The position of the packaging industry - Essay Example

?Introduction To remain globally and to survive competitive pressures, it has become essential that organizations adopt a flexible approach. This makes it essential to restructure the organization which has to be implemented across all functions including the HR department. Focusing on HR is not merely to reduce costs but it also helps to enhance productivity through restructuring of different functions such as compensation plans, rewards and recognition and overall talent management which includes career progression. The position of the packaging industry Sononco had enjoyed uninterrupted growth and financial success but following the Asian Financial crisis sales were impacted to a large extent. Stock prices had fallen and the company was under pressure to sustain the stockholder value. The packaging industry underwent a complete change as branding became a part of packaging and organizations were required to respond to changes and demands in real time. These changes required Sononco to look for a new business model which would focus on meeting customer needs. It also called for cross-divisional cooperation along with restructuring of the HR functions. As of now talent is not viewed as a corporate resource but was individually managed by each General Manager. Objectives for change Three strategic objectives were formulated by the Sonoco CEO which included GM’s accountability for talent management and at the same time ensuring the HR is able to support GM’s objectives. Hartley planned to distribute talent evenly across divisions within the organizations. When Hartley took over the charge, the HR functions were decentralized. The new CEO thus suggested two alternatives – to have a centralized approach or a hybrid approach. In the case of Sonoco a hybrid approach is a better option justification for which has been provided. Sonoto has large multisite workplaces and the hybrid model helps deliver quality HR needs across the organization. However, this model requires clear lines and scope of responsibility and consistent communication between the centres of excellence (HRMAE, 2011) or centres of expertise as in the case of Sonoco. Through this approach it is possible to share information and exchange views on effective programs before they are implemented within the organization. This requires further discussion. The position at Sonoco Each division has the autonomy and hence had their own HR functions, their own budgets and systems, performance management processes, and leadership and training programs. Sonoco has a tight-knit culture in which there is resistance to hold the underperformers responsible. It has inconsistent HR practices and processes. The divisional HR managers are involved in day-today employee relations issues. Lack of communication persists in the organization while the GMs have been empowered to decide on the compensation and appraisals for their subordinates which results in unfair practices. HR just had to follow the dictates of the VPs and the GMs. Career and succession planning was lacking within the organization which dampened the enthusiasm of the employees. Divisional HR can enhance performance and productivity within the organization. A hybrid structure can provide a strategic link between corporate HR functions and businesses. However, a hybrid structure does not enable interaction with line managers which is possible through the centralization approach. Moreover, Sonoco had changed over to the hybrid approach and found that it is not sure of it had the right people at the right jobs. It may be difficult to segregate the responsibilities between the head office and the individual divisions which can result in regular conflicts. Thus, the above discussions suggest that the HR changes at Sonoco were far from successful. While each division having its own GM deciding on the benefits and other HR related functions about their employees, giving so much autonomy can lead to competition within divisions in an organization. This strength ultimately results in diluting the power within the company. Thus, a strong HR vested with certain powers, is essential to achieve the strategic objectives of the company. Companies have been trying to have a flexible approach but this may not be applicable for all companies. Flexible organization Organizational flexibility is achieved partly through outsourcing of HR functions and partly through delayering and restructuring (Saunders & Thornhill, 2006). While flexibility has become essential for survival, flexible HR is not a norm. It is a state of mind that varies across firms (Caldwell, 2004). The flexible approach has led to the evolution of self-managed teams that have to work closely together to achieve horizontal coordination across organizational divisions. A delayered organization can be a flexible organization but a totally flat organization can create organization chaos and motivational deficit. Flexibility should not be merely viewed as a cost-cutting strategy but a tool for survival. Flexible HR practices can induce the labour towards enhanced productivity but these have to be supported by technology and training (Marlow, 1997). Flexible approach to HR is not necessary when there is a sophisticated approach to labour management. Flexible HR practices also lead to difficulties in attracting, gaining and