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How Strategic Human Resource

Management Contributes to Achieve


the Competitive Advantages of
FedEx
Term Paper on
How Strategic Human Resource Management
Contributes to Achieve the Competitive
Advantages of FedEx
Course: Strategic Human Resource Management
Course Code: HRM 416
Section: 1

Submitted to:
Mr. Zahidul Karim
Lecturer
Department of Business Administration
East West University

Submitted by:
1. Moonzarin Hamid ID: 2006-2-10-250

2. Md. Rezaur Rahman ID: 2008-2-10-018


3. Farhana Ferdous ID: 2008-2-10-023
4. Shati Itminan ID: 2008-2-10-121

Date of Submission:
December 14, 2010
December 12, 2010

Mr. Zahidul Karim


Course Instructor (HRM 416)
Department of Business Administration
East West University, Dhaka
Subject: Submission of the Strategic Human Resource Management Term Paper
Dear Sir,
Here is the term paper on “How Strategic Human Resource Management Contributes to Achieve
the Competitive Advantages of FedEx” that we are assigned to prepare as a part of Management
Research course curriculum.

The group intuitively studied one of the most important topics which are a vital issue for the
“FedEx Express”. Through this research the group has identified different factors associated with
Strategic Human Resource Management of FedEx Express.

A special debt is due to our instructor Mr. Zahidul Karim, our respected faculty for the
valuable guidance in the preparation of this report. We have been immensely benefited from his
valuable guidance in the process of understanding and preparing this report. His advice and
guidance in the work has immensely inspired the team to consistently work hard.. Without his
active support, continuous encouragement, and constructive criticism, probably it would not be
possible to write an informative and objective report.
We also acknowledge the contributions of the librarian of East West University for allowing us
to utilize their library facilities. We also should show our gratitude to the workers of “FedEx
Express” for providing us many helps.
It was a unique opportunity for the team to conduct such important research that correlates
course related knowledge with the real management research problem. This research has created
a scope to widen the experience of the novice researchers to conduct research in future. The team
hopes that, despite of all the limitations, the report will give a fair idea on this issue and we will
be available to answer to any questions or queries regarding the report.

Sincerely yours,

1. Moonzarin Hamid ID: 2006-2-10-250 ……………….

2. Md. Rezaur Rahman ID: 2008-2-10-018 ……………….


3. Farhana Ferdous ID: 2008-2-10-023 ……………….
4. Shati Itminan ID: 2008-2-10-121 ……………….
Table of Contents
Content Page

Executive Summary ………………………………………………………………. v

1. Introduction …………………………………………………………………..… 6

2. Research Methodology ………………………………………………………..… 7

2.1 Research Design ……………………………………………………..…. 7

2.2 Primary Sources …………………………………………………..……. 7

2.3 Secondary Sources ………………………………………………..…..... 7

2.4 Limitations………………………………………………………...………7

3. Definitions ………………………………………………………………..………. 8

3.1 Human Resource Management (HRM) ……………………….……… 8

3.2 Strategic Human Resource Management (SHRM) ………………... .. 8

3.2.1 Difference between HRM & SHRM ………………………... 9

3.3 Competitive Advantage ……………………………………………….. 10

4. Overview of FedEx ……………………………………………………………... 12

4.1 Company Profile ………………………………………………….. ….. 12

4.2 FedEx’s Competitive Advantages ……………………………….…… 13

5. FedEx SHRM Practices …………………………...…………………… ……. . 13

6. Competitive Advantages through SHRM ……………………………..…...…. 18

7. Comparison of FedEx’s Practice & Standard SHRM Practice ……….…..… 20

8. Recommendation ……………………………………………………………..… 22

9. Conclusion ………………………………………………………………..……... 23

Bibliography

References ………………………………………………………………...……..… 24
Executive Summary
Strategic human resource management broadens the ideas of Human Resource management
several steps further. Human resource management tries to improve effectiveness of the
organization in different sectors like selection, recruitment, training, job analysis, performance
appraisal etc. But strategic human resource management relates all of these moreover; it helps to
identify all the internal strengths of an organization with the external opportunities and by
matching those, defines competitive advantages.
A number of studies suggest that strategic HRM can contribute to firm performance. Many
organizations are undergoing changes as a consequence of globalization, new technology
application and fundamental changes of work and employment relations. There is increasing
demand to transform HRM practices from focusing on a functional role to a strategic role, which
means to put more emphasize in its strategic human resource management.

