Faculty of Management and Business Technology

Centre for Post Graduate Programme

Assignment ____ Cover sheet

(Individual)
Name OGUIKE DESMOND UDOKA
ID 00000102196
Intake OCTOBER,2017
Course (subject) HUMAN RESOURCE MANAGEMENT
Course Code MBA 653
Assignment title SONOCO CAST STUDY
Lecturer MR SHEIKH
Hand in date
Weightage

Declaration:
I certify the content of the assignment to be my own and original work, that all sources have been
accurately reported and acknowledged and that this document has not been previously submitted in
its entirety or in part to any educational establishment.

Signature: ________________________

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Introduction

Sonoco, a multi-billion-dollar-provider of consumer packaging, industrial products, protective

packaging and packaging supply chain services, was founded on May 10th,1899 in Hartsville,
South Carolina with the initial name of Southern Novelty Company. In 1923, it was changed to
Sonoco Products Company, using the first two letters from each word of its original name. In
2000, Sonoco had 17,300 employees working in 285 facilities across 32 countries.

Sonoco businesses are divided into two main categories: industrial packaging (55% of revenue)
and consumer packaging with total revenues of $2.6 billion. This allocation mainly came from
the financial crisis in late 1990s, when the company faced a 6%deduction in revenue and decided
to shift the product from textile to packaging. The company found another way to survive the
crisis and even enjoyed an uninterrupted growth via acquisition, an effective way to capture the
market, increase the revenue and reduce the competition. However, the change in consumers’‟
demand (external factor) and globalized operation (internal factor) has forced the company to
adjust the strategy and working structure to maintain competitive edges. These measurements, in
their turns, have pushed the strategic HR approaches to reduce cost by 20%, equivalent to $2.8
million, yet to increase efficiency.

Since 1995 until 2000, the new senior vice president of HR, Cindy Hartley, has implemented
several practices. In 2000, she received a mission from the new CEO, Harris De Loach, to
achieve that cost reduction.

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Question one: What was happening to the packaging industry at the time of the case? How
were these changes impact Sonoco’s strategy?

In the packaging industry, by the late 1990s, Globalization presented a new competitive
challenges and growth opportunities. The manufacturing firms were moving from United States
to countries like India and China, where labour was cheap, and many Firms from the United
States were investing heavily overseas. In addition, the domestic consumer markets were
becoming increasing segmented as products were tailored to the preferences of distinct
consumers groups, especially in food beverage industry. Meanwhile, U.S. overcapacity led to
consolidation and between 1998 and 2000, the market share of the five biggest packaging
companies in North America increased to 40% to 60%

Nevertheless, in retail, packaging was widely viewed as more influential than advertising in
wooing and retaining consumers. The consolidation was the order of the day and manufacturing
firms were always on the lookout for companies that offered them a combination of services,
rather than relying on multiple packaging supplier

In terms of the impact on Sonoco’s strategy; in response to the changing trends in packaging
industry, the Sonoco's strategy was becoming more attractive to the solution oriented needs of
the end consumer. Also Sonoco realized that it was not only important to understand what
Procter & Gamble wanted, but what the consuming public wanted and was attracted to. Also they
began pursuing a more coordinated marketing approach whereby a single point of contact within
the company would coordinate all the business needs of large customers like Procter & Gamble
and Nestle

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Question two: What are Sonoco’s current strength in terms of its culture and people? What
are the company’s major weaknesses?

Current strength in terms of its culture: Sonoco’s culture was described as collaborative,
family, friendly, paternalistic, ethical, and team oriented.

 The working atmosphere at Sonoco is more conducive 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. Employee attrition rate was low, and overall 60% of the executive
committee had been with the company for more than 20 years i.e. Sonoco had a loyal
workforce
 Because 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.
 Sonoco is characterized by an ethically aligned culture which can be seen in the value
that attributed to the employees. The ethic of its corporate culture is testified by an
employee who clearly says ‘Sonoco is a group of ordinary people doing extraordinary
things’
The company’s major weaknesses

The major weakness of the HR function was that it was highly decentralized, inconsistent in its
process and unequal in the services that existed among the various businesses

 Ineffective collaboration amongst larger departments: HR managers reporting to the

solid lines to the General Manager, but dotted lines to the corporate HR. Some of the
divisions specifically paper, industrial and consumers had its own HR function with
separate HR systems, budget, performance management processes and leadership training
program. There were different pay revision cycles among different divisions.
 Complex staff structure and communication on overall direction was scant: The
staff’s complex reporting and communication structure has made no room for a healthy
communication regarding overall intent or direction regarding how the implementation
needed to be coordinated at the division or plant level.