retaining a skilled workforce (Fuchs, 2002). Employment relations become non-standard in a flexible HR environment and the core number of workers shrinks. A lean organization does not necessarily mean that it is a flexible organization. Thus, Sonoco should not aim to be ‘flexible’ and engage in reducing the employee strength just to maintain competitive edge. Talent management at Sonoco As of now it appears that employees at Sonoco are not able to get the work suited to their talents or their abilities. The right people at the right position can ensure enhanced productivity and a motivated workforce. As far as recruitments are concerned it should be a mix of the centralized and the hybrid approach. A centralized approach ensures that duplication of work is minimized thereby enhancing productivity. This is also known as ‘shared services’ where it becomes possible to leverage synergies (Martinez, 2002). Centralization results in stronger technical expertise and helps in developing specialization. It is also possible to measure recruitment performance and also institute uniform recognition and rewards. Even if the process of recruitment is outsourced, the recruiters can be provided with challenging development assignments. In addition, since recruitment is centralized, the top management is aware of the talent available and hence it becomes feasible to shift staff to meet the changing demands. Such agility in an organization enables redeployment of resources easily. This can be achieved through shared staffing approach. However, this can work only for some functions. A hybrid approach becomes necessary in some situations and in some cultures. It may become necessary to meet the specific needs of individual business units. Centralization or hybrid Sonoco has two different business units and operates across several nations with diverse cultures. It may not always be possible to shift resources because of cultural differences. Moreover, the requirement of the business unit is best understood by the line managers as they are the ones that interact with their subordinates the most. In the centralized approach the field HR reps at Sonoco are in direct contact with the line managers. According to Thornhill and Saunders (1998) management of human resources is now considered an activity to be carried out by all managers. Under the centralized model each sector at Sonoco would be equipped to carry out all the HR functions independently. This has been considered essential because people closest to the employees understand the work done, they are equipped to extend appreciation, and they are in a position to extend rewards and recognition (Renwick, 2003). However, the line managers have to work in conjunction with the HR specialists. The line managers can assist in resourcing, in employee relations and in rewards and recognition but the policies have to be formulated in conjunction with the HR managers (Whittaker & Marchington, 2003). HR needs to be valued as a function but it needs to be integrated with the strategy of the company. Certain issues are too complex for the top management to be involved in and the local managers can respond to it much faster (Budhwar, 2000). Such a strategy results in cost reduction while also preparing the middle managers to be future managers. Thus, it takes care of career progression as well, which helps in keeping the staff motivated. The HR professionals are not in a position to identify the performance issues (Huselid, Becker & Beatty, 2005). If the local managers and the HR work closely it would help to recognize and reward the right talent and avoid overinvestment in underperformers. Therefore, the recruitments should be through a centralized approach but other HR issues such as training and development, performance appraisals, career progression and rewards and recognition should be done using the hybrid model. Meeting financial objectives To meet the financial target of delivering annual double-digit returns to the shareholders, the hybrid model is better. While the projected cost savings is marginally higher in the centralized approach, it should be noted that these are merely projected figures. The centres of excellence and the administrative back-office functions are identical in both the models but the hybrid approach would be able to link the organizational objectives with the HR strategy. This would not be possible with the centralized approach. It is important to have a global organization structure in place but all the units/businesses should be connected through integrative processes (Sinha, 2002). If this is not adhered to, the autonomy that the local managers gain would lead to costly disconnections among units and functions. The way forward for Sonoco Talent management, initially meant just to improve the process of recruitments and develop the skills and aptitude of the people but today it encompasses functions such as mentoring, performance management, leadership development, career planning, and recognition and reward. Today talent has become the key differentiator to gain competitive advantage (Bhatnagar, 2007). Sonoco is at the moment not sure if it has the right people at the right job. In other words, it is not sure of its talent management approach is right. Organizations pride themselves of being sustainable and feel competent to be able to deliver effective returns to the stakeholders