Who is FedEx?
FedEx was started in April of 1973 by Fred Smith. FedEx is the
world’s largest express transportation company with more than 145,000 employees
worldwide and delivering more than 3.2 million packages daily. They command
a fleet of 634 aircraft and more than 42,500 vehicles. They log more than
2.7 million miles each day on the ground. FedEx’s revenues in 1998 were
$14 billion (U.S. dollars).
FedEx is a subsidiary of the FDX Corporation as of 1998. FDX
Corp. is a holding company which provides strategic direction and coordination
for the FDX family of companies. Among these companies are; FedEx, the
largest and most profitable of them, RPS, Inc. is the second largest small
package carrier in the United States, Viking Freight specializes in one-
and two-day less-than-truckload ("LTL") throughout the western United States,
Roberts Express is the world's largest surface-expedited carrier. They
offer only one service -- time specific, non-stop, door-to-door delivery
for critical shipments anytime, anywhere. Finally, Caliber Logistics offers
contract logistics across the entire supply chain.
At the heart of FedEx is the basic services it offers that made
it a success. FedEx's SameDay Service, delivery is within 24 hrs., door-to-door
for urgent packages. The Overnight Service is has an 8 a.m. delivery to
about 5,000 ZIP code areas. It's Priority Overnight has a delivery
by 10:30 next-business-day in most U.S. cities and by noon in most other
areas. Their standard overnight delivery has a 3 p.m. delivery time in
most cities and 4:30 in other areas. Finally FedEx offers Air Charter services.
They accept any acceptable commodity that will fit on an airplane (as they
claim "from elephants to satellites"). FedEx provides the plane and the
crew and you choose the time and route. This can be either a one-time use
or a long-term commitment.
FedEx History
When Fred Smith started FedEx (then called Federal Express and
later shortened to FedEx) there were no overnight package express services.
If one wanted small package delivery one used the U.S. Postal Service and
hoped that it arrived in a reasonable amount of time and intact. If you
were lucky enough to live in a city that was served by an airline that
provided airfreight and were sending your package to some one in like condition
you might get delivery quicker if the package didn't languish on the dock
before the receiving party got it. All of this was a problem, which Smith
saw as an opportunity to offer an express delivery service. His first attempt
was a flop. He offered service to the wrong cities, and the first air-cargo
plane that FedEx greeted of the tarmac was empty. This led Smith to re-evaluate
his expected customer base. It was the people that weren't served by major
airports that needed his service. He restructured his services and the
rest as they say is history.
FedEx is probably best known for is by-line of " when it absolutely,
positively has to get there". This is but one reason FedEx is a leader
in the industry. Smith incorporated eleven management principles that have
made FedEx an overnight success. These principles have made FedEx employees
show unprecedented dedication to their work and to their company. It is
no idle boast to say that they are a family.
Management Principles
FedEx has maintained its profitable commitment to excellence
by applying eleven management principles. These eleven principles underlie
FedEx’s unparalleled success. They are:
· You can never, ever, do enough for your people.
· Everybody pitches in.
· Rewards are absolutely, positively everything.
· A winning culture has many cultures.
· An ounce of inspiration is worth a pound of control.
· The first rule is change the rules.
· Problems have silver linings, too.
· Software equals savings, service, and sales.
· He who hesitates is lost (but, remember, look before
you leap).
· Letting go is hard to do.
· The image is the reality (if you work at it).
You can never, ever, do enough for your people.
‘ The rights and value of a single human life have become the
central focus of social evolution in the industrialized world … FedEx,
from its inception, has put its people first both because it is right to
do so and because it is good business as well.’ (FedEx manager’s training
guide).
Smith put people first, from the start, knowing that service
and profits would follow. The flat management structure minimizes the distance
between leaders and frontline workers. This has the effect of empowering
the employees and expanding their responsibilities.
While there can be no honest unconditional commitments to a no
lay-off policy, what FedEx has done is to make a commitment to reasonable
employment security. This is done by cross-training employees for more
flexibility and allow for the redistribution of work during slow periods.
During peak workloads, the hiring of part-time workers reduces the need
for lay-offs of full-time workers in off-peak times.
Thoughtful and imaginative compensation schemes are at the heart
of FedEx’s human resources policies. FedEx may provide flexible work hours,
leave-of absence for family emergencies, and permanent part-time work.
Benefit packages are also structured to accommodate age, health, career
paths, and other personal preferences. Individual bonuses and awards
are tailored toward individual preferences and not bestowed indiscriminately.
FedEx has a policy of promotion from within, a procedure for
resolving employee grievances, which can result in the problem ultimately
being reviewed by the CEO, executive vice president, chief personnel officer,
and two senior vice presidents. Open communication plays such an important
part in FedEx that they have set up their own internal broadcasting company,
FXTV, which reports on everything from inclement weather, company goals,
the previous night’s service levels, what the competition is up to, and
candid call-in programs. This is their own internal CNN.
Everybody pitches in.
While everyone has their own responsibilities, the fences are
kept low between jobs. If someone needs help, it is always there, someone
pitches in (cross-training strikes again). Everyone focuses on the customer.
It is not unusual to find senior vice presidents or Fred Smith himself
loading and unloading packages at the hub during the holiday season. Top
executives will make personal sales calls, everyone works hand in hand
to achieve FedEx’s all important guarantee.
