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FedEx was founded by Fred Smith, an ex-Marine who served in Vietnam, and the company retains strong elements of military culture (Smith, 2008). The company fosters its culture in several ways -- in the training process, through corporate lore, and through communications between different levels. As a result, FedEx has a fairly strong corporate culture. They have, however, had challenges in the past when growing via acquisition. Sometimes the acquired company does not adjust well to the FedEx culture, and this happened most prominently with the acquisition of Kinko's, a company that had a dramatically different culture (Goldgeier, 2007). This paper will examine the organizational behavior at FedEx, where it pertains to both the company's culture and its organizational design.
Type of Culture
The culture at FedEx was formed in its early days. There are two major influences. The first is the military culture that founder Fred Smith brought with him. This culture emphasizes discipline and doing whatever it takes to get the job done. These virtues have been instilled in the company through much of its lore. These virtues are strong because they support the strategic objectives of the company. The other influence on culture is the early struggles that the company had and the sacrifices that different people made in order to overcome those struggles. For example, it is said that pilots did not get paid for several months during the first year, because they believed in the company and knew that the cash flow was critical. They were repaid when the company became larger, but their sacrifice for the company was noted in corporate lore.
There are three main types of organizational culture -- pluralism, dualism and salad bowl. Pluralism reflects a culture where different people who join the culture maintain many of their cultural traits, which are then accepted into the culture as a whole. There is a dominant culture that basically allows for this to happen, within its own context. Dualism reflects an organizational culture that has two major elements. The interplay between these two is often a critical factor in whether or not that culture is successful or not. The third concept, the salad bowl, reflects something similar to pluralism, but where the different elements are brought together and bound only by a few common elements (Thornton, 2012). Where pluralism has a dominant culture and some assimilation, there is less assimilation in the salad bowl.
FedEx is none of these. The company has a single dominant culture and pretty much everybody who joins the company fits with this culture. The company hires with cultural fit in mind, first of all, and second FedEx uses the training process and the corporate folklore to indoctrinate new recruits into the culture. The Kinko's experience illustrates how FedEx is not pluralistic nor a salad bowl, because the Kinko's culture was simply never accepted at FedEx; it was far too informal. The dualism concept also does not apply -- there is a single dominant culture at the company only, and no others have been able to survive even though FedEx has expanded around the world and used acquisitions to build its domestic business. The company has had internal exposure to other cultures, but actively works to subdue those cultures in favor of the dominant culture.
Modes of Communication
There are a number of modes by which communication occurs at FedEx. For many workers, there is direct daily communication with supervisors. Even for those whose jobs are routinized, there are team meetings at the start of the shift that allow for communication about broader issue at a given station or unit. There are sometimes also supplemental training seminars provided, and of course there are regular performance reviews. Further, the communication within the company will also include meetings and visits for higher-level managers, in order to ensure that there is some contact between high level managers and front-line workers.
The company also uses written communication, both in printed newsletters and online. The online element of the communication is not as well developed as one might expect, if only because so many of the company's workers do not work in front of a computer terminal. However, where possible there is communication via the Internet. A good example is human resources. This function is often centralized, and as a result most employees contact HR about job openings or grievances through an online system.
One facet of FedEx's communications is that there is not much bottom-up communication. The company provides few avenues for the employees to communicate up the food chain, and where such venues exist they tend to be only one level up. This can be an issue with respect to creating strict hierarchical barriers but it also fits with the military culture that the company employs. There are also multiple means that the company uses to maintain contact with customers, and there is usually one or more communications with customers on a daily basis.
Nature of Authority
With a military mindset, FedEx has long had a recognized social rank system of authority. Formal authority is by far and away the most important type of authority at the company. Formal authority controls the channels of communication, for one. Additionally, jobs are quite segregated between the levels. This formal authority mindset is also evidenced by the hierarchical approach one normally takes to move up in rank -- time served is a good indicator of one's potential to move up. There are exceptions. Just as in the military, there are those who are identified as stars. Such employees are put on a fast track to managerial success. With that fast track, they are then free to move up.
At the highest levels, there is a flattening of sorts. Smith himself has stated that he will allow his managers to make decisions that he himself would not have made. This is because, he rationalizes, he gave them that authority so he trusts them. So at the higher levels of the organization, it is possible for someone to make decisions or have input beyond what their level might be. At that point, they have basically earned the trust of the brass, and therefore are granted this authority not as much as the basis of formal authority but expert authority -- they are treated as knowing a lot about that subject and therefore can be leaders and opinion matters within their area of expertise.
The company uses a number of different motivational techniques. One of the more interesting selling points of FedEx is that they do not fire full-time employees. They give themselves labor flexibility by hiring a lot of temporary workers. However, once you're in, you're in, and will not be laid off. This does not just attract good workers, but it also provides an element of motivation. Whether you subscribe to Maslow's hierarchy or Herzberg's two-factor theory, by providing this element of security at a time when many American corporations cannot do so, FedEx provides some motivation for the employee to be loyal to the company -- loyalty begets loyalty in this case (Riley, 2012). This is a form of intrinsic motivation, because loyalty once established can be a powerful motivator for workers.
Another form of motivation that is used at FedEx is the availability of a stock purchase plan at lower levels and stock options at the higher levels. Arguably, these work on different levels. Equity for lower level workers is more of an intrinsic motivator, because it builds loyalty and an emotional sense of ownership. For the executives, stock options are more extrinsic motivation. They reward directly, financially, short-term stock performance rather than long-term loyalty. So while there are some equity-based benefits for all employees they are structured differently and definitely will have a different form of motivation. Part of this is that there is an underlying assumption that executives have a lot of loyalty to the company (most are hired internally) and have demonstrated competitiveness. Thus, they lack not for intrinsic motivation, but a little extrinsic will help out.
There are other forms of motivation at work at FedEx as well. The company tries to foster intrinsic motivation. The corporate culture and folklore emphasizes going above and beyond the call of duty both for the company and for customers. Such heroic tales will typically instill pride in workers, and a desire to perform at a higher level. There is no particular reward for this -- rewards are based on specific, quantifiable objectives -- but the company goes to great lengths to foster this intrinsic motivation in all of its workers, and even to communicate this to customers as a means of enforcement -- when customers expect excellence it is incumbent on workers to deliver.
Where there are extrinsic rewards, they are few, and are probably more motivating on an intrinsic level. Things like company barbeques cost money and can be tied to successful unit performance, for example, but are usually more in the "team-building" vein, which works more on…[continue]
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