Human Resources Management Term Paper

By Ahmed Nounou
12/16/2011 CBS-FTMBA-Class 2012 Presented to: Dana Minbaeva

e. 2005. These changes require the company to change its strategy and business model which will reflect on the whole company’s procedures and cultures. more differentiated products in the market and thus. One of the main drivers of this change inside the company is the Human Resources function. higher value to the clients). In addition to that. stock price had fallen to an eight-year low and a consolidation in the industry gave rise to a higher market concentration (60% for the top-4 companies). 4.HRM – Term Paper Q1) considering the economics of the packaging business and the context of the current market environment what are the critical human resource tasks that Sonoco must accomplish in order to be successful? Sonoco is a large packaging firm that is facing big changes in the industry. I will follow the strategy cascade process presented by (Groysberg et. in 2000 the packaging industry was facing a big change. Sonoco’s top management has identified three main strategic directions to be followed in the coming years  Cost Cutting (Lowering down the fixed costs) Page 1 of 11 Ahmed Nounou From the HR perspective. I would like to start my answer by defining what it means for Sonoco to be successful. pp. shapes and materials) (Case-A. 2006) to structure the Strategic HR focus. the company’s revenues were stagnating.5) Sonoco Strategy Initiated by the current business and market situation. Figure 1: Strategy cascade process Current business situation: Sonoco is a highly recognized player of the packaging industry. In my answer to this question. being successful is to effectively and efficiently implement the company’s strategy through applying HR practices and systems. packaging companies are turning into One-stop shops for packaging solutions and the market is getting increasingly segmented (i. more packages per product with different sizes. packaging is more of a product differentiator (i. During the period from 1995 to 1999..

HR will have to act as an internal advisor for the company’s management and to share responsibility with line managers for the people’s performance. achieve its strategy). Huselid.e. In order for Sonoco to be successful (i.. the HR Sonoco has to play another strategic role as a change agent in the organization (Groysberg et. & Beatty. p. the HR role is to support the management in achieving the objectives through realizing the workforce requirements. p.  Innovative workforce: The people who are able to respond to the complex needs of the highly segmented society have to be innovative and creative. Groysberg et al have discussed the importance of HR as a strategic partner in organizations (Groysberg et. Historically. the HR in Sinoco was more of an operational tool. the HR in Sonoco has to play a significant role as a strategic partner in realizing the company’s strategy. In addition to its role as a strategic partner. p. being more flexible and agile Offering solutions to large customers instead of selling products Workforce Requirements Achieving these strategic objectives require:  Efficient workforce – Less numbers of people to lower the costs but at the same time more efficient employees who are able to respond quickly and effectively to the customer demands  Talented and flexible workforce: More general talents who are able to understand the client’s needs and offer solution that matches the rising and diversified demands of their customers. Ahmed Nounou Page 2 of 11 . Systems like talent management. (Case-A. performance management and organization development have to be effectively put in place. A clearly articulated culture of accountability helps to enable successful strategy execution (Becker. HR Strategic focus: In lights of the strategic objectives and requirements. i. 5). 2005. succession planning.e. 2006). The culture in Sonoco is a collaborative. 3). This resulted in siloed and inconsistent HR procedures across the organization.. Speaking of HR roles. The HR was reporting solid line to general managers instead of HR Manager (Case-A. but it clearly lacks accountability as there was a reluctance to hold lowperformance accountable (Case-A. 3). family friendly and team oriented. 2009).HRM – Term Paper   Shifting the business Model to accommodate the needs of the market. It was used by managers to handle employees’ relations issues. 2006).

