Challenges and Continuous Professional Development - Essay Example

? Case Study Analysis al affiliation Case Study Analysis Introduction Cindy Hartley, Senior VP, Human Resources, joined Sonoco In 1995. Upon her employment, she found the Human Resources (HR) not functioning as required by the company. Her aim was to work towards changing the HR system for effective performance in order to, achieve Sonoco’s business objectives. This paper presents an analysis of the Harvard Business School case study (Sonoco Products Company). The paper presents this analysis by outlining the challenges of Sonoco Products Company to improve its corporate strategy which includes products, context, and human resources in order, to compete with other companies and continue performing well in the dynamic global packaging industry as proposed and developed by Cindy Hartley (Mission statement - Sonoco, 2009). Organizational contextual factors Sonoco Products Company is a global packaging company that was developed in 1899 in Hartsville, South Carolina. Major James Coker established the company and his main target was to make paper cone used to hold yarn in the textile industry. The company kept on making paper cones till it became a leading paper cone industry, experiencing competition from other cone producing companies. This led to its expansion and it started manufacturing packages till it became the largest packing industry in the world (Thomas, Groysberg, and Reavis, 2008). The company proposed a new organizational restructuring that would suit the function cost by at least 20%, this is for the reason that, the company had been highly taxed due to the high cost it was experiencing, so the company managed to increase the sales by 14% by reducing expenses with the increase in shareholders. The organization established a new organizational model; this was to improve the top growth in improving the company’s sales to compete with companies around the world. The consumer packaging department was to check the packaging style to meet the demands of the customers around the world. This strategy was a rethinking strategy of certain company structures like the human resources. Under the HR every manager managed talents within each of her or his division (Kotelnikov, 2006). The managing director developed policies for performance, management, compensation, development and successful management. These polices advocated for the HR to increase general manager accountability for talent management, to distribute HR talent management and to distribute more, to optimize HR talent ability to give customized ability to the customers. These strategies are only effective if implemented by serious working staff members within the organization (Fort and Salin, 2001). The Sonoco Company established in 1889 in California was a textual industry and gradually developed into a consumer packaging consumer industry. This growth occurred manly through acquisition in 1990 where the company made 60% acquisition around the world. The company occupied two segments the packaging segments and the consumer packaging. The industrial segment which served as the textile industry paper industry and film industry employed around 11000 employees and made 55% revenue to the company. The consumer packaging had a range of 6000 employees and made high revenue to the company with its products. Some of the company’s products are Gillette, Krafts, Nestle and Procter as well as Gamble. The cultural background of the company is friendly, collaborative, and ethical and team oriented. Most of these employees have been in the organization for over twenty years and enjoyed working with the members of the community. During the late 1990s there was a fall in the stock and change was a required in the structure of the organization to solve the problem (Mission statement - Sonoco, 2009). In the early 1990, the packaging companies generated around 40 billion and the consumer industry represented about 70% countrywide distribution. Paper industry accounted for 30% and film industry accounted for 34%. During the late 1990s, globalization presented challenges in terms of competition from other companies. Manufacturing was moving from United States of America to countries like China and India where labor was cheap and many firms in the US were investing overseas. During the late 1990s and the year 2000, the market share in the US improved and the packaging industry started getting an increase of 60% from 40% (Robbins and Judge, 2008). During this time, domestic marketers were directed to the needs of the consumers and packaging was winning its role in branding- developing attention from the consumers. Many of these packaging industries developed their packing skills to suit the needs of the consumers as the need changed with time. With the rise in this need, the Sonoco Company looked at its marketing approach and developed a more coordinated approach where a single point in the business would bring together all the systems within the company (Byars and Rue, 2008). During the period of 1995, the company hired Hartly as VP of HR. She found a much disorganized HR function and it was inconsistent from business to business. As indicated in Exhibit 1 the HR was reporting to the solid line of general managers and dotted line to the HR. This structure directed the HR with divisions from general