Corporate Performance Management of Sonoco - Essay Example

? Case Study: SONOCO HR Introduction SONOCO is a 100 year old company that is a provider of industrial and commercial packaging products operating globally that have enjoyed uninterrupted growth and financial success until the early 1980s. In the 1990s SONOCO’s traditional client’s natural response to the series of financial crisis that plagued the world has severely affected its sales. Despite the reduced demand because of the US industries’ reduced export, SONOCO still managed to increase its net income by reducing its expenses. Extreme pressure to restore shareholder confidence was brought about by the downward trend in sales with no reprieve in sight. The industry’s shift towards a more involved supplier that offers end to end packaging solutions made it hard for SONOCO to compete directly with its competitors until serious change are implemented in the company. In response SONOCOs leadership implemented strategies designed to control cost that is juxtaposed to its new business model of generating top line growth. The strategy involves retooling its consumer packaging divisions to meet the large demands of clients that is sensitive to consumer taste or preferences. The new business model practically granted more autonomy to the General Managers of each division in terms of managing his or her own talent pool despite the new business model’s demand for more cross functional cooperation to respond to the dynamic customer needs. SONOCOs corporate culture is family-oriented, paternalistic, collaborative, and team oriented. Due to its long profitable history the company in its entirety tolerates underperformance so long as the company can afford it. But the employees are also extremely loyal to the company with majority of them enjoying tenures of more than 20 years. The company’s employees pride themselves of being able to set the phase in the packaging industry. The Issues Cindy Hartley was hired to assist SONOCO to support the strategies of DeLoach the company’s CEO that is aimed at: (1) increasing GMs accountability for talent management; (2) distribute HR talent and support more evenly across the company’s divisions and make HR systems and process consistent; and (3) to optimize HR’s ability to provide customize strategic support to the GMs businesses. These priority areas are designed to align the organization with the dynamic demands of the packaging industry. After conducting a comprehensive assessment of SONOCO’s HR needs, Hartley identified three priorities that she needs to resolve at once to respond to the challenge posed by DeLoach. First, the mechanical and arbitrary compensation and performance-management systems needed to be linked and made consistent and more accurately reflective of employee contributions to company performance. Second, the company needed to create an employee-development process to refine employees’ skill and to identify and develop deficient skills. Third, develop succession planning to identify and prepare the next generation of leaders was urgent. It would be prudent to ensure that whatever changes and initiatives that will be implemented by the organization it will also change the corporate culture and psyche of SONOCO to sustain its continuous implementation (Devero, 2007). The onus should be geared towards continuous improvement through iterative compliance to dynamic policies and procedure of a learning organization (Senge, 2006). The transformation should also be complete that it will positively influence or impact the correct core values of the organization (Whiteley & Whiteley, 2006). Analysis of the issues SONOCOs steady growth through acquisition of other companies over the years has contributed to the redundancy of several departments across divisions when the acquired companies were eventually consolidated to their respective divisions (DePamphilis, 2009). One of these departments is the HR department. Operational imperatives or requirements that call for expedient filling of positions to meet orders from customers also contributed to the creation of HR departments within the domain of the concerned General Manager. Instead of being an agent of change (London, 1988) the HR department was viewed as a back office support and talents are not viewed as a corporate resource. These gave rise to the inconsistent implementation of compensation and benefits that led to salary distortions. Rewards are given on a whim and there is no common policy or even procedure to support a systematic performance evaluation as basis for the granting of a uniform merit increases if not rewards across the entire company. These led to complications when there is a need to terminate the service of employee due to poor performance. Another adverse effect of multiple HR departments existing independently in different divisions of one large company is personnel development. There is no coherent direction and uniformity in implementing personnel development. There is a disconnection between employee development and career development with the needs and direction of the company. As a result instead of developing internal talents for them to become multi skilled their own career direction is left to chance. Leaders are not yet ready to take on managerial positions, and employees stagnate in their current jobs and position including their knowledge and skills. Analysis of the Solutions A peculiar aspect of Cindy Hartley’s plan is the lack of an operational, compliance monitoring and continuous improvement strategy (Oden, 1999). It also lacks an objective metric system that would enable HR to accurately calibrate the performance evaluation and the success of the training programs (Kessler, 