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  Inaccurate and biased Performance rating system or Lack of a performance
management strategy: Sonoco had an absent or failed performance management
strategy. According to several managers the divisional managers often manipulate the
performance ratings to get larger salary increases for their staff. Evaluations did not
reflect employee’s performance accurately. Employees were laid off the company without
justifiable reasons. Worst even, talented employees lost their jobs because of the lack of a
performance management strategy. This was bad for the sustainability of the company
 Absence of a reward management policy and over dependence on the general
managers managing talent: The highly structured and mechanistic system obscured the
true performance of employees and also contributed to the difficulty in assigning
appointing new managers. Rather than viewing talent as an overall corporate resource,
the current structure was too dependent on the objectives and strategies of the current
managers. The major problem with such a system is that defined objectives are usually a
reflection of individual interest and fail to profit the organization.
 Uneven distribution of Human resource talent: Most of the HR talent was
concentrated at the top of the organization while smaller divisions were left to figure out
organizational problems on their own. Most often organisms with low consideration for
HR fail to tap out the potential from their employees and hence fail to take advantage of
an important competitive advantage.

Question three: What are Cindy Hartley’s changes at Sonoco?

Cindy Hartley was senior vice president of Human Resources at Sonoco Products Company. Her
objectives for changes at Sonoco were to come up with at least two HR structures that would

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reduce the function’s cost by 20%. In addition, 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.

She created a corporate wide consistency on how HR systems and processes were implemented
and used, how to increase the level of accountability placed in general managers in the business
for developing, retaining and replacing talent, and how to provide customized, strategic support
to the businesses. 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 or
develop lacking skills.
3. Building a succession-planning process to identify the next generation of leaders.
4. She created a corporate wide consistency on how HR systems and processes were
implemented and used, how to increase the level of accountability placed in general
managers in the business for developing, retaining and replacing talent, and how to
provide customized, strategic support to the businesses

Hartley introduced a performance management system that incorporated companywide goal

setting, earnings targets and individual employee performance and she provided the priorities to
her objectives which include change in the compensation and management system so that they
were less mechanical and arbitrary and instead linked consistent and more accurately reflective
of employee’s contribution to the company’s performance.

Hartley created an employee development process to highlight and further refine employee’s
skills and to identify and develop required skills that were lacking. To build a succession
planning process to identify the next generation of leaders, therefore deepening the talent pool.
Apart from all these priorities of achieving objectives there were other issues to be tackled which

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were pertaining to diversity, gender, age, education, experience, personality and management
style.

Question four: How successful were the HR changes at Sonoco? Was 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

Change of performance and compensation Management System

Hartley linked the company’s HR by eliminating bureaucracy and installing a system which
better reflected employee contribution to company performance

Creation of an employee development process

Graves (2017) expressed that Employee development is an ongoing process which helps
employees to enhance their skills and knowledge to contribute more effectively towards the
organization. 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

Leadership development and succession 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

Diversity issues

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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 five: What is the right HR structure for Sonoco – centralization or hybrid?
(Evaluate different options pros and cons)

Sonoco Hybrid structure was better than the centralized structure. Researchers suggest that large
complex organization with advanced technology and dynamic environment typically do better
with hybrid structures. This structure also allows the right skilled person to work with the most
beneficial area of the company to work with.

According to Blackburn (2015) the organizational structure of a company is one of the elements
that determine the sustainability of the company, and accountability is an important element in
organizational planning. Organizational structure defines the way in which the people and
resources are organized and coordinated by the authority to achieve the organizational goals
(Charles, 2016). Hybrid structure, otherwise known as matrix structure, is a type of
organizational structure within a company/organization that is a combination of functional and
divisional structures. It features the efficient use of resources and expertise development found in
functional structures (where the employee's positions are organized by specialized areas, or
functions) and the flexibility among command found in divisional structures (where employees
are organized by the similarity of their markets and products)

Advantages of Hybrid structure

 Increased Efficiency: According to Aquinas (2009) the major advantage of hybrid

structure is the increased efficiency. This structure makes sure that the right quantity of
work is assigned at the right time to the right professionals, thus making the optimum use
of resources and prevention of waste. This structure works very well even when the
resources are scarce. As the specialized staffs are readily available, projects are launched
quickly, thus increasing the efficiency of the organization.

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  Shared mission and values: In this type of structures the organization creates a unified
team of individuals with common goals and objectives. Employees perform best suited
even in moving from project to project within the organization.
 Market challenge overcome: A hybrid structure can overcome market challenges and
could perform better during recessions and financial crunch
 Development of Cross-Functional Skills: In hybrid structures groups are formed
considering the specializations as well as services. Thus employees with different skills
are mingled together which gives an opportunity to learn and develop a variety of skills
from many other participants. This is the main advantage of hybrid structure in terms of
the personal growth of employees, which can be later utilized by the organization. This
also results in minimization of projects costs, as resources can be shared
 Scale of reach: Instead of a top down hierarchical structure a hybrid structure could
cover a wider area and could read to maximum number of employees even the
information dissemination is easily possible with a hybrid structure. The span of control
increases and the efficiency increases within the organization
 Flexibility: The hybrid organizational structure is more flexible than centralized
structure. There exists a healthy relationship between the senior managers and junior
employees. This helps in addressing all employee problems easily, thus increasing the
effective output from the employees