manager with the focus of the daily running of staff members within the company. The business managers believed that the HR was mainly a backroom operation. By the end of 1990s the HR had its division in terms of budgets, performance, management process, leadership and training process. These divisions were left to select what kind of HR function they wanted. This was a disadvantage in the company because it reduced the workers morale for working because there was no unity and cooperation (Byars and Rue, 2008). The human Resource managers were viewed as monitoring individuals to head all employee relationship and the staff complex structure prevented HR to work effectively (Denhardt and Vinzart, 2008). Benefits and compensation reported to different VP than benefits and compensation unit. There was no proper communication in this structure, compensation was centralized, and the general manager enjoyed so much on how they compensated their workers. Compensation were taken as entitlements rather than costs controlled by the top management to motivate the workers behaviors. The review of performance was based on the employee anniversary dates rather than the company’s annual fiscal year when annual budgets and strategies developed. During this time Sonoco merit increase system was mechanic, and did not reflect on employee performance. Most of the employees were dismissed of their duties despite the fact that, they performed very well. There was the issue of poor payment; most of the employees were poorly paid and managers manipulated performance contract of their workers. Moorhead and Griffin (2011) argue that, poor payments may cost the company a great deal. It was experienced in this period that employees indicated about their future plans, but no action was taken thus there were no chances of professional development within the company, and that the company cared less about employee professional development (Cummings and Worley, 2009). In early 1990s, Hartley entered in the company and her role was to build a more professional business oriented HR group. During this time, leadership role was very effective and the HR was to come up with effective strategies that would help improve productivity within the company and develop working capital management and increase cash flow within the company. Hartely developed three priorities that were introduced in the company to improve its working conditions. The first priority was mechanical performance and management system which, according to Pitsis, Clegg and Kornberger (2005), looked at the needs of the company workers. These improvements led to improvement and performance of the company. Secondly, the company needs to develop an employee development process which improves employee skills and develop better skills that can be used to develop the performance within the company. Lastly, succession planning was to prepare and develop next group of leaders within the company to maintain how it works with its workers thus maintaining the company standards. During this time, a good number of managers were not doing well because of lack of professional skills; therefore, Hartely developed the HR group that was linked to performance, management, development, and succession planning. She included all these elements in the company act and looked at the needs of the company workers and the company’s objectives as, presented in Exhibit 2 of Hartley’s HR initiative. It is during this time that, Hartely was to change the looks of the company and how the company performed its duties. Fellow workers described her as a collaborative worker and within the system she appointed as HR advisor that consisted of more HR that were to advice her and they were to make sure that development of new initiative were put into practice to improve Sonoco performance leading to its development. During the year 1996, a performance management system was created to improve the company’s consistence and alignment. The system was to give the company wide goal setting and employee earning structures. Initially the managers evaluated the company’s measures and looked at how it was to be measured. By 1997, a well developed system of employee performance and salary structure was developed and implemented. The new performance management system was linked to compensation system. The Sonoco Company five wider salary bonds replaced the 18 scaled salary grades to improve managerial flexibility among the employees. This plan called for managers to know every employee contributions and compensation was to paid based on the market guidelines, so that staff members are paid based on merit. For proper decisions making, Hartely developed a team that would make sure that, they had a voice in the company management system. By the end of 2000, more of the important departmental aspects had been developed and put in place. By this time Hartley had developed the company and it had improved in management and diversity, compensation, succession planning, IT system, 3600 appraisal and improved communication within the company. Despite the fact that, she had made a lot of improvement, some factors still affected the working conditions of the company (see Exhibit 3). For instance, the management system was still controlled by the HR and the general manager, some who did not look at the needs of the staff members especially