As Smith summarizes, “when people are placed first, they will provide the highest possible service, and profits will follow.” The three corporate goals are translated into measurable objectives throughout the corporation. Smith and his staff talk to customers continuously at the executive level to make sure their needs are being met.įedEx has three corporate goals: People-Service-Profit. At FedEx, each officer is assigned responsibility for the major customers in a sales district.
Good leaders know that having a customer focus is critical. Active participation in the quality improvement process doesn’t get any better than that. Smith led the development of a measure that tells all FedEx employees, every day, exactly how they are doing on customer satisfaction and service quality. Many other service companies are still trying to figure out what to measure. To develop and implement such broad measures and objectives, Smith and his staff had to understand the company’s quality objectives, its customers’ needs, and the potential effectiveness of SQI as a measure and motivator. Managers are evaluated on how well they achieve their objectives. Smith sets his own personal objectives with input from the board of directors, and the process cascades through the organization from there. Every manager at FedEx, including Fred Smith and the senior executive staff, has annual benchmarks for each of these three corporate objectives. Service is one of the company’s three overall corporate objectives: People-Service-Profit. One of FedEx’s service goals is to reduce the totals of the SQI every year. Each indicator is weighted: the greater the weight, the greater the impact on customer satisfaction. As Smith said, “We believe that service quality must be mathematically measured.” The company tracks these 12 indicators daily, individually and in total, across its entire system. In the late 1980s, he helped develop a more comprehensive, proactive, customer-oriented measure of customer satisfaction and service quality: the Service Quality Index (SQI).
He founded the company on a belief that customers would value a time-definite express delivery service, then used on-time delivery as the company’s primary measure of performance. Fred Smith and his top executives founded FedEx on the idea of providing the highest quality of service, then participated in quality training in the first year of the company’s existence.Īt FedEx, Fred Smith has been directly involved in the development of every quality process and system the company has implemented. Jamie Houghton took this step in 1983, shortly after he became Corning’s chairman. The first step for any company president, chairman, or CEO is committing himself or herself, as well as the company, to the process. Once they are on the quality path, the cultural changes they see all around them frequently breed a missionary zeal about the need for, and the benefits of, the quality improvement process. Whatever inspires them-the fear of failure, the promise of success, the achievement of other companies, the belief that there must be a better way to manage a company-triggers the leap of faith. A lot of times it’s brought on by trauma.” Leaders often embrace Total Quality Management because they see no alternative: improve or die. FedEx’s Fred Smith compares the awakening to quality to “a near-death experience. The survival issue is prominent in the minds of quality leaders. Since then, the company has expanded its ground delivery business by purchasing both Parcel Direct (formerly a division of Quad/Graphics, now renamed FedEx SmartPost) and more than 1,100 Kinko’s locations (now FedEx Kinko’s Office and Print Centers) in 2004. Today, FedEx (its nickname, “FedEx,” officially became the company name in 2000) is the world’s largest express transportation company-almost 196,000 employees move more than 3 million items to more than 200 countries each business day, up from 110,000 workers and 2 million packages just five years ago! In 1990, FedEx became the first service company to win the Baldrige Award. company to top $1 billion in revenues in its first decade. It launched its overnight air express business in 1973, and just 10 years later, it was the first U.S. Federal Express was founded in 1971 as the “big idea” of charter airplane pilot Fred Smith.
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