HR Case Studies: UPS, FirstMerit, and Tesco Management

UPS and the Community Internship Program (CIP)

This section addresses several questions relating to compassion and proper management skills in the workplace, using UPS and their Community Internship Program (CIP) as the lens through which the topic is assessed. The four questions considered are: whether compassion can be taught in a training program, whether the CIP can help better manage work/life conflicts, what negative outcomes could result from CIP training, and why only 50 of the 2,400 managers at UPS are included in the training. While compassion in the workplace makes intuitive sense, it can create additional and larger problems if not applied carefully.

The idea that an associate can "learn" compassion in a training seminar is a stretch. Either someone has it in their nature to use compassion or they do not. There are also reasons why compassion may not always be appropriate to exhibit in the workplace. First, rules exist for a reason, and allowing an associate to take an extended absence in contradiction of established policy sets a precedent — one that other employees may expect to see applied to their own situations. While caring for a seriously ill family member would seem to be a clear justification for bending the rules, other reasons for absence are far less clear-cut, such as bonding with a newborn, extended vacations, and similar circumstances. Also relevant are factors like how long the employee has been with the company and what their attendance and performance records look like.

This connects to a second concern: some workers may abuse an exceptions-based policy, or become resentful when their own requests for special treatment are denied. In an ideal world, such responses would not occur, but they are a realistic possibility. A third concern involves defining the boundary between genuine compassion and treatment that is inequitable or inconsistent. This matters because maintaining operational continuity and profitability is ultimately UPS's primary obligation — the business cannot persist if that dimension is compromised too severely.

That said, the CIP could clarify that while standard rules should apply whenever possible, there are situations that genuinely call for exceptions. For instance, if an employee is stranded at an airport during an approved vacation due to severe weather and cannot return for their scheduled shift, they should not be penalized, as the absence was outside their control and they made a good-faith effort to return on time. By contrast, an employee who repeatedly fabricates reasons to take unearned days off — paid or unpaid — warrants closer scrutiny. In short, the CIP could be very effective if the boundaries of acceptable conduct are defined clearly and applied consistently across the organization.

Possible negative outcomes of this policy include reduced retention, lawsuits stemming from claims of disparate treatment, and general discord among employees — even if UPS's intentions are good. Finally, the fact that only 50 out of 2,400 managers, barely two percent, participate in the training is a serious concern. For the sake of consistency, either all managers should complete the training or none of them should.

FirstMerit and Pay-for-Performance Compensation

Ultimately, UPS has its heart in the right place, clearly wanting to signal that while business performance matters, employees also have personal and family lives that deserve recognition. However, the modern workplace has become sufficiently litigious and contentious that such policies may create more problems than benefits over the long term, even when the intent is to do right by employees. It is an unfortunate position: UPS appears damned if it acts and damned if it does not.

The second case study pertains to FirstMerit and the plan they implemented to increase accuracy while simultaneously improving retention and pay structures. Previously, all employees earned $9 per hour and virtually no one remained with the company beyond two years, resulting in a turnover rate of roughly 100% every two years. Error rates and overall performance were unacceptable. The questions addressed here include: what type of compensation plan FirstMerit was using, what intrinsic rewards might improve performance in the check processing department, and whether comparable results could be achieved with a lower base salary combined with a piecework plan. While a base-plus-piecework plan might have yielded some improvement, a truly effective approach must address both quality and quantity — and a piecework-only model would prioritize quantity at the expense of quality.

The compensation plan that FirstMerit implemented, as described in the case study, was a pay-for-performance plan. FirstMerit made clear that both accuracy and volume mattered, and structured pay accordingly. They achieved this balance by measuring keystrokes per hour rather than number of checks processed or other simpler metrics. Keystrokes per hour is a more accurate proxy for actual work completed than raw item counts. Employees were no longer paid a flat hourly rate; instead, their pay reflected how well they performed on the keystroke measure. This is essentially an intrinsic reward structure: employees performing at a higher level are compensated commensurate with that performance and are no longer treated identically to lower-performing colleagues.

A base salary combined with a piecework component could have been moderately effective, but would not have matched the pay-for-performance framework, because piecework output and keystrokes are not in a one-to-one ratio. Time actively spent working correlates more closely with keystrokes than with the number of discrete items processed. For this reason, basing pay on keystrokes is the more accurate and equitable approach. The pay-for-performance plan used by FirstMerit is demonstrably more effective, and the logic behind it is straightforward.

Conclusion

Tesco has a full and complete hiring system that is serving the company very well. They should be careful to ensure that their interview process is as optimized as possible and that the assessments they use reliably predict on-the-job performance. So long as those elements are continually refined, the quality of their hires should remain high, benefiting Tesco substantially over the long run.