Human Resource Practices at FedEx in the Business Environment - Assignment Example

Human Resource Practices at FedEx Introduction As the business environment becomes more competitive globally, organizations seek to gain competitive advantage thus turning to adoption of effective human resource practices because of the postulation that human resource management influences employee performance and attainment of organizational objectives (Al-Swidi & Mahmood, 2011). Employees have been appreciated as valuable assets in any organization and therefore need effective management. Organizational culture has been attributed to the difference in human resource practices across organizations. A fit between the organizational culture and objectives and human resource practices yield better organizational performance (Biswas, 2009). This paper focuses on FedEx, a logistics provision organization made of various companies distributed globally. The aim would be determine how its culture interacts with human resource practices, pointing out areas where the human resource practices fail to observe the corporation’s culture. Human resource practices describe the system which attracts, develops, retains and motivates employees so as to achieve sustainability competitiveness of the organization and the members (Ling & Nasurdin, 2010). This refers to the set of internally consistent policies and practices which have been designed and implemented to see to it that human capital contributes towards the achievement of its objectives. Adeleye (2011) introduces the social aspect noting that human practices describe the policies that facilitate the development of organizational competencies through complex social relation thus generating organizational knowledge that yields sustainable competitive advantage. Ahmad (2012) refers to organizational culture as “patterns of shared values and beliefs over time which produces behavioral norms that are adopted in solving problems” (2011, p.79). It refers to a system made up of shared meanings observed by members and distinguishes an organization from another (Biswas, 2009). The human practices of an organization greatly influence organizational culture and vary across cultural clusters. Cited by Mohamad, Lo and La (2009) as the most influential levers in organizational culture, human resource practices should fit within the organizational culture for enhanced performance. FedEx Corporation Considered as the world’s leading company in logistics solution provision, FedEx Corporation, popularly referred to as FedEx provides reliable fast delivery in the US and over 220 countries globally. Began in 1973, FedEx uses ground and air network for delivery of shipments to its over one million customers. The company has over 140,000 employees distributed across 50,000 drop-off points operating over 645 aircraft and about 42,000 motor vehicles across its network. The mission for FedEx is to “produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related business services” (FedEx, 2012). The philosophy of people-service-profit, PSP has been adopted to guide the company in achieving this. This philosophy rides on the postulation that establishing a culture that respects and rewards employees would cause a delivery of exceptional service to its esteemed customers who would in turn reward the organization with business and loyalty thus creating a profitable enterprise (Jackson, Schuler & Werner, 2012). Human Resource Practices at FedEx Since the inception of the corporation, the management has been keen to provide a suitable working environment for its employees that would enhance innovative solutions. This has been reciprocated by employees who have exhibited exemplary commitment to their work evidenced by their willingness to use their personal assets during the period when the company faced serious financial troubles so as to meet its obligations to the customers (Jackson, Schuler & Werner, 2012). Even at times when the employees did not receive their salaries on time, they still worked. Being a service organization, its founder, Smith believed that success would be heavily pegged on its employees, giving rise to the 1973 PSP philosophy. This philosophy considered the welfare of an employee as paramount to provision of efficient service to customers who would in turn generate profits for the organization. This was the basis of all management decisions at FedEx henceforth, including formulation of its human resource practices. Recruitment and selection Recruitment refers to the human resource process where people needed to fill in particular vacancies would be discovered, developed, sought and attracted. Selection on the other hand involves use of personal information to determine who to hire (Adeleye, 2011). The philosophy of people-service-profit acknowledges people as an important asset in an organization. FedEx does not discriminate on race, gender, age, disability, citizenship and religion when recruiting new employees. Selection would be based on qualifications and the required skills. After all, organizations should select staff that fit within its environment and meet the job requirements. Both the job fit motivation and organization fit motivation define the culture fit, a critical component in hiring decision which would make the organization attain a competitive advantage in its marketplace (Al-Swidi & Mahmood, 2011). Growth opportunities At FedEx, internal promotion to higher responsibilities has been highly observed. Through its SFA program, the management makes appropriate promotion decisions. Nonetheless, this program has been criticized for its implementation at the management cadre only. A different program, referred to as Leadership Evaluation and Awareness Process, LEAP has been used to grow the non-managerial cadre employees to managerial level. This program was devised in 1988 after observing that 10% of its non-managerial employees who were promoted to managerial posts resigned within fourteen months. The LEAP program provided the employees with the ability to gauge