Sonoco Products Company: Building a World-Class HR Organization

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Case Study Analysis

Sonoco Products Company (A): Building a World-Class HR Organization

Abstract

This is an analysis of the Harvard Business School case study -- Sonoco Products Company (A): Building a World-Class HR Organization. This analysis outlines the challenges of Sonoco Products Company to revise its corporate strategy (i.e. products, structure, Human Resources, etc.) to remain competitive and continue its growth in the volatile, ever-changing global packaging industry. In 1995, Cindy Hartley, Senior VP, Human Resources, came to Sonoco and found the Human Resources (HR) function broken. She soon began working on a plan to rejuvenate HR and link HR processes to Sonoco’s business objectives. As Ms. Hartley was well on her way, Harris DeLoach became the newly appointed Chief Executive Officer (CEO) in 2000. Mr. DeLoach soon recognized concerns with HR as well as overall business strategy in light of the changes to the industry, Sonoco’s diminishing returns, etc. Consequently, he instructed Cindy Hartley, Senior VP, Human Resources to among other things devise two alternative HR structures that would reduce HR’s cost by 20%, or $2.8 million. Other pressing reasons for the request include the following: 1. Ensuring top-level accountability for talent management and upgrading. 2. Providing for a more even distribution of HR talent and support 3. Leading the way in supporting the company’s new growth strategy, which often meant working across division lines to market and sell “solutions” to a single large customer (Thomas, Groysberg, & Reavis, n.d., p. 1).

This case analysis utilizes the 7S Model of organizational alignment to perform the situational analysis, explore the issues and/or opportunities related to the company and the CEO’s request, evaluate the alternatives and recommendations for course of action for the Senior VP, Human Resources to meet its financial goals and HR meet goals.

Introduction

Sonoco Products Company, a global packaging company, began in 1899 in Hartsville, South Carolina. Founded by Major James Coker with $6,000 of initial capital, Sonoco’s original name until 1923 was the Southern Novelty Company, and the new name of Sonoco uses the first two letters from each word of its original name ("Mission statement - Sonoco," 2009). Its original product was a paper cone used to hold yarn in the textile industry. Since most of the textile cones of that time were wooden, paper cones were unique. Although Sonoco did not invent the paper cone, its engineers invented new processes to automate the production of these cones. This automated manufacturing gave Sonoco a competitive advantage, and it soon became the leading producer of cones in the United States. During its history, Sonoco also adds to its credits the use of the plastic “T-shirt” grocery sack common in supermarkets and retail stores and the creation of Ultraseal, a closure system for Crisco shortening cans that eliminated the need for a can opener (International Directory of Company Histories, Vol. 8 St. James Press, 1994). By 2000, Sonoco was one of the largest packaging companies in the world. Its revenues reached $2.6 billion through the manufacture and sales of consumer and industrial packaging, with 17,300 employees across 285 operations in 32 countries, serving customers in 85 nations with a wide array of industrial and consumer packaging solutions (Thomas, Groysberg, & Reavis, n.d., p. 2). In addition to being a major packaging company, Sonoco produced nearly all of its own paperboard, consuming almost two million tons of recovered paper annually.  Over the years, Sonoco Products Company continued to grow with new operations around the world, diversify its product line (i.e. cardboard, aluminum cans, plastic, flexible packaging, etc.) and become remarkably profitable. However, as Sonoco grew and changed, so did the world and industry around it. While the United States was enjoying economic...
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