TABLE OF CONTENTS

1.0 Introduction

1.1 HR Practices

1.2 Background of FedEx

1.3 Purpose of the Report

2.0 FedEx HR Practices

2.1 Recruitment & Selection

2.2 Training & Development

2.3 Performance Management & Communications

2.4 Employee Retention

2.4.1 Compensation

2.4.2 Benefits

2.4.3 Effect of Compensation & Benefits on Employee Retention

3.0 FedEx Competitors HR Practices

3.1 Introduction of Competitors

3.2 Comparison of HR Practices of Competitors

3.3 Explanation of Competitors Practices

3.4 FedExs Competitive Edge

4.0 Recommendation

5.0 Conclusion

6.0 References
1.0 Introduction
1.1 HR Practices
In a highly competitive business world where there are unpredictable changes in economy,
human resources have been identified as the one of the main sources of competitive advantage
for organizations. Human resource management (HRM) is the management of employees in an
organization through the policies, practices and systems which influence employees behavior,
attitudes and performance. Human resource practices include determining human resource needs,
recruiting, screening, training, rewarding, appraising and also attending to labor relations, health
and safety and fairness concerns. It is extremely important to implement HRM practices
effectively in order to keep the employees motivated to enhance organizational performance
(Osman, Ho & Galang, 2011).

1.2 Background of FedEx

FedEx came into existence in 1971 when Smith, F.W decided to setup a company in order to
deliver documents overnight by using an airfreight system. The company was named Federal
Express Corporation and was established in June 1971 at Little Rock, Arkansas, US with an
initial investment of $84 million. FedEx expanded their operations across 25 cities in US which
marked the beginning of air/ground express industry. Although the first few years of their
operations resulted in losses, they started to generate profits in 1976. A massive hub was built in
Memphis the same year which became the base of FedEx operations worldwide, increasing their
net income by $4.6 million in 1 year at the end of 1977 (Prashanth, 2003).

In 1980s, FedEx became one of the leading air cargo carriers in US and crossed the $1 billion in
revenues, making them the first company to achieve this feat within 10 years of its inception
without merging with others. Their continued growth over the next decade earned them $10
billion in revenues, while the launching of their website www.fedex.com in 1994 enhanced the
brand recognition. FedEx renamed the company as FDX Corporation in 1998 due to the $2.4
billion acquisition of Caliber Systems and its subsidiaries. In 2001, FedEx formed individual
companies according to their operations by regrouping all of their subsidiaries under the FedEx
brand umbrella. At the end of financial year 2003, FedEx reported a net income of $830 million
from the $22.5 billion revenues they made (Prashanth, 2003).
According to their South Pacific Managing Director, Malcolm Sullivan, the main factor which
influenced their extraordinary success is innovative HR practices and their commitment towards
employee development. Malcolm quoted, Unlike a factory which churns out goods, FedEx as a
service company only has people couriers to pick up and deliver goods and document,
customer representatives and sales executives. If we hire the right people, train them, equip them
and manage them properly, they will provide service that will satisfy customers and in turn those
customers will reward us with business after business that generates profits (Prashanth, 2003).

1.3 Purpose of the Report

The purpose of this report is to analyze the innovative HR practices of FedEx and how it
contributes to their overall performance as an employee-friendly, service oriented organization
with a very low turnover rate of 7%. In this report, each of FedExs HR practices will be
analyzed in detail with relevant theories to understand the importance of these practices and to
determine whether these practices are beneficiary or not for the organization. Moreover, FedExs
competitors and their HR practices will be analyzed, before comparing them with the practices of
FedEx to evaluate the competitive edge gained by FedEx through these practices. This report
will be concluded by recommending more HR practices that FedEx could adopt to improve their
organizational performance.

2.0 FedEx HR Practices

2.1 Recruitment and Selection
The human resource practice of recruitment and selection process at FedEx Corporation is based
on the People Service Profit (PSP) philosophy of policies (Hill & Charles, 2008; Neal &
Cathy, 2007). Their people service profit (PSP) philosophy resembles companys caring towards
their employees, which helps to increase the efficiency of services provided to the customers
which in turn will benefit the company by generating more profits.