Federal Express also known as FedEx is one of the largest and prominent transportation
companies in the world. FedEx has been always stereotyped as a service of highest quality. The
competitive advantage of FedEx is its continuous concern on quality management. FedEx is also
one of the renowned organizations for practicing strategic human resource management.
This research paper’s aim is to identify the competitive advantage of FedEx and also reveal how
strategic human resource management helped FedEx to maintain its competitive advantages over
decades.
1. Introduction
Human Resource Management is considered as the philosophy, policies, procedures and
practices that are connected to the administration of the employees of an organization. It is
connected and related to the administration of the employees of a company. It has a great
contribution in successful process of attracting, developing, motivating as well as maintaining a
high-performing workforce that helps to add to the competitive advantage of the organization.
Furthermore, HR has a great impact with the institution and the implementation of the
different policies, programs and procedures that can affect the success and failure of the
performance, competences as well as the loyalty of the entire workforce of the organization.
Because of the policies and procedures, individuals are being attracted, retained, motivated as
well as developed in order to perform the work of the organization. This is due to the fact that
through these policies and procedures, the organization will seek to mold as well as shape the
actions of the employees in order to operate successfully. Thus, comply with the different public
policies, offer high quality of employment that will help to improve and maintain the position of
the company in the market by the process of reinforced ability to compete and serve.
Above all, the process of incorporating the top management’s goals to the SHRM
practices and policies will help to bring out as well as reward the different types of behavior that
are important in achieving the strategy of organization. The effectiveness of the SHRM practices
can help to improve the competitive advantage in creating both the cost leadership and
differentiation and focus.

FedEx, one of the top transportation companies of the world has been practicing Strategic
Human Resource Management over years. Here in this research paper, we tried to identify how
strategic human resource management helped to achieve its competitive advantages.

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2. Research Methodology
In order to carry out the research study, certain approaches and methodologies are required to be
followed. The following approaches were followed in conducting this term paper.

2.1 Research Design and Type:


The research was basically based on descriptive method. The strategic human resource practices
of FedEx was gathered by different sources and then analyzed. The uniform or standard SHRM
principles were also gathered from different books. By comparing those two data, we got our
conclusion.
2.2 Primary Sources:
The report was mainly based on the data derived from primary sources and the primary sources
of data were mainly derived from the different articles written on “FedEx” by different scholars
and published in the websites and magazines.
2.3 Secondary Sources:
The secondary sources that helped us to perfect and enrich this term paper are given below.

• Text book of SHRM


• Newspaper
• Harvard Business Review

2.4 Limitations:

1. Time constraints: Limitation of time was one of the most important factors that imposed
restrictions on conducting the study extensively. Due to the time limitation many aspects
could not be investigated in the present study.

2. Dearth of Secondary Data: In Bangladesh there is an acute dearth of secondary data in


every sector. This sector is not exception to this. The amount of secondary data needed to
thoroughly investigate the study was scarce. Thus, it depreciated the authenticity of the
findings of this study.

3. Privacy: It was not possible for us to collect some information that companies/customers
considered to be confidential.

4. Lack of Experience: As an apprentice, it was not possible for me to apply sophisticated


statistical tools and techniques to analyze data. Had these techniques been applied, more
detailed and authentic finding could have been derived. 

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3. Definitions

3.1 Human Resources Management (HRM)

According to, Human Resources Management is the philosophy, policies, procedures, and
practices that are connected to the administration of the employees of an organization. HRM is
particularly linked with all the activities that contribute to successfully attracting, developing,
motivating, and maintaining a high-performing workforce that adds to an organization’s
competitive advantage. HRM is involved with the institution and implementation of policies,
programs, and procedures that affect the performance, competences, and loyalty of the
organization’s workforce. Through these policies and procedures, individuals are attracted,
retained, motivated, and developed to perform the work of the organization. It is through these
policies and procedures that the organization seeks to mold and shape the actions of the
employees to operate successfully, comply with various public policies, provide satisfactory
quality of employment, and improve its position in the market place through strengthened ability
to compete and serve.

3.2 Strategic Human Resource Management

Strategic human resource management can be defined as the linking of human resources with
strategic goals and objectives in order to improve business performance and develop
organizational culture that foster innovation, flexibility and competitive advantage. In an
organization SHRM means accepting and involving the HR function as a strategic partner in the
formulation and implementation of the company's strategies through HR activities such as
recruiting, selecting, training and rewarding personnel.

