Sonoco Products

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Sonoco Products

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By:Hemant Vasishth (232008)Juli Gupta (232009)Sonoco Products Company(Building A World Class HR Organization)

Founded as the Southern Novelty Company in 1899 in Hartsville, South CarolinaOperates 285 facilities in 32 countries employing 17,300 employeesCompany culture Family-friendly, paternalistic, collaborative, ethical and team-orientedVery low attrition rate. In 200, over 60% executive committee members had been with company for at least 20 years.Reluctant to hold under-performers accountable.

Sonoco Products

Company segments

Packaging industry sales worth $400 billionConsumer packaging 70% and industrial packaging 30%Heavy manufacturing moving from US to China, India due to cheaper laborDomestic market becoming more segmented as products were tailored to preferences of distinct consumer groupsEmergence of one-stop-shop conceptPackaging Industry

Highly decentralized and siloed HRDivisional HR managers reported to GMHR role more tactical than strategicEach division had their own HR functionsCorporate HR mainly a watchdog to head off legal and employee relationsCompensation decentralizedBusiness goals and individual objectives not linkedEvaluations rarely reflected performanceNo succession planning

HR systems before hartley

Build more professional, business-oriented HR group.Leadership development on high priorityPerformance management systems to be linked and made consistent and more accurately reflective of employees contribution to performance.Need to create an employee-development process to refine employees skills and to identify and develop deficient skillsSuccession planning to identify and prepare the next generation of leaders

Hartleys objectives

Hartleys initiatives

Sales fell 6% between 1995 and 1999 from $2.7 billion to %2.5 billionDeclining top-line salesSignificant fall of stock pricesControl costsRapidly changing packaging industryDecentralized HR Issues

To increase GMs accountability for talent managementTo distribute HR talent and support more evenly across the companys divisions and make HR systems and processes consistentTo optimize HRs ability to provide customized, strategic support to the GMs businessesObjectives of new organizational structure for HR

Most HR services to be handles by 4 centers of expertiseDivisions served by a pared-down field staff.Each rep to cover 10-15 plants and consults one-on-one with line managers on plant-level HR issuesCentralized team responsible for strategic programs and initiatives.Cost savings 3.1 millionOption 1 (Centralized model)

Option 1 (Centralized model)

Option 1 (Centralized model)

Divisions will have direct involvement in staffing, succession planning, personal programs, compensation, and benefitsHR is organized into 2 sectors consumer and industrialEach sector is assigned a VP, HR supported by directors of EE Relations, compensation and organizational development. The 3 directors directly involved in sectoral planning and interact with GM, hence they have first hand knowledge of business.They also link the GMs within the sector to Centers of Excellence.Each sector also has field HR reps to provide support.Cost savings 2.7 millionOption 2 (Hybrid model)

Option 2 (Hybrid model)

Option 2 (Hybrid model)

Which option would best suit a changing industry in which only the flexible survive?Which option would better ensure that the right people were in the right positions?Which option would better help the company meet its financial target of providing annual double-digit returns for its shareholders?Which option best embodied Sonocos time-honored principle that people build businesses?Things to consider for decision making

Based on the case and the options available, we would recommend to go with option 2 i.e. HYBRID HR STRUCTURE.


Have clearly defined roles for the Corporate and the divisional HR departmentsHave a clear process to implement any new policies or reforms across the organizationEnsure 2-way communication between corporate and divisional HR to avoid duplicity or gaps in implementation

Cautions to follow while opting for Option 2