Federal Express - Reward Strategy and Performance Management System

1. Introduction

Federal Express (FedEx) is one of the largest logistics company in the world who commenced its operations from year 1971 and now they are one of the leading company in this field. Fred Smith is current Chief Executive who founded the company and when he was student in Yale University, he comes up with an idea of a global logistics company. Currently FedEx providing services in more than 220 countries and their core business is to provide transportation services around the globe and also they delivers businesses products in different parts of the world (Fedex.com, 2016).

FedEx, previously known as Federal Express, is a major player in the package delivery market. They are one of the world's largest airline in terms of freight tons flown and are fourth largest in rank, in the terms of fleet size. They have almost 300,000 employees in the company and their sales revenue is over $40 Billion (Grant, 2016).

Among the most important development for the FedEx Company was in 1990’s when they introduced and enabled international transactions for online customer and merchants. Later in 2003 FedEx a leading global logistics solutions provider, recognized one of the best companies in US. The company had received a high rating in different areas like employee turnover, compensation, work diversity and morale (Prashanth and Gupta, 2003)

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Figure 1: FedEx Official Logo, Source: (www.digitalizuj.me, 2014)

1. Review of the Organization’s Reward Strategy and Performance Management System

1. Performance Appraisal System

Basically performance appraisal system is a concept which stated in early 20th century. It is the procedure to obtain, analyze and records information regarding the employees of the company to evaluate and improve their performances. This system is steadily becomes a part of a company’s strategic move towards integrating HR practices and the organizational objectives. By this system, organizations seek to measure employees so they can improve their capabilities and performances and distribute rewards. Therefore, performance appraisal system is one of the major components of the company to know the strengths and weaknesses of their employees in order to establish training and recruiting employees with high performances (Padmaja, Rao & Venkateswara, 2015).

However, there are so many types of performance appraisal systems which are exists and every company is using different methods which basically best suitable for them to improve their performances. Regarding Federal Express Company (FedEx), they are currently using 360-Degree Appraisal System in their organization, the program which is developed by the Real Time Performance (Sunder and Sarangi, 2009).

Nowadays, majority organizations are using 360-degree appraisal system for both personal development and evaluation. Mostly organizations which are using this system actually want to give value to the input of their employees regarding the effectiveness of their supervisors and the managers as well. This system is very much reliable and convenient for the employees because it is allowing two ways of feedbacks. Basically 360-degree appraisal systems allow the employee to get feedback from various sources where it may have reported by the customers and the staffs, and because of this information, the organization will be able to identify the strengths and the development needs (Gary, 2003).

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Figure 2: 360-degree appraisal, Source: (www.360degree.monty2.netready.biz, 2016)

The actual reason for the use of 360-degree appraisal system in FedEx Company is to identify the strength of leadership and develops leadership skills in high post staff such as managers and directors of the company. Nevertheless, this system really provides some constructive results towards the performance of the company (Kaur, 2013).

Furthermore, by the use of 360-degree appraisal system in FedEx, it allows them to get their best managers. The reason to found best manager is that if the manger gets low score in two times during the employee appraisal then the position will be awarded to some other employee. This kind of appraisal system will motivates the managers and they start cooperating with their workers otherwise they will lose the position very soon and due to this risk they work really hard to keep their position safe. Therefore, with the help of real time performance, FedEx Company achieved some high competitive advantages by using 360-degree appraisal system in their organization which really improved worker engagement and leadership development (Leanne and David, 1998).

1. Reward Strategy

Reward strategy provides a sense of purpose and direction as well as a framework to develop reward policies, practices and its processes. This system is totally based on the understanding of the needs of the organization and its employees and how they can be satisfy with it. Actually this developing system will improve the chances of employees which are seeking actively to contribute to the attainment of their employer objectives. In addition to this, there are so many types of reward strategies and mostly companies used two strategies such as Intrinsic Rewards and Extrinsic Rewards (Bussin and Van, 2014).

FedEx Company is currently using extrinsic reward strategy which is to motivate their workers and this reward system usually focuses on Salary, Promotions, Bonuses and Fringe benefits. In FedEx Company, employee’s rewards are based on extrinsic reward system because the employees of current young generation mostly focus on salaries, promotions, bounces and fringe benefits. The survey on FedEx which is conducted in Canada, there was just one complaint registered that is regarding the engaging workers of the organization is quite slow. Thus, FedEx Company is providing rewards to their workers by increasing salaries which is totally based on their performances (Bussin and Van, 2014).

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Figure 3: Employee Motivation, Source: (www.web-books.com, 2016)

Besides that, FedEx Company is also providing tuition assistance for their workers who are really willing to carry on with their studies and organization is paying for them. Furthermore, FedEx Company is also using variable payment method where they are giving rewards to those persons who are contributing individually or as group for the company. Moreover, FedEx Company also provides paid leave to those employees who applied for the wedding leave, maternity, paternity leaves as well. In addition to that, FedEx Company provides some other rewards as well such as discounts on air tickets, discounts on personal shipping, and pension scheme after retirement (Heneman et al., 2001).

FedEx Company cares their employees a lot; therefore, they come up with a special program which is knows as Leadership Evaluation and Awareness Process (LEAP) which basically is to encourage their non-managerial employees so they can move up to the managerial posts (Galagan, 1994). FedEx founds out that this programs is quite useful tool for them and for their workers as well. Therefore, each year over 3000 of FedEx workers participates in this program.

In addition to that, organization can also create Survey Feedback Action (SFA) which actually focused towards the communication of workers. According to Björklund et al., (2007) by using SFA, organizations can easily gather these surveys from each department by going anonymous and this thing surely will help out organizations to establish new and more relevant training and which can improve the satisfaction level of their employees.

1. Evaluation

FedEx Company is one of the largest organizations in the world which provides services using 360-degree appraisal for evaluating performance throughout the company. This appraisal is one of the best methods which organizations can used to motivate their employees. But unfortunately, this appraisal system has some challenges as well which can impact negatively so the organizations can take some wrong decisions as well towards their workers (Kaur, 2013).

Actually if we look at the 360-degree appraisal system, it gives so many benefits towards organization. This appraisal system is creating awareness among all of the employees and also to the senior management. Basically this system supports the organization in order to make some better interpersonal relationship between departments and improve relations between managers and the subordinates (Kaur, 2013).