BEST HR PRACTICES AT

MBA II

Abstract:The case examines FedEx Corporation's various

innovative HR practices, which then became one of the most employee-friendly companies in the world.

Case gives an overview of the best practices employed by the company in the: Recruitment, Selection, Training and development,

performance appraisal system and employee retention strategies

Finally, the case reviews the benefits reaped by the company because of its employee friendly HR practices.

FedEx Facts

1971,Frederick W. Smith realized the need for an airfreight system which could deliver documents overnight.

Company was incorporated as 'Federal Express Corporation' in June 1971 at Little Rock, US, with an initial investment of $84 mn.

In April 1973, FedEx commenced full-fledged operations across 25 cities in the US.

FedEx had suffered losses during the initial years of operations, but by 1976 it had started generating profits.

FedEx Facts

Today's FedEx is led by FedEx Corporation, which provides strategic direction to its operating companies that compete collectively under the FedEx name worldwide: FedEx Express, FedEx Ground, FedEx Freight,

FedEx Office, FedEx Custom Critical, FedEx Trade Networks and FedEx Services.

Independently, each company offers flexible, specialized services representing the best supply chain, transportation, business and related information services.

Fedex's HR Practices

Human Resource Management (HRM) Best Practices at the FedEx CorporationFedEx has developed several innovative human resource programs over the years. These programs have served as a benchmark for many companies.

FedEx’s ‘People-Service-Profit’ (PSP) philosophyIn 1973, Founder and CEO, Smith had developed and implemented FedEx’s ‘People-Service-Profit’ (PSP) philosophy. This philosophy was based on the fact that if FedEx took proper care of its employees, they would provide efficient service to the customers. This in turn would benefit the company by generating more profits.Survey-Feedback-Action Program or SFA Program at FedExThe SFA program (a key employee relations and satisfaction program) helped management take decisions regarding romotions. From its inception, the SFA was administered manually, but that changed in 1992 with the introduction of online survey system in the US and other automations. Each April, every employee is asked to participate in the on-line survey. After the results are gathered, managers hold feedback sessions with their employees to discuss the survey findings and identify problems within and outside of their department.Leadership Evaluation and Awareness Process’ (LEAP)In 1988, FedEx devised a program known as ‘Leadership Evaluation and Awareness Process’ (LEAP) to encourage non-managerial cadre employees to move to the managerial level within the company.Employee Communication ProgramThe employee communication programs implemented by FedEx included the SFA program, Guaranteed Fair Treatment Procedure and Open Door Policy. FedEx also devised a mechanism to address and resolve employee grievances. This was apart from employing a formal communication system to inform employees about the major events taking place in the company.Job Change Applicant Tracking System (JCATS)JCATS is an on-line computer job posting system that allows hourly employees to post for any available job.Recognition and Reward ProgramFedEx rewards employees for their work with awards such as the ‘Bravo Zulu’ and the ‘Golden Falcon Award’.FedEx is an example of an organization that has created an effective HR strategy that supports productivity and profitability. 

Complimenting FedEx for its HR policies,

Work Force magazine wrote,

"FedEx is an example of an organization

that has created an effective HR strategy

that supports productivity and

profitability. The corporation's philosophy

is that employees should be doing the

kind of work they want to do."

Commitment of the employees

When the company was going

through severe financial

difficulties, the employees were

prepared to sell their personal

belongings and use their own

credit cards to purchase fuel to

deliver the packages to the

customers. Even when the

employees didn't receive their

salary on time, they continued

working with FedEx.

Growth Opportunities

Promotion of employees for

higher cadres

Unique program called “LEAP” -

Leadership Evaluation &

Awareness Process for providing

opportunities to employees from

non-managerial cadre to move to

managerial level within the

organization.

Employee Communication and Employee Communication and

PerformancePerformance AppraisalAppraisal

Two – way communication

Mechanism for resolving

employee grievances

Employee communication

programs implemented by

FedEx included the SFA

program, Guaranteed Fair

Treatment Procedure (GFTP)

and Open Door Policy (ODP).

Employee Retention

Employee retention was a significant

aspect of FedEx's HR policy.

"In our competitive marketplace, employee

loyalty tends to be low. If employees don't

like their jobs, they simply walk across the

street and find a new one. It's important to

keep your people happy and to create an

environment where they want to stay."- Mc

Mahan

The Benefits Reaped

FedEx's employee-friendly policies resulted in very low turnover rate. In 2000, the turnover rate was estimated to be below 6%, while the industry average was 20%.

It also enhanced the reputation of the company as an employee-friendly, service-oriented organization.

Over the years, FedEx developed several innovative HR and hence achieving maximum employee satisfaction.

This served as a benchmark for many organizations, particularly in the service industry.