The recruitment and selection process is very challenging to all the organizations as they have to
be thorough in hiring the best personnel for the job. The Survey Feedback Action (SFA)
program is also implemented by FedEx as a human resource practice to improve employee
management (Futrell, Shafer & Shafer 2005). The personal record information system (PRISM)
is used by the company to maintain the records of information of interns to recruit, in order to aid
the selection process.

Definition and Theories

The recruitment and selection is defined as a system which involves measurement of candidates
to be selected according to certain tasks in order to find the person who suits the job description
most (Zhang, Naughton, DeWitt & Luo, 2010).

Herzbergs Two Factor theory describes this human resource practice as one that influences the
dissatisfaction of employees if not managed adequately, as company policies is hygiene factor
according to the theory. Although having an excellent policy on recruitment and selection does
not contribute to the satisfaction and motivation of employees, poor recruitment practices can
lead to employee dissatisfaction (Nguyen 2012)

Importance of Recruitment and Selection Practices

The procedure of recruitment and selection process involves a number of stages such as
analyzing and writing the job descriptions, deciding the recruitment methods and application
methods and marketing the job (Burack & Elmer, 2008). An effective recruitment and selection
process reduces turnover, as it ensures that organizations employ the right candidate who is
reliable and capable to complete the tasks to provide quality services to their customers
(Johnston, Demand Media).

Advantages and Disadvantages of Recruitment and Selection Practices

The advantages of having an efficient recruitment and selection process include feasible short
listing of candidates and convenience in making a decision on short listed candidates (Walker &
Orville, 2006; Dwyer & Robert, 2007). A lot of time and cost can be saved by making a quick
decision on recruiting candidates using PRISM model at FedEx Corporation. It is because the
interns skills, qualification, and talents are stored in this model, and they can identify the most
suitable candidate by referring to this database (Woo & Lam, 2004). This new system
accelerated their screening process and reduced the processing time by 50% which enabled their
employees to work on other tasks. Moreover, their policy to promote employees within the
organization to higher posts improves the chances of employee retention.

There are disadvantages for FedEx by using the PRISM model in the recruitment and selection
process, as it focuses only on internal internship candidates, while neglecting the chance to select
open candidates. Hence, FedEx Corporation human resource department will be missing out on
more qualified candidates with diverse set of skills (Futrell et. al, 2005).

2.2 Training and Development

Definition and Theories
It is defined as a process to identify employees weaknesses on specific skills and providing
proper system to develop these skills. It is also the process of improving and updating skills and
knowledge according to the organizational requirements (Zhang et. al, 2010).

According to Maslows Hierarchy of Needs theory, training and development refers to the self-
esteem and self-actualization needs of employees as it is essential to develop their skills and
knowledge constantly to boost their confidence levels (Nguyen, 2012).

Importance of Training and Development Practices

Training and Development practice is an important part of HRM functions for any organization.
Employees will seek development opportunities, and by training them it will be beneficiary for
both the organization and employee. The management of organizations will benefit from a
workforce with the broad base of techniques, skills and leadership qualities, while employees
develop their skills and knowledge to boost their chance of climbing up the managerial ladder
(UK Essays, 2013).

Training also increases the morale and teamwork of an organization, as employees feel that the
organization values their skills by investing in their development. Hence, employees morale
increases and they feel empowered, which in turn will increase the efficiency and productivity of
the organization (UK Essays, 2013).
Advantages and Disadvantages of Training and Development Practices
There are several advantages of providing training and development for employees in an
organization. Orientation programs implemented at FedEx motivates the employees to gain skills
and knowledge while it improves relationship between management. Moreover, employees get
more familiar and have a better understanding of companys structures and procedures to
become more productive to satisfy their customers (Neal, & Cathy, 2007; Dwyer & Robert,
2007). The orientation program tool is more user-friendly and helps new recruiters to attend
continuously training to improve their skills.

The FedEx Corporation implemented the Personal Record Information System model (PRISM)
to identify the required skills to implement specific trainings and development for employees
(Woo & Lam, 2004). FedEx Corporation also implemented leaderships development institute
program to provide proper trainings to employees to gain leaderships skills. Furthermore,
employees get to test their improved skills by working in a competitive organization such as
FedEx (Burack & Elmer, 2008; Hill & Charles, 2008). Therefore, employees will feel more
valued at the organization which results in very low turnover rate of employees at FedEx.