2008). While Cindy Hartley’s plans are sound in terms of responding to the need of SONOCO and it could arguably able to achieve a degree of success in SONOCO the following could make it better or make it more successful. In the performance planning, it would be more advantageous if the operation of the plan includes an objective and direction setting at the top level (Jeston & Nelis, 2008). The company’s objective will then be translated into operational terms through specific key result areas for each of the divisions and then departments (Paladino, 2010). These will then be cascaded further down the company until it reaches all the down line employees. Key performance indicators will then be formulated for each employee that is both measurable and time bound (Cokins, 2009). The key performance indicator that is reviewed regularly or once a month will be the basis of the employee’s performance (Parmenter, 2010). This will measure the degree of the employee’s success in meeting his personal target that will then translate to a tangible and objective measurement of the employee’s contribution (Spitzer, 2007). This implementation strategy will ensure that the activity of each employee is focused towards the overall direction of the organization (Eckerson, 2010). The laudable aspect of the plan is that it was able to achieve the standardization of work process, outputs, skills and norms within the organization (Ulrich, et al., 2009). The cohesion of the strategy with the directions of the organization is strengthened by the continuous development of each employee’s skills and knowledge. It would appear that the centre for excellence is a knowledge based strategy that would allow the HR department to learn from the organization’s mistakes and successful programs. By making the excellence aspect of the personnel development to feed itself with both the negative and positive experiences of its employees it is assured that what is learned from the centre for excellence are the tried and tested techniques. The reward system of Cindy Hartley’s plan may need to be revisited. The combination of an incentive based system and merit increase system of rewarding good performers should be reflective of the company’s performance (Berger & Berger, 2008). It should be noted that merit increases will increase the operating cost over a period of time whereas an incentive system will have two advantages. The first advantage is that the operating cost will remain the same any spikes in the incentive will coincide with the good performance of the employees that translated to the good performance of the organization. Second is the predictable recurring cost in payroll expenses. The plan in its entirety is sound and could be successful if it is given the opportunity to percolate within the organization to make it part of the culture of the organization. However, without the benefit of a regular feedback mechanism for the performance evaluation through an objective Key Performance Indicator review the compliance to the various operational process of Cindy Hartley’s strategy may lapse and be overtaken by everyday operation (Berger & Berger, 2008) (Franceschini, et al., 2010). With regards to the training and personnel development program, without the vested interest of the employee itself and the support of the management, personnel development could also be overtaken by everyday operation concerns. recommendation One of the most difficult aspects of any project implementation is the buy-in of the affected party. Forcing people out of their comfort zone that they have been occupying for some time and put their trust and future into a plan that has not been tried and tested yet in their environment is quite a challenge. One strategy to overcome this is to make the changes part of regular operation (Murphy, 2009). Making the annual planning session part of the activities of the organization could achieve two things aside from arriving at a cohesive and achievable direction and goal for the organization (Fulmer & Bleak, 2007). First the event would be able to provide a forum where the achievements and challenges of each of the organization are vented in a forum where solutions from the experiences of the other division manager can be obtained. The attendance of the top management would also provide traction when it comes to getting funding for capital expenditures. The second advantage is the camaraderie and bond that will be formed with the other parts of the organization that will make working together easier even if their geographic location prevents them from working together physically. Making the Key performance indicator review part of the weekly or monthly meeting would enable the organization to make adjustments in their operation as soon as problems are detected from these meetings (Schein, 2010). Regularization of the KPI review is also a sound strategy to immerse the strategy into the culture of the organization (Cameron & Quinn, 2011). Continuous improvement can also be devised into these meetings by increasing the expected key performance indicator’s value. To make the personnel development plan succeed the following strategy is recommended: –Skills matrix should be devised for each position, the skills matrix should contain the skills needed by the position itself and the formal training needed. Skills matrix should also include the career path of the position. The skills matrix is therefore a collection of position that would contain the skills and qualification required for that position (Cameron, 2008). To operationally make the skills matrix successful each employee will be given their own career matrix included as part of their evaluation card. The career matrix will indicate