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Nestle Philippines Inc. and their Family-Friendly Benefits

Working Paper · January 2002

DOI: 10.13140/RG.2.2.20928.53764

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Maria Asuncion (Ina) Arraiza Ortiz

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 Final Copy: Business Case on Work Life
22 January 2002

NESTLÉ PHILIPPINES, INC.

AND THEIR FAMILY-FRIENDLY BENEFITS1

I. THE CHALLENGES TO BUSINESS COMPETITIVENESS

In 1899, the Nestlé and Anglo-Swiss Condensed Milk Company started sales operations in
Binondo, Manila. World War II forced the Company to temporarily suspend its operations.
After the war, Nestlé S.A. set up a distribution company called Filipro, Inc and sixteen years
later it entered into a partnership with San Miguel Corporation resulting in the formation of
a manufacturing company called Nutritional Products, Inc. Later on, Filipro and Nutripro
merged under the name Filipro, Inc., until 1986, when the name of the Company was
changed to Nestlé Philippines, Inc.

In the 1980’s, Nestlé Philippines, Inc. experienced prevalent labor unrest. Although the
labor strikes were settled in the late 1980’s, the relationship between the Company and the
employees at that time remained strained. The feeling of distrust within the organization
constantly threatened the newly acquired peace.

Though labor unrest was pervasive during that time, Nestle still managed to get itself
through its most critical stretch of labor-related crisis as management analyzed the
company’s employee relation situation against the totality of its corporate culture
environment. The Company then instituted measures to ensure its continued operations
and forestall the eventuality of folding up and leaving the country for good. Eventually, the
company’s efforts paid off. It even garnered the Employer of the Year (EOY) Award of the
Personnel Management of the Philippines for 1995.

1 Prepared for the Ayala Foundation and the Ford Foundation by Salvador Justino Occiano and Ina Ortiz of the Research
and Advocacy Department of the Employers Confederation of the Philippines based on the primary and secondary
information provided by Pilar Darvin-Moreno and Sandy Castro of Nestle Philippines. All misrepresentation of data is
entirely of the Team’s accountability.
The EOY Award recognizes a company whose leadership, dynamism and professionalism
enable it to fulfill its human resource management responsibility. The company is able to
demonstrate its leadership, strategic thinking and implementation, continuous improvement
in HR processes and programs, linkage of HR to business objectives and employee focus.
The EOY is meant to give public honor to the company in the hope that others may follow
its example.2

Demographic Profile and Work Schedules

Nestlé Philippines, Inc., as of 18 December 2001, employs a total of 3,782 people, plant-
based, office-based and sales employees. A configuration of employees across different work
sites is provided below.

Table 1.
Workforce Configuration and Other Information

WORKSITE ESTABLISHED WORKFORCE3 EMPLOYEE TYPES

Cabuyao plant 1976 920 Office and Factory

Lipa plant 1992 356 Office and Factory

Pulilan plant 1993 320 Office and Factory

Cagayan De Oro 1984 566 Office and Factory

Plant
Ice Cream Acquired in 1996 700 Office, Factory and Sales
(Aurora-Sta. Mesa)
Makati Admin. 920 Office and Sales
Office

2 The criteria and their respective operational definitions cited by the Personnel Management of the Philippines (PMAP) for
the Employer of the Year award were the following: Leadership, as evidenced by the company’s senior leaders to set,
communicate and deploy organizational values, performance expectations and a focus on creating and balancing value for
customer and other stakeholders; establishes and reinforces an environment for empowerment and innovation, and
encourages support for organizational and employee learning; assesses organizational health, competitive performance and
progress relative to performance goals and changing organizational needs; Strategic Human Resource Planning,
translates human resources capabilities and needs in the company’s strategic planning process and how they communicate
and deploy these objectives, action plans and performance measures to achieve overall organizational development;
Human Resource Focus, as evidenced in the company’s overall work system, employee education, training and
development; and employee well-being and satisfaction; Process Management, as evidenced by the company’s ability to
improve support processes in order to achieve better performance and keep them current with business needs and
directions; and Business Results, determines the current trends and levels in key measures and/or indicators of employee
well-being, satisfaction and development and how the overall HR systems and philosophy contribute to the bottom line.
Information provided by the Personnel Management Association of the Philippines, 12 December 2001, in an informal phone query and thru
electronic mail.

