Name: Praveen. S.

J
ID: PGXPM152PRS

Case Study Analysis
Sonoco Products Company (A): Building a World-Class HR
Organization.

Introduction
Sonoco Products Company, a global packaging company, began in 1899 in Hartsville, South Carolina.
Founded by Major James Coker with $6,000 of initial capital, Sonoco’s original name until 1923 was the
Southern Novelty Company, and the new name of Sonoco uses the first two letters from each word of its
original name ("Mission statement - Sonoco," 2009). Its original product was a paper cone used to hold
yarn in the textile industry. Since most of the textile cones of that time were wooden, paper cones were
unique. Although Sonoco did not invent the paper cone, its engineers invented new processes to
automate the production of these cones. This automated manufacturing gave Sonoco a competitive
advantage, and it soon became the leading producer of cones in the United States. During its history,
By2000, Sonoco was one of the largest packaging companies in the world. Its revenues reached$2.6
billion through the manufacture and sales of consumer and industrial packaging, with17300 employees
across 285 operations in 32 countries, serving customers in 85 nations with a wide array of industrial and
consumer packaging solutions. In addition to being a major packaging company, Sonoco produced nearly
all of its own paperboard, consuming almost two million tons of recovered paper annually. Over the years,
Sonoco Products Company continued to grow with new operations around the world, diversify its product
line (i.e. cardboard, aluminum cans, plastic, flexible packaging, etc.) and become remarkably profitable.
However, as Sonoco grew and changed, so did the world and industry around it. While the United States
was enjoying economic growth during the late Sonoco 41990s/early 2000s, so was the packaging
industry. During this time, Sonoco’s position began to change. The company was becoming increasingly
more susceptible to changes in the world economy. The packaging business began to focus on the
following: • development and implementation of policies and action programs to meet the consumer
needs, including development of innovative packaging containers and techniques • production for
diversified product types • improvement of productivity for cost reduction • introduction of higher speed
computer technology for quality assurance, improvement and labor saving • creation of websites for the
entire industry.
Question 1
What are Sonoco’s current strengths in terms of its culture and people? What are the company’s
major weaknesses?

Current Strengths

 Sonoco’s culture was “family- friendly, paternalistic, collaborative, and ethical and team oriented.

 We can also infer that Sonoco had a loyal workforce with minimal attrition

 Sonoco had showed in the past that it was capable of innovation and significant technological
development.

 Sonoco automated the production of paper cones and invented the ‘T-shirt grocery bag’.

 ’The working atmosphere at Sonoco is more employee friendly for work. Sonoco’s collaborative,
friendly and team oriented work environment policy is responsible for its history of productivity.

 Sonoco has succeeded to grow and maintain competition in its core activity and that of its
subsidiaries.

 The fact that some of employees have worked at Sonoco throughout their career is an indicator of
its career management strategy. Sonoco has been able to retain their employee which is a good
strategy for competition.

Weakness
The Lack of a performance management strategy

Sonoco had an almost nil or failed performance management strategy. Evaluations did not often reflect an
employee’s performance. Employees were laid off the company without justifiable reasons. Some cases
were worst even, talented employees lost their jobs because of the lack of a performance management
strategy.

General managers Controlled Everything
In Sonoco managing talent was not looked as an overall corporate resource, the current structure was too
dependent on the objectives and strategies of the current managers.

Uneven distribution of resources
Only top management had any presence of HR department, while smaller Units were left to figure out
organizational problems on their own. Most often organizations with low consideration for HR fail to tap
out the potential from their employees

Question 2
What were Cindy Hartley’s objectives for changes at Sonoco?

Hartley’s HR changes had the following objectives. Hartley tried to address the issues in her organization
with the following objective.

Hartley utilizes the 7-S Model to analyze Sonoco’s situation. This tool provides a structure with which
to consider the company as a whole, so that the organization’s problems may be diagnosed and a
strategy may be developed and implemented. Below are some of the 7s Model factors Sonoco analyzed
and applied solutions

Strategy
During most of its existence, Sonoco’s strategy was product driven; however, due to changes in the

environment, the industry, the economy, the workforce, and societal trends, it was adopting a more

solutions oriented approach. Consequently, Sonoco needed to review the business it was in, the

products it supplied, its differentiation relative to its competitors, its ability to sustain in a changing

industry, and the applicability of product solutions to multiple situations .

