Making and Managing Change at FedEx

Managing change in today’s organizations is not easy but doing it well is the new imperative. If companies want to survive and strive in today’s highly competitive environment, they have change quickly and yet successfully. Managing changes is now a core competency where organizations fall short in the race to adopt it. The increasing pace of change coupled with accelerating uncertainty. An IBM study reveals the following rates in change program success, only 41% organizations implementing change fully met objectives, 44% missed at least one objective and 15% missed all objectives or aborted. Basically 59% change initiatives failed to meet their objectives. The study also discloses the key success factors such as, the highest rating has a top management sponsorship (92%), an employee involvement (72%), an honest and timely communication (70%), a corporate culture that motivates and promotes change, 55% change agents (pioneers of change), a change supported by culture (48%). The lower rating but still important are the following factors, efficient training programs (38%), adjustment of performance measures (36%), an efficient organization structure (33%) and monetary and non-monetary activities (19%). The most considerable of all the above is the human factor because people matter the most in managing change in organization.

Change is something that makes people upset and has the higher potential of failures, loss production or failing quality. On the other end, there is a positive side of change, where he effects of change are important to the survival of the organization. From the perspective of employees both definition and understanding is essence to successfully managing change. As mentioned before uncertainty, a fear of unknown or an expectation of loss make people resistant to change. To eliminate this discomfort we have to make sure that people perceive the change in the positive way and that they are well equipped to deal with the change they expect either though training programs or communication. People have to be aware of the impact of the change of them. To begin with, the change has to be defined to employees in detail and as early as possible. It is a leader responsibility to provide updates as things developed and become clearer. Management has to help people understand what is changing and why and recognize they reluctance. People would like to know answers for what the change will be and when it will happen and why it is happening. Maintaining channels of communication between employees and management will help employees to embrace to change when they become aware of what is coming and what it will mean to them. The employees will appreciate that and be more productive before and after the change. Implementing change poorly is worst than not implementing change at all because poor implementations contaminate people’s attitude toward change and creates problem in the future. Middle management has to be aware that change for change sake’s is a recipe for failure. Change should be pursued in the context of clear goals.

Making change work at FedEx

Today’s fast pace work environment is causing the organizations to change the traditional view of what normal is. FedEx is a perfect example of the organization that is reframing its traditional view in effects of globalization, technology advances, complex multinational organizations, frequent partnering across national borders and company boundaries. The company was transformed by its founder into the world’s leading overnight shipper and major force in ground shipping.

Within forty years of being a leader in delivery service the FedEx Company went though chain of constant and successful changes. The company was founded in June 1971 by Fred Smith with only two small French-made airplanes handful of employees using their own cars or rental tracks for deliveries and its first customer, the Federal Reserve System. Fed was transporting checks and other documents between banks overnight. At that time Smith was already thinking to expand the service with an impact in air-cargo transport. The main focus was on high priority items such as computer parts and medical equipment where fast deliveries were crucial. With help of investors within not even a year FedEx had nine Falcons and was ready to expend it service in Midwest and South with the hub location in Memphis. On March 12, 1973 only six packages were sent in the first overnight flight to Memphis but next month there were 168 packages.

There were also niepowodzenia, the company gained a negative attention when in 1975 Smith was accused of forging documents to obtain loans for the company. Fortunately, he was cleared of charges and resume control of its own company.

FedEx situation significantly improved when government deregulated the air cargo industry what lets FedEx carry more cargo on large planes. FedEx quickly reacted on the new government regulations and replaced small Falcons with Boeing 727, 737 and DC-10’s. This had a tremendous impact on FedEx hub and spoke system. Not only planes where replaced but Smith purchased all leased trucked and run a designation operation to promise delivery by noon the next day for FedEx premium service. In early 1980 FedEx was a winner in the express delivery industry, an industry it has established. Among competitors such United Parcel Services and Emery, FedEx stand out as the first company to tap the over-night delivery market. Today, in one day (twenty four hour period) FedEx plane travel 500,000 miles which is equal to circling the globe twenty times. Smith expanded the company business again in 1981, adding the overnight delivery of letter and documents and in 1984 started operating around the world after purchasing Gelco Express International, an international package shipper base in Minneapolis, Minnesota and several overseas delivery firms. In this year the company rolled out a PC based automated shipping system.

