A company overview of FedEx
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Published: Thu, 18 May 2017
US based FedEx Corporation, is a universally acclaimed corporate giant for logistics and transportation and is a conglomerate of many subsidiary companies like – FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Custom Critical, FedEx Trade Networks and FedEx Services – functioning under the FedEx brand name (FedEx, 2009). FedEx’s core competencies lie in package routing, delivery and employee relations. Frederick W. Smith instituted the FedEx Corporation in 1971 under the name Federal Express. In 1998, the Federal Express Corporation was as FDX Corporation. It was in January 2000, that the FDX Corporation was renamed as FedEx Corporation and its subsidiaries were re-branded as well. Federal Express came to be known as FedEx Express since then; the small-package ground service RPS got re-branded as FedEx Ground; the shipping provider Roberts Express got renamed as FedEx Custom Critical; Caliber Technology and contract logistics provider Caliber Logistics were united to form FedEx Global Logistics; FedEx’s retail arm renamed as FedEx Office. Ever since its inception in 1971, FedEx showed extraordinary growth and truly metamorphosed into a gargantuan company. Today the company stands tall with a marked revenue upswing of $35.5 billion (though down 6% from $38.0 the previous year the loss can be mainly attributed to global economic slowdown) (FedEx Corp. – 4th Qtr. Earnings, 2009, June 17). FedEx comprises of a strong workforce of more than 290,000 employees and contractors. FedEx is renowned for its various ace service and innovatory HR practices, policies and procedures. This is proven by its consistent appearance on the Fortune magazine’s lists – “World’s Most Admired Companies”, “America’s Most Admired Companies” and “100 Best Companies to Work for in America”. FedEx enjoys nonpareil leadership in various realms of HRM such as employee motivation, employee retention, diversity of work and benefits and compensation. The key contributing factor to FedEx’s ginormous success and reputation is its People-Service-Profit (PSP) philosophy according to which FedEx views human resources as the prime contributor for its profitability.
FedEx’s objectives are to offer 100% service quality, immaculate customer service and overnight parcel delivery. FedEx’s corporate strategy is differentiation that transcends product, market and geographic boundaries. FedEx’s is able to maintain its competitive edge by way of its uncanny ability to innovate and by its being leader in technology. All the HR strategies elaborated below facilitate FedEx to enjoy competitive advantage by ways of innovation, technology, human resource and management capabilities.
HRM Organizational Objectives
Faultless delivery of tens of thousands of packages within stipulated maximum of 48 hours with an immaculate service quality is definitely a wondrous accomplishment. Despite the fact that FedEx adopted technological innovations well ahead of time, its capability and power to provide first-rate customer service is possible chiefly because of its committed, inspired and well-trained manpower. FedEx strategically manages its manpower resources. FedEx’s organizational strategy is “Compete collectively, Operate independently and Manage collaboratively” (FedEx, 2009, Mission, Strategy, Values). FedEx Corporation aligns its HR activities with its organizational strategy and by doing so it is capable of attaining such incredible and improbable success. People-Service-Profit (PSP) doctrine religiously adopted by FedEx Corporation assures that the organization’s priceless human resources are well cared for and empowered as well. Owing to the fact that the employees are taken good care of and are delegated with more power and authority, they reciprocally take care of the organization by delivering ace quality of service thereby facilitating the organization in reaping more profits (Chang, Labovitz & Rosansky, 1995, p.34; Birla, 2005, pp.9-13). Hence the People-Service-Profit (PSP) slogan forms the basis for all decisions made by the FedEx top management.
Key HR Strategies
FedEx’s core HR strategies and their alignment with organizational objectives are discussed as under:
Recruitment and Selection Strategy
FedEx recruits capable and qualified manpower for all hierarchical levels. It set up promotion from within policy with the intent of providing fair chance to all employees to employ their skills and competencies at work to the full (Birla, 2005, p.196). The company committed to a no lay-off policy so long as its survival is not imperilled (Frock, 2006, p.67).
