FedEx Total Rewards Program: 3 Key Performance Metrics

Overview of FedEx and Its Total Rewards Program

FedEx is a logistics company whose core business is overnight courier service, though it also operates ground delivery, office retail outlets, and other logistics-related services. The company seeks to measure employees on a wide range of outputs and ties these to compensation through performance reviews. For the total rewards program, the company must evaluate performance against overall corporate objectives, which include a mix of financial and operating measures.

Net Income as a Performance Metric

The first metric is net income. This is a fundamental measure, but it underscores the organization's commitment to creating value for shareholders. It is also a valuable metric because many full-time employees hold company stock through a benefits program, giving them a direct stake in financial performance.

Net income's appeal as a total rewards metric is that every employee contributes to it in some way. The downside is that FedEx employs several hundred thousand people, which means that the actions of any single employee outside the executive suite are unlikely to have a significant impact on net income. In fact, FedEx's revenues and net income are closely tied to the business cycle, meaning that one of the key measures for total rewards has very little to do with individual performance, despite its importance as a corporate metric. That said, net income provides a useful baseline because it ensures that employees share in the organization's overall success or failure.

Revenue Per Employee as a Productivity Measure

The second metric for the total rewards program is revenue per employee. This measure is important because it highlights the role individuals play in generating business. While most employees do not perform a direct sales function, they are all responsible — directly or indirectly — for the quality of service customers receive throughout the shipping process. Each employee therefore plays a role in revenue generation.

Equally important is the fact that a key organizational objective is to operate as efficiently and productively as possible. Revenue per employee is a key productivity ratio: the higher the figure, the more productive the company. Many employees can see themselves directly reflected in this ratio, which fosters a sense of personal responsibility for its improvement — another advantage of including this metric in the total rewards evaluation framework.

Conclusion: Metrics and Human Resources Strategy

Turnover is a key metric for two reasons. First, having highly skilled and experienced employees is considered critical to improving net income and revenue per employee. Second, the training process at FedEx can be extensive, so the company needs to ensure that the investment made in bringing new recruits to full functionality is repaid through long-term employee retention. Although FedEx does offer some short-term positions, it primarily seeks individuals who are looking for a career. Monitoring employee turnover therefore provides direct feedback on whether the total rewards program is achieving its talent retention goals.

Overall, these three metrics each measure a different dimension of the company's objectives. Together, they form a balanced framework that connects individual performance to corporate outcomes. Human resources contributes to corporate effectiveness by designing a total rewards program that attracts the best people and encourages them not only to stay, but to continually excel.