In 1986 the company introduced hand held bar code scanners to track packages. Focused on the improvement of the service FedEx introduced Service Quality Indicator (SQI) in 1988 which allowed tracking lost packages, missed pick-ups, and late deliveries. The scanners were also used to read the barcodes n invoices as well as to track the location of the packages throughout their journey. The company grew again n 1989 when it purchased Flying Tigers, an air cargo delivery specializing in overseas market. This transaction, added to FedEx debt and foreign losses and by 1992 the company stopped shipping packages within Europe but continuing shipping goods to and from Europe. In 1994 Federal Express Corporation officially changed its name to FedEx, in and lunched website www.fedex.com to let customers track their packages on the internet. The website capability was extended in 1996 allowing customers to create shipping labels and order courier pickups. According to Chris Newton, a senior analyst of supply chain strategies for AMR Research in Boston, this emphasis on IT innovation has gained FedEx 30 percent share in the highly competitive business to consumer expense delivery market. Among three possible change models with IT innovations such as Technology Driven Change, Stakeholders Decision Making and Stair Change Model FedEx had chosen the last one.

The Satir Change Model.

The Satir Change model focuses not just on systems or technology but individual people. This model describes the major stages of a change, transition between stages, effects of each stage on feelings, thinking, performance and physiology. Stair Change Model also evaluate helpful and harmful intervention during each stage, making it a robust model which explains the success the number one service industry that uses technology to carter to customer needs (Gordon, 2001).

Studying this model we will understand how individuals cope with unexpected or significant change as go through four stages: Late Status Quo, Chaos, Practice and Integration, and New Status Quo. We will notice how the performance changes as we move to the next stage in this model. In the Late Status Quo we see only small fluctuations in performance from time to time. In this stage people feel comfortable, bored, frustrated or anxious. The foreign element, something that comes from outside of your world, that shatters the familiarity experienced in the late Status. It normally happens when the company reorganizes and puts employee in a new role. Than we have another stage, which is Chaos, it is unfamiliar territory, where the life in unpredictable and individuals’ typical behavior don’t work. People in this stage feel stressed, confused, afraid, hurt, and uncomfortable or have other strong yet not positive emotions. The performance usually drops. Employees can react to Chaos differently, some will be directing other people around and try to stay in control, some will be focusing on small part of problem totally ignoring the Chaos happening around them, and other will be doing everything to find information about what is going on. Some of this actions work some do not. People’s bahaviors and performance are unpredictable, often varying from day to day or even from moment to moment. There is also a good thing about this stage, Chaos can be very creative time but experienced under urgency and stress. The Transforming Idea gives a new understanding of what to do. New ideas are created when being in Chaos. In Practice and Integration we try the new idea or behavior. People learn quickly even though make lots of mistakes but make progress. The performance improves, reaches higher level that before the Foreign Element.

The last step in this model is The New Status Quo the performance starts to level off as people manage new skills. The excellent results continue with less concentration and attention. People feel comfortable about how rapidly they learned new skills and gained confidence. With time, the New Status Quo becomes a Late Status Quo.

FedEx employees are familiar with the organizational team and understand that the company success and survival dependents on IT success. They know what is expected of them and are aware that if something fails so they might have to pick up the pace to fix it. FedEx stuff experience resistance to change which threatens power structure of the company. Resistance is natural reaction when change is to be implemented, However, overcoming resistance requires that “people… open up, become aware, and overcome the reaction, to deny, avoid or blame” (Smith, 2009). It is a natural reaction that the employees resist and questions validity of any new devices but after being trained and educated on particular device they realize that the product is a good. FedEx put significant efforts on employees training programs as well as communication.

