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Case study about Sonoco Products Company. Sonoco Products Company (A): Building a World-Class HR Organization Describes the steps the vice-president of human resources takes in revamping an HR function that was noncooperative and, at times, competitive and introducing the company to the notion of HR as a strategic business partner. Explores changes made to the company's compensation, performance management, and succession planning processes.
Case study about Sonoco Products Company. Sonoco Products Company (A): Building a World-Class HR Organization Describes the steps the vice-president of human resources takes in revamping an HR function that was noncooperative and, at times, competitive and introducing the company to the notion of HR as a strategic business partner. Explores changes made to the company's compensation, performance management, and succession planning processes.
Case study about Sonoco Products Company. Sonoco Products Company (A): Building a World-Class HR Organization Describes the steps the vice-president of human resources takes in revamping an HR function that was noncooperative and, at times, competitive and introducing the company to the notion of HR as a strategic business partner. Explores changes made to the company's compensation, performance management, and succession planning processes.
1. What are Sonocos current strengths in terms of its culture and people?
What are the companys major weaknesses?
Sonocos culture was described as collaborative, family, friendly, paternalistic, ethical, and team oriented. The employees were so comfortable working there that there were many employees with more than twenty years of experience working there. Employees understands the mission and vision of the company and they even have shared ethical work practices. Because company did well in the decades of 80s and 90s, the management has thought of not changing the culture. Sonco has evolved its strategy from product driven to the solution oriented company. The major weakness of the HR function was that it was highly decentralized, siloed, inconsistent in its process and unequal in the services that existed among the various businesses. HR managers reporting to the solid lines to the General managers but dotted lines to the corporate HR. Some of the divisions specifically paper, industrial and consumers had its own HR function with separate HR systems, budget, performance management processes and leadership training programme. There were different pay revision cycles among different divisions. The staffs complex reporting and communication structure has made no room for a healthy communication regarding overall intent or direction regarding how the implementation needed to be coordinated at the division or plant level. According to several managers the divisional managers often manipulate the performance ratings to get larger salary increases for their staff. Evaluations did not reflect employees performance accurately. This often resulted in difficulty in weeding out the non performing employees.
2. What were Cindy Hartleys objectives for changes at Sonoco? Cindy Hartley was senior vice president of Human Resources at Sonoco Products company. Her objectives for changes at Sonoco were to come up with at least two HR structures that would reduce the functions cost by 20% or by $2.8 Millions. She has a newer objective is to develop newer HR fundamental with fewer resources and a changing company strategy. She needs to create corporate wide consistency on how HR systems and processes were implemented and used, how to increase the level of accountability placed in general managers in the business for developing, retaining and replacing talent, and how to provide customized, strategic support to the businesses. She has provided the priorities to her objectives which includes change in the compensation and management system so that they were less mechanical and arbitrary and instead linked consistent and more accurately reflective of employees contribution to the companys performance. To create an employee development process to highlight and further refine employees skills and to identify and develop required skills that were lacking. To build a succession planning process to identify the next generation of leaders, therefore deepening the talent pool. Apart from all these priorities of achieving objectives there were other issues to be tackled which were pertaining to diversity, gender, age, education, experience, personality and management style.
3. How successful were the HR changes at Sonoco? Was the sequences of changes the right one? Critically Evaluate?
Cindy Hartley was hired to be a change maker at Sonoco. One of her first move of changes were to put together the HR council. HR council comprised of HR heads of various divisions who provide their inputs on coordination and guidance on key HR issues and ensure that all HR objectives were aligned with organisational culture. Cindy has proclaimed some changes which were viz. creating a director of organizational development position and reforming the benefits group to include benefits of planning, design and administration under one person New Performance Management system was introduced in March 1996, the new system was devised to create consistency in the system and a new cycle of performance management was devised to connect the companys business goals and employees role together. After the compensation management system the changes were made in the compensation management system. 18 salary grades were replaced with 5 wider salary bands. Managers were asked to own the compensation system to make them understand the employees contribution at first hand. Addition of equitable merit awards and demonstrated to know their skills. For Leadership development and the succession planning team of general managers endorsed a new leadership development team. The 360 degree reviews occurred every 24 months.
If we critically evaluate these changes than we can see find that the changes are occurred in correct order and this was the sequence which could be beneficial for the organisation in implementation of the new policies.
