DHL and FedEx Corporation - Performance Management Practices - Case Study Example

Research and Choose Two Organisations Using High Performance Work (HPW) and/or Performance Management (PM) Practices, Which You Can Compare and Contrast in Their Approach Table of Contents Table of Contents 2 Introduction 3 A Critical Discussion of Academic Definitions of PM 4 Evidence of Understanding of the Conceptual Framework That Underpins Performance Management (PM) 6 Critical Discussion of How Companies Achieve Strategic Alignment/Clear Line Of Sight 7 Compare and Contrast Between FedEx and DHL 10 Performance Measures (Behaviour or Results) 10 10 Performance & Learning/Development 11 Performance & Reward (Non-Financial Rewards and Pay) 12 Process of Performance Management: A Cycle of Expectations, Goal Setting, Support (Feedback & Coaching), Review, Analysis and Assessment 13 Conclusion 16 References 17 Introduction FedEx Corporation is an American courier company operating on a global context. The company provides transportation, business as well as e-commerce services to worldwide business organisations along with customers. The company possesses over 300,000 employees, who are motivated to conduct their operations in a positive and appropriate manner. The employees are encouraged to work as a team with due consideration towards professional along with ethical standards, so that the needs of the customers and communities are accomplished successfully (FedEx, 2014). Correspondingly, DHL is one of the largest logistic companies headquartered in Germany. The company provides mail services on a global context. It ensures that business users along with general consumers are offered with effective mail communication, transporting parcels and dialogue marketing services. The company operates in over 220 nations with possessing employees around 480,000. The employees are motivated to conduct their operations competently and are focused on service, sustainability and quality (Deutsche Post DHL, 2013). In this regard, the two companies are identified to be associated with logistic operations and the employees are considered to play an important role towards their business performances. Besides, the companies are required to conduct performance measures with the aim of ensuring that employees are able to perform in accordance with business objectives and requirements of customers. In this context, the concept of performance management (PM) plays an effective role in developing human resources of the companies successfully. PM is recognised as a procedure of measuring, developing, identifying and managing the performance level of employees so that business operations are performed valuably. Thus, the companies adopt PM with the intention of supervising the performances of employees on the basis of organisational goals. The concept also assists in communicating performance feedbacks and accordingly determining learning process and development opportunities (Aguinis, 2011). Subsequently, the assignment discusses the concept of PM and its conceptual framework in a detailed manner. Additionally, the assignment compares and contrasts the approaches related to PM taken by FedEx and DHL with appropriate theoretical underpinning. A Critical Discussion of Academic Definitions of PM Every business organisation has established certain goals to be achieved by effective utilisation of the resources such as men, machine, money and materials. Although it has been argued that effective utilisations of all these resources are vital to accomplish the broad organisational goals but the aspect of manpower is considered to be one of the most important factors. It has been argued that manpower or the human resource plays a crucial role in the utilisation of other organisational resources that leads to the successful accomplishment of the organisational goals. Employees within an organisation perform different jobs and roles. Additionally, the current business environment is extremely complex and challenging for the business organisations. In light of this challenging business environment, it has become imperative for the business organisations to effectively manage almost all the aspects of the business process for ensuring favourable outcome (Jaksic & Jaksic, 2013). Thus, it is decisive that the employees performing the jobs are competent and skilled to deliver the best outcome from the job performed by them. Correspondingly, managing the performance of employees is vital within an organisation. Notably, performance management (PM) is observed to meet the function of managing employees’ performance within an organisation (Balaban & et. al., 2011). In general, PM is thought to maintain, develop and motivate the employees performing diverse jobs with the aim of ensuring better outcome. It also ensures that activities that are performed within an organisation are able to meet the goals of the organisation consistently. Reflecting the importance of performance management within the modern organisations, different authors have provided different definitions for the concept. Accordingly, it has been claimed that PM is defined as the process of promoting work environment wherein the employees are able to perform at the best of their abilities. According to this definition, PM covers the entire work system that commences when the job to be performed is defined and ends when the employees leave the organisation. PM is also defined as a process of evaluating and assessing the achievement of pre-established goals as well as objectives using certain measurement parameters. According to this definition, inputs, delivery process of activities and services outputs and end results are important components of PM which serve as key parameters for measuring or assessing the achievement. Another definition of PM articulates that it is the core element of any “people management” practice