Building a World-Class HR Organization

To suggest which model to use out of the two alternatives for restructuring the HR function such that :
Best embodies Sonocos time ordered principle that people build businesses

It cuts cost of HR function

Only the best flexible survive

The right people are in the right position

 17300 employees in 32 countries Packaging Industry is moving to India and China with cheaper labor force 10 businesses occupied two segments: industrial packaging and consumer packaging. The industrial segment generated 55% of company revenue and employed 11,000 people. The consumer-packaging segments 6,000 employees produced packaging for food and consumer products and high-density film. Explosion in the variety of consumer packaging Industrial packaging suppliers are consolidated

To evaluate Sonotos current situation, we evaluated its degree of fit or alignment among all the seven Ss.

 Structure Highly decentralized and non-uniform HR before HR has no strategic role in the organization Centralized HR Administration aligned to the company goals Strategy Adaptive to end customer needs Solution-orientation strategy than a mere physical goods manufacturing Key Account Management Reach to changes in environment and minimize potential damage

 Systems Society is becoming technological and systems driven. Prior to Hartley, Divisions with separate systems and no uniformity in HR practices Benefits and compensation not used to drive performance but as entitlement No succession planning After Hartley was hired, Advisory HR council from all divisions and corporate Performance was measured and linked to pay Annual succession planning

 Skills Skills refer to what a company and its personnel do best. Sonocos core strengths are its market share, brand value, diversity in products, adaptability and culture Performance management system and the compensation system based on the measured performance are the initiatives to develop skills Six core competencies: excellence, communication, teamwork, technical/professional skills and knowledge, strategic integration, and coaching/mentoring

 Staff Reluctance to hold underperformers accountable New focus on succession planning Global diverse workforce Style Management style is not very participative Leadership is not completely effective as managers are reluctant to take unpopular decisions Teams preferred over individual performers

 Shared Values Collaborative and team-oriented Company loyal employees Ethical and paternalistic Diminished sense of responsibility

 Centralized Model
Most HR services would be handled by four centers of expertise. Divisions to be served by a pared-down field staff Advantages Decrease in cost of driving administrative and other process improvements. Disadvantages Restricted opportunities to align directly with individual

Source : HBS Sonoto case , Exhibit 4

Hybrid Structure
Divisions will have direct involvement in staffing, succession planning, personnel programs, compensation and benefits. Advantages Left intact a divisional HR presence on which GMs could rely. Disadvantages Concern whether changes could be easily driven across the company with this new structure. Ownership of Functions Which would be owned by corporate and which would by the

Source : HBS Sonoto case , Exhibit 4

Based on alternatives available our recommendation would be to go for a Hybrid Structure because of the following reasons Survival of the Flexible This structure would be more aligned to the flexible strategy of the organization and it would be more equipped to cater to the dynamic environment. Mirroring of HR Organization with that of Companys Organization HR will be organized into two sectors Consumer & Industrial.

 Appropriate systems in place to get the right people in place Ex Presence of field HR reps, who can provide proactive business-related support, including talent management, succession planning and formal coaching. People build businesses By having the right people with the right skills in such a way that they are most beneficial to the organization, Sonocos time-honored principle that people build businesses is also being retained.

Financial Target As people will get the right development and attention required, their performance will go up and in the long run organizations financial target will be met.

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