Human Resource Strategies in DHL Express and FedEx
Introduction
DHL Express is a division of Deutsche Post providing international express mail services. Originally founded in 1969 to deliver documents between San Francisco and Honolulu, the company expanded its service throughout the world by the late 1970s. The company was primarily interested in offshore and inter-continental deliveries, but the success of FedEx prompted their own inter-US expansion starting in 1983. DHL aggressively expanded to countries that could not be served by any other delivery service, including the Eastern Bloc, Vietnam and the People’s Republic of China.
FedEx Corporation, was known as FDX Corporation, is a global logistics, e-commerce and supply chain service providers, based in the United States with headquarters in Memphis, Tennessee. Originally founded in 1971, the company’s independent network of subsidiaries include FedEx Express (business courier services), FedEx Ground (business packaging and ground delivery services), FedEx Custom Critical (operating high-speed transport delivery services), FedEx Global (operating integrated logistics, technology and transportation services) and Viking Freight (the American West small transport companies).
Over the years DHL and FedEx have been on cut throat competition regionally with market share, but both being a service based company they have concentrated a lot on their internal factors i.e. Human resource management strategies in order to gain competitive advantage.
Similarity in the HRM strategies of DHL Express and FedEx-
Since both of the companies are service based, and has been operating on logistics for quite a lot of years, evidently they have a lot of similarities in the way they manage their human resources.
Performance & Motivational Training-
DHL took a broad initiative to develop its talent by introducing learning establishments namely DHL Asia Pacific Learning Centre and the DHL Logistics Management University. Furthermore, DHL has also launched its Deputy Country Manager Programme in 2008 in Singapore. The programme, which commenced in January 2006, aimed to create a talent pool who will be groomed to become senior executives capable of assuming country manager and other senior management positions in Asia Pacific. The Deputy Country Manager programme assigns a talent to work in another Asian Pacific country under the guidance of the local country manager. Each programme is designed based on a particular talent’s needs in specific skills and competencies. Assigning the deputy country manager with a key task, they will be developed in areas such as operations, human resources, corporate social responsibility and finance.
FedEx Training is considered as the most important events at FedEx, in order for the company to meet their goal of 100% customer satisfactory. It has a promotion from within policy. It undertakes as well as arranges extensive training for all of the employees as well as the managers that covers the quality management, leadership concepts as well as the philosophy of the company (Ahmed & Ullah 2006). Furthermore by maintaining a solid employee retention scheme the company had been able to maintain and retain their employees, and improves their skills, by making sure that every employee is receiving proper training in terms of job performance skills (Denton 1992).
Some of the additional strategies followed by DHL Express are:
360 Degree Online Feedback Program-
When DHL became a part of the Deutsche Post, a program called 360 Online Degree Feedback frameworks was adopted to integrate its diversity of operations and regions. The program was designed to achieve three aims:
· Performance management
· Talent Review
· Senior Leadership development Program
The program was an online one whereby its managers across the globe could participate in all the three areas mentioned above. “The online nature of the system would provide a streamlined structure that could be applied cost-effectively throughout the new organization’s massive network.” (DHL 360 Online – Developing a Global Solution for Leadership Development: DHL Identify need for Online Solution with Global Reach. 2005). All multi-national companies with global divisions such as Freight Forwarding face similar challenges and have to adapt and learn to be able to stay competent. For a manager in a division like DHL Global Forwarding, the 360 Degree Feedback Program which is an example of participatory management style was useful in understanding the needs, aspirations and views of its many employees across the globe.
Health management and occupational safety-
DHL puts a lot of priority on the health and safety of their employees and the fact that they are committed to retaining them and developing their performance. As one of the world’s largest service companies, it is a commercial necessity to invest in the health of their employees. They are therefore not limiting themselves to just reducing time loss through injury and illness, but are also promoting sustainable health and accident prevention.
Career Development-
Their International Business Leadership Program gives top executives from across the Group the opportunity to systematically build up strong cross-divisional networks, become familiar with business strategies and advance their management skills. More than 100 executives took part in the program in 2009. Since 2006, they have given selected executives the opportunity to develop their skills by taking part in an Executive Master’s of Business Administration program in leading business schools around the world. Students are enrolled part-time and specialize in general management, logistics or finance.
Workforce Diversity-
Their employees are a reflection of the society they live in. They come from a broad range of ethnic and social backgrounds, and represent different age groups, world views and life plans. Together, they provide services to a customer base which is just as diverse. In an effort to ensure the highest degree of productivity, creativity and efficiency possible, they are committed to managing diversity professionally and to creating a working environment that is free from discrimination. Diversity management is therefore an integral part of their employment policy and firmly rooted in their Code of Conduct as well as in their corporate culture. In May 2009, the DHL Supply Chain division launched the Diversity & Respect initiative throughout Europe. It is dedicated to getting young people from different countries, especially women, interested in a career in their industry. DHL Express Europe has also committed itself to increasing the diversity of its workforce. The division conducted a survey to identify priorities in diversity management. In the summer of 2009, DHL Express Europe launched the Women in Leadership initiative to support talented female employees.