Additionally, Sonoco recognized the need to embrace the growing global marketplace and its people.

They incorporated diversity into all aspects of business including products, suppliers, consumers, and

workforce.

Structure
Sonoco experienced a few iterations of corporate structure – centralized, divisional, functional, etc. – in

the past. However, key to any strategic business plan is the reassessment of an organization’s structure

to ensure its alignment with the current business environment. Thus, Sonoco reviewed its structure to

ensure that it too would aid the organization in meeting its overall goals. With a centralized structure,
Sonoco’s support departments, especially Human Resources were not able to be strategic in focus and

therefore provided little support in the way of long-term plans for the divisions.

Systems
Prior to Cindy Hartley’s arrival, Sonoco’s fragmented HR system was unable to operate strategically.

From a Human Resources perspective, Cindy Hartley had three main priorities:

1. Changing compensation and performance management systems to eliminate arbitrary nature and
more accurately reflect the employee’s contribution to the company’s performance.
2. Creating an employee development process to refine employees’ skills and identify/develop
lacking skills.
3. Building a succession-planning process to identify the next generation of leaders.

Introduced a performance management system that incorporated companywide goal setting, earnings
targets and individual employee performance. Linkage of performance ratings to overall divisional,
financial and business objectives. Linkage of compensation system to the performance management
system. Implemented a ‘leadership development System’ 360-degree review of managers every months.
Annual Succession Planning.

Staffing
Sonoco needs to get a tighter control over this component. Over the years, it failed to hold its people

accountable and develop them, especially the leadership. Sonoco realized this fragmentation led to

ineffective succession planning and leadership development that only harmed the company. Hence, the

implementation of the new performance management and compensation systems, the increased focus on

leadership development, and most importantly the succession planning process.

Additionally, Sonoco took advantage of the concept of incorporating diversity into its business.

Skills
Sonoco based expectations for all employees on satisfying customers through six core competencies:

excellence, communication, teamwork, technical/professional skills and knowledge, strategic integration,

and coaching/mentoring.

Question Three
How successful were the HR changes at Sonoco? Was the sequence of changes the right one?

Hartley’s HR changes at Sonoco were very efficient. She identified the loopholes in the system and

elaborated a sequential HR strategy that effectively tackled the different problems. The sequence of

changes was as follows: Hartley linked the company’s HR by eliminating bureaucracy and installing

a system which better reflected employee contribution to company performance.

1. Change of performance and compensation

Hartley linked the company’s HR by eliminating bureaucracy and installing a system which better

reflected employee contribution to company performance.

2. Process for employee development process

Hartley understood the performance of developing the potential in employees and she definitely

understood the impact it’s a long term competitive strategy for Sonoco. This program not only developed

skill but paved the way for the identification of future leaders.

3. Leadership development Planning

The lack of personnel training for top managerial positions at Sonoco led to the poor performance of

designated leaders (even those that had considerable years of experience within the company). The

previous HR system failed to analyze the data on career aspirations and thus failed to anticipate the

managerial future of the company.

4. Addressing Diversity Issues

Once Hartley had finished installing the hard HR laws of the company, she proceeded with issues

pertaining to diversity such as gender, race, age, education, ethnicity and a lot more. Lastly Hartley

adopted the rightful character of a human resource manager. She was open to disagreement and most of

all approachable thus she could easily have information about the company and models an exemplary

human resource system.
Question four
What is the right HR structure for Sonoco- centralization or hybrid? Why? Evaluate different
options (pros and cons)?

Problems with Sonoco’s Structure:
1. Highly Decentralized HR Function Non-cooperation amongst larger departments.
Complex staff structure hindered it form acting in a strategic manner. No linkage between
business goals and individual objectives Inaccurate and biased Performance rating
system Complete lack of proper succession planning.

2. HR Roadmap Make the performance appraisal system more in line with employee
performance Create an employee development process Succession planning was critical
as a number of newly appointed managers were not meeting standards. Contribute
significantly to the cause of Sonoco functioning as one highly integrated unit.