in an organisation. Conferring to this definition, an organisation is understood to exist for performing certain activities. Subsequently, the failure of employees to perform effectively is argued to make the survival of the business organisation extremely difficult. On the contrary, it has been argued that if the employees with an organisation perform extraordinarily, the organisation is benefited with greater competitive advantages as well as sustainable growth and opportunities (INFLIBNET Centre, 2010). Evidence of Understanding of the Conceptual Framework That Underpins Performance Management (PM) PM is a significant tool of measuring the performance of employees and accordingly, devises appropriate policies with the assistance of which employees are motivated for enhancing their competency level. In this regard, PM is used as an integrated approach based on which capabilities of employees are enhanced. The concept of PM also aids in developing a better competent team of employees for improved business performances and success. In the present competitive as well as changing business scenario, business organisations have adopted PM in order to ascertain that the changes are implemented effectively (Aguinis, 2011). The conceptual framework of PM is based on certain procedures with the assistance of which performances of employees are required to be measured. Subsequently, the conceptual framework of PM is seemed to be underpinned on motivation theory which includes expectancy theory, control theory, social cognitive theory and goal theory. Goal theory implies that employees of business organisations are required to be aware of business objectives along with goals. Correspondingly, employees should be goal-oriented in their approaches with the aim of ascertaining that business operations are conducted accordingly for better accomplishments of business objectives. Expectancy theory signifies that employees are required to possess certain level of expectancy on the basis of which they should perform their assigned tasks. Contextually, expectancy level of employees is estimated with regard to business outcomes as well as performances (Armstrong, 2009; Atkinson & Shaw, 2006). Control theory depicts the procedures based on which employees are able to shape their behaviours. Employees receiving feedbacks from customers are able to have a better understanding of their current behaviour and expected behaviour. Besides, the employees are able to conduct their activities with corrective actions for effective business performances. Social cognitive theory is dependent on the principle of self-efficacy. The performances of certain activities by employees are based on their individual perceptions. Moreover, employees are required to possess positive self-belief with the aim of performing their operations successfully (Armstrong, 2009). The different motivation theories form the base for the conceptual framework of PM owing to the fact employees are considered as the vital element for the successful performance of business operations. Respectively, the conceptual framework implied that the employees are required to be motivated in order to ensure that they are able to conduct their activities is a rational as well as individualistic manner. Additionally, the motivation theory also aids in developing an effective working culture in an organisation, which will aid businesses in adopting changes in their business operations effectively. Thus, FedEx Corporation and DHL are recognised to offer efficient training services, development facilities and appraisal mechanism so that employees are motivated to perform their operations effectively. Critical Discussion of How Companies Achieve Strategic Alignment/Clear Line Of Sight It has been argued that the performance management should be in alignment with the strategies of the organisation in order to deal with the challenges imposed by the current business environment and achieve success through the accomplishment of the business goals and objectives. It has been further argued that strategic alignment is important for improving performance and optimising value creation. Moreover, in order to achieve strategic alignment, it has been argued that organisations are required to define performance indicators and identify strategic objectives that are measurable. In other words, performance metrics are ascertained to be the important element of performance management that enables organisations to align performance with organisation’s strategy. However, it has been argued that performance metrics are double edged sword which implies that improper selection of performance metrics can lead towards unintended results. Moreover, the wrong selection of the performance metrics is considered to disrupt the organisational process followed by demoralising the employees. Consequently, it may adversely affect the production and service level of the organisation (Eckerson, 2009). It has be identified that an organisation intending to align performance management with the organisation’s strategies is required to execute certain imperative activities pertaining to strategic alignment process. Correspondingly, the major activities associated with the strategic alignment process are outlined below: Formulation of strategy Identification of stakeholder groups along with the information needs Determining specific key performance indicators (KPIs) and deriving understanding regarding cause and effect relationships between KPIs Measuring and collecting information relevant to performance Selection of appropriate communication modes such as alerts, broadcasting agents and dashboards Source: (Heesen, 2012) Based on the above identified process of strategic alignment, it can be identified that formulation of strategy is a crucial and complex task in the current highly volatile business environment. It is thus essential for an