FedEx employs several processes like Open-Door Policy (ODP) (Frock, 2006, p-204), Guaranteed Fair Treatment Program (GFTP) (Frock, 2006, p.207) and Survey-Feedback-Action (SFA) (Frock, 2006, p.206) to establish sound and good bipartite communication networks. Employees from all hierarchical levels are made to actively get involved and interact freely in the various discussion and QA programs employed by FedEx.
FedEx offers extremely competitive pay schemes (Dessler, 2003, p.358). It also gives pay-for-performance incentives. It ensures fair treatment of all employees. It vouches job security for all employees.
Training and Development Strategy
FedEx’s Training strategy facilitates in fulfilling its organizational objective of cent percent customer contentment. The organization practices promotion-from-within policy. Hence it ensures that adequate and all-encompassing training – comprising leadership conceptions, quality management and organizational philosophy – is provided to employees belonging to all rungs of organizational hierarchy.
Harvard model sketches four key HR domains – 1) Human Resource Flows – recruitment, selection, appraisal, termination etc.; 2) Reward systems – pay packaging, employee motivation etc.; 3) Employee empowerment – empower and delegate employees with more power, authority and accountability; and 4) Work systems – work definition, managing diversity of work and alignment of human resources (Price, 2007, pp.35-37). The above four policy areas result in the 4 Cs – Commitment, Congruence, Competence and Cost-Effectiveness. The characteristics of Harvard Model of HRM that are prevalent in FedEx environment are the following:
Human Resource Flows
Recruitment and Selection – FedEx is consistently showered with laurels such as “best employer”, “most admired organization” and “great place to work”. FedEx, having earned such recognition and accolades does not obviously have any trouble with enticing and luring the best work force. FedEx carries out both internal and external recruitment drives. In FedEx, collaborative effort is valued more than individual effort. Equal employment opportunities are given to skilled and competent potential candidates at all hierarchical levels. FedEx’s “Job Change Applicant-Tracking System” (JCATS) offers opportunities to irregular workers to acquire regular employment (Shen, 2007). Also FedEx’s “Leadership Evaluation and Awareness Process” (LEAP) provided employees from non-managerial positions search positions at managerial levels (Holbeche, 2001, p.294).
Appraisal – FedEx’s performance appraisal done annually relates pay hikes to individual performance. Performance goals are decided and agreed in advance but of few notable characteristics that deserve appreciation and guaranteed pay hikes are enthusiasm, team playing skills, commitment, customer orientation and technical know-how and expertise (Cook, 208, p.205). Pay reviews for hourly paid workers are done once every 6 months.
FedEx’s rewards system comprises of various awards such as The Five Star Award, Super Star Award, Bravo Zulu, Circle of Excellence and Golden Falcon Award that are instituted to motivate and boost the morale of the employees and push them towards even more better performance (Mcshane, Von Glinow & Sharma, 2008, p.552).
FedEx caters to customers’ demands by even exceeding their expectations, which is why it is possible to deliver such a top-rate customer service. In order to meet and exceed customers’ expectations, FedEx resorted to employee empowerment (Kandula, 2004, p.143). Employee empowerment is the most established and proven means to gain competitive edge over peers. Employees are empowered to the extent of even chartering flights on their own so as to meet the customer delivery requirements. FedEx has even empowered truck drivers so that they are accountable for scheduling their delivery routes in order to meet the delivery schedule. Federal Express records Service-Quality Indicator (SQI) depending on various parameters like – a) prompt delivery of shipments; b) delivering past the stipulated deadline; c) unable to track the status of the shipment within half an hour of a customer’s enquiry. SQI’s intent is to comprehend the causes for failure and reduce such instances in order to increase customer satisfaction. Keeping SQI at desired levels was possible due to employee empowerment.
Managing work diversity
FedEx won the accolade “100 Best Companies to Work For” from Fortune magazine due to its capability of managing work diversity (FORTUNE, 2009, January 23).
From the above four policy areas identified in the context of FedEx, we can infer the following –
By putting the people first as in the FedEx philosophy “People-Service-Profit” (PSP) and adopting various employee-friendly HR practices detailed above (recruitment, selection, rewards system, employee empowerment), the workforce will definitely remain committed to fulfilling FedEx’s goals. FedEx work environment is conducive to innovation and its practices are employee-friendly to ensure that they are kept motivated ever.