the skills that they have already obtained and the skills that is required from them to complete the requirement of their current position. Effort should be exerted to influence the employee to have himself be equipped or certified for the skills requirement of the next level position. This is to ensure that if in case an opening in the next level position is available the most qualified employee can take on that position. The following recommendation is therefore put forward to augment the plans of Cindy Hartley to make it more successful. Each employee should have a performance evaluation card where it will reflect the career options of the employee. The card will also contain the key result areas of the employees and the key performance indicator that will provide an objective metrics on the success of the employee in meeting his key result areas. The key performance indicator review should ideally be done every month and it should be conducted between the immediate superior of the employee and the employee themselves separate from the key performance indicator review conducted with the other employees. The performance of the employee with regards to his key performance indicator should be recorded every month. The performance evaluation card should also contain the employee’s career matrix. The number of training or skilled that is scheduled to be completed within a specific month should also be recorded. The success of the employee in completing the training within the schedule is a key performance indicator of both the employee and his immediate superior (Hubbard, 2010). The last metrics that should be included in the employee evaluation card is the initiative or project performance. A list of individual projects normally given to employees who can complete will also be listed and rated as to its success. This is to ensure that the effort of the employees goes beyond their regular operation but should also extend to their extra mile they give by completing worthwhile project that will also impact the bottom line of the organization. Answers to case study Questions Answers to questions: 1. The packaging industry at the time of the case are mostly being moved if not outsourced to where the consumer markets are since the manufacturing plants have also been moved closer to where there are high concentration of patrons to major SONOCO clients. The strategy is to shorten the delivery turn-around time for components such as packaging and other raw materials (Blanchard, 2010) to save on warehousing and storage cost (Ohno & Bodek, 1988) (Monden, 2011). These changes impacts SONOCO since most of its manufacturing plants are in the US and the strategy being developed is generally for US employees. 2. In addition to what was previously stated in this paper, Cindy Hartley’s objective for changes at SONOCO is to do more with less and to build a world class organization. Since the major impact of manpower is fixed recurring cost, maximizing the revenue generating potential of each employee by making them multi-skilled and flexible leaders and followers at the same time will enable the company to respond to market changes. These would include taking on leadership functions to newly acquired manufacturing plants outside the US or hands-on multi-skilled operators of manufacturing equipment within the US. 3. The success of the initial HR changes at SONOCO implemented by Cindy Hartley can be measured by the level of buy-in of the advisory team. Their immersion of the initial plans of Hartley is indicated by their development of a new four-step leadership development system that is juxtaposed to Hartley’s direction. The success can also be measured by the involvement of the taskforce members in their “heated back and forth about the relative merits” of each of the plans. The sequence of event as highlighted was effective however other permutations with regards to the sequence in which it is implemented could have been as effective. The key to the success is the involvement and buy-in of the General Managers. 4. The best HR structure for SONOCO would be the hybrid because it gives flexibility to both the General Managers and Corporate while the needs of both are addressed. The hybrid would respond to the basic HR functions of each GM. The hybrid design would also enable corporate to push its initiative seamlessly to the division level thru the HR field reps. The basic flaw of the hybrid system being proposed is also its strength HR field reps only has a limited time per division. This is inconvenient if there are HR related issues that would consume most of the HR field rep’s time that could leave the other division being attended to by the HR reps without any coverage. Another flaw of the hybrid system is the divided concentration by the HR reps to the concerns of each of the division he is servicing. 5. The key success factor that needs to be ensured by Cindy Hartley is the immersion of the changes into the corporate culture of the organization. Only by making the operational aspect of her Plans adopted by the corporate culture would its sustainability be assured. Cindy Hartley can attend to converting the organization into a learning and knowledge based organization. Changing the core values of the organization to make it more ambidextrous can also be a next a project since this will not only support the changes it will also make the company more resilient in terms of its revenue streams. Bibliography Berger, L. & Berger, D., 2008. The Compansation Handbook. 5th Edition ed. New York: McGraw-Hill. Blanchard, D., 2010. Supply Chain Management Best Practices. 2nd Edition ed. New York: Wiley Publishing. Cameron, K. S., 2008. 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