The disadvantage of training and development programs at FedEx Corporation is not being
exposed to the working environment of other organizational systems, as specific training is
provided to employees according to their job descriptions at FedEx. The online system training is
knowledge gained within the organization limits, and is not a physical exposure with trainees.

2.3 Performance Management and Communication

Definition and Theories
It is defined as a measurement tool used to understand how effectively the employees skills and
knowledge is delivered at the work environment. This practice also involves strong
communication and understanding between employee and employers to analyze the skills to be
improved (Appleyard & Dennis, 2005; Futrell et. al, 2005). It is also defined as to know the
weakness of employees skills to upgrade according to the work environment.
Maslows Hierarchy of Needs theory can be related to the performance management and
communication practices at organizations. The self-esteem needs in the theory emphasize on
leaders to implement a proper performance method to motivate the employees to learn and
upgrade the skills and knowledge. The social needs in the theory emphasize the communication
between leaders and employees, as they need to have a sense of belonging by having good
relationship with leaders (Nguyen, 2012).

Importance of Performance Management and Communication Practices

The importance of performance management policies such as open-door policy is that it
improves two way communications between management and employees at organizations. The
performance management provides more benefit to the employees than employer in terms of
gaining skills and knowledge, as it helps to identify employee weaknesses (Woo & Lam, 2004).

The performance management is not conducted to measure the standard performance resulting
from the job description, but on performing the strategic tasks of the organization. The process
identifies the best potentials in the organization, and organization can focus to develop the key
talents, top performers and successors.

Advantages & Disadvantages of Performance Management and Communication Practices

FedEx has implemented several performance management and communication practices such as
Open Door Policy (ODP), Survey Feedback Action (SFA), and Guaranteed Fair Treatment
Procedure (GFTP). ODP allowed employees to question company policies or complain about
them, which helps them to improve employee management and keep the employees motivated
and satisfied to increase productivity (Zhang et. al, 2010).

The SFA program enabled FedEx to evaluate performance of the managers and solve employee
problems to improve workplace relations, by surveying the employees on immediate superiors
and overall management and getting their feedback on survey results before taking action.
Additionally, employees were allowed to express their job grievances and they were heard up to
three levels of managerial hierarchy to increase the possibility of fair treatment of employees
(Prashanth, 2003).
Although the SFA program allowed employees to express their opinions anonymously, the
disadvantage of open door policy is more employees who questioned or complained is recorded
on the system. Hence, employee relations might weaken as there will be personal grudges due to
complaints of managers and other employees, which will result in productivity decline.

2.4 Employee Retention

2.4.1 Compensation
Definition and Theories

Dessler, G. defined compensation as "Employee compensation refers to all forms of pay going to
employees and arising from their employment" (Ahmed, 2010).

According to Maslows Hierarchy of Needs theory, the first level of physiological needs can be
related to compensation provided in the workplace. It is the most basic need of employees, hence
organizations must provide adequate compensation to the employees for the work they do.
Moreover, compensation is a hygiene factor in the Herzbergs Two Factor theory, which can lead
to employee dissatisfaction if proper compensation is not provided (Nguyen, 2012).

Importance of Efficient Compensation System

The importance of an efficient compensations system is inevitable for any organization, as it is
essential to make sure their employees are satisfied and motivated to work in the organization.
Satisfied and motivated employees perform well to produce efficient work, making it an
important tool to generate more profits (Dwyer, & Robert, 2007).

Advantages & Disadvantages of Compensation

The advantage of having an efficient compensation system at FedEx is continuous motivation of
employees to work in the organization (Appleyard & Dennis, 2005). FedEx have a compensation
system that acknowledges individual efforts of employees, in order to motivate them. They also
have a variable pay component in the compensation system, which rewards individual and team
contribution, to enhance the teamwork in the organization. Moreover, they provide high
compensation to employees that generate new ideas to ensure they remain inventive, which give
the organization a competitive edge by incorporating these ideas within the organization on a
daily basis. By having such a compensation system, employees view it as an increase in their
total compensation and not as an incentive program which is advantageous for FedEx
(Compensation and Benefits at FedEx).