All the HR practices outlined above have their objectives aligned perfectly with FedEx’s goals – that is – to offer unparalleled customer service.
FedEx’s core competence is its leadership in innovation, human resources and processes. FedEx with its best employer tag and excellent HR practices is able to easily attract and retain talented pool of workforce and this mainly contributes to its success in its operational area.
Obviously, FedEx’s processes are cost-competitive and facilitate in a great manner to maintain the competitive edge over its competitors.
This model posits that provided a unified set of HRM practices and procedures is employed in a logical and consistent manner, with the objective of accomplishing the prescriptive objectives of great dedication, superior quality and task flexibility, then super-ordinate employee performance will ensue. Further such a collective performance excellence from employees will eventually result in superior organizational performance too. Guest model’s six components are – 1) an HRM strategy; 2) a set of HRM policies; 3) a set of HRM outcomes; 4) behavioural outcomes; 5) performance outcomes and finally 6) financial outcomes
FedEx’s strategy is differentiation that transcends product, market and geographic boundaries in order to attain 100% customer satisfaction.
HRM practices & policies
Recruitment & selection, training, appraisal, rewards, job design, involvement, job security, open-door policy, promotion-from-within, no-layoff-policy, profit-sharing policy, fair-treatment policy
Employee commitment, service quality and flexibility
Motivation, involvement and collaboration
High productivity, high innovation, low turnover, low absenteeism, less customer complaints
Profits, good ROI (Return on Investment)
Key HRM Activities
Recruiting the right skilled and talented workforce is crucial to fulfilling FedEx’s organizational strategy and this becomes a key HRM activity that facilitates FedEx maintaining its competitive edge over its peers as well. The Recruitment and Selection procedures practiced at FedEx are detailed under the HR Planning and Development section below.
FedEx has set up various awards that are defined below to acknowledge talent and to actuate exceedingly gifted employees (Mcshane, Von Glinow & Sharma, 2008, p.552; FedEx Overview, n.d.). These awards, tokens of appreciation and accolades immensely facilitate in motivating the employees to improve and do even better and fix high standards for them as individuals and as teams.
The Five Star Award
The highest and best award one will get in FedEx for exceptional performance is the Five Star Award. The employee who contributes to an extraordinary extent to enhance teamwork, service quality and profitableness receives this most coveted award.
Super Star Award
Employees who perform consistently and are constant achievers in terms of performance deserve this Super Star award.
Bravo Zulu is slang used by US Navy for “well done”. Employees whose performance is outstanding are sure to receive this award.
Circle of Excellence
Team and collaborative effort demands appreciation, recognition and encouragement. This award is one such award given to teams rather than individuals that do exceptionally good.
Golden Falcon award
Employees who offer extraordinary customer service by exceeding the customers’ expectations deserve the Golden Falcon award.
Bipartite communication involving the top management and the employees is prevalent in FedEx Corporation. FedEx is committed to Open-Door Policy (ODP), Guaranteed Fair Treatment Program (GFTP) and Survey-Feedback-Action (SFA) in order to facilitate such a bipartite communication.
Open-Door Policy (ODP)
ODP facilitates employee empowerment by enabling them to call into question / to register their displeasure (or) discontent regarding various organizational policies such as – hiring, career, benefits, compensation, etc. The formal accusations and charges thus registered are put forward to the open door forum and are later on forwarded to the respective official to be handled (Frock, 2006, p.204).
Guaranteed Fair Treatment Program (GFTP)
FedEx requires having a professional grievance handling system to cater to such a huge workforce. GFTP precisely satiates such a need. GFTP facilitates employees to record their grievances, displeasure and discontent on several aspects like disciplinary measures, appraisals, layoffs, downsizing and placements. Such issues are processed at three levels of managerial hierarchy. The manager at the first hierarchical level who is the employee’s immediate superior reviews the issue. Any issue that reaches second level is carefully reviewed by the Vice President of the section. If the issue is still not resolved at the second level also, then it is addressed by the Supreme Court of FedEx Corporation headed by none other than Fred Smith (Frock, 2006, p.207).