supervisors and employees initially agreed on what was to be measured and how it was to be measured (Case-A. Strengths It is stated that Sonoco’s culture is a tightly knit culture. 2005. the culture plays a big role in shaping the way business is being run in the company and hence the company’s overall performance. family friendly and team oriented (Case-A. employees where taking an active role in the performance management process throughout the year. Being ethical is highly important to ensure long-term business sustainability. This means that managers were not willing to sacrifice the personal relationship for the company’s performance. The most obvious for me would be recruiting. Considering Sonoco’s case. activities and tasks that HR should achieve. For example. 2005. 2005. 3). In this part I will discuss the company’s strengths and weaknesses in relation to the current market and business situation for Sonoco. especially at hard and crisis times when people need to come together to overcome the challenges. collaborative. the managers are reluctant in punishing underperformers “You could ride with a little bit of extra cost of a C player not pulling their weight” (Case-A. retaining and developing the company’s talent while implementing a mind-set and culture change program to strengthen accountability within the company. The employees in Sonoco describe the culture in the company as “ethical”. 2010). 8). Weaknesses Having such a family culture also has some downsides too. p. This is proven by the fact that the company has sustained for more than 100 years. Q 2) What are Sonoco’s current strengths in terms of its culture and people? What are the company’s major weaknesses? “An organization’s culture develops over many years and is rooted in deeply held values to which employees are strongly committed” (Robbins & Judge.HRM – Term Paper In summary the HR in Sonoco has to play a more significant strategic role in the organization. Together. 3). p. in a company of over 100 years old and employees who probably spend their whole career in the company (Case-A. p. It is proven in the text that employees are willing to do extra efforts for the company’s benefits. Being such a close culture could have a lot of advantages. This should result in variety of initiatives. This definitely had badly Ahmed Nounou Page 3 of 11 . 2005).

As a consequence.g. 2010). organizational outcomes (e. 2005. For many years. Paauwe & Farndale suggest a classification of the variety of ways to measure HRM (Puaawe & Farndale. In addition. managers used to manipulate performance rating in order to get larger salary increase for their employees (Case-A. etc. I will discuss the effect of the HRM practices on Sonoco’s performance.. Huselid.). Applying there concepts on our case. 6). 2006). 3) How successful were the HR changes at Sonoco? (Take the snapshot of 1995 and contrast that to what Hartley had implemented by 2000). 2005. we find that Sonoco has an “Employer of choice” culture which focuses on making the firm a good place to be in rather than a company that drives their employees to perform at their best in order to serve the company’s strategy. the company’s efficiency is tested and the effect of free-riders becomes more apparent. Becker et al have discussed the culture and discussed in contrast its effect on company’s performance (Becker. this decreased the differentiation inside the company and established a culture that is based on the strength of relationships managers rather than performance competencies. 6).g. a strong culture might act as a barrier for diversity (Robbins & Judge. 7). On the times of tough competitions. p.. and intention to quit) Ahmed Nounou Page 4 of 11 . Reflecting on that. 2005. efficiencies) and HR-related outcomes (e.g. 2005. sales. Most of the employees were getting the same rating (Case-A. 2009).. Will changes be sustained? In this question. & Beatty.HRM – Term Paper affected the efficiency of the company and led to increasing the company’s cost. p. They even found it problematic if they were to assign a salary increase for their employees different than that in other departments (Case-A. which might have also affected the level of openness in the culture. This resulted in employees who assume that pay is not based on performance and achievement. It is stated that there were issues related to gender. This suggests a culture that lacks integrity and openness between the different departments. If the employees are not motivated to do their very best. profits. I believe that having such a culture could be one of the reasons that caused the company’s lousy performance in the past few years. quality. p. such as satisfaction. ethnicity and age (Case-A. market share. p. It can be measured through financial outcomes (e. race. output measures such as productivity. the company didn’t have a proper Performance Management or Compensation Systems. attitudinal and behavioral impacts among employees. commitment. 6). they won’t perform as needed and they will tend to free ride on the company’s whole performance.