In order for a company to be effective, it must have a high degree of fit or alignment among all the seven
Ss. Thus, this writer identifies the following issues/challenges as possible reasons to initiate or continue
transformational change initiatives at Sonoco:
 Stagnant business strategy
 Growing packaging industry
 Saturation of market, increased competition
 Environmental concerns
 State of economy
 Globalization
 E-commerce
 Expanding product lines
 Diverse, sophisticated and demanding consumers
 New and/or improved technology
 Age of differentiation, brand value, changing image
 Company culture
 Evolving role of Human Resources
 Ineffective organizational structure
 Management deficiencies
 Changing policies and/or practices

The Centralized Model Implementation
Reduced cost of administration and process improvements Cost Saving of $3.1 mil (0.4 mil more than
Hybrid) Cons. No focus on integration of HR Function and Business Departments. Greater customer
service issues and employee dissatisfaction due inflexibility and reduced coordination throughout the
organization.

Pros
 Hartley succeeded to surpass the cost cutting limit recommended by the CEO. She defined a
model that will cut cost by 22% instead of 20% as recommended by the company’s newly
appointed CEO.

Cons
 Having defined the functional system of Centralized organizations, it is clear that one of the cons
of this system is the difficulty of coordination. The responsibilities of the Human Resource Field
representatives are too wide and it is clear that they will be less efficient than a smaller group of
managers responsible of specific task.

 Secondly, As a result of the inflexibility of the centralized human resource, it fails to understand
the problems of the consumer and industrial class of customers

Hybrid Model Implementation:
Direct involvement in all employee development functions. (Staffing, Development programs,
compensation and benefits). Solid HR Presence in all departments offers greater dependability to GMs.
Quicker response to environmental changes. Cons: More Expensive, therefore lesser savings. Might lead
to segmentation rather than integration if cooperation between divisions is not managed properly.

Pros
 The presence of the Consumer and industrial human resource representatives makes the
decision making process more dynamic and efficient. Divisions have direct involvements with
decision making on key issues and as a result the problems of the stake holders are have a direct
impact on the elaboration of decisions
Cons
 As can be seen on the illustration above, managers in this system are more accountable for their
task and outcomes.

 The presence of the Consumer and industrial human resource representatives makes the
decision making process more dynamic and efficient. Divisions have direct involvements with
decision making on key issues and as a result the problems of the stake holders are have a direct
impact on the elaboration of decisions

Question 5
Will changes be sustained? What should Cindy Hartley attend to next?
To institutionalize the process and to keep the changes sustained the below steps and recommendations
should be followed.

Process Organizational Development for
Performance System
The key steps involved in performance system can be comprehended as below and Sonoco’s as adopted
it
 Analyze and contract
This deals with handling the below questions.
a. Which
b. When
c. Why
d. Who
e. Where
f. How
 Diagnose and Feedback
 Plan , Design and Implement
 Implement
 Evaluate and Institutionalize

By adoption above process for performance system Sonoco was effectively much of its crisis.

Culture of the Organization
Finally establishing the culture of the organization is more important than any of the above items.

By establishing the culture, above items gets institutionalized and any external environment pressures

and influences can’t disrupt the working culture of the organization.

The major factors involved for establishing the culture of the organization are below

 Tasks

 Process and Tools

 Rewards

 Relationships

 Purpose

 Structure

 Leadership.

All of the above of factors have a close interlinking and all of it should function seamlessly to establish the

culture of the organization.

Recommendations

Hybrid System Vertical Alignment:

The Hybrid System will allow HR to be more in touch with departmental and organizational

objectives as it allows for more HR-Management Contact. Alignment of Organization Objectives

with individual Career objectives. More attention given to employees, will prove highly beneficial

since one prime area of focus is employee development. This will also help in developing

specialized skill sets and increasing productivity.

HR as a change agent:

Because there is a large amount of changes happening within the organization, a more focused

and connected HR Department can help maintain (reduce disruption of) Employee satisfaction

and loyalty.HR as an employee Champion In-line with age old values of Sonoco which focuses on

Employee Happiness.