The main goal of the strategic human resource or SHRM is the improvement of the way HR are
managed in strategic manner in the organization, with the connection to the definitive goal of the
improvement organizational performance, that are judged by its influence on the corporate
strategy of the company, and the concern of the customers and shareholders.

HRM can help to determine the HR needs in order to support the strategic objectives as
well as to ensure that all of the employees are selected, trained, evaluated as well as rewarded in
ways that helps to achieve the objectives of the business. In addition, the strategic HRM is a
linear, balanced process that begins with the identification of the goals that will serve as
guidelines in the HR practices.

Above all, the integration of the HR programs with the goals of the entire organization
can help to increase the value of the organization.

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The key features of SHRM are

• There is an explicit linkage between HR policy and practices and overall organizational
strategic aims and the organizational environment
• There is some organizing schema linking individual HR interventions so that they are
mutually supportive
• Much of the responsibility for the management of human resources is devolved down the
line

Human Resource Management professionals are increasingly faced with the issues of employee
participation, human resource flow, performance management, reward systems and high
commitment work systems in the context of globalization. Older solutions and recipes that
worked in a local context do not work in an international context. Cross-cultural issues play a
major role here. These are some of the major issues that HR professionals and top management
involved in SHRM are grappling with in the first decade of the 21st century:

• Internationalization of market integration.


• Increased competition, which may not be local or even national through free market
ideology
• Rapid technological change.
• New concepts of line and general management.
• Constantly changing ownership and resultant corporate climates.
• Cross-cultural issues
• The economic gravity shifting from 'developed' to 'developing' countries

SHRM also reflects some of the main contemporary challenges faced by Human Resource
Management: Aligning HR with core business strategy, demographic trends on employment and
the labor market, integrating soft skills in HRD and finally Knowledge Management.

3.2.1 Difference between HRM & SHRM

In the last two decades there has been an increasing awareness that HR functions were like an
island unto itself with softer people-centered values far away from the hard world of real
business. In order to justify its own existence HR functions had to be seen as more intimately
connected with the strategy and day to day running of the business side of the enterprise. Many
writers in the late 1980s started clamoring for a more strategic approach to the management of
people than the standard practices of traditional management of people or industrial relations
models. Strategic human resource management focuses on human resource programs with long-
term objectives. Instead of focusing on internal human resource issues, the focus is on addressing
and solving problems that affect people management programs in the long run and often
globally. Therefore the primary goal of strategic human resources is to increase employee
productivity by focusing on business obstacles that occur outside of human resources.

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The primary actions of a strategic human resource manager are to identify key HR areas
where strategies can be implemented in the long run to improve the overall employee motivation
and productivity. Communication between HR and top management of the company is vital as
without active participation no cooperation is possible.

3.3 Competitive Advantages:  A competitive advantage is an advantage over competitors


gained by offering consumers greater value, either by means of lower prices or by providing
greater benefits and service that justifies higher prices.

Fig. 1: The model of competitive


advantage

a. Cost Leadership Strategy

This generic strategy calls for being the low cost producer in an industry for a given level of
quality. The firm sells its products either at average industry prices to earn a profit higher than
that of rivals, or below the average industry prices to gain market share. In the event of a price
war, the firm can maintain some profitability while the competition suffers losses. Even without
a price war, as the industry matures and prices decline, the firms that can produce more cheaply
will remain profitable for a longer period of time. The cost leadership strategy usually targets a
broad market.

Some of the ways that firms acquire cost advantages are by improving process efficiencies,
gaining unique access to a large source of lower cost materials, making optimal outsourcing and

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vertical integration decisions, or avoiding some costs altogether. If competing firms are unable to
lower their costs by a similar amount, the firm may be able to sustain a competitive advantage
based on cost leadership.

Firms that succeed in cost leadership often have the following internal strengths:

• Access to the capital required making a significant investment in production assets; this
investment represents a barrier to entry that many firms may not overcome.
• Skill in designing products for efficient manufacturing, for example, having a small
component count to shorten the assembly process.
• High level of expertise in manufacturing process engineering.
• Efficient distribution channels.