The disadvantage of compensation system at FedEx Corporation is, it creates differences

between employees by giving different salaries to employees, even people working at the same
level. It is also disadvantageous, as employees forget the compensation they received once it is
utilized for expenses, unlike non-monetary benefits. Moreover, FedEx faced difficulties in
determining the base to provide extra incentives, although they resolved it with the localization
method (Compensation and Benefits at FedEx).

2.4.2 Benefits
Definition & Theories
Employee benefits can be defined as non-financial form of compensation offered in addition to
cash salary to improve employees lives. Employees demand extra benefits apart from their fixed
salaries, from employers to work for their organizations (Ahmed, 2010)

Employee benefits can be related to the security needs of Maslows Hierarchy of Needs theory,
as they seek the next level of needs once their basic needs are fulfilled. Also, it is a hygiene
factor according to Herzbergs Two Factor theory, which could lead to employee dissatisfaction
if benefits are not provided (Nguyen, 2012).

Importance of Efficient Employee Benefits

Advantage & Disadvantages of Employee Benefits

FedEx believes that their recognition and reward programs will help to reinforce desired
behavior in employees to deliver quality service to their customers. Their recognition and reward
programs include The Five Star, Bravo Zulu, Purple Promise, and Humanitarian award to keep
their employees motivated to do their best to satisfy their customers. By acknowledging
employees work, FedEx can motivate and satisfy their workforce, stimulate new ideas and
develop better performance and team spirit within the organization (UK Essays, 2013).

2.4.3 Effect of Compensation & Benefits on Employee Retention

3.0 FedEx Competitors HR Practices
3.1 Introduction of Competitors

3.2 Comparison of HR Practices of Competitors

In addition to that as per the case studies the competition with DHL and UPS in terms of
employees strength. The comparisons with competitors how strongly the human practices
maintaining at DHL and UPS organizations (Zhang et. al, 2010).

3.3 Explanation of Competitors Practices

The competitors DHL human resource practice particularly performance and motivational
training policies and methods, online feedback approach in performance management, talent
review, senior leaderships development programs such as 360 degree online feedback program
and workforce diversity achievements (Dwyer, & Robert, 2007).

3.4 FedExs Competitive edge

The FedEx Corporation competitive edge in terms of human resource practice polices compare
with DHL express. Its Asia specific learning center, DHL logistic management industry, deputy
country manager program to create a talent pool as compared to FedEx Corporation human
resource practices (Robert, Futrell, Donald, & Shafer, Linda, Shafer 2005)

4.0 Recommendation
As per the above discussions on FedEx Corporation human resource practices requires upgrading
with new systems and tools as well as strategies to human resource policies (Burack & Elmer,
2008). It is understand that the DHL human resource practice in terms of performance
motivation trainings stages is also recommended process to FedEx Corporation human resource
practices.

It also essential to understand the new wireless technologies used in human resource practice.
Particularly trainings development systems the recommended performance appraisal system
under rewards must carefully apply to motivate employees (Appleyard, & Dennis, 2005). Hence
the FedEx Corporation human resource management develops new strategies to achieve human
resource practices with advanced technologies.
Recommendations towards understand the employees psychological feelings, attitudes, behavior,
to willing in learning new skills and trainings (Hill, & Charles, 2008). Therefore the policies
must match with communities of employees to improve the skills and knowledge to competitive
with competitors.

5.0 Conclusion
It concludes that the FedEx Corporation human resource practice policies, procedures as per the
case study such as people service profit helps to take care of FedEx Corporation employees
shows better service from the employees to service the customers. The philosophy is also based
the management decisions. The survey feedback action shows that it improves employees
management relationship. it is also understand that FedEx Corporation human resource practices
for recruitment ,selection, trainings and development, performance appraisal is role of PRISM
also have advantage and disadvantage at FedEx Corporation. The FedEx Corporation developed
different role service profit polices in terms of recruitment selection, trainings and development,
performance appraisal, and organization communication as a part of human resource practice.
The trainings and development perception FedEx Corporation created leaderships development
institute to develop several programs for different levels to conduct different types of trainings.
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