Additional Strategies followed by FedEx are:
Leadership Evaluation & Awareness Process (LEAP) –
FedEx believed in promoting people from within for higher management cadres. The
SFA program helped management take decisions regarding promotions, though its utility was confined to evaluating the performance of the managerial cadre employees only. FedEx also provided opportunities to employees from the non-managerial cadres to move up to the managerial level. In order to encourage non-managerial cadre employees to move to the managerial level within the organization, FedEx devised a unique program known as ‘Leadership Evaluation and Awareness Process’ (LEAP).
Employee Retention-
The retention of talents is also one of the most important strategies of the company. It has a turnover rate of 1%, having to show that they have the most effective way of keeping their employees. The main reason behind the said success is that the company is offering high career opportunities, the result of the policy that employees are being promoted from within. Because of the said policy, the company had been able to recognize the efforts of its people through awards, open communications as well as other incentives.
Reasons
It’s quite evident from the similarities and differences of both the companies above, that DHL express has an upper hand in terms of global HRM than FedEx. DHL’s rapid globalization of their business has actually played a very important role in their ways of diverse thinking for their business, whereas FedEx was concentrating more on their revenue generating abilities.
Strategies of DHL Express and FedEx in relation to the HR theories-
Over the years it has been evident that Human Resource Management has been advantageous to an organizational performance in more than one way, it has improved employee commitment, improved skills and productivity, lower levels of absenteeism and employee turnover, and enhanced employee performance and efficiency. Hence, going through both of the service based company’s human resource strategies it can be drawn out that DHL and FedEx has a very fair blend of three major strategic HRM theories which are the following:
DHL Express
Best practice approach- In recent years there has been heightened interest in the idea that performance improvements arise when companies use specific sets of employment practices. There are two types of view in this approach, one, the universal approach; two, bundles and high-performance working practices. Some of DHL express’s HRM practices are exemplary and applicable to all organizations and settings, no matter what their industry, geographical location, or organizational culture (Pfeffer 1998). When it came to human resource they have been very multidimensional and have systematically concentrated on the employment security and internal labour markets, hiring and sophisticated selection, extensive training learning and development, sharing information and employee involvement, high pay contingent on company performance, reduction of status differentials. Although one of the drawbacks that DHL faced by adapting this approach is that it’s easier to for organizations to engage in high performance practices when labour costs are low in proportion to the total cost of the business. But in times of economic downfalls these labour costs make up a high proportion of total costs, therefore during the recession on 2008-2009 Patricia Burke, vice president of labor relations at DHL Express Inc. On Sept. 25 at Littler’s Global Employer Institute, she recalled how DHL at the end of 2008 and beginning of 2009 had to scale back its U.S. workforce from 40,000 to 4,000 employees in order for DHL Express to return to its core business of international air express delivery. But since this alarmed as a bad sign for the company in terms of job security, when the economy gradually brightened Burke had to consider outsourcing talent other than hiring.
Resource Based View (RBV)- Studying all the strategies that DHL follows it is determined that the company invests a lot on their current and potential employees, in terms of educating and training, thus making the logistics business a very potential career path. The focus of the RBV is on the personal attributes employees bring into the organization, using them to promote sustained competitive advantage and corporate growth. Unlike the best fit approach the RBV focuses on the firm’s internal resources and the specific factors enabling the organization to remain viable in the market. DHL’s two big examples of upholding its core competencies are;
Sourcing and Talent management- During economic crisis, skilled executives and specialists are in demand so they increasingly use a variety of recruiting channels to ensure they have a competitive edge in hiring first-class specialists and executives. In 2009, DHL ranked among the top 50 most attractive employers in a survey among 120,000 university students around the globe conducted by the US consulting firm Universum. DHL was ranked 42nd overall, and was the only logistics company listed in the index.
Internet Recruiting- Their careers website is one of the most important contact points for potential employees. Every year, they post more than 12,000 job vacancies online and their database already holds the details of more than 500,000 applicants. Market researchers Potentialpark ranked their careers portal second in Germany and third in Europe in its Top Employer Web Benchmark 2009.
FedEx
Contingency theory/ Best fit- approach is based on the view that different types of HRM practices are suitable for different kinds of business conditions. It asserts that there is a link between HRM practices and competitive advantage but that HRM activity is contingent upon particular circumstances of each business. Since its inception, FedEx’s management focused on providing a suitable work environment that encouraged employees to come up with innovative solutions which increased employee commitment. At FedEx, two-way communication between the management and the employees was encouraged. The employees were allowed to freely express their opinions about management’s policies. The company also resolved employee grievances, apart from employing a formal communication system to inform employees about the major events taking place in the company. The employee communication programs implemented by FedEx included the Survey Feedback Action (SFA) program, Guaranteed Fair Treatment Procedure (GFTP) and Open Door Policy (ODP). One of the major drawbacks of this approach is that it lacks sophistication in terms of competitive strategy, unlike other multinational organizations who concentrate on all the aspects diligently.