Table of Contents
- Synopsis
- Diagnosis
- Analysis
- Evaluation
- Recommendation
- Design
- Implementation
- Reflective Summary
- References
Sonoco’s HR Structure Dilemma: The Pros and Cons of Centralised and Hybrid Structures
Synopsis
The Sonoco Products Company has been undergoing several changes under the initiative of the Human Resource (HR) division. Much of these changes were targeted to mobilise improvement and development of existing HR practices and processes, particularly performance management, rewards, succession planning, and talent management. These developments aim not just to improve the HR system but to re-design it, such that it becomes characteristically responsive to the corporate needs and goals. Supporting a new business model, the HR department is tasked to restructure its function to primarily control costs while at the same time meeting the objectives of increasing talent management accountability, distributing HR talent and support as well as optimising customised and strategic support (University of Wolverhampton Business School (UWBS), 2011). Thus, in evaluating the proposed structures, the main parameters to be used are these four. In lieu of these challenges, current senior vice president of HR, Cindy Hartley, presented two options: the centralised and hybrid structures. Each structure covers the four main parameters at differing levels. These levels will be the basis of solving Sonoco’s HR structure dilemma.
Diagnosis
The packaging industry started its co-existence with the advent of commercialisation across the wide physical barriers of civilisation. Since then, it has played its valuable role in the industrial and commercial supply chains, primarily ensuring the protection of goods during its transport up to prolonging its shelf life (Industrial Council for Packaging and the Environment (INCPEN), 2011; Advisory Committee on Packaging, 2008). As the packaging design evolves, so is its function. Packaging has extended its role to advertising and carried the “role of a silent salesman” (Cage, 1991, p.3). Indeed, with its brand names and product information, introducing a new product in a vast market has become less burdensome. The boom in this industry has led to additional government interventions by regulators (Hisrch, 1991). Such measures are necessary in order to combat any economic failures, health and environmental problems.
The most characteristic feature ever benchmarked by the packaging industry is its technological innovations. INCPEN (1995) proffered competition as the key to the proliferation of innovation among the packaging companies. Amongst the most evident innovation is lightweighting, which substantially decreased the weight of the packaging material yet still contained the same volume of product (INCPEN, 2003). This breakthrough was the industry’s best solution to overpackaging resource issues (Cottica, 1994). Another technology involved in heightening the “performance of the package system” was active packaging, which was inclusive of “subsidiary constituents” (Robertson, 2006 cited in Kerry & Butler, 2008, p.1). Innovations were not just limited to the packaging itself; it also made a significant influence on printing technologies of the marketing industry. There are three known printing technologies that rely heavily on packaging demands — flexographic, offset, and gravure printing (Kipphan, 2001). All of these innovations enabled the packaging industry to grow and contribute to the global economic growth.
The packaging industry became more consumer-oriented at the time of the Sonoco case study. Consumers were maintained only effectively through “an active value chain for packaging,” of which manufacturers, distributors and packaging firms were the key players and highly responsive consumer data systems were involved. (Sand, 2009, p.43). Such measures reflect the rising sensitivity of the packaging industry to “uniform packaging and sensitive products” growing demands. (Alon, 2005, p.18). The more the commercial and industrial companies choose to diversify, the more segmented they become. The packaging industry was then expected to offer unique and dynamic choices of packaging, thereby answering the segmented demands. In a general perspective, the more diversified the nature of this industry is, the tougher the challenge to minimise the entailed high costs to maintain competitive edge over the competitors.
The trends in the packaging industry’s markets impacted Sonoco’s main strategies to compete: top-line growth and overall costs control (UWBS, 2011). In the company’s history, Sonoco has proved its marketing and innovative capability to support its top-line growth. For instance, Sonoco patented a self-opening system of the plastic sack, which increased its usage efficiency and consequent sales (Gibbs & Dematteis, 2003). For the service component, Sonoco has introduced the two effective options to market packages to customers: offering a detailed list of all products and services; and proffering a customised assembly of packages (Iacobucci, 2001). The first option gives free reign to the customer while the other involves consulting the sales representatives’ expertise. The latest of Sonoco’s customer-oriented moves currently involve the convenient provision of a single contact point for large customers (UWBS, 2011).
Several moves had been pursued to achieve top-line growth. These moves targeted the product and service components of Sonoco. The second strategy of controlling overall costs now needs to be addressed, particularly by function departments. These departments include the HR division. Before presenting the proposed organisational structures that both support important functions and cut costs, it is essential to provide an analysis of the existing HR systems.