The Success Story of FedEx - Essay Example

FedEx - The Success Story FedEx is one of the world's leading companies in the field of transportation, delivery, information and supply chain services. Its operations are global offering a variety of solutions to customers worldwide. The company rose to become a leading and trusted brand by developing leadership practices that drew on employee commitment, loyalty, discretionary effort, creativity and expertise. This has enabled the company to thrive and prosper in the global environment and stay ahead of the competition. The key to FedEx's rapid growth has been due to the company's open and helpful work environment that encourages employee participation in the innovative process. This paper looks at these aspects in detail. The enduring success of FedEx has been in part due to the wisdom, knowledge and information imparted towards the employees in helping them gain a better understanding and applying a number of company principles and policies. The philosophy at FedEx has always been People, Service, Profit. People always come first. A deep understanding of what makes people tick, their inner psychology, motivations, desires and aspirations are key factors that the company strives to take into account when dealing with them. As people everywhere are varied, FedEx accepts their diversity and understands that each individual must be handled differently. The company attempts to find a common ground between itself and the customer where both mutually agree on terms and conditions and are satisfied with the business goals. The second point is service. To maintain long term customer relationship, the company makes sure that its own philosophy, work practices are sound and credible. When its own employees and leaders are comfortable with the system and have understood it fully, they are able to serve the customer better. The service side of the business is always scrutinized and made adaptable to a changing economic environment. FedEx maintains quality control at every level from the handlers to the customer service representatives. The third aspect is profit. Without the first two factors in place and functioning properly, profits may be affected. FedEx uses cutting edge technology and analytical systems to ensure that the company is on the right course. Variations in profit margins are evaluated and set against the backdrop of the bigger competitive economic picture and also internal company practices. If need be, a revision of policies are made. The company might also look into the process of innovation and how it can be improved upon. The underlying pattern in FedEx is constant change and adaptation. FedEx recognizes the changing world and business environment and in order to be a part of the evolution process, they have continually evaluated business models and strategies. The company regularly studies market trends and the competition and attempts to stay one step ahead. As their customer base expands and a diverse range of people have varied number of requirements, customer satisfaction is very important and FedEx has addressed the expectations and desires of its customers. FedEx has also recognized that the present global economy is extremely competitive and preserving a status quo would not suffice. In order to grow, the company strives to change constantly. This means being flexible in organizational procedures. Rather than sticking rigidly to company policies, an open more adaptable policy towards change has taken place at FedEx. FedEx's growth depends on successfully meeting and anticipating varying customer's requirements in a competitively differentiated manner. Competitive differentiation works on planning and providing customer value offers that are of better-quality that those offered by the competition and which are considered to be a better investment. In designing customer value propositions, each department and employee is directly or indirectly participates in the development. As people are involved in the innovation process, FedEx employees are expected to believe that anything done today can be done better the next day and customers are better served. The various managements and their leaders actively encourage their subordinates to involve themselves in the generation, acceptance and implementation of innovative ideas. This is the three-step process of innovation which is a people process that FedEx employs. Step one encourages individuals to generate ideas and articulate creativity. Step two involves groups of individuals within the company and in the separate departments to work in collaboration with each other to build on and develop a raw idea into something more tangible and evolve a business plan. Step three involves sometimes the entire organization to develop and implement the idea. The employee is vital to the process and this view has enabled FedEx to develop a culture of innovation that surpasses that of the competition. The process of innovation is nurtured and actively supervised and cannot just made to occur. Once ideas are presented and agreed upon, constant vigilance is maintained to see the idea follows through to its logical conclusion. This supervision involves regular communication between management and employees. The openness of communication channels within the company is a crucial aspect. The more lines of communication there are the greater the flow of ideas and distribution of knowledge which adds to the knowledge database. The company has recognized that a single important innovation may jolt the competitive market and enable the company to stay ahead but a sequence of incremental innovations could lead to an increasingly cumulative outcome on profits and market share. Incremental innovations help the idea go through a trail phase so that any shortcomings and issues may be ironed out. Once these ideas gain general acceptance, they secure a permanent place in organizational policy. FedEx also ensures that any innovations that the company creates are market driven and customer oriented. The company's innovation culture model has five dimensions. The first dimension is Engaged