Human Resource Management of Sonoco Company - Assignment Example

?Human Resource Management of Sonoco Company Grade 6th January The situation of the packaging industry atthe time of the case At the time of the case, about one hundred thousand packaging industries were generating approximately 400 billion pounds sales annually. About 115 billion pounds of this total was generated by the United States followed by Asia and Western Europe. Out of 100 % revenue generated by consumer packaging, 70 % was generated by industry wide production while 30% was generated by industrial packaging. In addition, the board and paper accounted for 34% of revenue although the cost- effective and durable plastic was stepped into the shoes by glass and metal (Case study task two). In around 1990, there was the problem of globalization which resulted to growth and competitive challenges. This globalization made heavy manufacturing to move from United States to countries where there was cheap labor. By that time, countries like China and India had cheap labor. Consolidation was another major problem. This was brought about by United States overcapacities which lead to increase of the market share of packaging companies from 40 % to 60 %. Consolidation also led to segmentation of domestic consumer markets which in turn led to products being tailored to the preferences of distinct groups of consumers. The beverages and food industries were highly affected by this (Case study task two). In addition, more attention was being given to packaging’s role in branding. To some extent, this led to standardization of seven to eight versions of products instead of one or two. As a matter of fact, in traditional retail, advertising was less influential as compared to packaging. Packaging was considered to retain and woo more customers when compared to advertisement. A strategy was to be set in order to give the packaging companies the responsibilities of equipping themselves to changes in dime. This would ensure the packaging companies to compete towards use of new or emerging technologies and application of innovative tools as well as ability to speed development. This made many of the packaging companies to use sophisticated equipments in investment in order to handle abrupt changes in product design. By that time, many manufacturing companies started using one- stop- shop concept in order to consolidate their stables of suppliers. This led to a great improvement. Some companies like Hershey had spent many years on hundreds of packaging suppliers but after the concept, 80 % of their packaging needs were met by only 20 suppliers. This helped the company in the human resource management because of shortened production and delivery cycle (Case study task two). Impact of changes to Sonoco’s strategy These changes will help Sonoco follow sophisticated and coordinated marketing strategies. The approach will ensure a single point of contact within the firm to coordinate all the business needs of large customers. These will also result to satisfaction of the public and large customers e.g. Procter & Gamble, and Nestle. Sonoco has a great problem in supply management. Through the changes, they will manage to reduce the numbers of the suppliers and hence good management of human resource management in the company. If they adopt one- stop- shop concept, they will be able to consolidate their stables to suppliers. In addition, the company will compete with other companies in speeding development through the use of new or emerging technologies and application of innovative tools. Just like other company, Sonoco will be able to use sophisticated equipments in investment and hence handle abrupt changes in product design. Sonoco Company will also increase its market share and hence a good chance of increasing its production. This will mark a good start for expansion making the company come up with strategies of improving the human resource management due to increased employees. Addition of employees calls for removal of manipulations in terms of performance ratings. Employees’ farewell needs to be properly looked at in order to promote and increase their salary after performance reviews. It also calls for viewing of benefits and compensation as entitlements rather than costs in need of control or tools to drive behavior. This will help solve the problems in the Sonoco Company where merit increase process is unreflective and mechanistic of actual performance. Payments are also made near the mid- point for all individuals. In addition, evaluations rarely reflect performance and the termination of employees who had consistent good performance rating becomes difficult. This shows a great problem in the human resource management of Sonoco Company. However, if they adapt to the changes discussed, all this problems will be solved. Cindy Hartley’s objectives for changes at Sonoco Cindy Hartley mandate in the company was to build a sophisticated professional and business oriented Human Resource group. She would also ensure that leadership development was prioritized to ensure sustainable growth. Lack of suitable and appropriate candidates for top management jobs prevents the company from growing. Cindy Hartley wanted to come up with the appropriate strategies for reducing the expenses. This could be achieved through cutting down of the internal consumption and unnecessary expenditures. By so doing, the net income would be increased. In addition, she wanted to improve the productivity of the company. This could be achieved through adoption of strategic methods of production and marketing. Improvement of productivity can only be possible through customer satisfaction. To help improve the productivity, she was aiming at enhancing the management of the working capital and the cash flow. Proper handling of