United

Parcel Service
Case Background
1. Founder : Jim casey at 1907 called American messenger company
2. Beginning with :
errand and carried notes, hand baggage, trays of food from restaurants
they delivered package by foot, streetcar, or bicycle
3. 1913 (new company) = First delivery car => a Model T Ford
4. 1919 = Labor Union Internal brotherhood of teamsters to represent UPS drivers
& part-time hourly employees.
5. 1922 = took a major strategic step " Common carrier in southern california
serve any shipper who was willing to pay, no matter how small the
shipment or how remote the location.
6. 1929 = Policy book was created to standardize these traits and other corporate
ideals throughout all branches of the business. (exh 1)
7. 1976 = planned an aggresive international expansion.
8. 1980 = expanded its service to all 50 states => "The Motor Carrier Act"
9. 1982 = next day air services" in US
10. 1987 = owned 89 aircraft, leased 140 , had 13 boeing 757, offered service to
canada, europe and japan
11. 1987 = largest transportation company and largest air freight carrier in the world.

Company after deregulation
before deregulation, long -distance common carriers (like UPS) unable to own
/operate private aircraft without subjecting themselves to the profit & pricing controls
by the Civil Aeronautics Board (CAB)
After deregulation, many common carriers and forwards purcashed their own fleets
and became integrated air carriers, offering a complete solution to a customer's express
delivery needs.
owning the aircfart = better services.
the competitor => Federal Express Corporation (the nation's only major air express
carrier) => "Federal Express Bill" assisted FedEX by enabling to increse its package
volume and revenue.
FedE use Dassault Falcon ( converted executive jets) with cargo 6,200 pounds.
1976, FE sending 6 Falcons / night to one city & spending $25,000 a day more than it
would with larger planes.
with deregulation, it imediately purchased 10 secondhand boeing 727s & incresed its
service to 300 cities => the daily pacakge vol increased by 34%.
Deregulation allowed UPS to service parcels up to 100 pounds.
then, UPS began to fine-tune its operations, decreasing cost, and increasing
productivity => develop new technologies.

u.s postal service*for years, UPS's major competitor had been the U.S. Postal Service's
fourth class parcel post.*on a number of occasions over the years, UPS executives had
argue that income from the USPS's large ($20 billion in 1986) first class was used to
subsidize the price of its parcel post service below true cost.*The USPS also competed in
the air with its express mail service.federal express*incorporated in 1971 by Frederick
Smith, as an air freight business specializing in the overnight deliver of small packages,
federal express nearly bankrupt before making its first profit of $3.6 million in
1976.*fred smith emphasized technology as an important element in his company's
strategy.*these group had developed the COSMOS, ZODIAC and DADS hardware and
software system for scheduling, tracking and sorting packages and documents rapidly and
accurately.other competitor*airbone freight Inc, a traditional freight forwarder had
made a total commitment to the domestic and international package express market, it
owned 33 aircraft and leased 43.*Emery air at one time had been the leading air freight
forwarder in the United states. however, by 1986, emery lagged far behind federal, ups,
airborne and american express mail service.*purolator's speciality was in ground
packages delivery.*roadway package system began opeations in 18 midwest and
northeast states, with terminals in 33 cities and hubs in 3 other locations.

UPS Operation
1. Pioneered the concept of daily pick up and delivery service to rtail and
commercial accounts with delivery to all locations.
2. Low rates and dependable service, retailers and manufactures.

Package car
1. Most drivers treasured the customer contact
Opinion : Good job security and interesting job
Good workout
2. Drivers had to determine for themselves how to handle abnormalities .

Package center
1. The process is decentralization
2. UPS can maintain personal contact
3. Have 1200 package center
4. Ony hiring 10-15% of part timers

Hub
1. Using large tractor-trailer truck
2. New hires selected by the pesonal department on criteria such as independence,
flexibility, physical fitness and relaibility.
3. 95% new hires is student from local collages
Policies and OrganizationAll of the policies in UPS is a representative of UPS
culture which can be read in "The Policy Book"Employee OwnershipUPS is a private
company that offers no stock to the public. They use unique profit sharing and stock-
ownership plan for their employee.It makes the employee consider working at the UPS
as a lifelong commitment because they can earn more than a normal salary.Jim casey
stated something like this : "There is no bigger incentive than for someone to work for
himself..."People at the full-time supervisory level and in upper management were
considered partners or owners of the company.Everyone in the company entitled in at
least one of the employment benefit plans. There are 3 profit-sharing plans, which is
: 1. Thrift Plan for regular employees with at least one year of service 2. UPS
Management Incentive Plan for full-time managers only 3. Stock Options Plans for
employee who hold division manager positionAll employees whether full-time or part-
time are entitled to long-term financial security and immediate health care
services.Because of that when UPS conducted a survey in 1985, the majority of workers
selected "good pay and benefits" as the most important job
attribute.DecentralizationUPS emphasized decentralization, the operating
organization was divided into regions, districts, divisions and operating areas.the district
is a basic unit of the delivery operation. the district formed a complete operating
group with full responsibility for service and cost within the district.regional
management and staff provided services to all districts in their regions and facilitated
exchange of information among districts. HQ management performed a coordinating
function on operational matters and several certain services.CommunicationUPS
emphasis on corporatewide communication in which they designed tools to facilitate
communication. It's tools are :1. A publication called "the big idea" to inform national
and local UPS news.2. A weekly monday meetings where representatives from each
department meet with the top management committee.3. A yearly conference which
involves top 200 managers to discuss about future strategic plans and accomplishmentfor
the communication within areas, it's tools are :1. performance appraisal and opinion
surveys.2. Pre-work communication meetings (PCM), 3 minute meeting held prior the
start of every work between staff function and operator.3. "Talk, Listen, Act" (TLA) is a
one to one communication between managers, supervisors, package handlers and
drivers.
Internal Development of Employees
- Company had succeeded in preparing some of its most junior workers for top-level
position with dedication to its Promotion-from-within policy, effective training
school, on-job training, and role modeling.
- It could only a small percentage of its part time supervisor into full-time delivery jobs
because it had many more part-time employees than available full-time position
- Full-time supervision become eligible for ownership in the company.
- Top management had been explicitly working to close any lingering gaps between
the long-held management philosophy of cooperation and actual supervisory
practice.
- The management style at time they used to inject brown blood with two-by-four, now
they do it through osmosis.
- Recognition, reward, and daily encouragement for a job well done