organisation to clearly articulate strategy and communicate throughout the business with the use of appropriate communication channels. In other way round, the strategy framed by an organisation needs to be understood by every individual in the organisation for ensuring that the day-to-day operations are aligned with the organisation’s goals and objectives. At the same time, it has been identified that currently organisations use a number of KPIs as a measurement tool. However, the use of several KPIs reduces the ability of the organisation to improve its performance while increasing the complexity for managers and executives using KPIs. In this regard, it has been observed that organisations applying fewer but relevant KPIs are more successful in achieving strategic alignment while those organisations utilising variety of KPIs are ascertained to face challenges associated with declining motivation, productivity and service level. The efficiency of performance management generally relies on the measurement precision of the relevant information collected from the various sources. Subsequently, organisations are currently involved in retrieving and communicating information gathered from the applied performance indicators (Heesen, 2012). Compare and Contrast Between FedEx and DHL Performance Measures (Behaviour or Results) Performance measure is an effective way of analysing as well as ensuring that employees are able to conduct their operations in accordance with organisational objectives. In this regard, FedEx is identified to adopt 360-feedback tool with the assistance of which the employees are able to change their behaviours based on expected skills as well as competency level (RealTime Performance, 2009). Similarly, DHL has adopted different approaches that include discrete choice analysis and interview with the aim of developing the behaviour of employees so that they are able to conduct their operations successfully (Coltman & et. al., 2010). In this respect, it can be identified that the companies have adopted certain approaches of ensuring better business performances. FedEx has implemented RealTime performance with the aim of building better competitive advantage through increased engagement of employees and development of leadership (RealTime Performance, 2009). In contrast, DHL conducts ‘employee opinion survey’ with the assistance of which the company is able to perform business operations effectively by identifying key performance indicators (Deutsche Post DHL, 2013). Subsequently, it can be recognised that the companies have adopted different approaches for the accomplishment of different business objectives. Performance & Learning/Development Performance and learning or development is an important element of PM on the basis of which employees are offered with training as well as development services. The services aid employees in developing their competencies. FedEx provides training and development program with the aim of developing skills of employees. Subsequently, the company has planned to build an effective corporate culture. The company in order to develop an effective working culture has merged learning organisation with performance management and talent management so that the behaviours of employees are developed. Additionally, the company for better satisfaction of employees has adopted ‘Survey Feedback Action’ (SFA) strategy. The strategy assisted the company in measuring satisfaction level and identifying performances of employees accordingly, the employees are offered with training as well as development services for better business performances (Cattel, 2013). In the similar manner, DHL provide learning as well as development opportunities to the employees for developing their expertise. Moreover, the training and development opportunities have aided the company in expanding the competency level of employees. The company also adopts a 360-degree feedback program with the aim of identifying the potentialities of employees effectively and accordingly provides employees with career growth plans (DHL International GmdH, 2014). FedEx has implemented training as well as development programs with the aim of developing an effective working culture. The prime focus of the company is to manage the behaviours of the employees in alignment with working culture both inside as well as outside the company. In this regard, the company develops a value based on which the company has planned to develop the working culture (Cattel, 2013). In contrast, DHL has developed and implemented learning along with development opportunities with the aim of building the competency level of employees. Additionally, the company with the assistance of training opportunities has planned to enhance skills on a continuous basis. The company has also opened online training services in order to develop foreign language skills and other management skills (DHL International GmdH, 2014). Performance & Reward (Non-Financial Rewards and Pay) It has been ascertained that both the companies including FedEx and DHL undertake extensive rewards and recognition schemes for motivating and retaining quality workforce. In this regard, FedEx can be observed to structure several compensation and reward schemes that are aimed at stimulating new and innovative ideas, motivating exceptional performance and promoting teamwork. Notably, financial benefits are provided in terms of salary increase and variable pay structure for employees demonstrating outstanding performance. In addition, discounted travel, pension and healthcare program also occupy a major initiative of FedEx as reward management approach. FedEx also has recognition programs that are intended towards celebrating the achievement of employees for delivering exceptional performance which includes five star award, excellence award, purple promise quality award and humanitarian award. All these