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Bachelor of Arts Essay 1.1 FedEx Corporation Overview FedEx Corporation provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenue of US$ 27 billion, the company offers integrated business application through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the worlds most admired and trusted employers, FedEx inspires its more than 250,000 employees and contractors to remain absolutely, positively focused on safety, the highest ethical and professional standards and the needs of their customers and communities. 1.2 Strategic Initiatives Currently, with its exposure to volatile fuel prices, high capital expenditures, and thin margins, FedEx can not stand up to the rigorous rule maker quantitative criteria, but its brand power is a perfect example of a sustainable competitive advantage. FedEx ships over 3 million packages a day. Along the route, those packages, the planes that carry them, the trucks that deliver them, and the people that handle them leave impressions on customers. FedEx recognizes that with every box it delivers and every person that delivers it, a brand impression is made. Brand equity is certainly significant to FedEx since its products and services are less differentiated in this fast changing dynamic competitive market. To remake the corporate image in order to extend and enhance its brand equity is one of the key strategic initiatives that has initiated by the management of FedEx Corporation recently. Other strategic initiatives are to focus on the growth of core package business and supply chain capabilities, and growth through e-commerce and technology, and new services and alliances. 2. DESIGN OF HUMAN RESOURCE MANAGEMENT SYSTEM 2.1 HRMS of FedEx FedEx Human Resources develop policies, programs and procedures that not only attract, but also retain the most qualified, talented and diverse employees. To this end, Human Resources have implemented successful recruitment, development and Employee relation programs. The Corporate HR function consists of 45 employees who provide human resources support for the entire FedEx Organization. The overall headcount for this team has not changed in over four years even though the employee base has grown by greater than 30%. Most key programs are linked to the companys diversity strategy to build value and manage a diverse workforce that reflects the rich mix of persons available in the Communities. The HR team regularly attends diversity recruiting career fairs and supports both local and national organizations committed to the development of women and minorities. HR has sought to automate and introduce electronic processes, in order to streamline its various staff function. These include the introduction of an electronic company wide web based Internal Career Opportunities Program (ICOP), that provides employees anytime/anywhere access to available opportunities within the company. Employees can search, apply and be notified of open positions within the organization by logging on to the site. Managers, can also initiate the employment process and receive approval electronically via an on-line employment requisitioning process. The major obstacle that needed to be addressed in the alignment of these two major programs was accessibility, communication and education. Employees were encouraged to submit their personal profiles so that they could receive automatic notifications from the system when positions for which they qualified became available. FedEx has developed a proactive staffing model for its facilities. This program allows the Field organization to add management staffing before the need exists. Recruiting, sourcing and training are done 20 weeks before the individual is expected to begin their career as a service manager. By accessing the HR website, both employees and Managers can obtain a wide variety of information geared to keep their employment information current, provide easy access to employment information (employee handbook) as well as provide access to benefits information and employee centered programs. Online access to the HR Web is available from home and work to all employees. 2.2 VRIO Framework Analysis Value FedEx managers stress that they are a people-first organization. The corporate philosophy statement sums up their view of the source of competitive advantage: People-Service-Profit. FedEx discovered a long time ago that customer satisfaction really begins with employee satisfaction. In other words, the FedEx philosophy is that people are the primary link in the value chain, and thus, value is created by focusing on employees first. Rareness FedEx value and capitalize on the differences of their employees with diversity education programs such as Gender Speak, Delivering Diversity, Introducing Diversity, and Valuing Differences. One of its most successful programs RESPECT provides a process where employees can work together to resolve their differences. Therefore, it would exercise tremendous potential to exploit the rare characteristics of its employees for competitive advantage. Imitability FedEx worked closely with the University of Memphis, established the FedEx Institute of Technology, a unique public-private collaboration designed to advance world-class interdisciplinary research and introduce a new generation of highly skilled graduates to the workforce. The company has more than 219,000 employees globally and expects the alliance will help develop a highly skilled recruitment pool. Organization FedEx is committed to fostering an employee focused culture. It has a well-developed and thoroughly deployed management evaluation system, which involves a survey of employees, analysis of each work groups results by the work groups manager, and a discussion between the manager and the work group to develop written action plans for the manager to improve and become more effective. Data processed are aggregated at all levels of the organization for use in policymaking. Employees are free to share their opinions with management and in turn, work towards the resolution of internal issues within their department by participating on their action planning teams. 