3 The count covers both managerial and non-managerial employees.

 Across the country, Nestlé has nine (9) unions organized in its five different production
plants, administrative office and sales offices. The management is dealing therefore with
different bargaining units, from daily-paid to monthly-paid employees, from its sales force
workers to office union, with each unit having salary and benefits expectations different
from the other, that is to an extent influenced by the class and age of workers and locus of
environment of the office and each of the plant.

Approximately, eighty percent (80%) of its employees are married and have families.

The company adopts a flexible work schedule for its employees in its Administrative office
in Makati City. Their workweek is from Mondays to Fridays, from 7:30 a.m. to 4:30 p.m.,
flexible until 9:00 a.m. to 6:00 p.m. In the factories, production is on a 24-hour basis and
employees generally have three shifts: 6:00 a.m. to 2:00 p.m.; 2:00 p.m. to 10:00 p.m.; and
10:00 p.m. to 6:00 a.m.

II. WORK-LIFE DIRECTED RESPONSES TO BUSINESS COMPETITIVENESS

The Rationale for Implementing Family-Friendly Programs and Benefits

The company has not been explicit in its provisions of work-life programs for its employees
even up to this period. What they have developed in the earlier phase of the organization’s
history were family-oriented programs that proved to be the appropriate corporate strategies
and responses to a brewing labor tension. Over time, however, the family-oriented
programs have evolved and until now are still very much part of the Nestlé culture.

In the late 1980’s, after the settlement of the labor strikes, the company wanted to
determine, among other things, the level of employee satisfaction towards the organization.
Nestlé decided to conduct an organizational climate study. This study revealed that
employees put more value and importance on the kind of “treatment” they got from the
Company, than more tangible items like compensation. Comments ranged from the need
for recognition to the need to feel the Company’s concern for employees’ well-being within
and outside of work. This revelation made the Company re-think on its corporate values,
particularly, its relationship with employees. The assessment gave birth to two closely-
related values that Nestlé espouses until now: Family Spirit and Concern for People. From then
on, Nestlé made the conscious effort to recognize the persons behind the workforce --- that
the worker has a family, and that a happy family man is a happy worker.

For this reason, company programs were not only geared towards the provision of superior
compensation and benefits, but also reached out to employees and their families as well.
Initially, employee greeted the programs with distrust, questioning the motives behind its
inception and implementation. Fortunately, over time, the commitment to reach out was
eventually recognized, marking the beginning of a stronger relationship between the
Company and its employees.

Employee Programs Promoting the Family Spirit Aligned with Work-Life Balance

Nestlé believes that a strong people orientation is a big factor in a company’s long-term
success. To provide for its employees’ needs, the company has developed a wide range of
programs responsive to these needs and geared towards the continuing personal and
professional growth of its employees.

1. Training and Development

The company believes that training and people development are critical to enhancing the
overall competitiveness of the Company. Various seminars meet a range of functional and
personal development objectives, covering topics of management and leadership, work
values, lifestyle planning, family management and skills training.

2. S I N A G (Structured Implementation of Nestlé Activities for Growth)

Because of the company’s belief in what its people know and can do, Nestlé acknowledges
the employees’ desire to make a personal contribution to the success of the organization.
Small group activities (SGA’s), Quality Circles and Continuous Improvement Activities are
all part of the SINAG umbrella. They allow employees to engage in productivity
improvement projects that identify, analyze and formulate solutions to specific problems in
their work areas. Many projects have been successfully implemented, resulting in cost
savings and improved productivity. Not only did these activities enhance the spirit of
innovation and quality, they have also developed a greater sense of collaboration and
camaraderie among all levels of employees

3. Sports and Recreation

Every year, the Company offers various recreational and sports activities in order to build
rapport and camaraderie among employees in and out of the workplace. Sports tournaments
are held almost year round in the different plants. Every summer, outings are organized for
the employees and their dependents. To promote healthy fun and entertainment, the
Company also provides opportunities for the showcase of talents in various employee
contests.