Disadvantages of Hybrid structure

 Conflicts: The major disadvantage of hybrid structure is the chance of having conflicts
between corporate departments and divisions. There could be dilemmas among project
managers and department managers regarding deadlines and resources. Many employees
become very much confused about the line of authority. There can also be confusion
regarding the roles and responsibilities of each employee
 Duplication of Tasks: there are many instances when there is duplication of task and
reporting happens, in order to avoid this, the hybrid structures must have a constant watch
and work under well-organized chain of command
 Excessive staffing: The excessive staffing may result out of hybrid structures because the
tendency of the structure to have a dual centralized and decentralized structure which
may tend to accumulate staff at corporate levels

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  Too Much Administration Overhead: Waste of time and effort come into picture in
case of hybrid organizations. To resolve the conflicts that happen between divisions and
corporate departments, time and effort get wasted in the form of meetings. Meetings are
also required for better utilization and coordination of staff in case of two or three
concurrent projects

On an account of considering the above mentioned facts it can be analyzed that the Hybrid
structure was best suited for Sonoco Products Company. In recent past Sonoco had the
decentralized organization structure which has been revoked and another hybrid structure was
created by Cindy. It may take larger time lag for the employees to shift from a highly
decentralized structure to another more centralized structure hence hybrid structure was the best
fit to do so

Question six: Will change be sustained? What should Cindy Hartley attend to next?

Cindy brought about some significant changes in HR policies and structure. Mentioned below
are some of the key highlights and whether the changes are sustainable:

Creation of an HR Council: The formation of this council brought about cohesion and
standardization in approach in HR related matters. All HR verticals would come onto the same
page. It retarded disjointed approach and was critical when major changes were on the anvil.
This was the right thing to do and very much sustainable as then, the initiatives are being taken
forward with a majority consensus and after having evaluated diverse opinions.

Performance Management - The critical change here was to link business goals with individual
objectives. A 6-section Performance Management system was rolled out. Formal appraisals as
per stipulated timelines were mandated. Performance measurement metrics were outlined jointly
with the supervisor and employee. Personal and Career development formed a key element of the
new framework. This was the right thing to do and very much sustainable as metric based
standardized evaluations reduce perception-based appraisals.

Linking Rewards to Performance Management - changes were made to link the two. The
change provided greater managerial flexibility in differentiating and awarding merit increases.

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Managers were made more accountable to evaluate performance in a merit-based manner and
give rewards accordingly. This was the right thing to do and very much sustainable as it rewards
the good performers and identifies under performers.

Leadership Development & Succession Planning - The General Managers along with HR
Team made to go through a 4-stage process (I) Assess (ii) Identify gaps (iii) Build development
Plan (IV) Implement. The development plan was to be 70% on the job and 30% through other
methods. Assessment of a manager's ability to meet the core competencies were based on 3
elements (a) the performance management system (b) the 360 degree feedback (c) succession
planning. This was the right thing to do and very much sustainable as without a continuous
pipeline of talent and leaders, no initiative can survive long.

The key items she should attend next

Rigorous reviews and measurement - with so many good initiatives launched, it is imperative
for Cindy & Team to constantly evaluate progress and if the same has added value and increased
productivity. Approach should be recalibrated to review progress

360 degree feedback - It would be good for Cindy to engage the general managers periodically
and get 360 degree feedback from them if the general managers feel that all the HR changes are
adding value and making a difference on ground.

Diversity & Inclusion - Cindy Should build on this further as it would reduce concentration and
bring about scalability and creativity. It would enhance the organizations capabilities to manage
change and grow across borders.

The Future HR structure - Cindy has to decide amongst the 2 possible models, centralized or
hybrid. All the good initiatives would be non-sustainable without a robust HR structure to drive
them forward.

Culture of the Organization: establishing the culture of the organization is very important. By
establishing the culture, above items gets institutionalized and any external environment
pressures and influences can’t disrupt the working culture of the organization.

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Conclusion

The Hybrid System will allow HR to be more in touch with departmental and organizational
objectives as it allows for more HR-Management Contact as well as 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.

Nevertheless, because there is a large amount of changes happening within the organization, a
more focused and connected HR Department can help maintain employee satisfaction and
loyalty. This is no easy task with the organization as vast and as strong as Sonoco needs to go
through a change, it'll certainly be huge but it is indeed attainable. Cindy will have to focus on
the key priorities in a systematic manner. Her priority will be to improve the entire chain of HR
activities

References

Alexis (2016)Different Types of Organizational Structure,Hearst LLC

Aquinas (2009), Organization Structure & Design : Applications And Challenges, India, Excel
Books

Blackburn (2015),The Sustainability Handbook: The Complete Management Guide to Achieving

Social, Economic,West Academic

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Charles (2015) Hybrid Structure Advantages & Disadvantages, Leaf Group Media

Graves (2017) The Management and Employee Development Review: Competitive Advantage
through Transformative Teamwork and Evolved Mindsets,CRC Press

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