Each generic strategy has its risks, including the low-cost strategy. For example, other firms may
be able to lower their costs as well. As technology improves, the competition may be able to
leapfrog the production capabilities, thus eliminating the competitive advantage. Additionally,
several firms following a focus strategy and targeting various narrow markets may be able to
achieve an even lower cost within their segments and as a group gain significant market share.

b. Differentiation Strategy

A differentiation strategy calls for the development of a product or service that offers unique
attributes that are valued by customers and that customers perceive to be better than or different
from the products of the competition. The value added by the uniqueness of the product may
allow the firm to charge a premium price for it. The firm hopes that the higher price will more
than cover the extra costs incurred in offering the unique product. Because of the product's
unique attributes, if suppliers increase their prices the firm may be able to pass along the costs to
its customers who cannot find substitute products easily.

Firms that succeed in a differentiation strategy often have the following internal strengths:

• Access to leading scientific research.


• Highly skilled and creative product development team.
• Strong sales team with the ability to successfully communicate the perceived strengths of
the product.
• Corporate reputation for quality and innovation.

The risks associated with a differentiation strategy include imitation by competitors and changes
in customer tastes. Additionally, various firms pursuing focus strategies may be able to achieve
even greater differentiation in their market segments.

The example of differentiation strategy can be Apple corporations. Apple undertakes an


intensive research program continuously to invent new technologies. For example: Iphone, Ipad
etc.

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c. Focus Strategy

The focus strategy concentrates on a narrow segment and within that segment attempts to
achieve either a cost advantage or differentiation. The premise is that the needs of the group can
be better serviced by focusing entirely on it. A firm using a focus strategy often enjoys a high
degree of customer loyalty, and this entrenched loyalty discourages other firms from competing
directly.

Because of their narrow market focus, firms pursuing a focus strategy have lower volumes and
therefore less bargaining power with their suppliers. However, firms pursuing a differentiation-
focused strategy may be able to pass higher costs on to customers since close substitute products
do not exist.

Firms that succeed in a focus strategy are able to tailor a broad range of product development
strengths to a relatively narrow market segment that they know very well.

Some risks of focus strategies include imitation and changes in the target segments. Furthermore,
it may be fairly easy for a broad-market cost leader to adapt its product in order to compete
directly. Finally, other focusers may be able to carve out sub-segments that they can serve even
better.

4. Overview of FedEx
4.1 Company Profile
FedEx express is the world’s leading express transportation company that provides fast and
reliable delivery to every U.S. address and to more than 220 countries and territories. FedEx
Express uses a global air-and-ground network to speed delivery of time-sensitive shipments,
usually in one to two business days with the delivery time guaranteed.
The company has in excess of one million customers, served by more than 140,000 employees
across approximately 50,000 drop-off locations, with 645 aircraft and approximately 42,000
motorized vehicles in its integral global network.
FedEx Express takes its commitment to diversity seriously. The company was built on a
philosophy that puts people first. That philosophy, People-Service-Profit, maintains that when a
company establishes a culture that is respectful and rewarding for employees, they will deliver
exceptional service to customers. Customers, in turn will reward the company with their business
and loyalty, creating a profitable enterprise that can provide job satisfaction and job security for
its employees. FedEx Express is a subsidiary of FedEx Corporation, connects areas that generate
90% of the world’s gross domestic product in 24-48 hours with door-to-door, customs-cleared
service and money-back guarantee. The company’s unmatched air route authorities and
infrastructure make it the world’s largest express transportation company, providing fast, reliable
and time definite transportation.

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4.2 FedEx’s Competitive Advantage
Federal Express’s strategy is to differentiate itself from its competitors by offering superior
customer service and guaranteed on-time deliveries. Since the same basic technologies are
available to UPS, DHL, and FedEx other competitors, it is FedEx workforce – its human
resource – who necessarily provide FedEx with a crucial competitive advantage.

FedEx’s overall HR strategy is aimed at building a committed, competent, and customer-oriented


workforce.

5. FedEx’s SHRM Practices


1. Policies built on “People-Service-Profits”

Federal Express Corporation’s greatest asset is its people. The company aims to promote a
working environment where the employees and contractors feel respected, satisfied and
appreciated. The FedEx philosophy is that people are the primary link in the value chain, and
thus, value is created by focusing on employees first. This emphasis on employee satisfaction is
illustrated by the organization’s annual attitude survey.

At FedEx, the attitude survey forms part of the annual managerial evaluation and reward process.
FedEx’s philosophy has gained an increasing base of empirical support. For example, one
scholar hypothesized that HR practices would be related to employee attitudes which would be
consequently related to customer satisfaction. They found significant relations between HR
practices and customer reports of the quality of service they received. Federal Express applies
commonly known managerial concepts and effectively translates them into action through a
philosophy they define as “people, service, and profits”. They point out that it is no accident that
“people” are listed first in the phrase. Federal express says that people are placed first because it
makes good business sense.

