Sonoco Products Company is a global packaging company that was facing challenges from globalization and consolidation in the packaging industry. It had a highly decentralized HR function with no clear linkage between business goals and employee objectives. Sonoco developed a hybrid HR model to centralize some functions like performance management while maintaining a local HR presence. This model improved goal setting, succession planning, and employee development while allowing quicker response to changes and better coordination across departments. The hybrid model was recommended to make HR a change agent and employee champion in line with Sonoco's culture.

1. Sonoco Products Company:
Building a World Class HR
Organization

2. Sonoco Products Company:
 A global Packaging company founded in 1899
 Business Focus on Industrial Packaging and
Consumer Packaging.
 By the year 2000 Sonoco had revenues of 2.6
Billion, 17300 Employees operating 285 facilities in 32
countries.

3. Sonoco Company Strengths
 Sonoco’s culture was “family-
friendly, paternalistic, collaborative, ethical and
team oriented.’’
 We can also infer that Sonoco had a loyal
workforce with minimal attrition.
 Sonoco had showed in the past that it was capable
of innovation and significant technological
development
 Sonoco automatized the production of paper cones
and invented the ‘T-shirt grocery bag’.

4. Situational Analysis
 Globalization had created a highly competitive
environment.
 Manufacturing firms were moving overseas to countries
where labour was cheap
 Domestic markets were becoming highly segmented as
products were highly customized especially in the F&B
industry.
 Consolidation was the order of the day and
manufacturing firms were always on the lookout for
companies that offered them a combination of services,
rather than relying on multiple packaging suppliers.

5. Situational Analysis
 In light of the changing environment, Sonoco was
facing falling stock prices.
 Sonoco now felt the need to reorganize and be
more attentive to the end consumer’s needs.
 Sonoco was pursuing a more co-ordinated
orientation and getting rid of its decentralized
structure.

6. Problems with Sonoco’s
Structure:
 Highly Decentralized HR Function
 Non-cooperation amongst larger departments.
 Complex staff structure hindered it form acting in a
strategic manner.
 No linkage between business goals and individual
objectives
 Inaccurate and biased Performance rating system
 Complete lack of proper succession planning.

7. HR Roadmap
 Make the performance appraisal system more in
line with employee performance
 Create an employee development process
 Succession planning was critical as a number of
newly appointed managers were not meeting
standards.
 Contribute significantly to the cause of Sonoco
functioning as one highly integrated unit.

8. HR Implementations
 Introduced a performance management system
that incorporated company wide goal setting,
earnings targets and individual employee
performance.
 Linkage of performance ratings to overall
divisional, financial and business objectives.
 Linkage of compensation system to the
performance management system.
 Implemented a ‘leadership development System’
 360-degree review of managers every months.
 Annual Succession Planning.

9. The Centralized Model
Pros:
 Reduced cost of administration and process
improvements.
 Cost Saving of $3.1 mil (0.4 mil more than Hybrid)
Cons:
 No focus on integration of HR Function and
Business Departments.
 Greater customer service issues and employee
dissatisfaction due inflexibility and reduced
coordination throughout the organization.

10. Hybrid Model
Pros:
 Direct involvement in all employee development
functions. (Staffing, Development
programs, compensation and benefits).
 Solid HR Presence in all departments offers
greater dependability to GMs.
 Quicker response to environmental changes.
Cons:
 More Expensive, therefore lesser savings.
 Might lead to segmentation rather than integration
if cooperation between divisions is not managed
properly.

11. Recommendations
Hybrid System
 Vertical Alignment:
The Hybrid System will allow HR to be more in touch
with departmental and organizational objectives as
it allows for more HR-Management Contact.
 Alignment of Organization Objectives with
Individual Career objectives
More attention given to employees, will prove highly
beneficial since one prime area of focus is
employee development. This will also help in
developing specialized skill sets and increasing
productivity.

12. Recommendations
 HR as a change agent:
Because there is a large amount of changes happening
within the organization, a more focused and connected
HR Department can help maintain (reduce disruption of)
Employee satisfaction and loyalty.
 HR as an employee Champion
In-line with age old values of Sonoco which focuses on
Employee Happiness.
Allows HR Staff more access to information on
department functioning and employee evaluation, so
recommendations to GMs can be more customised,
accurate and effective.

13. Thank you!