the working capital ensures good business management and hence reduction in the payback period. It helps in the improvement of the cash flows generated from the business (Mathis, 2010.). Cindy Hartley was determined to link the mechanical and arbitrary compensation and performance management systems in order to make consistent and more accurately reflective of employees’ contributions. The systems had to be designed as a cycle that would begin with companywide goal setting and earning targets as well as cascading down to the level of individual performance. In addition, she needed to create a good process of employee development in order to refine the skills of the employees as well as identifying and developing deficient skills. She intended to use the cyclical system to highlight individual employees’ development needs and hence creation of career development plans in the entire company. The new manager also intended to come up with succession plan in order to help in the preparation and identification of the next generation of leaders. This would also help reduce the failure of the managers caused by lack of good preparations. This would be achieved through use of full integrated process which ensures that everything is connected and intuitive. She would link the development, succession planning and performance management to business objectives, people, values and culture. Achievements of HR changes at Sonoco As a change maker, Cindy Hartley is a collaborative and systematic manager. She was more concerned in compensation and performance management because they are the most fundamental areas to be designed and introduced across the entire company. She managed to introduce new performance management systems in order to drive alignment and consistency. The system was designed as a cycle that would begin with companywide goal setting and earning targets as well as cascading down to the level of individual performance. She was determined to ensure that, in one division, every plant manager would have a set of metrics. The metrics includes safety, plant profit, machine downtime, customer returns and quality. She was also determined in ensuring other divisions have metrics. They include emphasizing on reduction of scrap and machine throughout to drive cost reduction and productivity. The combination of this metrics formed business and divisional financial objectives. The new manager also succeeded in improving the career development plan. She intended to use the cyclical system to highlight individual employees’ development needs and hence creation of career development plans in the entire company. In addition, she came up with a system of performance management for salaried employees in the company. To accomplish this, she systematized the system to ensure that this was done and done correctly. A new compensation system was linked to the developed performance management system. This helped in replacement of 18 salary grades with five wider salary bands in order to enhance managerial flexibility in differentiating among employees and awarding merit increases. This ensured that the managers knew the employees’ contributions to help them make fair decisions on merit awards and then explain the decisions to the employees. This main objective of doing this was to reward individual contributions while adhering to market guidelines. She was successful in doing it. To ensure that the general managers had a voice, Cindy Hartley formed an advisory team of divisional general managers. Acceptance of divisional senior management was very crucial towards changing the company’s approach to development of leadership and planning succession. To achieve in this, she came up with a new four- step leadership development system. This would help in short term assessments and job changes as well as education and formal training. Cindy Hartley was also determined towards customer satisfaction through good communication and excellence, teamwork, coaching or monitoring, technical skills and professional knowledge and strategic integration. She was to come up with 360 degree reviews which were to take place after every 24 months and succession planning. The succession planning took place after every 12 month at the executive committee level. The main objective of doing this was to assess the managers’ competences and to pinpoint actions needed to speed readiness as well as to address organizational issues (Case study task two). The right Human Resource structure for Sonoco Sonoco Company uses Hybrid Human Resource Structure and not centralization. This is because the senior director, Cindy Hartley delegates her duties to administrative and divisions. With a comparison of hybrid structure to centralization structure, hybrid has a delegate of three directors, i.e. administrative, centers of expertise and divisions but centralization has administrative, center of expertise and field & staff services (Daft, 2009; Briscoe, Randall, 2008). It is clear in the case that, the management is made of administrative, centers of expertise and divisions. In addition, the centralization structure has HR administration but not salary administration. This is very evident in the case where the structure has benefits administration and payroll after the vice president administration. According to the objectives of the senior Human Resource manager, the VP of Human Resource would be supported by a director of compensation and organizational development (Hui and Martocchio, 2011) as well as a director of employee relations. Hybrid structure is composed of these features. The sectors formed here are given representatives who provide business related support which comprises of talent management, succession planning as well as formal coaching. All these were the key objectives of Cindy Hartley