The People, Service, Profits philosophy is implemented by asking and answering several basic
questions. The first is, “What is expected of me, and what do you want me to do?” Federal
Express tries to spend a lot of time answering that question for their personnel by having an
extensive orientation program that explains Federal Express’ values. The second most important
question is, “What is in it for me?” Federal Express provides tangible evidence of what is in for
them. The company strictly adheres to a promotion from within and career progression policy.
An extensive job posting system keeps employees informed of opportunities. When a position is
open, notices are posted throughout the company for all employees to see.

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2. Recruitment and Selection
According to (2002), recruitment is an HRM process that is involve in the discovery,
development, seeking, and attracting the right people to fill actual or anticipated job vacancies.
Selection is the process of obtaining and using information about job applicants in order to
determine who should be hired for short or long-term positions. Placement involves matching
individuals to jobs, based on the demands of the job and the competencies, preferences, interests,
and personality of the individual. Selection and placement yield a match between the
organization’s needs for specific qualified individuals and different needs of employees that
determine the type of work that is satisfying for them.

The core philosophy of FedEx that governs its every activity is People-Service-Profit (PSP):
Take care of the people; they will in turn deliver impeccable service demanded by the customers,
who will reward the company with the profitability necessary to secure FedEx’s competitive
advantage. FedEx is dedicated to the principle that stresses the importance of its people as assets
of the company. The company believes that motivated and diligent people provide indispensable
professional service to ensure profits and continued growth. The company also makes selection
regardless of race, religion, gender, national origin, citizenship, disability, or age.

3. Career Development/ Advancement


Career development is an ongoing, formalized effort by an organization that focuses on
developing and enriching the organization’s human resources in light of both the employees’ and
the organization’s needs. Career planning is the process by which an individual formulates career
goals and develops a plan for reaching those goals. Career development looks at individual
careers from the viewpoint of the organization, whereas career planning looks at careers through
the eyes of individual employees.

Every FedEx office and worksite strives to cultivate an open, supportive environment where each
employee can reach their full potential and freely contribute to the company’s success. The
company’s founding philosophy, People-Service-Profit, supports the fair treatment of its people
as the most valued asset and cornerstone of FedEx’s success.

There is ample opportunity for all employees to advance within the company. Another popular
career advancement tool is a tuition refund program, where the company reimburses employees
for their tuition costs.

4. Incentives and Benefits


Career Advancement is not the only incentive used to increase the retention of employees. One
approach that works well is the awards program, which is designed to reinforce desired behavior
such as quality work and customer focus. Federal Express believes this and other incentive

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programs help them deliver high-quality service and keep their people motivated. Federal
Express knows that acknowledging efforts is essential for a motivated and satisfied work force,
and that such acknowledgement stimulates new ideas and encourages better performance and
team spirit. One of the nice things about the Federal Express incentive is that the customers are
left out of this reward process. Customers have a voice in selecting outstanding service.

The Golden Falcon Award is given to full-time employees who have demonstrated service to
their customers that goes above and beyond the call of duty. Nominations for these awards are
usually based on unsolicited internal, as well as external, customer letters citing outstanding
performance. Winners of these awards are announced monthly, usually through company
publications and video programs. Winners receive an award and, most important, shares of stock.

Federal Express' highest award is the Five Star Award, given to individuals for outstanding
performance which has materially helped the corporation enhance service, profitability, and
teamwork. Several categories of employees are eligible for the award including non-managerial
employees, managers or senior managers, and managing directors and officers.

The company offers an active work environment that supports its employees in building their
career, and a broad compensation and progressive benefits program that rewards every
employee’s contributions to the business.

FedEx Corporation offers its employees with outstanding benefits and an extremely competitive
salary. In addition, the company also provides rewards that go well beyond financial
compensation and fringe benefits. Each employee has opportunity to grow, succeed and be
recognized for his or her contributions.
The company is also aware that employees have unique and diverse needs. That is the reason
why it created a benefits package that provides flexible, customized coverage so that the
employees can choose the options that best address their benefit needs. Among the benefit
options offered are medical, dental and vision care, disability protection, medical absence pay,
short- and long-term disability and worker’s compensation. Basic life insurance programs are
company-paid with supplemental options available at a cost.