the structure of the HR department was decentralized. Performance management systems were mainly based on objective and measurable indicators.g. which created a room for manipulation and agency costs (Zimmerman. there is no much data in the case text on the organizational performance before and after the HRM practices where introduced. e. 2005.g.HRM – Term Paper Although the company had a financial dip in revenues. 2006). 2010). The different HR departments were highly aligned with the divisions but had no strategic focus. There was no consistency in processes or services among the various businesses. profits and values during the period from 1995 to 2000. 2005) From 1995 to 2000 Hartley had performed many HRM reforms that can be summarized in the following points: Systems: She established the Performance Management system that is linked to the corporate and divisional strategy. e. It Ahmed Nounou Page 5 of 11 . 8-10) Culture: Hartley worked on tackling the diversity issues inside the organization by creating a vision for diversity and implementing a corporate wide task force to focus on diversity issues (Case-A. 7) In my evaluation I will use the best fit model developed by (Puaawe & Farndale. pp. A complex organizational structure inside HR avoided strategic planning. On the organizational outcomes side. 2005. fragmented and siloed. HR managers were reporting directly to GMs while indirectly to HR Corp. budgets. I shall start with a brief description to the HR situation in 1995 and then summarize the main HRM achievements before I evaluate the effectiveness and sustainability of those practices. p. Hartley introduced a new 360 degrees evaluation process and a leadership development program that is also connected to the PMS and started a succession planning process that aims to place the new potential leaders in their best fit positions. divisions had their own HR Departments with own systems. benefits administration was separated from benefits planning. In addition. In 1995. In my attempt to this question I will discuss the HR related outcomes in Sonoco. Benefits and compensation were not seen as tools to motivate people. the termination process was complicated due to misuse of the performance review (Case-A. performance reviews most of the time ended with a score of four. Finally. (Case-A. performance management processes. yet it wouldn’t be fair to draw a direct relationship between HRM and the financial outcomes especially that the world has witnessed the East-Asian financial crisis during those years. she made changes to the compensation system to link it with the PMS.

etc. It is also stated that the HRM changes didn’t succeed in changing the attitude of managers towards low-performers. developing talents and increasing efficiency of the company. In summary. processes.e. systems. 2005) . e. Hartley was highly focused on the consistency of the HRM processes and making sure they are interlinked  Organizational fit: Fit between the HRM and other systems in the organization. attitudes. There is no sufficient data in the case on how the designed HRM were aligned with the other operational or administrative processes. yet there is information on how the workforce perceived such changes. there is no information in the case on the recruitment processes which I see a critical process in developing the company’s talent and increasing efficiency. Systems like performance management. culture. yet more efforts have to be done to improve the soft side of the organization (i.g. The designed HRM processes were highly synchronized together. In my opinion. Hartley has succeeded in laying down the hard foundations of HR (i. it would be interesting to know the effect of implementing those systems on the employees’ performance and on the administrative cost per employee. Besides there is no evidence that the efforts done to improve the diversity have actually succeeded in achieving the desired cultural changes. Ahmed Nounou Page 6 of 11 . In addition an effective talent program was still mission in Sonoco.e. “The new system was designed as a cycle that began with overall company goal setting and earning targets and worked its way down” (Case-A. 2011).). In addition. all the system changes are not expected to sustain on the long run.  Environmental fit: Fit between the HRM practices and the social and cultural environment.HRM – Term Paper suggests four dimensions for evaluation the HRM system:  Strategic fit: “Vertical fit between the HRM practices and the corporate strategy”. e. On the other side.g. there is a clear distinction between the intended HR practices and the actual perceived ones. It is stated that the HR managers have bought in the new changes after some resistance. The designed system was in high alignment with the company’s strategic objectives. without effectively addressing the cultural issues. follow-up procedures).  Horizontal fit: Internal coherence between the different HRM practices. leadership development and succession planning are intended to support in cutting costs. As discussed by (Nishii.

