increase sales and profitability. Improved communication will boost the relationship among the employees, which helps to avoid any discrimination or harassment. Also, it will promote fairness as the staffs can easily communicate with the management in cases in which they are mistreated or feel aggrieved.

We recommend the reinforcement of the culture of accountability within the workplace. For example, breaking things down into meaningful goals and measurable metrics for everyone. Also, make accountability a part of your team’s normal way of operating. So, each employee should have a responsibility in a particular area to enhance accountability within the organization. Such action will eliminate carelessness and will encourage each to follow all the laid down guidelines and policies. Responsibility will ensure that the line manager confirms that all employees follow the relevant health and safety laws to avoid injuries and mistakes. Also, the HR manager will ensure that all the employees adhere to the rules and regulations laid down in the code and continuously update the policies to accommodate the changes in the health and safety laws.

Conclusion

The presence of a code of conduct ensures that all the employees within the organization follow the rules and guidelines laid down. Nestlé faces a significant challenge in handling its human resources mainly due to its size and global presence. The primary goal of the company is to conduct its business in a manner that will positively influence the community while still growing its profitability. Also, the company strives to make sure that there are no negative health, safety, and environmental impacts of its operations. To achieve these goals, the company follows laws pertaining fair dealing, honesty, full compliance, and integrity. Some of the aspects included in the code of conduct include conflict of interest, compliance with rules, regulations, and laws, corporate opportunities, antitrust and fair dealing, insider trading, bribery and corruption, confidential information, fraud protection of company assets and accounting, and discrimination.

There are some gaps in some of the provisions of the code of conduct. For instance, the issue of fairness is a common vice in the workplace but is not sufficiently covered in the code. The management should reaffirm that all the staff receives equal opportunity to be recognized and that the compensation system is transparent and fair. Also, they should ensure that issues regarding promotions are mentioned and handled fairly within the organization. Another critical issue that is omitted is the compliance laws and regulations that must be followed. The code should include the organizational policies and procedures such as the health, safety, and environmental laws. Taking such actions will boost the compliance amongst the employees since they will be aware of such laws.

References

Erb, M. (2017). Four Ways to Foster Fairness in the Workplace. Retrieved from https://www.entrepreneur.com/article/219505

Friedman, R. J. (2010). Religious Discrimination in the Workplace: The Persistent Polarized Struggle. The Tennessee Journal of Business Law, 11, 144-165.

Kasim, A., and Scarlat, C. (2007). Business Environmental Responsibility in the Hospitality Industry. Management, 2(1), 5-23.

Komodromos, M. (2014). Employees’ Perceptions of Trust, Fairness, and the Management of Change in Three Private Universities in Cyprus. Journal of Human Resources Management and Labor Studies, 2(2), 35-54.

Nestlé. (2007). Code of Business Conduct. Retrieved from http://www.nestle.com/asset-library/documents/library/documents/corporate_governance/code_of_business_conduct_en.pdf

Nestlé. (2017). About Us. Retrieved from http://www.nestle.com/aboutus

Nestlé. (2017). The Nestlé company history. Retrieved from http://www.nestle.com/aboutus/history/nestle-company-history

Oehl, F., Floyd, D., and Fowler, A. (2010). Food Safety’s New Regulatory Reality: Are You Prepared? Retrieved from https://www.foodsafetymagazine.com/magazine-archive1/aprilmay-2010/food-safetys-new-regulatory-reality-are-you-prepared/

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