The company also provides two plans, a pension plan and a retirement savings plan, designed to
help the employees obtain their long-term savings goals and help prepare for retirement. In
addition to tuition assistance programs, everyone can participate in the company’s employee
stock purchase plan, receive reduced rate shipping, global travel opportunities and participate in
its credit association.
 

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4. Communication
Federal Express’ success with employee relations and retention depends on candid
communication. Federal Express spends enormous time on their internal employee response
program. The heart of this program is an open door procedure where employees are encouraged
to find answers to situations they find disagreeable, controversial, or contrary to existing policy.
Open doors, especially the way Federal Express uses them, can be effective, but perhaps the
company’s most successful communication tool is their renowned Guaranteed Fair Treatment
Procedure (GFTP). This procedure which they believe is the cornerstone of their “people”
philosophy, gives each Federal Express employee the right to have any eligible issue go through
a systematic review by progressively higher levels of management. Their GFTP helps ensure that
personnel have a right to discuss complaints without fear of retaliation.

The company also believes it helps them maintain an open atmosphere as well as keep their
complaint handling process fair and equitable. The Federal Express survey/feedback/action
program compliments the GFTP and other communication tools. It is an annual survey of
employee attitudes. Management uses the survey to learn what they need to do to improve in
specific departments and with the company in general.

5. Employee Motivation
Higher employee motivation leads to greater creativity, productivity and discretionary effort,
which in turn lead to improved company performance.

6. Employee Training
Top management at FedEx Express has always believed that training is a key factor in a
successful business. FedEx Express values training; it is a policy that management members join
in 40 hours of training every year. The company attempts to achieve 100% customer satisfaction
and believes that only committed workforce can achieve this standard. FedEx Express’ corporate
culture emphasizes the importance of treating its people with dignity and respect. This includes
giving employees the liberty to do their jobs and the tools they need including training, to
perform at their highest level with appropriate recognition and rewards for a job well done.

FedEx Express believes that effective and timely training plays a critical role in not only
attracting and retaining a highly motivated and productive workforce but also is an important
factor in its ability to deliver superior value for the shareholders and service to the customers.

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The major characteristics that FedEx have can be expressed in the short list given below.

• Skilled Workforce selection – Recruits skilled and competent workforce at all levels and
institutes various promotion – from within activities aimed at giving employees every
opportunity to fully utilize their skills gifts at work. The company follows no lay-off
policy.

• Communication Strategy – Uses various mechanisms to build healthy two-way


communication. All the employees and senior managers routinely participate in
interactive discussion and question-answer programs.

• Compensation Strategy – Provides highly competitive salaries and pay-for-performance


incentives. Gives guarantee of greatest possible fair treatment and employee security for
all employees.

• Training and Development Strategy – Training is one of the most important events at
FedEx to meet the goal of 100 percent customer satisfaction. FedEx follows ‘promotion
from within policy’. For this, FedEx undertakes and arranges extensive training for all
employees and managers covering quality management, leadership concepts, and
company philosophy.

• Employee Retention – FedEx Express, with a turnover rate of about 1 percent, is one of
the companies that have found effective ways of keeping their employees. One of the
reasons it is successful is that employees have career opportunities. Federal express has a
policy of strictly promoting from within. It also recognizes the efforts of its people
through awards, open communication, and other incentives. Employee retention is
interrelated with recruitment and employee relations. Each impact the other and all three
is related. Federal Express begins its retention efforts by centralizing its recruitment
efforts. Federal express retains employees as well as improves their skills, by making
sure its employees receive proper training in job performance skills.

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6. Competitive Advantages through SHRM
Strategic human resource management aims at the improvement of the way human resources are
managed strategically within organizations, with the definitive goal of improving organizational
performance, as judged by its impact on the organization’s declared corporate strategy, the
customer or shareholders. Strategic human resource management (SHRM) is a philosophy of
people management based on the belief that human resources are uniquely important to sustain
the success of a business. SHRM can be defined as the process of linking the human resource
functions with the strategic objectives of the organization in order to improve performance.
Strategic human resource management involves the linking of HRM with the strategic goals and
objectives of the organization in order to achieve a progressive business performance and
achieve an organizational structure that promotes innovation and flexibility.  
Strategic HRM according to has emerged as a major approach to improving the competitive
advantage of the firm. The goals and objectives of HRM are aligned with the strategic objectives
and plans of the organization. The role of HRM is to determine the human resources needed to
support strategic objectives and to ensure that employees are selected, trained, evaluated, and
rewarded in ways that further the achievement of business objectives. Strategic HRM is
frequently described as a linear, balanced process that begins with the identification of goals that
will guide human resource practices. The integration of the HR programs with the goals of the
organization will result to the organization’s increased value. The recruitment,
compensation, performance appraisal, promotion, training and other functions are designed and
managed so that they work towards the strategic objectives of the firm.  
 
