The World is Flat Globalisation It means primarily

The World is Flat “Globalisation? It means primarily creation of horizontal networks and increasing role of co-operation and mutual trust …“ Thomas L. Friedman – The World is Flat A Brief History of the Twenty-First Century Good Food, Good Life

Change in the Mindset FROM Hierarchy Command Experience Competing Discipline National - Functional TASK ORIENTATION Good Food, Good Life TO Network Alignment Insight Co-operation Initiative Cross-border/Cross-functional RESULT ORIENTATION

The Develop People Initiative Core elements: 1. Holding an effective performance and development dialogue in an agreed performance and career management process 2. Applying 13 behaviours from the Nestlé Leadership Framework 3. Planning succession Good Food, Good Life

Management development Scope & working principles Ê Competency based recruitment Ê Definition of Key positions at local / regional / Group levels Ê Succession planning for Key positions with target of 2 successors per position Ê Performance assessment using competency based: - Progress & Development Guide (appraisal form) - 360 o Feedback - Training and development Ê Expansion of Talent pool based on new definitions Good Food, Good Life

Management development Sourcing M De an ve ag lo em pm e en nt t Management Development & Sourcing Good Food, Good Life Internal sourcing & People development for Key positions So ur ci ng

Develop People – different from current performance management systems FROM TO • No consistency across markets • One consistency standard across the world • Seldom applied to top management • Starts with and is led by top management • The focus was on ‘what’ people achieved • The focus is on ‘what’ people achieve, and ‘how’ they do it • Performance and Competencies were rated in an inconsistent way • Move away from ratings to the language of performance • Salary increases generally based on performance • Salary increases based on 5 criteria: - performance, potential, market forces, fairness and salary history Good Food, Good Life

Cascading objectives(O), strategies(S) & measures(M) O S M Company O The company strategy becomes the divisional objective and the divisional strategy becomes the department objectives and so on Good Food, Good Life S M Division O S M Department O S M Individual/Team Action Plan

Nestlé Leadership framework Progress & Development Guide Flat and Flexible Structures Inspiring Management Long-term Development Dynamic Compensation Life-long Learning Good Food, Good Life

Using the Nestlé Leadership Framework • Behavioural Competencies – behaviours provide the point of difference between a good performer and an average one • The Nestlé Leadership Framework provides direction on the behaviours that matter at Nestlé • They apply to everyone in the business What is a competency ? Any characteristic of a person that differentiates levels of performance Demonstrably Related to Superior Performance in a Job Characteristic that Enables Superior Performance : • more often • in more situations Good Food, Good Life

Individual behavioral competencies Skill Knowledge Social Role Self-Image Trait Motive Good Food, Good Life Behaviours

Individual competencies (cont’d) The Competency Foundation Characteristics at different levels: Skill Knowledge Social Role Self-Image Trait Motive Skills are things a person knows how to do well, e. g. , reading a profit-and-loss statement. Knowledge is what a person knows about a particular substantive area, e. g. , basic accounting principles. Social Role is the image a person projects to others. It reflects a person’s values - what one believes is important to do - such as developing others or providing a sense of mission & direction. Self-image is the way a person sees him/herself - the internal concept of identity, e. g. , seeing oneself as a teacher or leader. Traits are relatively enduring and stable characteristics of a person’s behavior, e. g. , being a good listener, or being able to recognize patterns across seemingly unrelated elements. Motives are natural and constant thoughts and preferences in a particular area (i. e. , Achievement, Affiliation, and Power) that drive, direct, and select a person’s outward behavior. Good Food, Good Life

Behaviors become more important as job complexity increases Relative Importance « Natural » Tendencies and Traits For Example: Task-Related Knowledge and Skills For Example: Low Good Food, Good Life Results Focus Curiosity Proactive cooperation Courage Knowledge of Electronics, Companies Products, Labor Relations, Law, Skill in active listening, Negotiating Job Complexity High

Nestlé Leadership Framework 4 clusters and 13 behavioral competencies Inspiring People • Lead people • Develop people • Practise what you preach Adding Value Opening Up • Know yourself • Insight • Service Orientation • Curiosity • Courage Good Food, Good Life • Results focus • Initiative • Innovation & Renovation Dealing with others • Proactive co-operation • Convincing others

When should you do an Interim Review? ü At least once through the year to ensure the reviewee is on track ü When the reviewee's objectives change significantly ü When the reviewee changes positions ü When the manager changes position ü In these last two situations the full end of year process should be completed including giving an overall assessment ü This information should be provided to the reviewee's new manager Good Food, Good Life

Performance Review Cycle Set Personal Performance Objectives* Business Objectives Development Plan Final Review Salary Review Identify Behaviors Review Progress • The performance review is one of the inputs into salary review. • The other criteria for salary increase – if any – are: potential, market forces, fairness and salary history. • Coaching @ Feedback are ongoing and occur at each stage of the Cycle. Good Food, Good Life

