Application of Organizational Behavior Concepts Term Paper

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Org Behavior

FedEx has a distinct organizational culture that has been instrumental in helping them become a worldwide business leader. The core of the company's motivation system is the PSP philosophy (People-Service-Profit) wherein they make their employees the highest priority, which in theory drives higher service levels and in turn greater profit. The culture at FedEx has been cultivated over the years based on legends about the dedication of employees during the firm's formative years. The corporate communication strategy has been designed to reinforce the key components of culture, both internally and externally. This culture has come under challenges in recent years, most notably with absorption of Kinko's into FedEx. The unique culture at Kinko's has clashed badly with the established FedEx culture, providing a textbook case on the management of organizational change.

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Despite the challenges in integrating Kinko's into the corporate fold, FedEx remains an industry leader and the envy of business leaders. The culture facilitated their rapid ascent and continues to be a key component of their success. The culture is supported on many fronts. The human resources department views the maintenance of FedEx culture as their primary role. Internal corporate communication is almost entirely based on molding organizational behavior. The core components of the culture have driven FedEx to not only thrive, but to continually adapt to changes in their business environment, to the point where even slowdowns such as occurred in late 2001 do not cause concern.

The Core of FedEx Culture

Term Paper on Application of Organizational Behavior Concepts in an Organization Assignment

In an interview in 1997, FedEx founder and CEO Fred Smith outlined the three core elements of FedEx culture - the PSP philosophy, continuous quality improvement, and focus on change. The PSP philosophy is the most firmly entrenched aspect of FedEx corporate culture. Fred Smith built this philosophy based on his experiences in the Marines during the Vietnam War. A Yale graduate with an upper-class background, Smith led a platoon of working class soldiers. Two key things came from this experience and were directly applied to the FedEx culture. Smith learned that employees who are expected to deliver a high level of service must be infused with a commitment to delivering that service. At FedEx, this was translated into a perpetual drive for excellence. Employees were hired based on their commitment to a high level of service above all else. The second impact of the Vietnam experience was the ability to motivate a group of people. Smith learned how to understand workers under his charge and use that to find ways to motivate them. The most important part of that proved to be the "people" part of PSP, in that there is a universal desire to be respected in the workplace and that if you hire good people and treat them with respect they will deliver service.

The second core element of FedEx culture is continuous quality improvement. The company prefers, for example, to use absolute measures of quality rather than percentages. In this way, there is always room for improvement until perfection is reached. Management culture is attuned to the desire for perfection, given the importance of the goods typically being transported.

The third core element of FedEx culture is the focus on change. According to Smith, the genesis for the FedEx concept was the realization that computers were going to change the way the world did business and that this would open up opportunities on the transportation and logistics side of business. Since then, technological change has driven many changes at FedEx, but the company has responded by being at the fore of many of these changes, such as using the Internet as a business and communication tool.

How FedEx Culture Works - Communication

The main tools for the cultivation of culture at FedEx are training and reinforcement. Communication, primarily internal but to an extent external as well, is critical. The FedEx business model assumes a world that never sleeps. As such, communication takes on that aspect of the culture. Additionally, it transmits the culture. The primary service that FedEx offers is speed. This is the key component of FedEx communications, in everything from their internal correspondence to their logo. The customers expect it, which in turn provides motivation for the employees, because they understand that their job is to deliver speed.

Training forms an integral part of the FedEx communication process, and is focused on enculturation. Core to the training is the speed, the way the operations work, and the importance of being perfect. Maximizing efficiency is another key theme throughout the FedEx training program, again a key part of the corporate culture. Efficiency is the key to success in a competitive (low margin) environment where high speed and 100% accuracy are demanded.

Reinforcement of corporate culture at FedEx is a critical element, one in which FedEx is stronger than many of their peers. The main tool in reinforcing organizational behavior at FedEx are the legends. These are stories that are passed through the company about the dedication level of the early employees. One famous example is that of the pilots working pro bono through one crucial peak season in the early years of the company because they believed so much in the success of their young firm. There are a host of other similar stories, each highlighting the concepts of dedication and the "FedEx hero."

How FedEx Culture Works - Human Resources Practices

Fred Smith has stated that "if you're going to run a high service organization, you have to get the commitment of the people working for that organization right at the start." At the core of this theory is that while motivation and communication are powerful tools for the creation and dissemination of corporate culture, the people themselves must start out with a commitment to excellence, if they are to truly achieve high service levels.

Human resources at FedEx therefore forms a key component in the development of organizational culture. The HR department considers itself responsible for keeping FedEx employees motivated, passionate, interconnected and productive.

Communication, and especially training, as described above, are part of its mandate. Other key components are delivering excellent benefits, building career paths, and providing up-to-date information on both the industry and on safety practices. This reflects the core PSP philosophy. The human resources function supports the organizational culture by building the positive environment that permits employees to deliver the desired service levels.

How FedEx Culture Works - Organizational Structure

One the keys to the consistency of organizational behavior at FedEx is consistency at the top levels of the company. Many of the senior executives are long-term FedEx employees, and were reared in the corporate culture in the days when the company was tight-knit and the culture was completely permeated through all employees.

The structure of FedEx is relatively centralized, with key decisions made in Memphis. This allows those most in tune with the culture to build it into policy. The more important the policy, the more likely the decision is to be made in Memphis. At the same time, Fred Smith has stressed that small decisions are left to employees. For example, couriers are able to manage their own routes with relative independence. The empowerment of employees in consistent with the many legends FedEx has cultivated about its employees over the years that form one of the most important components of FedEx culture.

How FedEx Culture Does Not Work - Kinko's

One area in which the FedEx culture has struggled in recent years is with the integration of Kinko's into the FedEx family. In 2004, FedEx purchased Kinko's and attempted to bring that firm into the FedEx fold. They installed a longtime FedEx veteran to lead Kinko's but the culture clash proved difficult and as a result the expected synergies from the purchase failed to materialize.

The Kinko's culture prior to 2004 was significantly different than that of FedEx. Moreover, it was complicated by the fact that Kinko's had been run by an investment firm for several years, and they had tried to change the Kinko's culture as well. The Kinko's culture was loose and casual. Kinko's had built its culture in a manner not unlike FedEx, though, with its own legends and charismatic leader. However, Kinko's culture lacked much of the formal support that FedEx culture has. The human resources infrastructure that allows FedEx to hire employees with the desired mindset across the globe was non-existent at Kinko's, where store managers did their own hiring without any corporate guidance.

When FedEx tried to instill its culture on Kinko's employees, it failed. Longtime Kinko's employees, having not had the opportunity to be indoctrinated in FedEx culture when they joined the firm, proved resistant. FedEx culture also did not correspond with the temporary nature of the job (for most Kinko's employees)

Organizational change was one of the three core aspects to FedEx culture outlined by Fred Smith. Through much of early FedEx history, the company adapted to change well, embracing new technologies, adjusting to new competitors and moving fluidly into international markets. The Kinko's… [END OF PREVIEW] . . . READ MORE

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