organizational development and employee relation management. In regards to depth of the services offered. I will share my understanding to the selected solution. which is different than the hybrid structure suggested earlier then I will draw an evaluation of it in contrast with the alternative option. it consists of compensation. In regards to the strategy alignment. Under the hybrid model. the field HR reps would be able to provide more proactive. as discussed by the management. the first is the HR strategic design (center of expertise). The criteria for assessing this decision. What is your evaluation of this decision? In order to be able to answer this question. The model starts with defining the problem. under it. personnel programs. business-related support. p. succession planning. 2005. 2005. I will assume equal weights to those criteria and I will discuss the available alternatives along the defined criteria without giving quantitative ranking. the hybrid model shows a relative strength because the divisions would have direct involvement with staffing. p. In my evaluation to the decision taken by the management. in our case.HRM – Term Paper 4) Hartley had two options: a centralized HR function or a hybrid organization. HR is split into two main functions. I will structure it using the normative decision making model (Bazerman & Moore. The second function is HR management on the divisional level. p. which means they would be closer to the business requirements and thus are able to provide flexible and meaningful support. which consists of 5 sub-functions. the problem was to choose a structure for the HR department which would maximize the benefits vs. Ahmed Nounou Page 7 of 11 . benefits. As you learnt from the Case B “the hybrid option won”. the hybrid model keeps showing relative advantage. are identified as:      Depth and effectiveness of the services provided Alignment of the services with the corporate and divisional strategy Consistency creation in HR procedures across the organization Cost Cutting Readiness to implement the new structure For simplicity reasons. compensation. strategic LE Relations. the divisional HR directors would be closer to the general managers of the different businesses (Case-A. 10). HR information Services and finally OD & staffing. compensation and benefits (Case-A. 1). costs difference. 11). 2009). In addition. This would also retain the personalized and customized services on which the divisions relied (Case-B. 2005.

we could assume equal rating for both models along the cost cutting criteria. Under the new hybrid structure most of the HR activities will be managed by the two divisional directors (VP level).HRM – Term Paper Regarding consistency creation along the HR procedures. 1). In order to overcome this problem for the hybrid structure. the centralized model saves a little more money. p.12%). It is stated in case B that finding those people is a hard task (Case-B. Regarding cost cutting. which would probably create two big silos in the organization. Corporate VP HR has to be aware of ensuring procedures’ consistency in the two big divisions. The hybrid structure requires personnel who can provide strategic services related to talent management. I have no clue how big the gap is between the current state of the HR department and the required talent. my analysis shows that the hybrid model displays a relative strength in terms of the depth. 2005. performance management and coaching. customizability and effectiveness of the services provided to the business units. Knowing the size of the gap could be a deterministic factor in my judgment to this particular point In summary. 1). it is stated in case B that “Senior managers believed that the new structure would create greater collaboration among the business and a new opened around sharing information and talent” (Case-B. In my opinion. p. the selected model shows a relative weakness in terms of creating consistency in the applied HR procedures across the organization. On the other hand. The centralized model would require less talent because the HR representatives are expected to perform basic-level tasks like managing employee relations and communicating HR program changes. the centralized option doesn’t have this problem as most of the HR functions are designed and implemented on a corporate level. The fifth criterion is the readiness to implement the suggested structure. yet the difference between them is negligible in comparison to the company’s total administrative expenses (around 0. On the other hand. both models show a significant cost saving. I would rather disagree with this statement. This could create variance in the way HR procedures are implemented in each division. It also shows relative advantage in terms of alignment with the corporate and business strategy. 2005. Apparently it would be more challenging for Hartley to implement the structure due to the gap between the current and required HR department capacity. Ahmed Nounou Page 8 of 11 .