their capabilities prior to taking up managerial responsibilities. The Job Change Applicant Tracking System, JCATS which is an online job posting system allows employees, especially the hourly employees in any of its subsidiaries to apply for available vacancies (FedEx, 2012). Through a career plan, an employee would formulate individual career goals and come up with a plan to achieve these goals. While career development perceives careers in the eyes of the organization, career planning would perceive careers from the employees’ viewpoint (Biswas, 2009). Thus, each arm of FedEx works towards cultivating an open and supportive environment where employees attain their full potential and contribute to the success of the company freely. Growth in employees has been achieved through appropriate trainings. The corporation requires that employees train for at least 40 hours per year (FedEx, 2012), a policy that has been strictly followed especially at FedEx Express, a subsidiary of FedEx. Training enables the organization to have a productive and highly motivated workforce which delivers superior value to its customers and shareholders. Performance appraisal and communication with employees Employees at FedEx are allowed to express their opinion on managerial decisions, enhancing two-way communication. The company spends massive resources on its program on internal employee response based on the open door policy where employees find solutions to disagreeable and controversial situations. In addition to the open door policy, FedEx is renowned for its Guaranteed Fair Treatment Procedure as a communication tool (FedEx, 2012). This allows employees to use the appropriate systematic review through progressively higher management levels in articulating their concerns. As such employees are open to discuss their complaints with no fear of retaliation. Further, this helps in the maintenance of an open atmosphere and an equitable and fair complaint handling process. In addition, FedEx has mechanisms geared towards addressing and resolving the grievances of employees. Such mechanisms have also played an important role in informing employees of new undertakings in the corporation. These communication mechanisms observe the argument by Abdulkadir, Isiaka and Adedoyin (2012) on the importance of employee participation in the formulation of human resource practices. Participation plays a critical role in the decision making process in an organization as it allows employees to make known their dissatisfaction, express collective organization and demonstrate cooperative relations and mutuality. In this arrangement, employees have the opportunity of influencing management’s decision and make appropriate contributions geared towards improving the performance of the organization. The degree of participation positively correlates to the productivity, performance and satisfaction (Al-Swidi & Mahmood, 2011). Therefore, by FedEx adopting varied communication mechanisms with its non-managerial employees, their participation in the organization’s decisions increase which ultimately improves performance, just as intended by the PSP philosophy. On an annual basis, an attitude survey would be conducted from which the results would be tabulated and consolidated to indicate the companywide leadership score, CLS, the basis for rewarding managers. Should a year record a dip in the CLS, then the managers forfeit the annual bonus. The non-managerial employees are evaluated on their enthusiasm, customer orientation, team fit, technical expertise, flexibility and loyalty among other parameters. Regular employees would have their performance reviewed annually and semi-annually for temporary employees. Evaluation would be based on training record and test scores. Just as argued out by Abdulkadir, Isiaka and Adedoyin (2012), appraising employee performance helps FedEx set work standards, assess the actual performance of employees relative to the set standards and provides feedback to the employee for motivation, elimination of deficiencies and continued above par performance. This fits well within the PSP philosophy of FedEx which appreciates the importance of an employee in attainment of competitive advantage. Employee retention Job satisfaction is a critical component in ensuring continued service from an employee. The way to achieving this involves matching the organizational culture to human resource practices which conform to the employee expectations. While studying the relationship between organization culture and job satisfaction in Malaysia, Mansor and Tayib (2010) found out that employee attitudes would be tied to individual needs that determine job satisfaction. Some of these needs include supportive environment and rewards. The work environment would definitely be a direct consequence of the human resource practices hence the importance of ensuring that such practices match the organization’s culture. Majumder (2012) cites training, development, participation, employment security, communication, social interaction, performance appraisal and management style as human resource practices that determine employee motivation. Appreciating this fact and operation in an industry where employees tend to have lower loyalty in their respective organizations, FedEx considers employee retention as a significant aspect in its human resource policy. Among the major competitors of FedEx include DHL and UPS. Other than training its employees, FedEx also effectively uses various incentives and benefits through its award and incentive programs. The Golden Falcon Award has been set for full-time employees who serve customers beyond their call of duty (Jackson, Schuler & Werner, 2012). The nominees of this award would be determined through an autonomous selection based on customers’ feedback. Other than an award, winners are also given shares of stock of the corporation. The highest award at FedEx is referred to as the Five Star Award. This would be given to employees who exhibit outstanding performance which enhances teamwork, service and profitability