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

1.Which option would best suit a changing industry in which only the flexible survive?

2.Which option would better ensure that the right people were in the right positions?

3. Which option would better help the company meet its financial target of providing annual double-digit returns for its shareholders?

4. Which option best embodied Sunoco’s time-honored principle that “people build businesses’?

Sunoco Products Company (A): Building a World-Cass HR Organization Sunoco Products Company is a global packaging company where its grass roots began in 1899 in Hartsville, South Carolina. During the 90s, revenues peaked to $2.6 billion in the manufacture and sales of consumer and industrial packaging. Their 17,300 employees touch 32 countries and serve up to 85 nations. During late 90s and early part of the turn of the millennium, they enjoyed economic growth. Sunoco began to adapt more to their environment with less effort. With the enormous surge of technology, speed allowed for more improvements along with saving in labor. Production for diversified product types and implementation of policies and action programs were meeting consumer need more quickly. In addition, new and innovative packaging containers and techniques were swiftly apprehended. Sonoco came to the realization that it needs to reinvent itself in order to remain competitive in their market. Hartley has to answer several questions from Sonoco’s CEO, Mr. DeLoach. Hartley’s solutions were twofold. Part of her solution is proving which structure, horizontal or hybrid, would be best to accomplish the company’s goals. Sunoco is a part of an ever changing, fast paced market reacting to changes not only necessary but also crucial to the future existence. A hybrid structure where divisions would have some direct involvement with planning, personnel programs, compensation, and benefits would be ideal. The key advantage of this particular structure is that it would leave a form of divisional Human Resources management in tact where general management would call be provided with necessary information. The Human Resources’ key personnel can, also, postulate the strategic interface between corporate Human Resource functions and Sonoco’s business objectives. The flexibility of the hybrid structure would be swift to respond to environmental changes and be able to partake in divisional level strategies. The hybrid structure tailors to an organization with complexity like that of Sonoco, with the industries ever changing advances in technology, along with the vibrant environment that incorporates fluctuating products favorites, and the strict unpredictable government regulations. It is crucial for Sunoco’s associates to select proper personnel for each area. Therefore, the adaptable strategy that Sonoco

encompasses is perfectly suited with this hybrid structure because of the changing demands of its industry and consumers.

It is evident that Sunoco’s beliefs circle around the people, their culture, and their principles. The respect, integrity and well being of their employees have been the core of their philosophy. Since the 1980’s, however, there was a faded sense of personal responsibility and accountability that supplemented each position. Financial goals were below par. DE Loach’s andHartley’s new strategies brought new light to this situation. The fragmented structure became ineffective and contributed to the potential demise of the company. The accountability factor was overlooked. Therefore, a development plan with firmer control of all levels of personnel, including leadership, was needed. It was essential to implement the new performance management and compensation systems. Increased focus on the leadership development process and the succession planning process was important. Hiring key personnel with the precise knowledge and skill set needed to be addressed. This was necessary to sustain the company’s position into the future.A forward-thinking process is required, i.e., a developed talent pool of future leaders. As a result, a hybrid structure where divisions would have direct involvement with recruitment, succession planning, workforce programs, compensation, and other benefits.

In the hybrid structure, the strategy focus on Human Resources Department to planning, and its implementation responsibilities would primarily rely on the top HR Corporate level while the field staff would handle divisional level issues by assisting in rolling out initiatives, performing consulting services.

Focusing on the hybrid structure, Corporate level would be responsible for the implementation of strategy within the Human Resources Department and extending to the planning department. Ground staff would handle divisional level issues. Their assistance would extend to developing key initiatives and performing consulting services. As a profitable corporation, the bottom line is a driving goal. Sonoco wants shareholders to experience the most profit from their chosen strategy. Diversity and inclusion affect not only the businesses’ people and operations internally but also their customers, suppliers, and other external stakeholders.

Between both structures, the centralized and the hybrid options, the most feasible choice would be the hybrid selection. Cost saving appears have a slight edge in profit in the centralized structure as compared to the hybrid structure; $2.7 million paralleled to $3.1 million respectively. However, the latter would consolidate the functions at administration levels adding economies of scale to increase long-term profit for the company. In addition, a system to incorporate the most skilled personnel in their appropriate positions will increase employee satisfaction, i.e., decrease turnover. Costs would indirectly be saved on diminished inbound training programs and profit should increase due to a proud foundation. The most essential element to this equation, however, is the continuity of Sunoco’s principle; “People Build Businesses”. A fluent organization with individuals properly placed in their

exact positions while communicating is a winning strategy. The Human Resource department is the glue that brings the company’s sections together. It is relevant that a corporation's strategy, structure, and system are well defined. However, details that encourage employees to integrate socially, develop through training, motivate, and manage the careers of its “human capital”, are what hold everything in place.

All being said, the hybrid structure would best fit Sonoco’s principle “People Build Businesses”. Sonoco came to the realization that this fragmentation of company led to ineffective succession planning and inept leadership development. This would do extensive harm the organization. Having the right people with the right skills at this time is not only crucial, but also mandatory. The right people are needed in the right positions in order to have a sound working business. A hybrid structure would have some direct impact on the divisions and how people are motivated within the organization. This results in higher performance from each department and the company as a whole. Sonoco took advantage of the concept of incorporating diversity into its business allowing for brighter, fresher, more assorted ideas for the business. Workforce diversity would bring a competitive advantage against competitors as well. The Human Resource team can observe and communicate about compensation plans with first hand knowledge of operation and staff. Commanding companies know it is fundamental to regularly uphold diversity as a principal business essential over a period of, at minimum, five years before diversity can gain adhesion and become part of the way those corporations do business.  True diversity is not just about the mixture that composes the workforce; it is also about a company’s customers and business associates.