FedEx organizational culture and the Kinko's acquisition challenge

¶ … 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.

Areas of EQ Embraced by the Organization

Emotional intelligence is a concept that relates to one's ability to deal with emotional situations, or to recognize emotions in others. It is the emotional equivalent to the intelligence quotient (IQ) tests that judge things like problem-solving and pattern identification. As a managerial concept, EQ has not necessarily been widely embraced. In this study, there was no compelling evidence that FedEx uses EQ as an evaluation technique or in any other way. There are instances where one's emotional intelligence might be evaluated in an informal way, and maybe not even using the specific EQ concept. For example, someone who is being hired to lead people will need to have demonstrated at least a little bit of aptitude for that. However, as a whole, FedEx does not place emphasis on EQ, and typically does not test for it either.

It can be said, though, that the dominance of the company's culture in some ways overrides EQ. When hiring, FedEx looks for people who will fit with its culture, and then ensures that its people are enculturated. The common culture is something that managers can point to when dealing with interpersonal problems. The other thing is that aside from some customer service staff, the company deals mainly with logistics. This is a fairly cold, hard science. There is little benefit to having high EQ workers in positions that demand a high level of technical proficiency. Also, there seems to be a little workplace conflict, because the value of teamwork and dedication to the company is so important. So there are good reasons why EQ is somewhat discounted by FedEx and thus far the company does not seem to have missed this emphasis.

Virtual Elements

FedEx is a little bit old school when it comes to technology. The business has changed surprisingly little since its inception. Therefore, this is not a company that makes extensive use of virtual elements, and indeed provides little in the way of workplace flexibility except at its Memphis headquarters. Many of the jobs are in situ anyway, and cannot be performed remotely. Supervisory roles demand physical presence because of the emphasis placed on daily in-person communications at the company.

Remote workers at FedEx are provided with modern communications equipment, however. They are typically connected through wireless communications devices with dispatch and from there to the world. So workers who are on the road at FedEx are never out of communication. This is something that the company has long been expert at, because of the nature of its business. It is interesting that a company so expert at this can have so few opportunities for virtual commuting. However, it is not too surprising that with its culture based on around teamwork and dedication that FedEx might view telecommuting and other virtual elements with a certain degree of suspicion.

Conclusion

FedEx has a strong culture that was designed by the founder, Fred Smith, and this culture has been reinforced over the years. This culture is the dominant element of organizational behavior at the company. It defines things like hierarchical standing, and the importance of formal authority within the company, because it derives from military culture, which takes largely the same approach. The emphasis on formal authority also derives from the culture, as does the reliance on intrinsic motivation. Thankfully for FedEx, the company has been consistent for its entire existence with respect to these things, so it has become quite good at them. This is something that FedEx can look at as a strength.

Where the organizational behavior might be viewed as a bit of a weakness is in the more conservative side of the company. FedEx does not appear to have a particularly modern view of things like emotional intelligence and virtual workplaces. The company focuses on cultural fit as more important in hiring, and it does not have many people who work virtually, despite having some competence in mobile communications. So these are things that FedEx might think more of as a weakness in terms of its organizational behavior, that it might be slow to adapt to changes in the technology, and in the external environment.