in the organization. Managing directors, senior managers, managers and non-managerial employees all qualify for nomination for this award. These help in the delivery of high quality service and keeping people motivated. Acknowledging efforts plays a critical role in motivating and satisfying a workforce which enhances stimulation of new ideas and encouraging better performance (Ahmad, 2012). Majumder (2012) appreciates the importance of a motivated workforce in reducing staff turnover and increasing loyalty to the organization. In the study of human resource practices and satisfaction of employees in Bangladeshi, the researcher observes that motivation of an employee would be determined by such an employee’s perception of the human resource policies on promotional opportunities, appropriate supervision and adequate pay. Human resource practices that exhibit the intention of an organization to invest in its employees through training and developmental experiences yield higher standards of affective organizational commitment. Benefits of FedEx’s Human Resource Practices Over the years of its existence, FedEx has developed innovative human resource programs that have been borrowed by many other organizations in the service industry, having been ranked by Fortune Magazine as among the top 100 best companies to work for in the US (FedEx, 2012). These programs have seen the company’s financial gains go high because of improved employee productivity. The reputation of the corporation also rose, particularly as a service oriented and employee-friendly organization. These employee-friendly policies saw a reduction in turnover rates, estimated at less than 6% against the industry’s average of 20% in 2000 (Jackson, Schuler & Werner, 2012). Limitations of FedEx’s human resource policy Albeit the benefits realized from FedEx’s human practices could be enormous, there are considerations that the company needs to adopt to ensure sustainable competitiveness. In spite of a program that aims at absorbing part time casual employees into full time employment, little has been done in line with this and many complaints persist on the same. Instead, the company sources for employees outside the organization as observed by Jackson, Schuler and Werner (2012). This demoralizes FedEx’s employees which could eventually have detrimental effects on the organization’s production. At this point, it would be important to appreciate the argument by various scholars (Abdulkadir, Isiaka & Adedoyin, 2012; Ahmad, 2012; Majumder, 2012) who argue on the importance of internal promotions as a key component of human resource practices in motivating employees which has a positive correlation to organizational performance. In addition, the discrimination in the development opportunities available to managerial and non-managerial employees could also hamper the attainment of greater productivity. Of particular importance in this argument is the use of different mechanisms to promote employees from either divide. As earlier noted, non-management staff would have their promotions based on their score in LEAP while managerial staff would be evaluated based on scores on SFA (FedEx, 2012). The organization should develop and appraisal mechanism that serves all the employees equally based on their performance regardless of the positions held according to the findings by Abdulkadir, Isiaka and Adedoyin (2012). The researchers postulated that equivalent involvement of employees in appraisal increases organizational commitment. Similarly, the firm seems to discriminate against its hourly employees in various aspects. Other than discrimination in offering them equal growth opportunities in the organization, the company has no award program for these employees. Such factors reduce the motivation of this category of employees and going by the postulation by Majumder (2012), their productivity would be limited thus negatively affecting the overall organizational performance. Conclusion FedEx, a logistics provision company in America has been appreciated as one of the best organizations to work in. This has been largely attributed to its employee-sensitive culture driven by the people-service-profit philosophy crafted by its founder, Smith in 1973. Further to this, this paper has indicated the existence of fit between the organization’s human resource practices and its culture to a large extent. Recruitment and selection process at FedEx aims at sourcing for skilled labor that not only fits within the organization but which also exhibits ability to undertake the relevant responsibilities. Having sourced for the most appropriate talents, the company strives to retain these employees through offering them appropriate training that would develop their careers. FedEx also provides its employees with growth opportunities into the managerial cadre for employees exhibiting exemplary performance evaluated either annually or semi-annually. The corporation has developed various mechanisms that propagate effective communication. However, the firm seems to discriminate against its employees working on hourly basis. It therefore needs to grow this cadre of employees as opposed to external sourcing and adopt equal performance appraisal mechanisms to achieve higher organizational commitment that would see it perform even better in line with the objectives of its PSP philosophy. References Abdulkadir, D. S., Isiaka, S. B. & Adedoyin, S. I. (2012). Effects of strategic performance appraisal, career planning and employee participation on organizational commitment: an empirical study. International Business Research, 5(4), 124 – 134. Adeleye, I. (2011). Theorizing the diffusion of international human resource practices: towards an integrated conceptual approach. International Journal of Business and Management, 6(12), 254 – 269. Ahmad, M. S. (2012). Impact of organizational culture on performance management practices in Pakistan. Business Intelligence Journal, 5(1), 50 – 55. Al-Swidi, A. K., & Mahmood, R. (2011). 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