Training and Learning ü Change of training culture (focus on training on the job) ü Emphasize the role of manager ü Use of new Nestle Leadership Framework & Nestle on the Move concept ü Skills courses transfer to the competency based models ü Course nominations based on results of appraisal meeting – PDG forms ü New e-learning programme ü E-learning & Blended solution Good Food, Good Life

Career Development / Planning ü Change of career development and succession planning culture ü Emphasize the role of manager ü Use of new Nestle Leadership Framework & Nestle on the Move concept ü Profile assessment based on the competency model: - For each position are defined key competencies - For key people 2 successors are nominated ü Succession nominations & career plan based on results of appraisal meeting – PDG forms Good Food, Good Life

Career Committee: ü Mini-career Committee = HR Partners + Division Head ü Company CC = HR Partners + Managers Committee ü It is about: headcount organisational structure key people (development, successors, …) high potential (development, successors, …) expats / inpats remuneration interdepartmental discussion on HR issues Good Food, Good Life

Nestlé on the Move – Year 1 Appraisal meetings, setting objectives, performance evaluation Train all appraisers and appraisees Results / evaluation Train the managers Feedback to managers Career committee and training plan 2005 Start-up 11 -12/2003 01 02 03 04 05 06 07 08 09 10 11 12 01/2005 Train new appraisers and appraisees Appraisal meetings, setting objectives, performance evaluation Start-up regular process Good Food, Good Life

Nestlé on the Move – Year N+ Appraisal meetings, setting objectives, performance evaluation Train factory appraisers and appraisees 11 -12/2004 01 Train all new appraisers and appraisees Results / evaluation Training nomination 02 03 04 05 06 Mini-career committees 08 09 10 11 12 Mini-career committees Career committee Good Food, Good Life 07 Career committee 01/2006

Management Development Cycle In red: Market Inputs Mid - February In green: Zone Inputs Nov- Feb Progress & Development review (incl. review of delivery on objectives) In black: EBM Inputs September EBM validation Succession Plans for Corporate Key Positions and Man. Com Positions July to 30 th August: Zone Validation of the Succession Plan Final list transmitted to the markets after EBM Validation P& DG for Key Positions, Expatriates and High Potential Talent Pool and Management Development March 11 th: March Talent Pool proposal by evaluation of potential Sept - Oct Plans and Actions to fill gaps Feb. 23 th: HR Zone EUR deliver current Verified Talent Pool list is due back to the Zone March 14 to 18: Pre-calibration Talent Pool discussions - SBU/Functions March 21 to 29: June - Aug Succession Planning April- May Talent Pool Validation Zone Validation of the Talent Pool submissions Final list transmitted to the markets after EBM Validation April 12 th EBM Talent Pool Validation May 21 st: Submission of the June 1 st to June 29 th: Management Development and Succession Planning discussions SBU/ Function Good Food, Good Life Management Development and Succession Planning proposals by the markets for Key Positions

Personal Development Cycle P&DG Training & Development Plan Career & Succession Plan Objective setting (short/long term) Good Food, Good Life

Personal Development Cycle – 4 steps End of February: • PDG finalized by Markets and forwarded to CE HR Nov-Jan Run PDG (incl. achievement of objectives) September: Applications for Rive Reine programs completed • Personal objectives defined March May-Oct Run training & actions to close development gaps Consolidate individual training & development plan April Prepare regional training & development plan End of March: Individual training & development consolidated by CE HR Mid of April: Training plan developed for Region End of April: Plans approved by Cd. D Good Food, Good Life

Succession Planning Cycle – 4 steps End of February: Nov-Feb PDG finalized by Markets and forwarded to CE HR Run PDG (incl. achievement of objectives) March June-Oct End of March: Propose succession plan Succession plan proposals logged into database by Markets and CE Management Plans & actions to fill gaps End of April: April-May June: CE Succession planning completed and sent to HQ Vevey Good Food, Good Life Succession planning discussions between • CM – CE • CE – LOC Succession plan reviewed through and finalized by CE Director and CE HR May: Approved succession plan

Training & Personal Development Cycle End of February: Nov-Feb October Run PDG (incl. achievement of objectives) T&D budget established through CM + CE HR + CE Finance PDG finalized by Markets and forwarded to CE HR March-April June-Oct Plans & actions to fill gaps June Individual training & development plan approved by CM + CE HR Good Food, Good Life Collect and assess needs vs existing opportunities May Develop individual Training & development plan End of April Training and development needs consolidated and comparison to existing training * opportunities completed Existing Training • Country local: CM, local HR • Nestlé centralized/decentralized: CE HR • Rive-Reine: CE HR • E-learning tools: CE HR

Q&A Questions & Answers Thank you! Good Food, Good Life