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 Corporation FedEx has developed several innovative human resource programs over the years. These programs have served as a benchmark for many companies. FedExs People-Service-Profit (PSP) philosophy In 1973, Founder and CEO, Smith had developed and implemented FedExs 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

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 Performance Appraisal

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.