the under performers though, the basic compensation system had been fully developed. Therefore, the company placed its focus on; development and policy implementation and putting programs into action in order, to meet the consumer needs, including creation of creative packaging containers and techniques, production of different product, productivity improvement for cost reduction, introduction of computer technology for the company’s quality assurance, labor improvement and employee saving accounts, development of company’s websites, and encouraging cooperative efforts for e-commerce individual packaging (Taylor, 2005). Thomas, Groysberg, and Reavis (2008) noted that, skills within an organization are very important and it refers to what members of a company do best. From the case study Sonoco’s strengths were its strong market positions, brand value, product diversification, flexibility, culture and visionary leaders. With the new reinforcement in the industry the company was in a better situation to develop the staff members professionally and to serve its employees. Therefore, six company’s role in satisfying the needs of consumers are; communication, excellence teamwork, professional skills and strategic integration, knowledge, and mentoring (Armstrong, 2006). Evaluation of options proposed by Hartley In Exhibit 4 Hartley presents a two structural organizational proposal where option one was to centralize and the HR service would be handled by four centers of experts. This structure was to control the cost of administration and other process improvement the company out put and working conditions. This option though, does not look at other needs of the managers and HR in the working process within the organization. This option had a centralized HR function, where one of four centers of experts would handle most of the services, and the identified field staff would serve the divisions. The advantage of this option is that it would trim down the costs and it would be less expensive. The second option is a hybrid structure in which the division would maintain direct involvement in staffing succession planning staff welfare programs compensations and benefits. These options come with the following advantages; the plan would distinguish between the GM and HR and they would come up with a strategic plan between HR and the company. The main challenge in this option is that, it is not clear if the changes could be effectively driven across the company with this model and the corporate structure is not clear in terms of its function. Hartley came up with observations on how these alternative structures would work within the company. In both structures, administration functions and centers of excellence operates the same way. The difference occurs in how they link business and the services they give to the staff members within the company. The project expenditure stands at $ 3.1 million, while in the centralized approach the expenditure is about millions of $ 2.7. In the centralized approach, the HR are always on call to serve the needs of the company and each manager handles 10 to 15 plants and the managers make consultations among themselves. The success of these two structures is of the centers of excellence. The leaders contact those people directly with their needs and that the company does not have much support thus, the structure is much cheaper. In the hybrid model, the HR are organized into two sectors are consumer and industrial mirroring the needs of the company. Each sector is assigned a VP of HR supported by direct relationship with the employees, this group of people have first hand information about the organization and link GM within the company of centers of excellence however, this option does not support the sharing of knowledge between HR managers because some of them are working in one division and the others are working in other divisions (Cummings and Worley, 2009). It can be argued that, it is difficult to select the suitable option that is flexible enough to fit the changing conditions of the company based on the market needs. It would be difficult to know which option would be used to ensure that the right group of people is in the right positions within the company (Ivancevich and Duening, 2005). It is also difficult to know the option that is suitable and would help the company meet its financial target of providing annual double returns for the company share holders. Lastly it would be difficult to know which option suits the company’s time honored principles that, business are built by people (Mission statement – Sonoco, 2009). Initially the company strategy was product driven though, the changes in the environment affected this strategy in terms of effects of the industry, the economy, the workforce, and societal changes, at this time the company was implementing a more solutions oriented approach. As a result, Sonoco Company needed to look into the business, the products it supplied its competitors, its ability to withstand the changing industry environment, and the use of multiple situations to solve product problems. Initially, before Cindy Hartley’s employment , Sonoco’s HR system were not able to work strategically, so the main three priorities proposed by Hartley were, changing compensation and performance management systems to get rid off arbitrary nature and more