Sonoco Products Company Case Study Analysis Psychology


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CredibilityAn organization may reach the creditability when its HR practices is able to createtrust between low level staffs and top management, as well as to encourage

employees‟ belief in HRM strategies.

In the case of Sonoco, the trust was created andstaffs of a division may understand HR practices being applied in their particulardivision, but not in others, and obviously not in the entire company. As aconsequence, the link between business strategies, including HRM ones, andindividual development was lost. Price (1997) advised top managers to be sincere,honest and consistent. Above all, managers should convey open messages toemployees and revise their HR policies to gain understanding.2.3.

CommunicationFor effective communication, objectives of organization and that of HRM must beunderstood and accepted by all employees; open culture with no barriers (Price,1997). But the communication at Sonoco contained a number of problems. Forexample, the implementation of the compensation system was only a dialoguebetween GM and HR staffs, not widely publicized. Even in such discussions, therewas mostly one-way communication from GM to HR managers, since

“there was notmuch HR could do but meet GM‟s wishes”

(Case study). Beardwell et al (2004)recommended that the development of social cultural, communication and empatheticknowledge will be a priority. Sonoco must break the silo situation; create amechanism for smooth flows of non-barrier communication and encourage openness.2.4.

Cost effectivenessTo be cost effective, the reward and promotion system must be fair. To Sonoco

management, however, “compensation and benefits were viewed as entitlements

rather than costs in need of control or tools to drive behavior (Case study). In HRaspect, this scheme failed to serve the purpose of reward management whichcontributes to appropriate organizational cultures, underpinning core values andincreasing the commitment and motivation of employees (Armstrong and Murlis,2007). From accounting angle, it decreased the cost control and caused a disorder infinancial management. F

rom owners‟ perspective, expenses to human capital shouldgenerate revenues in business, rather than serving managers‟ casual purposes.

Case | HBS Case Collection | October 2004 (Revised September 2005)

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

by David A. Thomas, Boris Groysberg and Cate Reavis


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. Teaching Purpose: To allow students to think strategically about reorganizing the human resources department to support business strategy and serve as a business partner.

Keywords: Human Resources; Compensation and Benefits; Management Succession; Measurement and Metrics; Organizational Change and Adaptation; Performance; Partners and Partnerships; Business Strategy;

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