When problems arise, such as the high costs of sorting, a team
of people, a sort worker, an industrial engineer, an IS supervisor,
a courier, a traffic clerk , and a quality engineer, will contribute
from their own perspective to arrive at a suitable solution. There are
times at which the customers are consulted (a lot) to arrive at the best
solution.
Rewards are absolutely, positively everything.
FedEx continually invites employee and customer assessment of
its operation and personnel. FedEx rewards success. On the spot recognition
is more the norm than a exception for a job well done. Nor is money the
only reward. Different contributions win different awards. The Bravo Zulu
award is ‘ visible recognition for ‘above and beyond’ performance. This
comes from the U.S. Navy flags Bravo and Zulu which means ‘well done’.
These discretionary awards can be cash, theater tickets, and dinner with
or without the boss, or any other reward the stresses recognition for a
job well done.
Finders Keepers awards cash to couriers, customer service reps,
or anyone else who brings in new customers. There are people who have added
as much as $1,300 to their monthly pay.
Best Practice Pays is a team cash award for exceeding company
set goals.
The Golden Falcon award is for employees whom customers and management
have nominated for recognition.
Five Star Awards for Leadership is recognition for individuals
whose contribution helps make significant progress towards company goals
and objectives.
Star/SuperStar awards are for the organizations best performers.
This is worth 2 to 3 percent of their salary.
All of these bonuses and awards are tied directly to performance
and supporting the company’s objectives. The rewards are based on what
is valuable to the recipient and are not tied to any specific time interval.
Spontaneous random timed rewards create an air of unexpectation. This keeps
the moment more memorable.
A winning culture has many cultures.
FedEx is famous for and known for its absolute dependability and its attention to detail. This is something that its customers have come to expect and are not disappointed. FedEx accomplishes this by not being a mass of bodies moving in one direction but rather by being the several parts that compose it and working together. It is liken to an aircraft carrier with its many subdivisions, the pilots, the couriers, the sorters, customer service, accounting, engineering, and management. All of these have different subcultures, in the field the culture is the customer, on the superhub floor time is the culture, and in the logistics and software development lab innovation and ideas are the culture. Each micro-culture has something to contribute, consider support rather than suppression.
An ounce of inspiration is worth a pound of control.
At FedEx, they strive for transformational leadership rather than
transactional leadership. FedEx’s manager’s guide relates the following
‘ A transformational leader raises subordinates’ awareness about issues
of consequence, shifts them to higher level needs, influences them to transcend
their own self-interests for the good of the group of company, and inspires
them to work harder than they had originally expected they would’.
Leaders must be loyal to their employees, seek partnership rather
than impose patriarchy. They must have a well-honed sense of duty and be
bearers of change, while being able to take criticism as well as give it.
Most of all, transformational leadership starts at the top.
The first rule is change the rules.
The U.S. Postal Service used zone and volume pricing; FedEx on the other hand started fixed pricing thus simplifying the process much to the delight of their customers. Smith lobbied Congress to deregulate the airfreight industry, competitors shared the benefits, and the industry grew ten-fold. Let your competitors follow your lead.
Problems have silver linings, too.
FedEx, like all other innovators, regards every problem as an opportunity. All innovators transform problems into opportunities. FedEx welcomes customer’s problems as well. Handling customer’s problems only opens the door for FedEx to offer the use of their other services while improving on their existing service.
Software equals savings, service, and sales.
Fred Smith has shown that information is the lifeblood of a service company such as FedEx. FedEx’s software which allows it and it’s customers to track shipments, has leveraged the strengths of its information systems into a vastly profitable logistics consulting business.
He who hesitates is lost (but, remember, look before you leap).
FedEx pioneered next day service. Smith’s closest advisors thought that it would cannibalize their existing services. Smith argued that it would generate cash and eliminate the down time between the standard overnight service and the economical afternoon service. Smith’s hunch paid off, the next day and two-day service have grown ever since. Do your homework, but follow your intuition.
Letting go is hard to do.
Sometimes intuition and spreadsheet models are wrong. Some things no matter how good they seem just don’t work out. Know when to cut your losses and don’t pray for miracles to save your project. It’s like the lottery, somebody is going to win it but not you.
The image is the reality (if you work at it).
FedEx’s guaranteed on-time service and complete satisfaction is unconditional. Customers equate FedEx with that promise. The image the company has so meticulously cultivated helps maintain and extend its market share. The image is reality if you make it.
Conclusion
Fred Smith, through these eleven principles, has made FedEx into
a world-class leader in the overnight package industry. Smith leads the
industry and follows no one. He inspires his workers by doing and providing
an example by which they can follow. FedEx continues out in the forefront
into the 21st century.
Sources:
http://www.fedex.com/us/about/facts.html
http://www.fedex.com/us/services/domestic/
http://www.fedex.com/us/services/serviceoptions/aircharter.html
http://www.sec.gov/Archives/edgar/data/1048911/0000899243-98-001610.txt
Wetherbe, James C. The World on Time: The Eleven Principles
that made FedEx an Overnight Sensation.
Santa Monica: Knowledge
Exchange, 1996.
This page was last updated 7/24/1999 by Kim Crofoot
For comments email me