As pictured is the graph above, following resistance is another stage called chaos, a lot of unknown which normally takes place upon accepting new device. This stage is required as a means of processing, problem solving, reframing and acceptance and buy-on for change initiatives. There is no place for old behaviors. Than is integration, the one of transforming elements that can show FedEx employees how the device can benefit them and increase value of the company in the market place.

FedEx communicates the value of the change to their employees through their “bottom line” as the bottom line is affected by the consumer behavior, the company communicates that the “initiator of change is (their) customer” (Gordon, 2001, p.3).

FedEx new status quo, which is the last step in the Satir Change Model, is to put company in a better place, stabilize performance at a higher level get more reliable information, anything to reduce change employees resistance, increase internal communication and to reduce customers change resistance.

FedEx objective desire was to reduce the change resistance among employees who fear the lack of competence to change, feel overloaded and overwhelmed. Through the implementation of the new technological devices the company wanted to convince its employees that the risk of change is greater than the risk of standing still. This was helpful for people who feel connected to other people who were identifying with the old. Minimizing resistance to change was important for the company so its employees have a healthy skepticism and be sure that new ideas are sound. Without offering support, counseling and training people will feel that the propose change threaten their notions of themselves. According to Schuler people genuinely believe that any recommended change is a bad idea.

FedEx experienced the most significant change which was a massive reorganization announced in January 19, 2001. The company consolidated four of its five operating subsidiaries under the FedEx brand name and moved most of its IT, sales and marketing stuff into a new company, FedEx Corporate. Simultaneously, FedEx realigned the relationships of these companies to one another, intending to provide customers with a single point of access to sale, customer service, billing and automation systems (CIO.com, 2001).

FedEx has managed is own way to manage resistance to change mainly by communicating with the stuff. Implementing and use of “FXTV” which connected the members of the company trough live broadcast was the FedEx way to increase communication as well as to exploit the internal expertise of company employees worldwide. The close-circuit television network which enables broadcasting with employees at any time around the world is the one of the most valuable FedEx IT resources available when the company goes through a new change or undertakes a new project. Employees appreciate the way the company communicates the reorganization or the project even though it may not have a direct impact on them. They know in advance what will be happening in details that are provided clearly through email and FXTV. This indicate that the company values its employees

Besides FXTV, the Smith company uses IP multicast technology to fuel programming through the company intranet into IP-TV viewer that employees have on their desktop.

FedEx continually works to find a way to reduce change resistance of their employees as well as its customers. Customers value FedEx as a very responsive vendor and are encouraged to do more business with the company. For instance, General Motors Service Part Operation was working with FedEx to improve shipment of small automotive parts from GM facilities to dealers worldwide. FedEx willingly worked with GM to blend their systems expertise and successfully fulfilled GM needs. In today’s fast paste environment, there is ongoing pressure to be responsive to customer needs and at the same time maintain the cost-effectiveness. According to FedEx customers, the company can translate expertise into IT solutions and create opportunity to serve customers better and eliminate waste from its system. From the very beginning the company had shown a potential of managing change without losing touch with its core mission. During the 40 year period of operation in delivery business, FedEx technology and competition have shifted enormously but the company was able to coordinate the following, introducing new services with avoiding fluctuations in growth, profitability and very important efficiency of employee morale. FedEx success was achieved with use of the Satir Change Model and through communication with employees.

As mentioned by Gordon, FedEx has regularly managed change to its advantage by maintaining different task simultaneously, such as perpetuating the company essential mission, remaining innovative, exploiting competitive edge to achieve “value-added services” and seeing the end result of any change as a continual way to build value and utility through customers.

For every prosperous business, it is fundamental to establish communication practices that enable employees to be informed, administer feedback, ask questions and develop a re-framing of the change situation so they become aware and understand overall benefit to the system in a company. The communication practices benefit FedEx employees as they develop the competency and expertise in using these systems so they can move through the frequent changes required to provide value-added products and services to customers.