when he joined the company. Advantages of hybrid structure It is relatively cheap when compared to centralization structure. The projected cost savings for centralized approach was 3.1 million pounds while in Hybrid structure; the projected cost savings was as low as 2.7 million pounds. The structure creates a shared mission and also ensures that employees work on different projects in different sectors (Bolman, & Deal, 2011). It ensures that, a team of unified individuals is created with a common goal and different experience and interests. Through the sue of the structure, each employee is capable of performing in the areas that he or she is best suited and also move from project to project reporting to the relevant individuals (Daft, 2009). The hybrid structure is able to do away with traditional barriers such as advertisement of budgets that may result to crippling of financially small organizations. It is able to ride the signal of market disruption to the top of creating a massive media bombardment that gives energy to development of product and demand. Through the use of the hybrid structure of human resource use of spider web based structure is possible. This structure involves groups of individuals in geographic areas working jointly to in order to accomplish different shared goals. It also helps to do away with the problem of pipeline distribution slowing down accessibility to the finished products (Daft, 2009). Disadvantages of hybrid structure The major disadvantage of the structure is excessive duplication of activities amid divisions and functions. In addition, the structure has a tendency of creating conflicts between divisional functions and headquarters (Daft, 2009). Sustaining the changes Sonoco Company needs to control companywide costs in order to support the new business model. The model aims at generating the top line growth as well as reigning in overall cost for global competition. In order to sustain the changes, the consumer packaging divisions must retool to meet large customers’ needs for rapid changes and company’s growth strategy called for cross divisional cooperation in order to devise nimble solutions for consumers. Talent will also be reviewed as a corporate resource because each general manager will be required to manage talent within his or her own division. This will ensure sustainability of the changes effected by Cindy Hartley as a senior human resource manager. The performance management, development, succession planning and compensation policies set by Cindy Hartley will also be effective in sustaining the changes. She opened the task force final meeting by summarizing the required schemes for the members. She was to increase the general managers’ accountability for talent management, to distribute the human resource talent and support the company’s divisions in order to make human resource systems and processes more consistent. In addition, she was to optimize the HR’s ability in order to provide customized and strategic support to the general manager’s businesses. Sustaining the changes can only be achieved through good management (Renckly, 2003) of all the relevant departments within the company. Accomplishing the three ambitious objectives, the changes will be effectively sustained. What to be attended next by Cindy Hartley Cindy Hartley should work on corporate Human Resource. This is because corporate HR was viewed primarily as a watchdog in order to head off employee and legal relations problems. Employees’ farewell is a very crucial area that determines the operations and activities of the company. Compensations and benefits were viewed as entitlements rather than costs. In addition, the performance reviews were done on employees’ anniversary dates rather than the start of the company’s fiscal year when the annual strategies and budgets were developed. These are areas that need a lot of improvements in order to fulfill the set objectives. There is a problem of handling the employees in the company. Their payments are never delivered on timely manner. Receiving the payments at the midpoint is unfair to the employees. In addition, the employees are asked about their career inspirations but no action plans are developed. Sophisticated plans need to be developed in order to acknowledge the employee’s talents and career inspirations. Taking into consideration that Sonoco Company is highly leveraged due to fixed costs of its plants, Cindy Hartley should help the top management come up with strategies of reducing the debt. High leveraged companies are always at high risk of bankruptcy. To avoid this, Sonoco Company should be determined in reducing their leverage. Constant borrowing creates a bad image to the company (Walker, 2001; Wolper, 2009). It might limit access of another loan when it is needed most by the company. It also reduces equity in comparison to the return of assets. References Bolman, G., & Deal, E., 2011. Reframing Organizations: Artistry, Choice and Leadership. pp. 6. New York: John Wiley and Sons. Briscoe, R., Randall, S., 2008. International Human Resource Management. pp. 19. Willamette university: Taylor & Francis. Daft, R. L., 2009. Organization Theory and Design. pp. 5. New York: Cengage Learning. Hui, L., Martocchio, J., 2011. Research in Personnel and Human Resources Management. pp. 15. Michigan: Emerald Group Publishing. Mathis, R. L., 2010. Human Resource Management. pp. 50. New York: Cengage Learning. Renckly, B. R., 2003. Human Resources. pp. 10. New York: Barron's Educational Series. Walker, A. J., 2001. Web-based human resources: the technologies and trends that are transforming HR. New York: McGraw-Hill Professional. Wolper, F. L., 2009. Health care administration: planning, implementing, and managing organized delivery systems. pp. 16. Texas: Care publishers. Read More