4. What is the right HR Structure for Sonoco- Centralization or Hybrid? Why? Evaluate options with pros & cons.
Sonoco Hybrid structure was better than the centralised structure. Researches suggest that large complex organisation with advanced technology and dynamic environment typically do better with hybrid structures. This structure also allows the right skilled person to work with the most beneficial area of the company to work with. World Bank defines a hybrid structure in which more than one organizational design is used. This allows a company more flexibility in distributing work and assigning job roles Advantages of a Hybrid structure- Shared mission and values. In this type of structures the organisation create a unified team of individuals with common goals and objectives. An employees perform best suited even in moving from project to project within the organisation. Market challenge overcome- A hybrid structure can overcome market challenges and could perform better during recessions and financial crunch. Scale of reach- Instead of a top down hierarchical structure structure a hybrid structure could cover a wider area and could read to maximum number of employees even the information dissemination is easily possible with a hybrid structure. The span of control increases and the efficiency increases within the organisation. Disadvantages of a Hybrid structure- With so many advantages with the hybrid structure there are disadvantages as well. Duplication of Tasks- there are many instances when there is duplication of task and reporting happens, in order to avoid this the hybrid structures must have a constant watch and work under well organised chain of command. Chances of conflict- There could be many instances which may give rise to conflicts in an hybrid structure. There may be a slow response to exceptional situations requiring coordination between a division and a corporate. Excessive staffing- The excessive staffing may result out of hybrid structures because the tendency of the structure to have a dual centralized and decentralized structure which may tend to accumulate staff at corporate levels.
On an account of considering the above mentioned facts it can be analysed that the Hybrid structure was best suited for Sonoco Products Company. In recent past Sonoco had the decentralized organization structure which has been revoked and another hybrid structure was created by Cindy. It may take larger time lag for the employees to shift from a highly decentralized structure to another more centralized structure hence hybrid structure was the best fit to do so.
5. Link the case with High Performance Work System (HPWS) model & principles given in ch.13 (textbook).
High-Performance Work System is defined as a specific combination of HR practices, work structures, and processes that maximizes employee knowledge, skill, commitment, and flexibility. Notion of HPWS was originally developed by David Nadler to capture and organizations architecture that integrates technical and social aspect of work. There are four simple powerful principles 1. Shared information 2. Knowledge Development 3. Performance reward Linkage 4. Egalitarianism 1. Principle of Shared information - providing information about business plans, performance and strategies and asking suggestions to improve business and to incorporate business change. Cindy Hartley has incorporated this system of sharing of information by organising an HR council where in HR heads of various divisions along with corporate functions. This initiative was to ensure that all HR objectives and outcomes supported strategic business goals and were aligned with Sonocos desired culture. 2. Knowledge Development- Principle of knowledge development says that when people are developed with correct knowledge in order to minimise the skill gap, the development of the organisation starts in real time. Creating and enterprise knowledge driven culture, developing the leadership and developing a knowledge driven culture with creating a learning organisation should be in priority. Cindy had started the training programme of Performance management for the employees with a team of general managers endorsed a new leadership development system. 3. Performance Reward linkages - When rewards are connected to the outcome the employees would surely comes with the outcome that mutually beneficial to the employee and the organisation as well. With the introduction of new PMS (performance management system) by connecting the employees objectives and the business objectives together. Employees were to take active role in managing the process throughout the year. Compensation systems were closely linked with the performance management. 4. Egalitarianism- Principles of egalitarianism says that all the employees are same as status wise within the organisation and it also stress upon elimination of power status within the system. Hartley has well observed there is a kind of decentralisation in the Sonoco which is acting as a repulsion to growth and employee development. The compensation system was also not true representation of individual performance rather than it was based upon the favouritism. This type of hindrance she had broken with broadening the compensation and bringing more employees under the same salary and compensation package bands. A uniform 360 O feedback system to retain the transparency in the system and propagate the motivation and healthy work culture.
1. Sources: World bank researches paper 2. http://en.wikipedia.org/wiki/High-performance_teams 3. http://www.equality.ie/Files/New-Models-of-High-Performance-Work-Systems.pdf (National centre pf partnership performance ) 4. Senll, Bohlander, Vohra Human Resource management 5. Thomas Wallner, Martin Menrad http://ehis.ebscohost.com/eds/pdfviewer/pdfviewer?sid=26590507-9059-4292-b48a- 6f332f5b1e29%40sessionmgr4004&vid=1&hid=4102