Best Practices In Human Resource Management Case Study

January 26, 2008 – Business Management Article

FedEx (NYSE: FDX), is among the 100 “Best Companies to Work For” in the US announced by FORTUNE magazine and the Great Places to Work Institute. FedEx (the largest employer in 2008 list and only shipping company included) now figures in this list in 10 of the past 11 years after being named to the “Best Companies to Work For” Hall of Fame in 2005. FedEx was ranked as 97th overall. FedEx already has a reputation of being one of the most employee-friendly companies in the world.

A History of Employee Commitment at FedEx

The history of FedEx goes back to 1971, when Frederick W. Smith felt the need for an airfreight system which could deliver documents overnight. He decided to setup his own company to effectively serve this need. Smith always believed that since FedEx was essentially a service organization, employees were largely responsible for ensuring success.

FedEx was incorporated as ‘Federal Express Corporation’ in June 1971 at Little Rock, Arkansas, US. Since it began in 1971, its’ management focused on providing a suitable work environment that encouraged employees to come up with innovative solutions. Such was the commitment of the employees to the company that, when FedEx was going through severe financial difficulties during the first couple of years, the employees were prepared to sell their personal belongings. They were also prepared to 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.

Human Resource Management (HRM) Best Practices at the FedEx Corporation

FedEx 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) philosophy

In 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 FedEx

The 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 Program

The 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 Program

FedEx 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.

Read related post on UPS: A bit of UPS history, some UPS and some downs

FedEx, HR Best Practices


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Excerpts

The Marriott Way

Marriott's history of taking care of its employees dated back to its early days, when its founder, JW Marriott, counselled the company's employees individually on their personal problems at his first hotel. He valued their presence, kept them posted about the latest happenings in Marriott and gave them excellent training. JW Marriott always ensured that employees who joined the company felt themselves a part of the Marriott family. He made managers responsible for the satisfaction of their subordinates.

JW Marriott was always conscious of the fact that in the hospitality industry, providing the best service to customers was paramount...


The HR Practices

Apart from providing a competitive pay package, Marriott strived to give its employees a good work life. The company gave equal importance to non-monetary factors such as work-life balance, good leadership, better growth opportunities, a friendly work environment and training.

Employees stayed longer with Marriott as they were happy with these non-monetary factors and thought them more important.

Marriott's culture and guiding principles had a significant influence on the company's HR practices including manpower planning, recruitment and selection; training and development, employee retention and welfare initiatives and grievance redress.

Manpower Planning, Recruitment and Selection

Marriott attached a lot of importance to manpower planning. It started right from entry level and went through to higher positions. Every unit of Marriott (division or department) prepared its expansion plans over the next couple of years, and, in the process, decided on the number of entry level and managerial employees required for the expansion.

Details on the number of new units planned in the given time frame (two to five years), a rough picture of the likely organization structure, the time required to develop employees who could take managerial positions, current availability of employees within Marriott and the necessity to recruit externally - all these were determined during the planning process...

Training and Development

Once the right candidates were recruited, it was important to get them accustomed to the company's unique work environment. Training and development played a key role here. These programs varied between frontline employees and managerial personnel. Over time, training programs evolved from classroom- based teaching to interactive multimedia training. Fresh recruits went through an eight-hour initial training session, during which they were given an overview of Marriott and their individual roles.

A unique feature was that senior hotel employees served lunch at the first session. During the three- month training period which followed, a mentor, addressed as 'buddy' was allotted to each recruit. The mentor guided the trainee. All trainees attended refresher sessions after the first and second months. On the final day of training, recruits enjoyed a sumptuous feast at a Marriott hotel...

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