programs are identified to serve as an important aspect of PM in FedEx (FedEx, 2014). Similarly, DHL also considers its employees to be valuable assets for its success in the global courier and logistic industry. Thus, DHL has launched several benefits schemes for its employees. The most prominent benefit offered to DHL’s employees includes the private medical insurance. Besides, it offers benefits related to pensions which entail Trust-based defined contribution (DC) scheme and two legacy defined benefit (DB) schemes. As non-monetary reward, the company offers annual leave of 25 days excluding public holidays and retail discounts. Thus, it can be identified that both the companies have been able to represent themselves as caring organisations and share strong similarities between them in terms of performance and reward. On the other hand, it can be identified that there exists minimum differences in their performance management system. Accordingly, the differences can be viewed in terms of their reliance on the type of performance and reward scheme. Notably, it can be identified that FedEx offers more non-financial rewards in terms of employee recognition while DHL provides greater financial incentives to employees (Sullivan, 2012). Process of Performance Management: A Cycle of Expectations, Goal Setting, Support (Feedback & Coaching), Review, Analysis and Assessment FedEx has concentrated its performance management process towards offering suitable workplace environment wherein employees are motivated to provide new and innovative ideas. With the expectation to increase its competitiveness in the globally and to retain competent employees, it has introduced several programs with different goal setting. In this regard, ‘Survey Feedback Action’ (SFA) program was launched by the company with the aim of motivating employees to render heir valuable feedback to management policies. Similarly, ‘Guaranteed Fair Treatment Procedure’ was directed towards addressing the grievances of its employees. ‘Leadership Evaluation and Awareness Process’ was intended to non-managerial employees to avail the opportunity of managerial position. It has also followed systematic recruitment and selection process to attract and retain potential talent in the organisation. Extensive staff training and development are also conducted by FedEx in order increase the skills of its employees so that they are able to provide company with the greater efficiency with regard to meeting the needs and expectations of its customers. The SFA program initiated by the company has provided employees with an opportunity to render their feedbacks which has assisted the company to identify problems faced by employees and determine appropriate solutions to eliminate their problems. The company has also used several performance appraisal techniques to evaluate and assess the performance of its workforce. In this regard, the company has been using three metrics which represents people, service and profits that form the core of the FedEx’s operations. In order to track the quality of service, FedEx has determined ‘Service Quality Indicators’ that measure the level of customer satisfaction (Prashanth, 2003). On the contrary, it has been recognised that there is no specific performance management process in DHL, it largely relies on ad-hoc basis of performance measurement. It has been further identified that managers in DHL use KPIs but these parameters do not have standardised definition across the organisation. It has been claimed that PM system in DHL is distorted. The metrics used by DHL are argued to deliver unbalanced outcome. Moreover, it has been ascertained that the managers in DHL focus more productivity measure and little is emphasised quality of service. Measures used in DHL are also ascertained to be connected with the specific goals but are more concentrated on budgets and fixed improvement goals rather than competition which makes quite difficult for the managers to assess the performance of employees. On further note, it has implemented sophisticated time registration system and analysis tools to collect information. DHL conducts monthly review which is often long and irrelevant (Stefenson, 2004). It can be concluded that performance management process of DHL lacks in several areas as compared to FedEx. Conclusion It can be comprehended from the foregoing discussion that PM plays a significant role towards the development of employees in relation to their skills as well as knowledge. PM is ascertained as a procedure based on which the performances of employees are identified and accordingly, measures are adopted with the aim of enhancing the competency level of employees. Contextually, it has been identified that FedEx and DHL have adopted different performance measures objectives with the aim of building an effective team capable of conducting business activities in accordance with organisational goals as well as objectives. The companies have adopted learning as well as development programs in order to enhance competency level of employees and build an effective working culture. On the other hand, the companies are determined to adopt different approaches of ascertaining that competencies of employees are enhanced. It has been identified that FedEx adopted PM with the aim of building an effective working culture while, DHL has implemented PM in order to expand competencies of employees on a global context. References Aguinis, H., 2011. Performance Management. Documents. [Online] Available at: https://www.ebsglobal.net/documents/course-tasters/english/pdf/h17pe-bk-taster.pdf [Accessed May 07, 2014]. Armstrong, M., 2009. Armstrongs Handbook of Performance Management: An Evidence-Based Guide to Delivering High Performance. Kogan Page Publishers. Atkinson, C. & Shaw, S., 2006. Managing Performance. Chapter 8. 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