Nestle is shaking things up. The company, known for brands like KitKat and Nescafe, has introduced a new performance evaluation system. This change is intended to reward high achievers with bigger bonuses while cutting back on rewards for those who don’t meet expectations.
Under the new plan, Nestle has expanded its performance ratings from three levels to six. Employees with “exemplary” ratings can now earn bonuses up to 150% of their target. In contrast, those marked “unsatisfactory” could see bonuses drop to as low as zero.
This shift aligns with CEO Philipp Navratil’s strategy to improve company performance since he stepped in last September. Alongside these changes, he has announced layoffs of 16,000 positions and plans to refocus on four main business segments. The company is also divesting its internal ice cream operations and specific water and vitamin lines.
According to Nestle, the revamped system aims to simplify performance reviews. By doing so, they hope to enhance employee development and feedback. The bonus targets vary across different teams, making the process more tailored.
Nestle is also aiming for better internal growth, expecting increases in sales volumes. In 2025, the growth rate was just 0.8%. Navratil emphasized the introduction of a “minimum growth requirement” for bonuses. He explained that now, leadership bonuses are linked to the company’s overall performance, ensuring a shared sense of purpose across departments.
In this competitive landscape, companies are constantly refining their strategies to retain talent and boost morale. According to a recent report by McKinsey, companies that adopt clear performance management systems see a 30% increase in employee engagement. Expert opinions suggest that companies should focus on transparent communication and fair evaluations to motivate their teams effectively.
This approach is becoming increasingly popular as firms seek to harness talent in innovative ways. As Nestle adapts, it joins others in striving for a culture that recognizes and incentivizes hard work. Such changes not only reshape a company’s internal dynamics but also reflect broader economic trends that prioritize performance and accountability.
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