3. EMPLOYEE SKILL, MOTIVATION, JOB DESIGN WORK STRUCTURES FedEx has a clear goal to have people who are committed, motivated and well trained. Here are some of the tools and techniques that they have developed: 3.1 Selection FedEx Corp is proactive targeting of candidate sources leads to a richer pool of applicants and enables company to reach better candidates faster. They worked closely with the University of Memphis, established the FedEx Institute of Technology, a unique public-private collaboration designed to advance world-class interdisciplinary research and introduce a new generation of highly skilled graduates to the workforce. FedEx had created a multi-national, multi-lingual recruitment assessment system in identifying candidates most suited to the jobs on offer and capable of operating to the companys global standards and values. 3.2 FedEx Compensation Rewarding System FedExs bonus program is driven by goal sharing. This program encourages employees to achieve strategic goals by basing individual bonus levels on corporate and business unit goals, up to 10% of an employees total compensation. FedExs formula for calculating bonuses includes corporate variables such as contributed operating margin, corporate ROE, net sales, customer returns, shipped kilometers and total unit cost. Putting people first means that FedEx is dynamic in both reward and recognition. For hourly paid staff the pay is geared to individual performance. However, to encourage good team working, there is also a team based Best Practice Pays element. The pay for performance of salaried staff is based upon measures relating to the companys key philosophy. 3.3 Performance Reviews FedEx is a very performance-based company. Every person knows upfront what his performance objectives are and he also knows upfront what he can earn. So the crux of People Service People is a fairly laborious performance management and compensation system. If a person fails in his performance, then the person does not get disciplined, but he gets pulled into a constructive action plan. Employees are encouraged to identify their weaknesses through a personal development programme (PDP). These could be general things like communication skills or dealing with conflicts in the workplace. FedEx has an online training library with 600 courses on things like leadership, project management skills, even something as basic as presentation skills. Employees can log in and take any course, but need to pass. 3.4 Staff Survey The annual staff survey is considered to be one of FedExs biggest business improvement tools. A total of 32 questions are answered electronically in business time over a period of two weeks and participation has increased from 97% to 98%. 4. PRODUCTIVITY, CREATIVITY DISCRETIONARY EFFORT By competing collectively under the FedEx banner, FedEx in service companies benefit from one of the worlds most documented brands. FedEx is one of the most trusted and a respected brand in the world and its brand name is a powerful sales and marketing tool. Among the many reputation awards FedEx conventional during 2004, FedEx ranked seventh in corporate reputation on The Wall Street Journals Harris Interactive/Reputation Institute RQ Gold Survey, and for the third consecutive year, FedEx ranked in the top ten of FORTUNE magazines Americas Most Admired Companies and Worlds Most Admired Companies lists. FedEx is the only transportation company and one of the very few companies overall to rank this highly in all three reputation surveys. FedEx ranked highest in customer satisfaction in the University of Michigan Business School National Quality Research Centers American Customer Satisfaction Index in the parcel delivery category. Wal-Mart Stores, Inc., the worlds largest retailer, also selected FedEx as the recipient of its Carrier of the Year award. BusinessWeek recognized FedEx Kinkos in the magazines Web Smart 50 report for the companys innovative use of Internet technology to transform business processes and reduce costs. FedEx is well recognized as a leader, not only in the transportation industry and technological innovation, but also in social and environmental responsibility and corporate governance. Along with a strong reputation among customers and the general public, FedEx is widely acknowledged as a great place to work. In 2004, FedEx was listed among FORTUNEs 100 Best Companies to Work for in America, a list that FedEx have made every year it has been published. It is FedEx people-FedEx greatest asset-that give FedEx it strong reputation. In addition to superior physical and information networks, FedEx has an exemplary human network, with more than 240,000 employees and contractors who are absolutely, positively focused on safety, the highest ethical and professional standards and the needs of their customers and communities. Through FedEx internal Purple Promise and Humanitarian Award programs, FedEx recognize and reward employees who enhance customer service and promote human welfare. 5. IMPROVED OPERATING PERFORMANCE As discussed previously, new strategic role for HRM is very significant for the organizations advancement. System thinking among the line and HR manger is the first step. The performance management and incentive compensation system must define desire employee behavior and reward those behaviors in meaningful way when goals are achieved. Almost 50% of all FedEx spending goes to employee pay and benefits. Many Special Awards to recognize employees performance: i) Bravo Zulu award for outstanding performance beyond normal job expectations. ii) Golden Falcon award for exceptional customer service. iii) Humanitarian Award recognition for human welfare above and beyond work or community standards. iv) Star/Superstar Award a lump sum merit based award for top performers. v) Five Star Awards the highest award for enhancing service, profitability and the spirit of teamwork. Deadly combination and powerful connection are terms to describe the effects of an organization policy of promotion from within on firm performance. But probably not be present in every firm or even most of firms. So the only way that the organization can hope to identify the HR system properly is to adopt system perspective, which means business priorities drive the development of the HRM system. 