Strategic HRM has the purpose of improving the way that human resources are managed within
firms. The main objective of strategic HRM is to improve organizational performance as judged
by its impact on the organization’s declared corporate strategy. Strategic human resources
management means accepting the HRM function as a strategic partner in both the formulation of
the organization’s strategies and the implementation of those strategies through activities such as
recruiting, selecting, training, and rewarding personnel. The enhanced value of innovation in
determining competitive advantage requires organizations to attract, train and develop, and retain
employees of the highest quality.

Over time and throughout rapidly changing circumstances, organizations must be able to sustain
the competitive advantage that the knowledge and skills of these employees provide. In the past,
competitive advantage could be gained through finding better, cheaper access to financial capital,
or marketing a new product, or inventing some new technologies. While cheap and ready access
to capital, high-quality products, and new technology remain important components of any
organization’s competitive advantage, today’s business environment requires a greater focus on
the human resources element in business. Out of this realization has come SHRM.

How Strategic Human Resource Management Contributes to Achieve the Competitive Advantages of FedEx   Page 18 
 
Fig. 2: How SHRM helps to
achieve competitive advantages

Effective SHRM planning aids in creating a competitive advantage for an organization. SHRM
planning when done correctly provides a number of direct and indirect benefits for an
organization.

• Identification of gaps between an organization’s current situation and desired future


• Explicit communication of organizational goals
• Encouragement of proactive instead of reactive behavior
• Stimulation of critical thinking
• Creation of common bonds and a sense of shared values and expectations
• Identification of the potential problems and opportunities
• HRM costs may be lower because management can anticipate imbalances before they
become unmanageable and expensive
• More time is available to locate talent because needs are anticipated and identified before
the actual staffing is required
• Better opportunities exist to include women and minority groups in future growth plans.
• Development of managers can be better planned.

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7. Comparison of FedEx’s Practice & Standard SHRM
Practice
We have seen earlier that, FedEx has been practicing the “High Quality” dimension to achieve
competitive advantage. The set standard characteristics of practicing quality enhancement
strategy are given below.

For firms pursuing a strategy of quality enhancement the role of behaviors include:

• A high concern for quality


• A high concern for process how goods and services are made or delivered.
• Low risk taking activity
• High level of commitment

The key HR practice includes:

• Relatively fixed and explicit job descriptions


• Relatively egalitarian treatment of employees and some guarantees of employment
security
• High levels of employee participation on work issues
• Extensive and continuous training.

Over the last twenty years, protagonists of the resource-based view of competitive advantage
have produced an increasing amount of empirical research substantiating their espoused theories
that the resources and capabilities of the firm are the foundation for its long-term strategy
because of two premises. First, internal resources and capabilities are viewed as the key
competitive sources of a firm’s strategy; and secondly, the majority of the firm’s superior returns
are derived from these.

The resource-based view defines competitive advantage as when a firm is implementing a value
creating strategy not simultaneously being implemented by any current or potential competitors.
This assumes a firm’s competition includes all current competitors, but also, potential
competitors. Within this definition, a firm can create short run competitive advantage or first-
mover advantage. However, it is not sustainable because other competitors may be able to
imitate or purchase the sources of the advantage.

Thus, from a resource-based perspective, firms desiring competitive advantage cannot expect to
purchase or imitate sustained competitive advantages through the acquisition of a universalistic
set of best practices. A firm must take a configurationally perspective and create a system of HR
practices that are customized to suit a particular firm’s competitive strategies, and internal
practices, policies, and resources – provide both vertical and horizontal fit. That way, advantages
may be found in the rare, imperfectly imitable, and non-substitutable resources already
controlled by the firm.

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Wright et al. (1994) conclude that the role of the HR manager then, is to recognize, develop and
exploit the resources within the firm through the application of HR systems that develop the
human capital pool and elicit employee behavior supportive of a firm’s competitive strategy.

The table given here compares and contrasts the FedEx’s practicing policies with standard
SHRM principle.