FedEx instituted SFA with the purpose of enhancing employee – top management relationships. Employees are made to form teams or work groups amongst themselves and chosen representatives from such teams have to complete questionnaires on several management aspects and superiors. The advent of technological innovations have facilitated setting up of on-line SFAs so as to give instant, easy and immediate access to its global team of employees (Frock, 2006, p.206). FedEx’s bipartite communication mechanisms described here thus let openness and transparency prevail in the operations and hence should be appreciated for the same.
HR Planning and Development
The core HR Planning and Development activities / processes namely the recruitment and selection, training and development and succession planning that are performed in FedEx are elaborated below:
Recruitment and Selection
FedEx’s organizational objective is to provide unrivalled quality customer service. So recruitment becomes a critical process that needs to be carried out with careful consideration. FedEx only recruits people who were ready to accept challenges and take risks and also possessed enterprising attitude. FedEx entices functional experts by providing them stock options as well as chance to work in exciting and ambitious environs. FedEx adopts a logical and well-planned procedure to carry out recruitment and selection. FedEx supports recruiting students / graduates for intern positions so as to train them for taking up challenging job offers in the future (Working at FedEx., n.d.). Roughly around 25,000 employees are recruited at FedEx for various permanent as well as ad hoc positions. Keeping pace with the technological innovations and internet, FedEx automated the whole job application and application screening procedures. Job applicants can apply online by clicking the “Career Centre” icon in the FedEx home page – http://www.fedex.com. Vacancies prevailed in various areas such as administrative support, aviation maintenance, customer service, e-commerce, engineering, operations, HR, IT, marketing, truck drivers, vehicle technicians etc. are updated in Personnel Records and Information System (PRISM) (FedEx Overview, n.d.). Prospective applicants can apply online for jobs that commensurate with one’s skills, talent, education, training and experience. College graduates and students are also welcome to apply online for internships and permanent positions as well. Prospective candidates can complete information pertaining to their preference (job and place of work). FedEx job application system allows such prospective candidates to create and store on-line resumes. The candidate details are then checked with job eligibility criteria stored in PRISM and suitable candidates are identified. Such short-listed candidates have to further take an aptitude test that quizzes their Math, English and reasoning skills, followed by interview. Candidates who clear the interview further undergo a fitness examination and a background credentials check, and finally are given appointment letters. The new (online) system facilitated the screening procedure and drastically brought down the time taken for the procedure by about 50%. There is no race, gender, religion, nationality, disability or age discrimination when it comes to providing employment opportunities. Fair and equal treatment is provided to one and all at FedEx. Thus the recruitment and selection procedures at FedEx are carried out efficaciously thereby helping FedEx to maintain its competitive edge over the rest.
Training and Development
FedEx has a well-defined training program in place so as to train the new hires and to facilitate them to perform the tasks they are expected to. FedEx’s training and development program not only imparts job-specific skills and competencies but also contributes greatly to the wholesome development of human resources. FedEx provides an environment that favours continuous learning and hence stagnation of skills or plateauing is highly unlikely.
New recruits are made to undergo a very effective orientation program that is formulated with the intent of making first day at office or on-boarding in general a beautiful, enjoyable and unforgettable affair. The orientation program comprised of a New Hire Orientation Kit that includes – 1) letter from the CEO; 2) checklists; 3) welcome letter – personalized and signed by the managers; 4) first day / first week / through the year employee work schedule. And then the kit also includes a half-an-hour video program “Welcome to our World” that details out the benefits and facilities of FedEx (Connor, 2003, January 1). The orientation program enabled the new recruits to become conversant with the doctrine, policies and procedures, and the type and nature of relationship between higher-ups and equals at FedEx.
An on-the-job training program commences once after the orientation program is over. The training program is designed as per the type and nature of job and tasks the new recruits were required to execute. The higher-ups who are in-charge of the new recruits are also instructed as to how and in what manner the new recruits need to be provided on-the-job training. The employee types such as customer service representatives (CSRs), couriers and service agents, who have to interact more with customers were trained with extra care and significance. The training program for such CSR trainees was a rigorous eight-week schedule during which they were trained about FedEx’s service types and were put in conditions simulating real work environment. They were taken through computer screens which they will be required to use during their work; they were made to listen to customer live calls in order to get a flavour of the actual job environment. Tests were also conducted as part of the training program and the trainees have to obtain good scores in these tests in order to complete training successfully and be put to actual work. Couriers / service agents have to successfully complete a four-week on-the-job training before being assigned to real field tasks.
