Organizational Change the Company That Is Today

Organizational Change

The company that is today FedEx Office was once Kinko's. Kinko's was a successful chain of office services stores. Prior to the takeover by FedEx, Kinko's was known for a casual corporate culture and decentralized organizational structure. By the late 1990s, Kinko's consisted of 128 different joint ventures, small companies and partnerships, but had not franchised its operations. A restructuring during that period streamlined the structure, resulting in a Kinko's that was a singular corporate entity (Quittner, 1998). The company went public and eventually faced another restructuring when it was acquired by FedEx in 2003. At this point, the company was no longer independent, but part of a larger organization. Culture clashes began almost immediately and over the coming years the Kinko's organization would face restructuring and a shift in the organizational culture to integrate it into FedEx.

Before and After the Change

Before the change, Kinko's was adapting to a more corporate organizational structure. In the 1990s, it was decentralized and the organizational structure comprised of a large number of loosely-related companies. The result was that while Kinko's had built a large and strong brand, there was little consistency with respect to quality and service levels. The company's staff members were generally casual, semi-skilled and transient. Local store managers made their own rules on the fly, emphasizing the decentralized nature of corporate structure (Deutsch, 2007).

After the change, the company became more centralized. When FedEx purchased Kinko's, it made it an autonomous company within FedEx, but appointed a FedEx veteran to run the Kinko's unit. Purchasing and decision-making were pulled back from the store managers to the unit's head office, which in turn answered to FedEx head office in Memphis. The result of the latter was that after years of underperformance, FedEx eventually killed off the Kinko's brand entirely. With a top-down management structure, the culture of the company had changed dramatically, and the results to the bottom line were not positive (PR Log, 2010).

Analysis of Management Structure

The current management structure at FedEx Office is very centralized. Policies, procedures and products are all dictated by the unit's head office. Relations with other branches of FedEx (Express, Ground) are managed by the corporate head office. In contrast with how Kinko's was for most of its existence, there is no branch-level decision-making on significant issues. The objective of the highly-centralized structure is to allow the company to provide services to a larger customer base. The decentralized structure meant wildly variable service levels, which precluded large companies from embracing Kinko's. The centralized structure and service level standardization were put in place to attract corporate clients specifically. The change management, however, has generally been considered to be a failure. The company struggled post-takeover. The corporate cultures of Kinko's and FedEx clashed substantially, and especially on the point of decentralization vs. centralization.

Discussion of Change Management Strategies

Organizational change often runs into roadblocks, so the difficulties that FedEx had with Kinko's are not surprising. The basic strategy that FedEx followed was to impose the FedEx culture and ways of doing business on Kinko's. Managers at Kinko's were dictated to about how they should run their business, after having had significant freedoms for years. There was no employee engagement process -- it was assumed that the FedEx way of doing business was inherently superior and could be applied to Kinko's (Deutsch, 2007). Thus, the change to a top-down centralized structure was implemented in a top-down centralized manner. The employees of Kinko's naturally rebelled against this. The difficulties in executing this organizational change were predictable, even when the deal was announced.

Effective organizational change typically involves engaging all of the different stakeholders in the change process. FedEx failed to do this. The company never clearly articulated its vision to Kinko's nor did it articulate a rationale for implementing change the way it did. FedEx management appeared to believe that the rationale was self-evident and would win converts on its own. When that failed to happen, FedEx did not have a coherent response ready.