6. PROFITS AND GROWTH Base on the FedEx second quarters Fiscal 2005 financial report (six months ended November 2004), it shows that FedEx has adapted an effective and efficient HRM system, which has brought up the corporations profit and growth. This is evidential by the following financial analysis:- i) Revenue There is a 23% Revenue growth compare to the last 2nd quarter fiscal year 2004. The revenue has increased from US$11,607 billion to US$14,309 billions in this 2nd quarter fiscal year 2005. FedEx announced that they would expect to have Group Revenue of US$ 27 billions this fiscal year 2005, which is a 9.5% growth. ii) Salary Employee benefits Cost However, in term of Human Resources cost, we can see from the report that it is only an increase of 14%. Compare to 23% increase in revenue. The increase is justifiable. iii) Net Profit FedEx has shown a 212% increase in the Net Income this fiscal year compare with last 2nd quarter, from US$219 millions to US$684 millions, despite the roaring up of oil price, which is also one of the major operating cost, in this year. Their profit result is definitely considered outstanding. iv) Diluted Earning Per Share Obviously, with the high increase of the net income, the diluted earning per share is automatically increase by 210% compare to last 2nd quarter. It is definitely a kind of the positive effect of the HR- Stakeholders value relationship. v) Revenue generated per Employee Based on the US$27 billions Group Revenue generated by the total 250,000 number of employees in FedEx, we will be able to see that the revenue per employee generated is nearly US$108,000. Which is much higher than the world largest package delivery company UPS, who has an annual turnover of US$30 billions and 370,000 employees worldwide, and the revenue generated per employee is only US$81,081. The productivity is much better. This has shown the efficiency and effectiveness of the HRM system. 7. MARKET VALUE From the study of FedEx Corps HRM system, it is undoubtedly that its HRM has strategically adopted high performance work system that creates real shareholder value. Such system has strengthened FedEx HR to become a strategic core competency and have an economically significant effect on firm performance. This also generates the transformation from HRM to human capital management and hence becomes to be a competitive advantage. The consistent increased profits and growth as shown in the companys financial reports has also proved that FedEx HRM has created value and played an important role in the companys achievement and success. FedEx shareholder market value has increased continuously as shown clearly in its financial statements. However, companys HR market value has never been officially computed and shown in the financial statements. Based on the company productivity, FedExs each employee generates revenue of approximately US$108,000 quarterly, which is much higher than the world largest package delivery company UPS, whose per employee generates revenue of only about US$81,081 quarterly. 8. CONCLUSION For FedEx, timing is everything. Delivery on time is essential, and within FedEx, ensuring this performance every time, has meant the transition to systems that provide online, real-time connectivity, bringing improved business processes and increased productivity. With unrivalled logistics solutions, FedEx turned to its Human Resources function, to leverage its competitive advantage. In such a geographically diverse and disparate region, FedEx strives to manage its human capital by minimizing administrative burden and creating a culture of effective self-management. With employees spread across the Region, and in line with its organizations move to an Internet-centric company, FedEx was continuously looking for ways to empower its employees, and allow them to take control of some of their HR functions. Leveraging on PeopleSoft HRMS solution to effectively manage their human capital, it provided FedEx with the scalability and functionality they needed, to enable FedEx to move towards becoming a Real-Time Enterprise. FedEx employees were fully utilizing their self-service functions, and their HR staffs are now free to deliver a more strategic output to the business. They have increased the visibility of HR information to more effectively manage the enterprises most valuable resource human capital. APPENDIX A: BIBLIOGRAPHY Relevant Reference Sites: * www.fedex.com * www.fedex.com/us/investorrelations/2003annualreport/ * www.fedex.com/us/investorrelations/downloads/ * www.fool.com/portfolios/rulemaker/2001/rulemaker010502.htm * www.incomesdata.co.uk/studies/hrmansystems.htm * www.stevieawards.com/pubs/awards/70_1438_8395.cfm * www.findarticles.com/p/articles/mi_hb001/is_200309/ai_hibm1G1107999043 * healthproject.stanford.edu/koop/Federal%20Express/description.html * www.hoovers.com/fedex-corporation/ID__10552/free-co-factsheet.xhtml * online.wsj.com/ad/fedex/ * moneycentral.msn.com/investor/research/profile.asp?Symbol=fdx * www.humanresourcesmagazine.com.au/articles/19/0C029319.asp?Type=60Category=1162 * www.bizjournals.com/memphis/stories/2004/08/09/daily3.html * www.quality.nist.gov/FederalExpress_90.htm Evaluation of the Stakeholder Value Relationship Model Assignment BA361 Human Resource Management Page 2 of 12