Dimension FedEx’s Policy Standard Principle Comment


Quality One of the best A high concern for FedEx follows the
service providers quality. standard principle.

Commitment FedEx is highly High level of FedEx follows the


committed for both its commitment standard principle.
internal and external
customers.
Risk Taking FedEx doesn’t take Low risk taking FedEx follows the
any kind of risks with activity standard principle.
its service.
Job Description All the employees in Relatively explicit job FedEx follows the
FedEx have relatively description standard principle.
fixed job descriptions
and a formal
delegation of
authority.
Training and FedEx undertakes Continuous and FedEx follows the
Development intensive training extensive training standard principle.
program according to
the need of
employees.
Motivation and Higher employee High level of FedEx has a concern
Participation motivation leads to employee for this principle.
greater creativity, participation on work
productivity and issues
discretionary effort,
which in turn lead to
improved company
performance.
Employment Security FedEx has highest Relatively egalitarian FedEx has a concern
employment security treatment and for this principle.
with turnover rate of employment security.
only 1 percent.

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8. Recommendations
It had been showed that FedEx has a strong relationship with the most important entity or
stakeholder, the employees or human resource. The company had been able to retain their talents
that helped them to maintain productivity, thus maintain competitive advantage of FedEx. There
are different aspects that must be maintain and done such as the career development. This is an
ongoing, formalized effort of the organization that aims on the development and enrichment of
the human resource of the company that will target both the needs of the employees as well as
the entire organization.
Another important thing that must be considered is the internal communications. By
doing this, the company will be able to maintain their direct and sound relationship and
communication with the employees that will enable them to know what are the employees’ needs
and demands that will help and push motivation.
The following steps should be considered and implemented.
1. Make available and promote customers’ completing pre-visit activities including
applications and practice tests.

2. Improve labor efficiency

3. Develop communications methodology and operating policies to steer customers to the


desired delivery channel.

4. Prepare simple brochure(s) that can be located within station lobbies and other public
buildings, outlining the services, channels, and requirements.

5. Conduct a comprehensive customer Focused service surveys/interviews every 2 years to


reassess/confirm requirements.

6. Expand customer reach through self service channels, meeting customer requirements
while reducing station traffic.

7. Educate the public about available services, requirements, and delivery options.

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9. Conclusion
Strategic Human Resources Management aims to attract, develop, motivate and maintain high-
performing employees that add to the organization’s competitive advantage. The Strategic
Human Resource Management is now considered as a strategic partner of a company’s
management. The policies and strategies of the HR department must be aligned to those of the
company in order to achieve a favorable standing in the market place. Strategic HRM aims to
improve the organization’s performance through the improvement of the way the human
resources (workforce) are being managed. The changes in the external environment of the
business over the years have focused on the importance of the human resources in the
achievement of the organization’s goals and objectives.

FedEx Express values its people and believes that a motivated and satisfied workforce is
essential in providing quality service. The company believes that its people are one of its
competitive advantages. FedEx Express’ talented, skilled and motivated employees set them
apart from their competition. The company’s Human Resources Management strategies are
specifically tailor-made to fit the company’s objectives and goals. The company promotes a
working environment that is built on the “People-Service-Profits” principle. The HR policies and
practices at FedEx Express are designed to focus on the well-being of its workforce by providing
equal opportunities, competitive salaries and benefits, extensive training and career development
programs, effective training programs and others. The workforce is a source of competitive
advantage for FedEx Express.

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References
Book References:

1. Ahmed, F, M H Ullah, & M K Uddin 2006, ‘Strategic Human Resources Management:


Linking HR Practices with the Business Strategy, vol. 34, no. 3, pp. 15-30.

2. Denton, K 1992, ‘Keeping Employees: The Federal Express Approach’, SAM Advanced
Management Journal, vol. 57, no. 3, pp. 10 – 13

3. Recommendation and summary report; February 2006; page 6-9

4. Hamish G. H. Elliott, “SHRM Best-Practices & Sustainable Competitive Advantage: A


Resource-Based View”, page 17-19

Web References:

1. “Human resource management- best practice at FedEx”


http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organi
zation%20Behavior/HROB034.htm

2. “HR Best Practices at FedEx, a Best Company to Work For” http://www.casestudyinc.com/hr-best-


practices-at-fedex-best-company.php

3. “Guide to Services” http://fedex.com/us/services/packageshipment/index.html

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