With a corporate slogan of “anytime, anywhere”, FedEx has for nine straight years been ranked among the 100 best companies to work for by Fortune magazine Craig Donaldson looks at some of the drivers behind this record and examines the role HR has played in making the company an employer of choice
With a corporate slogan of “anytime, anywhere”, FedEx has for nine straight years been ranked among the 100 best companies to work for by Fortune magazine Craig Donaldson looks at some of the drivers behind this record and examines the role HR has played in making the company an employer of choice
FedEx is a global shipping, logistics and supply chain management company. With annual revenues of US$31 ($40) billion, FedEx operates in about 220 countries and territories around the world and employs more than 260,000 employees and contractors globally.
For the ninth straight year, FedEx has been ranked among the 100 best companies to work for by Fortunemagazine and the US-based Great Place to Work Institute. FedEx has also been among the leaders of Fortune’s World’s Most Admired Companies list for the past few years and one of the 50 Best Companies in America for Asians, Blacks and Hispanics.
People service profit
In the fiercely competitive air express cargo transportation industry, FedEx attributes much of its success to its corporate “people service profit” philosophy. Under the founder of FedEx, Frederick Smith, employees were an integral part of the decision-making process, due to his belief that “when people are placed first they will provide the highest possible service, and profits will follow”.
This philosophy is a value chain that suggests that, by taking care of employees, they will deliver the high levels of service demanded by customers, who will in turn reward the company with continued patronage and profitability.
The “people service profit” philosophy forms the basis for all business decisions, according to John Allison, vice president of HR for FedEx Asia Pacific. “This is our number one philosophy. We believe in it and we promote it. The focus we have on developing our people inside the organisation is critical, and HR is responsible for making sure that we provide the right programs and that we deliver them,” he says.
Surveying the workforce
FedEx has a number of initiatives in place to support its “people service profit” philosophy. FedEx runs an annual employee survey, “survey feedback action”, which rates management’s commitment to the philosophy and forms a basis for improvement. This survey is conducted each April, and every employee is asked 32 questions about the company in general and management performance.
The survey is seen as a problem-solving tool that operates both horizontally and vertically throughout FedEx. The first ten items on the survey serve as a review of management by subordinates. The scores on these ten items become the numerical measurement that determines whether the company’s annual people goal within the “people service profit” goal structure is being met.
Managers hold feedback sessions with their employees to discuss the survey findings and identify problems within and outside of their department. As a group, they develop formal, written action plans for solving these problems. Groups usually review plans throughout the year to determine whether problems are being solved satisfactorily.
“It’s a dialogue, not a one way street,” says Allison. “It’s an opportunity for the manager and employees to talk as a group, to understand what the issues are. Once they develop an action plan to solve these issues, this becomes the responsibility of all the employees in the workgroup. It’s not just the manager trying to resolve the issues, but it’s the employees and the manager working together to resolve whatever those issues may be. It’s a means of engaging all of our employees so that they can participate in expressing concerns about issues and at the same time participate in solving any problems that might arise.”
Guaranteed fair treatment
Another process in FedEx that supports the “people service profit” philosophy is the guaranteed fair treatment procedure. This allows employees to escalate complaints all the way up the company if they feel they have been treated unfairly – something of an employee appeal process for having complaints or grievances heard.
Issues could include disputed performance reviews, disciplinary actions, terminations, and job postings for which employees feel they should have been seriously considered, yet were not.
Employees must attempt to resolve the grievance with their manager or supervisor before initiating the procedure. “For example, if an employee got a warning letter for their poor performance, or disagreed with their performance appraisal rating, then they can have this addressed through the guaranteed fair treatment procedure if they feel they have been treated so,”according to Allison.
The employee’s manager, their senior manager and managing director as a group can examine the employee’s complaint and make a judgement as to whether or not management acted according to the company’s “people service profit” philosophy.
If the management decision is upheld at this first level, the employee can take it to the next level, which is the vice president, and make their complaint known there. If the vice president upholds it in favour of management then the complaint goes to the third and final level, where the president, the vice president of HR, and a rotating vice president consider the complaint, and make a decision whether to uphold or not uphold management’s decision, Allison explains.
“So it’s a process where an employee’s voice can be heard all the way into the president’s office. Hopefully management has acted correctly and that’s what most of the decisions are going to be, but there are times when a decision is overturned and in fact management has given instructions on how to handle a particular situation. So it’s a program designed to let employees take their message all the way through and ensure it gets handled properly.”
HR as counsellor
The ‘grow your own’ philosophy also applies to HR positions within FedEx. The majority of HR practitioners have come through the ranks and most often worked in frontline positions. This allows HR to play both a management and counselling role within FedEx.
The automation of administrative HR processes is creating opportunities for HR to be redeployed in the business to create extra value, according to Allison. “If you are removing administrative processes, the best way to make use of HR is to redeploy your HR resources as business counsellors – talking about people issues, resolving people issues, solving people conflicts and being a participant in the business.”
Allison says that cutting costs and shrinking the HR department after farming out administrative work would be a “very real mistake. Your HR resources are better served in broadening their business expertise. In the process, line managers have to embrace HR as a counsellor and not consider it to be just another line function. One of the things I suggest to my people is that they work with line managers – that they talk about business issues and not just HR issues.
“Understand what the business is. HR professionals have to be business people first and subject matter experts second. HR is not a backroom function, but a function that needs to be at the table with all of the other decisions being discussed by management. The challenge for HR is to not be pushed to the back – to see itself as a business function and for HR practitioners to think of themselves as business professionals,” he says.
Since its foundation, FedEx has had a chief people officer who reports to the chief executive, Allison says. “So HR is engaged in all aspects of the business. Promoting the “people service profit” philosophy is a part of our job, but it’s not just our job – it’s everybody’s job in the business.”
Manager as HR
There is a misconception in business that HR needs to do everything in terms of people, according to Ross. “They’re seen as the ones that need to discipline, motivate, keep records of employees, look after health and safety – everything. That’s not true. HR are not there to be the keepers alone.”
Most people see HR as problem solvers for all people problems, he says, when in fact they should act as a support role for line managers in equipping them to handle appropriate situations. “Managers think, ‘I have this problem now, let’s give it to HR.’ I would anticipate that HR is simply a back office function in some organisations, that they don’t need to go out and be part of the business. But it’s all about teamwork, it’s all about understanding, it’s all about communication – particularly in a service industry,” Ross says.
In such industries, he says, it will become more of a mission for managers to look after HR issues. “I like to say in our company that everybody is a HR manager,” says Allison. “HR doesn’t belong just to the HR department, but rather everybody is an HR manager. That’s the only way you can live a “people service profit” philosophy. For example, one of the responsibilities of line management is to hire people – that’s a very important function. Having the right people in the first place is key to the “people service profit” philosophy, so it can’t be driven just by HR.”
Growing FedEx’s own
FedEx has a strong philosophy of growing its own management talent, according to John Allison, vice president of HR for FedEx Asia Pacific. Ninety-one per cent of the company's management has been promoted from within, and FedEx typically only hires from the outside for front line positions or entry-level professional management positions. "From the frontline manager to the senior managers, all those jobs are made available in the company," he says.
David Ross, regional vice president for FedEx in the South Pacific, says this philosophy provides the company with a number of advantages. It provides managers with a solid understanding of grass roots as well as an ability to communicate at all levels of the company. Because internally promoted managers understand the business, culture and roles better, Ross says, this "creates a huge advantage which you don't often get with companies that bring in external hires for management positions".