FedEx is a learning organization that provides a continuous learning atmosphere to facilitate honing the skills, capabilities and competencies of the employees. To evaluate the competencies and proficiencies of the employees, they are subject to taking up a job-knowledge online test once every six months. The performance of the employees becomes an employee training record and is stored in Personnel Records and Information System (PRISM). By way of such evaluation it is possible to determine the areas in which employees ought to enhance their competencies and are assisted and trained further in improving their performance. If despite being trained the employees flunk the job-knowledge tests, they have no other option but to quit FedEx. Such is the significance of periodically assessing the employees’ job proficiencies.
FedEx started the “Leadership Development Institute” (LDI) during the 80s, and this was instrumental in formulating various training sessions and programs for employees from various hierarchical levels of management. The LDI backed training programs covered three subjects – Core Management Principles, outdoor-based learning, and Electives. LDI was staffed by Managing Directors and senior managers together to be called as “Management Preceptors”. FedEx’s LDI recognizes leadership material by functioning the Leadership Evaluation and Awareness Process (LEAP) (FedEx Overview, n.d.). LEAP is established on various leadership attributes such as charisma, dependability, flexibility etc. Team play is crucial in this LEAP process. This program is designed to cater to and evaluate the needs and potential of all employees who evince interest and involvement in donning leadership roles. Interested candidates are made to participate in a one-day introductory classroom session “Is Management For Me?” in order to make them conversant with managerial capabilities and responsibilities. On successful completion of this, the candidate progresses to the next stage to finish the leadership awareness activities. During a 3-6 month period, LEAP candidates are trained and evaluated in leadership qualities. Depending on the candidates’ performance during this tenure, the manager makes a written recommendation by either favouring or rejecting the candidates’ attempt for acquiring managerial positions (Murley, 1997, p.502).
FedEx believes in fostering and nurturing in-house talents and in promoting them to top rungs of management. FedEx also gives chances for employees from non-managerial cadres to get promoted to managerial positions. FedEx’s Leadership Evaluation and Awareness Process (LEAP) (Murley, 1997, p.502) was established in 1988 to enable non-managerial employees opt for managerial positions. The LEAP essentially involved assessing the leadership skills and capabilities of the employees who wish to get into managerial positions. FedEx gives preference to in-house talent and hence posts job vacancies in its on-line job portal called “Job Change Applicant Tracking System” (JCATS). FedEx encourages mentoring and coaching which is yet another non-formal but efficient way of succession planning. FedEx’s mentoring and coaching programs are carried out efficaciously in FedEx’s Leadership Development Institute (Murray, 2001). These are the various means by which FedEx facilitates career progression within the organization.
Performance Monitoring and Enhancement
The HR performance needs to be monitored regularly to enhance the effectiveness. So performance monitoring in FedEx is carried out and the various ways by which the HR performance is assessed are given below:
Performance Appraisal System
FedEx’s appraisal system links pay increases to the employees’ productivity and performance. Annual performance appraisals are carried out and employees are evaluated on the basis of various job-specific attributes – few noteworthy ones being – customer orientation, team skills, loyalty, technical expertise etc. (Cook, 208, p.205). Apart from hefty pay packages, several attractive prerequisites like – 1) tuition fees reimbursement, 2) travel discounts and 3) jump-seat availability (free flight privileges for employees). All such prerequisites are provided over and above the already entitled hefty pay packages. FedEx also offers a 10% profit-sharing scheme for those valued employees. All such enticing aspects related to compensation and benefits keep the employees happy and motivated and enable FedEx to enjoy unmatched position when compared to its peers.