people. When employees are engaged in the company's activities, they focus their mental and physical energies in confronting and solving problems in the larger interests of the firm. A collective focus by the entire organization is a powerful force which cuts across departments and specializations, enabling the creative generation of ideas and solutions to realize a common objective. Part of being one with this collective conscious comes from the need for employees to be part of a winning team, the desire for individuals to make a difference and the aspiration to grow within the company. These are the crucial factors that motivate employees to remain with the company. Under FedEx's People First philosophy, profit sharing is an important aspect that compels employees to make that difference. The second dimension is Growing People. Imaginative thinking is one of the key aspects of innovation. The ability to use both left and right sides of the brain to generate ideas is one of the fundamental capacities of creative thought. Part of the process of idea generation is using knowledge and connecting the dots. The more knowledge one possesses, the quicker the generation of creative solutions. In numerous instances, FedEx employees have used their in depth knowledge to find easy fixes for problems relating to developing overseas facilities and solving logistics issues. FedEx encourages the advancements, improvements and regular updations of knowledge databases that employees can tap into. Creative people usually grow within the organization and move up the company ladder. One of the main reasons for FedEx's growth is the company's policy of promotion-from-within. Even the employees who've begun their careers in FedEx at lower positions such as package handlers or field couriers have been promoted to management, engineering, marketing and higher positions of trust and responsibility. Some of FedEx's top level managers began their careers from the lowest levels. An example of this is Dave Rebholz. He worked as a part-time clerk cleaning trucks and moving packages in and out of planes. Today he is the Executive Vice President of Operations and Systems Support in charge of heading over 80,000 employees. The third dimension of the innovation culture is secure people. Often employees are hesitant to express their ideas in front of management who have the largest egos and may feel insulted or intimidated at supporting a subordinate's ideas. At FedEx, no matter the position of the employee or managerial staff, every individual is made to feel secure in the work environment. Feelings of insecurity within individuals, usually means the external conditions must change. It implies that criticisms and disapproval of ideas must be voiced and the mentality of 'doing things my way' must be challenged. To ensure a secure environment both leaders and employees agree on proposed ideas. In addition, nurturing of healthy relationships is a top priority in the company. A stable environment promotes generation and acceptance of new ideas. Employees are encouraged to come up with innovative ideas and managers are responsible for listening, discussing the viability of the proposed ideas and implementing them at a future date. The experiences of the employees either on the field or in office are taken into account. Their input which may have come from suggestions from customers is vital to the process of continuous evolving and progress of the company. When employee's suggestions are accepted and implemented, this gives them a sense of belonging and being part of the entire company. FedEx supports the behavior of employee-management interaction and policies and performance measurement depend on this. The fourth dimension is collaborative people. When management and employees agree upon an idea, a collaborative effort is required in order to implement it. This effort requires mutual understanding and team work from various departments, a utilization of their knowledge and shared action to make things happen. A collaborative environment places individual knowledge into a knowledge pool so that knowledge is more comprehensive. The key to discovering creative ideas is to request them from employees from all levels of the company. As large organizations fall prey to silence, managers are encouraged to walk around and speak to as many employees as possible who may provide valuable data that the managers could use. One more way to foster collaboration is to avoid offering organizational incentives and rewards which would adversely affect the company by fostering competition instead. The collaborative aspect of FedEx's innovation and performance driven culture is not only related to its employees but also among the people who work outside of FedEx. When confronted with a problem that may require outside help, a person from another part of the country could be contacted. Once a contact has been made, he or she is automatically involved. These cross-functional teams assist in finding solutions to the problem and developing new ways to tackle hurdles whether political or technical that they may encounter. The fifth dimension is committed people. Although collaboration brings people at various levels of the organization together in generating innovative ideas and solving problems, some employees who are not a part of the idea generation process may feel intimidated or afraid in a personal capacity. These fears can be overcome if employee commitment to the project and company is strong and focused. Employees must often tell themselves that even though a certain decision is beyond their comprehension, they must go along with the decision makers and the management and assume that it is for the greater good. FedEx has been successful in tapping employees' discretionary effort, the variance between commitment and compliance. Commitment to the company also stems from developing the leadership practices of engaged people, growing people, secure people and collaborative people. Good leadership help strengthen employee commitment. When employees are happy and content with management and leadership, they perform better than