Humility: A Company Ethic

- over an 80-years period, the organization had retained a humility that was reflected in
the physical appearance of its facilities and by the attitude of its top executives
- UPSers scrupulously emphasized cleanliness and also discouraged elaborate dcor.
- No one at UPS had his or her own secretary, including the CEO.
Costumer Service
- The entire section of The Policy Book was devoted to the company service.
- UPS give their employees complete authority to run their operations and do their
jobs, and push decision making down to the lowest possible levels.

INFORMATION SERVICES

Background

Created in 1971, called Data Processing until 1985

No financial and moral back up for the division from the headquarters
There is a classic case of corporate neglect
A lot of improvement in FedEx and RPS done in 1981 (technological innovation)
Altough UPS had the most extensive ground network, it had fallen behind in certain
technological innovations.

Departement Revolution

The Data Processing Department changed into Information Services Department

Since 1985, the department had experienced particularly rapid growth
The Department needs a lot of new HR, it could either hire people from within UPS
(with a lot of training) or hire people outside UPS (try to mold them into UPSers)
Information Services inside of UPS has been weak (low skills and weak contacts within
UPS problems)

Experimental Hiring

From Outside UPS From the District

Hired with the expertise Special school beforehand for
Skills necessary to begin working right 10 weeks of technical training (a
away (no need any training). slow and costly process).
UPS culture Special two week district No need any approach
sense experience
Negative Scared off by the UPSs Unrealistic deadline for projects
Oppinion stringent policies
Good values and work ethic at Good district experience
Positive UPS, there is an incredible program, the new employees
Oppinion amount of trust and cooperation from outsides UPS were very
among people. good.

THE BIGGER QUESTION

The issue of outside hires was not confined to Information Services Department.
The issue was not whether but how to approach the assimilation process.

Analisa berdasarkan CB-HRM untuk asimilasi outside hires :
- each job description must have specific technical competency & behavioural
competency
- in this issue, the most important thing is the behavioural competency, because UPS
have
strong company culture and outside hires may have problem to adapt.
-
Student Questions:
a. Why has UPS been so successful in the past? What key success factors have now changed?
Key Success Factors:
- At the beginning, there are less competitors in the industry
- The management style and the mistique of the organzation
- The innovation of Daily Pick up concept and all destination delivery (Cover all states in
USA)
- Low-rates and dependable services

Key Success Factors have now changed:

- Along with the growth of the industry, more competitors enter the business
- The management style of UPS has changed from "force policy" that based on force to
"people policy" which based on integrity and fairness.

b. Should UPS attempt to maintain its traditional culture in the new areas of service? If so, why?
If not, how should it go about creating a different environment, and what steps should it take to ensure
that the different parts of the company continue to function smoothly as a whole?

- yes they should maintain its traditional culture

c. Who are the major stakeholder groups in this case? What are their key concerns?

- information service department

- existing employee
- board of director
- customer
- new employee from outside of the company

- All UPS employees that has reached at least supervisors position in the company and

d. What are the tradeoffs between hiring, information services people from within and training them,
versus hiring trained people from outside?

For each issues: analyze using CB-HRM Approach

UPS POLICY BOOK

Objective:
- To fulfill a useful economic purpose with the best possible service at the lowest
possible cost to the public
- To maintain a strong, forward-looking, efficient and cooperative organization
- To keep ownership and control of our company in the hands of its managers and
supervisors
- To maintain a financially strong company earning a reasonable profit
- To develop additional profitable business which complements our efforts to
maintain a financially strong company
- To be alert to changing conditions and ready at all times to adjust our viewpoints
and operations to meet them
- To earn and preserve a reputation as a company whose well-being is in the public
interest and whose people are respected for their performance, character and
integrity
- To establish and maintain a high standard of excellence in everything we do
POLICY GROUP I - Our company and organization
- We function as partners
- Consolidated parcel delivery is our main business
POLICY GROUP II Our People
- We promote from within
- We strive to be considerate and understanding of our people
POLICY GROUP III Our Service
- We provide a uniform service
- We maintain a dependable delivery service
POLICY GROUP IV Our Character and Reputation
- We insist upon integrity in our people
- We maintain our vehicles o look like new
POLICY GROUP V Our Economic Stability
- We reinvest warnings to finance our growth