4. Family Programs

Nestlé recognizes the vital role of the family in the individual performance of the employee.
This value is shown through the various programs involving the employees’ families. Every
summer, the Company organizes programs exclusively for the children of its employees.
These include workshops on painting, theater arts, cooking and exposure trips to museums
and science exhibits. Also included under this is the Milo Sports Clinic that provides for
teaching the basics of swimming, tennis and basketball. Programs for the spouses are also
held regularly. These include livelihood workshops that teach them skills in handicrafts
making, meat processing, and other practical skills.

5. Nestlé Scholarship Program

The Scholarship Program seeks to recognize the academically outstanding children of Nestlé
employees. The company hopes that, more than the financial assistance given to the
scholars, they will carry with them the spirit of excellence that will mold them towards future
professional success.

6. Alay-Kapwa Program

The Alay-Kapwa is an outreach program that is fully managed and implemented by Nestlé
employees and supported by the Company. Alay-Kapwa volunteers identify and implement
various out-reach programs and organize fund-raising activities for the projects as well. The
Company, on the other hand, shows its support by donating an amount equivalent to
whatever value the group is able to raise. Alay-Kapwa activities have increased the social
consciousness of the employees participating in these projects and, indirectly, elevated their
level of satisfaction towards the benefits and programs that Nestlé provides for its
employees.

7. Employee Benefits

One clear way of demonstrating concern for its employees is by offering benefits that
promote the well-being of employees and their families. Benefits are part of the Company’s
over-all compensation program to enable employees to better cope and manage their
lifestyles. Aside from highly competitive salaries, employees also receive above-industry
rates for overtime and other work-related premiums. Employees also receive guaranteed
13th and 14th month bonuses. Nestlé also offers above-industry Life Insurance and Death-
in-Harness Benefits; and a superior, non-contributory Retirement Plan.

Apart from these work-related benefits, several other benefits supplement the needs of the
employee’s family:

a. A Medical and Hospitalization Benefit for employees and their direct

dependents under a 75% Company – 25% Employee Sharing Scheme, with a
maximum limit covering each patient, per illness, per year.
b. To provide time for rest and relaxation which are essential to employee well-being,
employees are given a Vacation Leave that ranges from 18 to 24 days depending on
one’s service years

c. Emergency Leave (maximum of 5 days) is given to cover occasions when

employees cannot go to work due to personal emergencies.

d. The Maternity Leave Benefit of Nestlé provides female employees a leave of 2

weeks before and 3 months after delivery with full pay. Aside from providing
sufficient time for the mother's recovery, this period is meant for the mother to form
adequate bonding with her newborn and also to enable her to breastfeed.

e. Bereavement Leave of seven days is given to all regular employees, with pay,
applicable to death of legitimate spouse, parents, and legitimate children.

f. A Rice Subsidy of one sack per month (or its cash equivalent) for every rank and
file employee.

g. To assist employees in raising equity participation requirement upon employee's

availment of public/privately financed housing loans, Nestlé has a Housing Equity
Loan Assistance Program.

h. Interest-free loans to assist employees in their Educational and Optical needs, as

well as for Emergencies.

i. A Burial Assistance in the form of cash and company products are given in case
of an employee’s or a dependent’s death.

j. The Company Staff Shop allows employees and retirees to purchase company
products for themselves and their families at a discounted price.
 k. A Christmas Gift Package consisting of company products, 1 sack of rice and
Gift Certificates are given to all employees.

l. A Birthday Gift, consisting of company products, is also given to employees.

m. Transfer Benefits allow career mobility for both married and single employees.
Employees who are transferred to another work location are given Relocation
Benefits consisting of a Rent Subsidy, cost of transfer for the employee and family
plus transfer costs of personal effects, and maximum of 2 months free lodging while
looking for a permanent place. For transfers to a location where everyday travel is
possible, the company grants a transferred employee Transportation Subsidy.