accurately reflects the employee’s contribution to the company’s performance; creating an employee development process to refine employees’ skills, develop lacking skills and building a succession-planning process to the next generation of leaders (Thomas, Groysberg and Reavis, 2008). According to view performance management, compensation, and succession planning systems must go hand in hand with its business strategy. Therefore, her implementation consisted of the following; involvement of senior management, she focused on most important business measures, she looks at the compensation and reward system of the organization, she reflected on the values and cultures of the organization, and looked at employee professional development (Cummings and Worley, 2009). Levitt (2009) noted that Hartley felt that until staff members act, one cannot notice its compliance when it is not properly done. Therefore aspects within the company could only be achieved if there was a positive compliance among the individuals working in the organization. Recommendation From the analysis of this case study and the models presented case, the researcher would choose option 2 (the hybrid structure option). From the literature in the case study complex organizations with developed technology and are affected by the changing environments that has dynamic competitors, continually changing customers’ preferences of different products, government dynamic regulations affecting business among all the environmental changes. Snell and Bohlander (2009) indicate that all these factors are applicable under the hybrid structure. Sonoco’s flexible strategy aligns perfectly with this option to meet the changing demands of its company and consumers. Above all, it is clear that, this structure allows for equal distribution of skills and this way one finds that right people with the right skills work where they are most beneficial to the company. This way the staff members are motivated and get attention to work effectively leading to better results and good performance. This option is also suitable in terms of meeting its financial targets. All the administrative functions will work well using this option. This system will make the company have an appropriate system that mainly targets to get the right people to work thus, improving its productivity (Rosenfield, 2001). The use of this structure, more attention could be directed to where it is importantly needed (Ulrich, 2002). For example, the field HR staff could work towards providing suggestions on how to improve the corporate work by using different initiatives normally this turns to a proactive business needs. The communication and compensation plans are communicated to the staff through the HR this is because the HR has first hand information about compensations and salaries. Lastly, Purser (2000) argues that this option will put the HR offices on their toes where they are to work to their best to produce desired results and this will lead to increase in production and a reduction in the company’s costs. References Armstrong, M. (2006). A Handbook of Human Resource Management Practice. London: Kogan Page. Byars, L. (2008). Organizational Human Resource Management (9th ed.). London , MA: McGraw-Hill. Cummings, G and Worley, G. (2009). Change Development and Organization (9th ed.). Thousand Oaks, California Denhardt, R. and Vinzart, J. (2008). Public Administration: An Action Orientation. New York: Cengage Learning. Fort, J., and Salin, L. (2001). To dream the perfect organization: creating new and human organizations solving social and health problems fighting the "system". New York: Third Party Pub. Co., Publishers. Ivancevich, J. and Duening, T. (2005). Managing organizations: principles and guidelines. London: Atomic Dog Pub, Publishers. Kotelnikov, G. (2006). Corporate Leader Business Architect. Thousand Oaks, California Levitt, T. (2009). Classic Advice from Theodore Levitt. Thousand Oaks, California Mission statement - Sonoco. (2009). Retrieved December 20, 2011, from http://www.sonoco.com/sonoco/Home/About+Us/cor_mission_statement.htm Moorhead, G. and Griffin, R. (2011).Organizational Behavior: Managing People and Organizations. London: Cengage Learning. Pitsis, T., Clegg, S. and Kornberger, M. (2005). Managing and organizations: an introduction to theory and practice. Sage Publishers. Purser, R. (2000). The self managing organization: how leading companies are transforming the work of teams for real impact. London: Free Press. Robbins, S., and Judge, T. A. (2008). Organizational Behavior (Ninth ed.). Upper Saddle River, NJ: Pearson Prentice Hall. Rosenfield, R. (2001). Managing Organizations. New York: McGraw-Hill Education. Snell, S. and Bohlander, G. (2009). Managing Human Resources. London: Cengage Learning. Taylor, B. (2005). Long-range vision: started more than 100 years ago, Sonoco has risen to packaging and recycling prominence in the Southeast. In Manufacturing Industry. Retrieved December 20, 2011. Thomas, D., Groysberg, B., and Reavis, C. (2008 ). Sonoco Products Company (A): Building a World-Class HR Organization Harvard Business School 1-25. Ulrich, D. (2002). Human resource champions: the next agenda for adding value and delivering results. Harvard: Harvard Business Press. Werner, J. M. (2006). Human Resource Development (4th ed.). Mason, OH: Thomson South-Western. Read More