those who have little care of respect for the heads. Caring and supportive leadership is something that FedEx strives to maintain. Committed employees are dedicated and loyal in adhering to the promises of the company. This is illustrated by the employee who remains at work past the closing time to ensure that a late customer's needs are addressed. Customers who come in with partial documents or paperwork for overseas shipping are taken care of. No matter what the conditions and circumstances, couriers will attempt to locate a customer's address and deliver the package. Such employees are willing to spare some time for the customer by giving up their own. All the above dimensions of FedEx's culture of work combined, enables the company to meet customer expectations and deliver to them. At the same time, the company's shareholders and employees are satisfied that their efforts have been fruitful. As the relationship between the business and customer grows, new areas of partnerships are explored and developed like customized solutions. Employees get to show another part of their personality, the caring and considerate side and that enhances the congeniality of the work environment. Those who have a stake in the company, for example the shareholders, receive higher returns. With the company's focus on conducting its operations conscious of public safety, the employees get to be involved in life enhancing activities. There are other aspects of this culture that the FedEx people incorporate as a work ethic in order to deliver goods at whatever costs to all its customers. One of these aspects is great leadership one whose visionary ideals are imparted to the employees who are inspired to work beyond their capabilities. Another aspect is the success of the venture that has changed business practices worldwide. Employees are made to understand that their involvement in the venture makes the difference for the company. With the company attracting new customers on a daily basis, the FedEx brand name is visible everywhere, on delivery vehicles, on planes and other systems of transport. The more popular the name the greater the opportunities presented to them. The company keeps its score through analysis of quarterly earnings. The score is determined by many factors and processes the company employs such as value propositions, capacity and capability, market standings and innovations in practices and procedures. A scrutiny of quarterly earnings helps give the company a general indication of where the company is at the current time and where it was at the same time last year or the previous quarter. A judgment is then made as to whether progress has occurred or if improvements are necessary. The analysis also indicates whether the company is heading towards its target and long term goals. FedEx stresses that no matter what type of business of the customers, whether manufacturing or services, the focus is on customer relationships. Good relations help foster faith, trust and partnership between the two parties. FedEx constantly sees to it that it marketing and public relations employees are of the highest caliber. Many go through regular training in order to hone their communication skills. On the field employees are also given regular training sessions geared towards improving the way they handle customers and offer them the necessary skills to tackle problems that may arise. FedEx appreciates the value of the stakeholders who are allied in their business goals. Community oriented positive activities such as involvement in charity backed by the company, improves employee satisfaction and regard for the company. As society becomes more conscious and supportive of charities, stakeholders and employees feel proud to be linked to a company that has progressive ideals not only for itself but for the good of the environment and the community. The company's schemes to tackle the concerns of society, shows them in a positive light in the community. One of these major issues that dominate the world's newspapers is global warming and the effects of pollutants in the atmosphere. Energy related issues are a major concern for FedEx. FedEx's thousands of delivery trucks travel thousands of miles everyday and flies hundreds of planes to various destinations. In addition, they run numerous facilities worldwide. Due to the nature of the business, FedEx is extremely concerned in energy conservation and cutting down on fuel emissions. The company has plans to assemble California's biggest corporate solar electric system on top of its facility at Oakland International Airport. This solar array will supply the facility almost 80 percent of the energy. The company is also experimenting with diesel-electric hybrid delivery vehicles that operate with half the fuel of regular vehicles and cut down on harmful emissions by 90 percent. In the future FedEx also has plans to utilize the next generation of super large aircraft, the Airbus A380, a cargo version of which will use 40 percent less fuel than the present planes it uses. These energy saving measures are not just remedial action to save money, but are done in a conscious effort to make the company more environment friendly. FedEx is leading the way in energy conservation by espousing fuel-efficient technologies and it is apparent that this is the right step to take if companies like FedEx are to surpass the competition and remain in business for the long run. Conclusion By taking initiative and innovative steps such as energy conservation and developing employee culture, FedEx is ensuring its employees and customers of assured business prospects and long term survival. The progressive nature of the company enables employee growth and creates a secure congenial environment, promoting collaboration, drawing on employee pledge and evolving an ethos of innovation combined with performance. These aspects are the crucial factors that make FedEx a successful and revered company. WORKS CITED 1. Birla, Madan. 2005. FedEx Delivers: How the World's Leading Shipping Company Keeps Innovating and Outperforming the Competition. John Wiley & Sons. pp.9, 66, 74. Read More