but most often they are not sure if their personnel are motivated enough to deliver (Little & Nel, 2008). Through the integration of HRM with the corporate objectives, rather than HR strategy being a set of, it is possible to manage employees more effectively and enhance performance (Othman, 2009). However, this itself is not sufficient which has been found at Sonoco. Integration is required with the personnel function and the rest of the management team which is not possible in the hybrid model. Integration provides a broader range of solutions to complex organizational problems. High Integrative capacity can help an organization to develop solution to achieve business goals (Chang & Huang, 2005). A lack of clear direction prevails at Sonoco which is evident from the current chaos that can be seen at the organization. Sonoco requires transformational leadership having high-level capabilities and management skills to be able to steer the organization in the right direction. To have sustainable competitive advantage organizational culture needs to be aligned with the overall business strategy and non-alignment can be deadly according to the contingency theorists (Palthe & Kossek, 2003). The strategy that Sonoco adopts should be able to create a shared mind set for the core workers which would also enhance cooperation and collaboration. The shared mindset is possible through the centralized approach. Today sustainable change and competitive advantage can no more be defined based on Porter’s model. The employee-employer relationships is now a psychological contract and such a relationship can support corporate performance and economic requirements while ensuring employees’ results are met (Tipples, 1996). Organizations have to be driven by relationships because nothing happen without the cooperation of people. Under the circumstances, for a sustainable HR strategy, Sonoco should adopt a centralized approach where the line managers are entrusted with the responsibility of their subordinates with regard to discipline, dismissal, recruitments and for issuing contracts (Cunnigham & Hyman, 1995). This would enable a healthy relationship between the line managers or the supervisors and their subordinates. It also empowers the line managers to have control over their subordinates. Becker and Huselid (2003) argue that if HR strategy implementation is effective, it can contribute to new value creation. Organizational structure is an important variable that impacts all organizational processes including HRM (Khatri & Budhwar, 2002). Hence, Sonoco should change over to a centralized approach but use the hybrid approach only for talent management to be able to sustain change. Continuous Professional Development (CPD) CPD is essential for every individual as it helps in the growth and development of the people. It is all about understanding the environment in which they work, the jobs they are given and how the jobs are performed. Since the dynamic changes in the social and economic environment impact the businesses, the technological changes affect the workplace, CPD helps to broaden the skills and aptitude to remain competent at the workplace. This study on Sonoco has been an eye-opener on how talent has to be managed in an ever-changing business environment. It is not sufficient to formulate certain principles and implement them within the organization. To work with a globally diverse workforce, to work in different business environments, and to work with a workforce that has independent views and varied lifestyle, is a challenge. This realization has been the result of the case analysis of Sonoco which is in a dilemma whether to adopt the centralized or the hybrid approach. CPD is essential because there has been a shift in what the people and the organizations want. It is no more sufficient to have strategic objectives. It is now equally important to formulate means to achieve these objectives. Achieving objectives require continuous development of the personnel. This lays emphasis on training and development of the people. Training needs analysis too has to be identified by managers that have the capability and the skills set to do so. Finding the right job for the right talent is essential for CPD. If the employee feels uncomfortable in the job role, there would be no interest or motivation to give his best. His interests have to be sustained and hence for optimum productivity, the right talent has to match the right job role. Motivation to a large extent comes from the supervisors as they are in regular contact with their subordinations. Besides, holding the immediate supervisors responsible for their staff also provides an opportunity to the supervisors to learn in the process, which is also a part of CPD. Employees must know how to support their staff for CPD of every employee in an organization. It helps to manage and develop their careers and the Gen-yers are more conscious of their future growth than the current pay package. Talent cannot be managed in an informal way. The strategies have to be integrated so that succession planning also is undertaken. This is part of CPD, essential in an organization. CPD and talent management are all inter-related terms and to achieve the intended objectives, HRM policies have to be integrated with the strategic organizational objectives. 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