n. The Infant Feeding Scheme is meant for female employees and in the case of
male employees, their legitimate wife, who are not able to breastfeed. Nestlé
provides them with 50 kilos of infant formula to help ensure proper infant nutrition.

o. Unlike other companies where the provision for Family Planning Programs
usually come in the form of seminars, Nestlé Philippines, Inc. gives tangible benefits
such as reimbursement of actual Family Planning expenses and free company
products as an incentive for following a Family Planning Program.

p. The company facilitates the administration of Hepatitis A and B screening and

immunization for employees occupying identified high-risk positions.

8. Family Room

A recent improvement in the Company’s Family-Oriented programs is the inclusion of a

Family Room in its Administrative Office in Makati. In this room, toys for toddlers, small
tables and chairs, and a television set are provided for the children of employees who cannot
leave their kids at home, though a nanny should accompany them. There is also an easy
access to the clinic in case of emergencies, where full-time medical help is always at hand.
 Inside the Family Room is a Lactating Area where female employees who are breast-feeding
can provide milk for their infants.

I III. IDENTIFYING AND APPRECIATING EMPLOYEE BENEFITS -

CRITICAL IN NESTLE’S BENEFITS PLANNING AND IMPLEMENTATION

The State of Nestlé Employee Benefits Package in the Market

Nestlé offers its employees one of the most comprehensive benefits packages in the food
industry. With the employees’ well-being in mind, Nestlé provides a package that goes well
beyond statutory provisions.

Identifying the Benefits Package to offer employees

1. Benchmarking

Nestlé compensation and benefits are regularly reviewed to ensure that they address the
needs of employees and are comparable with industry standards. This is done through
benchmarking with other Nestlé markets and industries. Nestlé also participates in an
annual community survey on compensation and benefits, allowing it to compare its package
with those of other companies. With these measures, Nestlé hopes to continue offering its
employees with competitive compensation and benefits packages.

2. Talakayan (Labor-Management Meetings)

The Talakayan is the regular Labor-Management Meeting meant to be the venue for giving
updates, discussing concerns and resolving issues. Through these meetings, the company is
also able to identify what employees need and want.

3. Partnering with the Line

Constant discussions and coordination with Line Managers and the different HR units in
each factory have contributed to the evolution of the different employee programs.
Partnering with the line managers has enabled HR to know what is important to the
employees.

Internal Communication Strategies

Oriented Towards Appreciation for and Efficacy of Existing Benefits

Offering a comprehensive benefits package coupled with various employee and family
programs is not always a guarantee that the company’s efforts are appreciated by employees.
Nestlé undertakes various communication strategies to ensure that their programs are well
understood and appreciated.

1. New Hires Orientation

The company ensures that new hires undergo a comprehensive orientation program
primarily aimed to welcome new comers by giving them much needed information about
the Company --- its history, demographics, policies, benefits and programs, among
others.

2. The Nestle Family Balita

The official company publication, Nestlé Family Balita, contains news and features on
Company events and developments, people movements, and other items of general
interest to Nestlé employees and their families. This publication is distributed to
employees in the workplace and mailed to the families of married employees. The
objective is to keep employees and their immediate families informed about relevant
developments in a timely and accurate manner.

3. The HR Intranet

This facility engendered a culture change within the organization by providing

transparent and easy access to employees on information regarding salary determination,
job size, company benefits and even government-mandated benefits like the Social
 Security System. Career and job opportunities are also posted on the site. The Company
has indeed become more transparent than before and technology has played a key role in
facilitating more transparent and faster communication. Additionally, the intranet has
become an effective venue to disseminate proper and accurate information.

Impact to Employees in Terms of Motivation to Perform and Stay Long with Nestlé

Box 1. Employee Appreciation of Family-friendly Benefits

Ms. Sandy Castro

Makati Office Rank and File Staff

“Family-friendly schemes given by the company are an expression of the concern of the
company not just for the well-being of its employees but also for the well-being of the
employees’ family. This scheme is a way of imparting the values of the company to the
employees’ family as well.”