FedEx conducts staff surveys on an annual basis and this serves to be crucial business enhancement tool. Participants are supposed to provide replies to 32 questions electronically in a two week period (Mosley, n.d.). Active participation of staff has been witnessed over these years. This Survey-Feedback-Action (SFA) procedure was introduced with the objective of helping top management in deciding upon issues related to promotions. But then SFA was practiced in reality only to the magnitude of evaluating the employees belonging to the managerial cadre. The employees from various teams are supposed to respond to the 32 questions asked about their higher-ups and the overall management anonymously. The survey results are collated and tabulated and given to the concerned team managers. The managers carry on feedback sessions with the employees, conduct a detailed discussion about the survey results obtained and spot the issues which ought to be handled. Once the feedback sessions conclude, the team members need to draft a formal plan of action to resolve the spotted issues. The plan is thereon reviewed on a regular basis to monitor the advancement of the corrective measures being carried out. Few sample questions from the survey are as follows:
“I feel free to tell my manager what I think”
“My manager lets me know what’s expected of me”
“Favouritism is not a problem in my work group”
“My manager: helps us find ways to do our jobs better
The SFA helps 1) to assess the managerial performance, 2) to resolve employee problems and 3) to enhance relations at work place.
FedEx has a very less and insignificant turnover rate of about 1 percent. This being the best employer knows the trick of successful and effective employee retention mechanisms. There is no dearth of career plans or opportunities for the FedEx employees and this is one crucial reason why FedEx is capable of successfully retaining its invaluable workforce. Promotion-from-within policy enables elevating the employees in the hierarchical rungs from within. Also employees’ performance, efforts and contributions are well-recognized and exceptional employees are awarded for their competencies and proficiencies. Also open and transparent communication too plays a great role in reducing the employee turnover rates. Also, employees should take pride in what they do and this is where imparting proper training to hone the employees’ skills becomes essential. FedEx has a well-defined on-the-job training mechanism which greatly helps in enabling the employees perform a meaningful job for which they can own pride and responsibility.
Motivation and Job Satisfaction
FedEx thrives on innovation. For innovation to prevail at impressive levels, creativity, productivity and discretionary efforts are prerequisites. Such attributes are fostered by high levels of employee motivation and job satisfaction experienced by the employees. FedEx has won a slew of accolades thanks to its job-satisfied and motivated workforce. FedEx environment is conducive to innovation and this in turn motivates the workforce to perform exceedingly well.
HR Policy Requirements
Here we compare and contrast three identified HR policies of two diverse organizations. The two organizations taken for study and comparison of HR policies are – 1) Northumbria Police and 2) UCL – London’s Global University. The three policies that are considered for comparison are – 1) Diversity and Equality, 2) No Smoking, & 3) Work life Balance
HR Policy 1 – Diversity and Equality
Northumbria Police versus UCL London’s Global University
Northumbria’s Diversity and Equality Policy (Northumbria – Diversity & Equality, 2009, April 8) strives to boost, encourage and preserve diversity, equality and human rights and inform individuals and community about the significance of honouring equality, diversity and human rights within the Northumbria Police. The policy is formulated to evince the Northumbria police’ support and compliance to enforcing anti-discriminatory, equal opportunity and fair treatment measures in the workplace.
UCL’s Race Equality Policy (UCL Human Resources – Race Equality, n.d.) aims to promote racial equality in all its functions and to value diversity of staff and student and to forbid illegal acts of racial discrimination. The Policy goes about defining racism and means of implementing the policy. UCL’s Equality objectives are clearly defined and an Equality Action Framework is formulated too. Special mention about dealing with the acts of harassment and bullying is made and institution of boards and committees to keep acts of inequality under check and control. Managing work force diversity and promoting fair treatment in recruitment and selection procedures at UCL is emphasized. Both the staff and student communities are included in defining the various equality initiatives that are required to be taken as per the policy.
HR Policy 2 – No Smoking
Northumbria Police versus UCL London’s Global University
Northumbria’s No Smoking Policy (Northumbria – No Smoking, 2009, April 1) states about the existence of “No Smoking” policy within the building premises and vehicles under its control. The objectives of this policy is to 1) ascertain that non-smokers are not involuntarily exposed to tobacco smoke, 2) to educate people about the health hazards associated with smoking, 3) to help those who wish to quit smoking and 4) to accommodate smokers as well.
UCL’s No Smoking Policy (UCL Human Resources – No Smoking, 2007, June 1) strives to create a smoke-free healthy environment f
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