The market leader in an industry it helped create

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Frederick W. Smith-FedEx

Thirty-eight years along, Federal Express, now known as simply FedEx, remains the market leader in an industry it helped create. The name FedEx is synonymous with overnight delivery. The person in charge of providing the strategic direction for all FedEx Corporation companies is its founder, Frederick W. Smith, the Chairman, President, and Chief Executive Officer. To position the company for the twenty-first century, Smith has organized FedEx into the following Strategic Business Units: FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Custom Critical, FedEx Trade Networks, and FedEx Services. These companies serve more than 220 countries and territories with operations that include 672 aircraft and more than 80,000 vehicles. With more than 290,000 team members worldwide, FedEx handles more than 7.5 million shipments each business day. FedEx has expanded far beyond what Smith started with back in 1971. FedEx has continued to strengthen its industry leadership over the past 38 years and has been widely acknowledged for its commitment to total quality service. Federal Express was the first service company to win the Malcolm Baldrige National Quality Award in 1990. In addition, FedEx has consistently been ranked on Fortune magazine's industry lists, including "World's Most Admired Companies," "America's Most Admired Companies," "100 Best Companies to Work For," and "Blue Ribbon Companies." With growth comes difficulties of coordination, maintaining efficiency, meeting customer expectations, and managing employees. Smith realized that a rigid hierarchy of command-and-control groups would only magnify these difficulties. To give his employees the flexibility and freedom they need to move quickly and help FedEx remain the dominant overnight delivery service in the world, Smith decided to restructure FedEx by emphasizing the team approach to getting work done. He directed his leadership team to empower these groups by giving them the authority and the responsibility to make the changes needed to improve productivity and customer satisfaction throughout the FedEx system. An example of the successful implementation of this new FedEx approach to organizing work can be found in Springfield, Virginia.

With strong support from its managers, employees formed the Quality Action Team to overhaul their package-sorting techniques. The improvements they introduced put couriers on the road 12 minutes earlier than before, and halved the number of packages they delivered late. The success of teams at departmental or local levels encouraged Smith and his leadership team to also assign employee teams to companywide projects. Facing growing competition from United Parcel Service, the U.S. Postal Service, and Airborne Express, FedEx organized its clerical employees into "superteams" of up to 10 people. These teams operated as self-managed teams with little direct supervision from managers. One team cut service glitches, such as incorrect bills and lost packages, by 13 percent. Another team spotted--and worked until they eventually solved--a billing problem that had been costing the company $2.1 million a year. FedEx teams have worked so well because Fred Smith sets standards and reinforces them.

He spearheaded the concept of the "golden package," the idea that every package FedEx handles is critical and must be delivered on time. Whenever there's a crisis, whether due to competitive pressure or to Mother Nature threatening to ground the company's planes, the team with the golden package takes charge to figure out how to make the delivery on time. Smith reinforces group performance by presenting a monthly Circle of Excellence award to the best FedEx station. He encourages innovative thinking by creating a "job-secure environment." He takes the position that "if you hang people who try to do something that doesn't quite work, you'll get people who don't do anything." Managers are by no means obsolete at FedEx. Smith has redefined their roles. There has been a shift in mindset from the traditional leader-centered to the teamcentered leadership approach. Managers are expected to formulate clear, attainable goals for their teams, to solicit employee ideas, and to act on the best employee suggestions. FedEx managers perceive their role as facilitators--and sometimes they are players. During emergencies at the Memphis hub, senior managers have been known to hurry down from the executive suite to help load packages onto the conveyor belts that feed

the company's planes. They practice team leadership by doing, not by telling. According to one company executive, "FedEx has built what is the most seamless global air and ground network in its industry, connecting more than 90 percent of the world's economic activity." It is evident that Smith's leadership in pushing for a much more open, flexible, team-based organization has been instrumental in keeping FedEx's lead position in overnight package service. It is also one of the reasons that FedEx has continuously earned high marks as one of the top companies to work for in the United States. GO TO THE INTERNET: To learn more about Fred Smith and FedEx, visit their Web site ( Support your answers to the following questions with specific information from the case and text or with other information you get from the Web or other sources.

1. How do the standards set by Fred Smith for FedEx teams improve organizational performance?

2. What motivates the members of FedEx to remain highly engaged in their teams?

3. Describe the role FedEx managers play in facilitating team effectiveness.

4. What type of teams does FedEx use? Provide evidence from the case to support your answer.

5. Leaders play a critical role in building effective teams. Cite evidence from the case that FedEx managers performed some of these roles in developing effective teams.


6. The Big Five model of personality categorizes traits into dimensions of surgency, agreeableness, adjustment, conscientiousness, and openness to experience (Chapter 2). Which of these dimensions do you think Fred Smith possesses?

7. The normative leadership model identifies five leadership styles appropriate for different situations that users can select to maximize decisions (Chapter 5). Which of the five leadership styles is practiced by FedEx team leaders?

8. The case reveals that at the Memphis hub senior managers have been known to hurry down from the executive suite to help load packages during emergencies in order to get the plane off on time. FedEx leaders want to be seen as coaches, not managers. Specific guidelines can help a leader become an effective coach (Chapter 6). Which of the guideline(s) does the example above represent?

9. Research on followership describes five types of followership (see Exhibit 7.3, Chapter 7).

Which of these types will work best in FedEx's team environment as described in the case, and why? CAS E EX E R C IS E AN D RO LE -P LAY Preparation: You are senior vice president for operations at FedEx. FedEx's monthly Circle of Excellence Award is presented to the best FedEx station. This time the best station was one that truly represented the spirit of teamwork in problem solving. The station manager spotted a loading problem that was costing the company millions of dollars a year and decided to leave it up to the station as a group to find ways of solving the problem. After a series of group meetings and key decisions, a solution was found that successfully took care of the loading problem and was adopted by the rest of the company. It has come to Fred Smith's attention that a key reason for the station's success is the leadership role played by the team leader during this process. Smith has asked that you use the award ceremony as an opportunity to highlight the virtues of the group-centered approach of leadership, particularly with respect to decision making in teams. Develop the key parts of the speech you will give on this occasion. Your instructor may elect to break the class into groups to share ideas and put together the speech or simply ask each student to prepare an independent speech. If you do a group speech, select one leader to present the speech to the entire class. Role-Play: One person (representing oneself or a group) may give the speech to the entire class, or break into groups of five or six and deliver speeches one at a time.

Reference no: EM131069713

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