Sonoco Products Company This case deals with a situation in which Sonoco Products Company is no longer the growing

and profitable company that it used to be. In a very competitive market and with the decrease of the companys share price, it needs to rethink about its human resource function to reduce the cost and link it strategically to the company overall strategy. If given enough time and space, the ideal case analysis should discuss these questions:

1- What is the financial situation of Sonoco? How competitive is it in its market? What is the specific importance of the human resource to its financial success? 2- What is the history of the HR function in the company before the appointment od Hartley? How is it related to the company culture? 3- What are the main priorities of Hartley when she was appointed in 1995? How did she develop them? 4- Describe how did Hartley translate her priorities into actions over her first five years? Illustrate. 5- What are the main reasons behind the need to restructure the HR function? What are the main disadvantages of the current structure? 6- What are Hartleys options to restructure the HR function? Compare between them and determine the best one. You need to make a decision and explain it.

Case Analysis

This is an analysis of the HR function in Sonoco products company, written based on the Harvard Business School case study ( Sonoco Products Company (A): Building a World-Class HR Organization). Due to the limited space, I will concentrate on the HR functions problems and recommend some solutions.

Introduction:

Sonoco Products Company is a global provider of industrial and consumer packaging and related services, which was founded on 1899 in Hartsville, South Carolina. During the last century, the company expanded globally and by the year 2000 it reached $2.6 billion of revenues created by a workforce of 17,300 employees from its 285 operations in 32 countries. However, packaging companies were facing new challenges created by more competition over the growth opportunities created by globalization. Despite its revenues, Sonocos stock price in the early summer of 2000 had fallen into an eight-year low. The uninterrupted growth and financial success of the 1980s and 1990s is over. Harris De Loach was appointed as a CEO of the company in 2000 and as one approach to solve the business problems he turned to Cindy Hartley, the VP of HR at Sonoco, and asked her to come up with at least to HR restructures that reduce the cost by 20% (or $2.8 million), create corporate-wide consistency on HR systems and practices, ensure top-level accountability for talent management and upgrading and become a business partner.

The Current HR structure

Since her appointment in 1995, Hartley found a culture that can be described as collaborative, family friendly, ethical and team oriented. On the other hand, HR function was highly decentralized, siloed, inconsistent in its processes and unequal in the services that existed among the 10 businesses of the company. Employees from different businesses may work in the same plant but their performance ratings systems have nothing in common. Moreover, the company lacked the cooperation between the HR function across the different divisions. Also, the HR function had no strategic role and was not able to link both of the business and individual objectives. Finally the HR function could not help the company in preparing future leaders since there was not any succession planning. As a start, Hartley determined three priorities in order to create more professional, business oriented and contributing HR group: 1) Create performance management and compensation benefits that are consistent and able to reflect the employees contribution to the company performance. 2) Create training and development processes that identify and develop the employees lacking skills. 3) Building succession planning process to prepare future business leaders. Finally, a vision for diversity was developed and linked to all HR practices. Hartleys first action was to put together an HR council. Then, performance management and compensation was tackled first since they are HR fundamentals that can be designed and introduced across the company fairly and quickly and will help in getting people more accountable for results and link their efforts to the overall strategy. By March 1996, the new performance management system was introduced. The new system determines what must get done (business objectives) and how things get done (core competencies). The employees had an active role in managing the process throughout the year and the managers were being asked to own the compensation process.

After that, Hartley and her team started changing the way Sonoco approached leadership development and succession planning. The team endorsed a new leadership development system that is linked to the performance management system and supported by 360-degree feedback system. Then, it supports the company efforts in succession planning.

The Dilemma

By the late summer of 2000, most of the HR fundamentals were in place and Hartley overseen the development and implementation of numerous initiatives. However, a lot of work left. Some managers were still reluctant to address the long term problem performers. Also, talent still controlled at the division manager level and reinforced by the division HR manager. Moreover, the new compensation system does not link some fundamental parts, like incentive plans, to the new company strategies. Finally, we have the cost concern. Hartley prepared two new restructures; here is a discussion of them: 1- Centralized HR function in which the majority of services would be handled by one of four centers of expertise. The divisions will be served by a pared-down field staff. Its main advantage is bringing down the cost of administration and process improvements and saving the costs by $3.1 million. On the other hand, this option gives less opportunity for the HR function to be directly aligned with the businesses needs and interests. Also, this option is linked to inflexibility and reduced organizational coordination which may raise customer and employees dissatisfaction issues. 2- A hybrid organization in which the divisions would have some direct involvement with staffing, succession planning, personnel program, compensation and benefits. This

restructure allow the new group of divisions HR managers to provide strategic link between corporate HR functions and the businesses. However, in this option we found two main problems: 1) the cost saving is only $2.7 million, which is even less than the requested savings and 2) if the cooperation between the different division was not managed properly it will create segmentation rather than integration.

Recommending the best option

The administrative back-room functions and the center of excellence functions were the same in both structures. Beside the savings difference, the key difference between the two options is how to link the businesses strategically and what services will be provided. The hybrid option is the best option for Sonoco. As Sonoco works in highly competitive market that is known for changing consumer preferences, the hybrid option will respond to the changes quicker. It also generates more involvement and gives more attention to specific employees needs. To overcome the problem of segmentation, I suggest having Knowledge management system that will help to create integration between the different divisions. The knowledge management system also leads to more involvement and empowerment of HR staff and if was created for the whole company it will help in developing the employees. Finally, even the less cost savings can be overcome over time and it is a good deal comparing to the benefits of hybrid system.