Sandy Castro has been working for Nestlé Philippines, Inc. for the past six (6) years. Among the
family-friendly benefits that she identified that really mattered to her are the infant feeding
scheme, the housing equity loan, family days, tree plantings, the staff shop purchase scheme, and
the various trainings that she had received as an employee of the company.

She is married to Mr. Mike Castro, an Industrial Performance Engineer of the same company.
They have a daughter, whose age is 2 ½ years old. When asked regarding the marginal benefits to
the family of being both employees of the same company, she admitted that only one is entitled
to avail of such benefit like the infant feeding scheme, the housing equity loan, among others.

She mentioned that, the Company offers a summer program for kids, like taekwondo classes.
For a minimal amount, employees’ kids could avail of such a sports program. In due time,
Sandy’s young daughter can also enjoy these programs.

According to her, employees in general are satisfied with such work-life provisions in the form of
family-friendly benefits. Furthermore, she reiterated that family-friendly benefits such as those
mentioned above, indeed provide an expression of company concern to balance the work and
life of employees and also an opportunity for the company to impart its value of family-
orientedness to its employees.

Low Employee Turnover Rate

Given a good compensation and benefits package for its employees plus various employee
programs, it follows that indeed, there is a low turnover rate in the Company of about
3.02%.
 IV. PROBLEMS ENCOUNTERED AND ADDRESSED, AND
LESSONS LEARNED

Balancing Work-Life Provisions and Business Competitiveness

Nestlé believes that its people make the business a success. Therefore, implementing work-
life provisions that make the employees happier and more satisfied workers will eventually
bring about long-term success both for the Company and the employees as well. However,
it is important to ensure that employees are able to meet the demands of work and, at the
same time, strike a balance with their personal needs and concerns.

The Gap Between Benefits Given and Employee Appreciation

Despite all measures taken by the Company, the question of whether these interventions are
understood and appreciated remains. Though Nestlé has a better relationship with its labor
unions now than in the 80’s, the labor relations scenario is still not an easy task to deal with.
As of this writing, Nestlé has already concluded CBA negotiations with seven (7) of its nine
(9) unions. However, the remaining two (2) unions continue to raise issues which lead to a
setback in the talks. Though it is recognized that the benefits package currently enjoyed by
employees is superior to industry standards, clamor for more improvements persist. The
Company hopes that, in due time, all the CBA negotiations will come to a close on a positive
note. Meanwhile, Nestlé continues to try to reach out to its employees, provide more
relevant programs and endeavor to communicate these programs effectively, to reinforce
employee understanding and appreciation.

Suggestions for Businesses Wanting to Institute Work-life Provisions

Nestlé suggests that businesses wanting to institute work-life programs should first start with
identifying the needs of their employees. Without properly identifying these needs,
interventions will most likely be futile. Appropriate programs would depend on the
need of the organization and the financial capability of the company. For starting
businesses, they can start with “high-impact, yet low cost” interventions. The more
 important aspect is that the employees are able to appreciate not just the concrete
programs, like salary and benefits, but more so the intangible feelings of security and
trust that the company is sincerely concerned about their welfare both as a worker
and as an individual.

Aligning Culture to Reality

Overtime, the OD framework of Nestlé has evolved from “Winning Back its People” to
“Growth through Excellence”, and now, Nestlé advocates a “High Performance Culture”. But
despite this shift, the importance given to one’s family has remained part of the Nestlé way
of life. This culture is seen in the various employee and family programs that the Company
chooses to maintain until now. To further ensure that the culture espoused by the Company
is reflected in the realities of work, these corporate values are consistently integrated into the
Training and Leadership Programs, especially for Management staff. Supervisors and
Managers are the ones who are in the forefront of ensuring that corporate values are
translated into real life situations. Because of this, they are given sufficient training and
support in order to mold them into being good leaders, the way Nestlé envisions them to be.

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