This is critical to align with the new changes to the company’s business model of solution based selling. This is expected to create a challenge for Hartley because she doesn’t have the right number of people with the needed skill set to make it work (Case-B. Based on the analysis carried out through the paper. firing and development. The academy would target current employees as well as interns and prospect candidates. I firstly discuss the main activities that need to be done in the HR department and the reasons for implementing them. Developing a plan to close the gap.HRM – Term Paper 5) What should Cindy Hartley attend to next? In my approach to this question. The main objective of the academy is to provide the company with the experienced and fresh calibers by holding the whole company –not only HRaccountable for developing talent. but also by the HR representative who deal with the managers and employees on a daily basis. The academy should be strongly linked to the leadership development process early developed. p. It is expected to include hiring. 1). I would suggest that she introduces an HR face-lifting initiative that would include the following tasks:     Assessing HR staff current capabilities. Hartley needs to take care of three main areas: HR department capacity. Hartley should establish a top-notch recruitment arm in Sonoco to make sure that the company hires the best employees in the required positions. Ahmed Nounou Page 9 of 11 . In addition to the academy. the HR department in Sonoco is expected to perform wide variety of tasks. I suggest that she starts what I call “Sonoco Academy for talent development”. The academy should assign highest priority to customer-interfacing and business-related positions. Secondly I discuss the priorities of these activities and suggest an action plan for implementation. Hartley has to work on raising the internal capacity of the HR department whether through recruitment or through talent development. Therefore. Analyzing the gap between the current and required capabilities. Those tasks are not only carried out by the high caliber corporate staff. In an industry that is heavily changing towards flexibility. talent would play a big role in paving the way to success. HR Department Capacity: Under the chosen hybrid model. talent management and organizational culture. The academy is to be sponsored and supported by the top management and strategically steered by the managers of the company. 2005. Implementing the plan and measuring its effectiveness Talent Management: It is one of the key differentiation factors for Sonoco to be able to compete in the future.

2010). the culture in Sonoco could act as hinder to the company’s development. more work on the people and culture has to take place. Robbins and Judge suggest a three-step model to implement culture change (Robbins & Judge. Hartley had succeeded in building the HR systems and foundations. The figure below shows the priorities of the main tasks required. create a new vision to drive the change and communicate it to the people. Establishing a sense of urgency and creating a vision would have a significant impact on the people’s morals and unfreeze some of the old assumptions. but in order to witness a visible result. which is by far the most strategic one. The successful implementation of both initiatives should enable Hartley to work on the talent management initiative. This is a critical step and has to be carried out as soon as possible taking into consideration the cost-cutting requirements associated with the hybrid model. I would suggest that Hartley starts firstly with implementing the cultural change program. Despite being the most important step.HRM – Term Paper The company’s culture: As discussed thoroughly in question 2. flexibility and outcome orientation are values that have to be implanted in the company’s new culture. The HR face-lifting initiative should be have an objective to fill in the major gaps within 6 months. The model starts with unfreezing the status quo by establishing a sense of urgency and creating a compelling reason for why change is needed. Figure 2: HR Action Plan Ahmed Nounou Page 10 of 11 . Accountability. Hartley should reinforce the change by consolidating improvements and reassessing the cultural change. Finally. A culture change program needs to be established in Sonoco. Priorities As discussed in Q3. Hartley should also work on removing the barriers for change and rewarding short-term wins that move the organization towards the new vision. Hartley has to work on building her own team of HR specialists. The second step is implementing the change. In this phase Hartley should form an empowered coalition to lead the change. talent management would consume a decent portion of the HR resources and thus has to be deferred until the HR department is well equipped. This would act as a quick-win which utilizes the HR infrastructure that was built during the past years. Meanwhile.

&. Ahmed Nounou Page 11 of 11 . Puaawe. W.. Willey. Judgment in Managerial Decision Making.. Robbins. & Judge. A. 11). (2009). E. Accounting for decision making and control. & Beatty. Zimmerman. Copenhagen. (2010). Judge. Groysberg et. Design an HR Architecture for the Differentiated Workforce. R. R.Sonoco Products Company (A): Building a World-class HR Organization (2005). Essentials of Organizational Behavior (Vol. T. L. & Moore. Bazerman.HRM – Term Paper 1 Sources HBR . Understanding Micro-Foundations for Successful Strategic Human Resource Management. International Human Resources Management and Firm Performance. HBR . B. A. B. (2010).al. (2006). (2011). P. (2010). Becker. Delivering Strategic Human Resource Management. & Farndale. Nishii.Sonoco Products Company (B): Building a World-class HR Organization (2005).. M.. S. Huselid. H. (2009). (2006).

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