Organizational change at Kinko's following FedEx acquisition

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).

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.

It is doubtful that FedEx would have actively engaged Kinko's, as it saw the existing Kinko's culture as a detriment. However, the company should have realized that the change process was going to be difficult if it implemented it in such a heavy-handed manner. FedEx should have focused on formulating and selling its vision for Kinko's. At best, it saw Kinko's as a means of driving customers to its shipping businesses. There were no particular benefits for Kinko's and the people within the organization knew this. FedEx needed to have a vision for a union between the two companies, and needed to sell that vision to Kinko's. Moreover, FedEx should have anticipated that there would be problems implementing the change, and had backup plans to address the challenges that were expected to arise. That the company did not seem to have any such plans resulted in the underperformance at Kinko's being reality for far too long. FedEx did not manage the change process effectively, and should have been prepared for the culture clash, as that was something that could easily have been anticipated.

Works Cited:

Bachrach, A. (2009). 6 management strategies for organizational change success. eZine Retrieved October 11, 2011 from http://ezinearticles.com/?6-Management-Strategies-For-Organizational-Change-Success&id=2472621

Deutsch, C. (2007). Paper jam at FedEx Kinko's. New York Times. Retrieved October 11, 2011 from http://www.nytimes.com/2007/05/05/business/05kinkos.html?_r=1&oref=slogin

PR Log. (2010). What happened to Kinko's? PR Log. Retrieved October 11, 2011 from http://www.prlog.org/10835819-what-happened-to-kinkos.html

Quittner, J. (1998). Why Paul Orfalea didn't franchise Kinko's. Business Week. Retrieved October 11, 2011 from http://www.businessweek.com/smallbiz/news/date/9809/e980923.htm