identify the HR problems and/or issues faced by the organization in the case stu
ID: 459043 • Letter: I
Question
identify the HR problems and/or issues faced by the organization in the case study and provide solutions for addressing the HR problems and/or issues
The company realized that it had to change its business model to enable new top-line growth and
to reduce its overall cost structure to be competitive in the global marketplace. On the consumer
packaging side, Sonoco had to rethink how it met the demands of a growing, convenience-obsessed
society and how it would differentiate itself from its competitors. In the meantime, controlling costs
to support the shift in the business model was one of the main objectives of Sonoco’s CEO, Harris
DeLoach, who was named to the position in July 2000. In addition, cost cutting provided an ideal
opportunity to rethink how parts of the company were structured, including HR. For HR, the current
structure was too dependent on each general manager’s managing talent as he or she saw fit, rather
than viewing talent as an overall corporate resource to be managed in support of the company’s
overall objectives and shared or moved cross-divisionally when needed.
The task being asked of Hartley was to devise a new HR organization that, in addition to costing
less, would support three not entirely inclusive objectives: 1) create corporate-wide consistency on
how HR systems and processes were implemented and used; 2) increase the level of accountability
placed on general managers in the businesses for developing, retaining, and replacing talent; and,
3) provide customized, strategic support to the businesses.
As the members of the task force gathered for what would be their last meeting before Hartley
was to present to the executive committee, they began debating the merits and potential pitfalls of the
two options they had devised.
Sonoco Products Company was founded as the Southern Novelty Company in 1899 in Hartsville,
South Carolina by Major James Coker. The company’s first product was a cone-shaped paper yarn
carrier used for winding and transporting yarn for the textile industry. While the company did not
invent the cones, it designed an automated manufacturing process to produce them. In 1923, with
sales nearing $1 million, the company changed its name to Sonoco.
Throughout the rest of the twentieth century, the company expanded its product line and its
operations globally. Growth came mainly by acquisitions. During the 1990s, the company completed
over 60 acquisitions worldwide.
By 2000, revenue reached $2.6 billion through the manufacture and sales of consumer and
industrial packaging. The company’s 17,300 employeesa were scattered across 285 operations in 32
countries, serving customers in 85 nations. North America accounted for approximately 80% of the
company’s sales.
Sonoco’s 10 businesses fell into two segments: industrial and consumer packaging (Exhibit 2).
Industrial packaging served the textile, paper, and film industries. It produced cones and tubes in
addition to plastic products, wood and metal reels used for wire and cable, and protective packaging.
With 11,000 employees, the industrial division accounted for 55% of revenue.
Priorities
Hartley was given a mandate of creating a more professional, business-oriented, contributing HR
group. Upon arriving, she was told that leadership development was very important, since often
there were insufficient choices for successors to key jobs, which could limit the company’s ability to
grow. Furthermore, HR was viewed primarily as a watchdog for keeping the company out of legal or
employee relations problems. It lacked sophistication when it came to supporting the company’s
growth strategy, driving down costs, improving productivity, and enhancing working capital
management and cash flow.
After a few months of due diligence, Hartley identified three main priorities. The first entailed
changing the compensation and performance management systems so that they were less mechanical
and arbitrary and instead linked, consistent, and more accurately reflective of employees’
contribution to the company’s performance. A second priority was to create an employee
development process to highlight and further refine employees’ skills and to identify and develop
required skills that were lacking. Indeed, “Nobody’s managing my career,” “Nobody’s telling me
what I ought to do next” were common complaints heard from employees. A third priority was
building a succession-planning process to identify the next generation of leaders, therefore deepening
the talent pool. Succession planning was slated as a top priority due largely to one concerning trend:
a number of Sonoco employees with 15 or more years with the company were failing once they
reached the management ranks, it was believed, because of a lack of preparedness. Historically,
succession planning had been a paper exercise. Meetings were held with employees about their
career aspirations, but action plans were never developed in response to the data that was discussed.
Doing More with Less
By the time Hartley and her HR reorganization task force met in late summer 2000, most of the
fundamentals were in place. In just five years, Hartley had overseen the development and
implementation of numerous initiatives (Exhibit 7). Rick Maloney, whom Hartley named as the
company’s first director of organizational development in 1995, summed up the objectives of the
efforts she led: “We wanted to see Sonoco with a fully integrated process where everything was
connected and, in turn, was intuitive. It was critical that it be obvious to people that performance
management, development, and succession planning all fed off of one another, were mutually
inclusive and were linked with Sonoco’s people, values, culture, and business objectives.” (See
Exhibit 8.)
Despite this, there was a lot of work left. Some managers were still reluctant to address long-term
problem performers. Furthermore, talent was still largely controlled at the division manager level
and reinforced by the division HR managers. Finally, while the basic pay system had been largely
changed, other aspects of compensation such as incentive plans were still not totally aligned with
new company strategies. While the restructuring of HR was being done in large part to reduce costs,
it was also seen as an opportune time to further standardize and streamline HR processes related to
recruiting and development and to drive more accountability for talent throughout the organization.
Explanation / Answer
When a company opts for reorganization, it should make sure that it instills the same thought in the minds of all its employees. It has to carefully strategize all its moves so that the employees come forward to contribute the most. If there is lack of co-operation and co-ordination, then the re-organization will not be as successfull as it was aimed to be. In the above mentioned case though it is clear that the company opted for re-organization, the lack of goal clarity in how they are going to exeute it made the difference.
The HR personnels were clear in identiying where the problem was but it became tough for them when it came to implementation as they had to face challenges from the most experienced work force of the organization. The knowledge transfer from the middle level managers to the new appointed staffs, in order to reduce the dependability of the employees played a major role.
To overcome this, the HR should have first defined the organization structure, the roles and the responsibilities of each department. The roles and responsibilities should be aligned with the goal of the organization. When the employees align themselves with the goal and start working for the common purpose, the decision making and the implementation would then become easy.
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