Shara Engleman
Tony Petrucci &
Shirley Robinson
"UPSer:.....As you know, our company is experiencing a
series of dynamic changes. We are, more than ever, questioning
why and how we do everything associated with running our business.
During this time, we have come to realize that many of the traditional
processes we have become accustomed to need to change because
they continue to increase our operating costs. We all need to
admit to...shortcomings and then commit to becoming advocates
for the change required to move to a much higher level."
Kent C. "Oz" Nelson, Chief Executive Officer
"Change represents an opportunity to grow...to participate
in the creation of the UPS of tomorrow."
Jim Kelly, Chief Operating Officer
As the year 2000 approaches, the economy is changing from a manufacturing
base to an information/service base. What has brought about these
changes? Demographic and economic changes, technological advances,
increased global competition, emphasis on quality, customer demands
forcing companies to look for ways to be more efficient (outsourcing,
part-time workers, self-directed work teams), government policy
changes (NAFTA), and other workforce issues such as the decline
of unions, influx of immigrants, etc. Internal and external forces
are forcing organizations to change from bounded to networked,
hierarchical to flat, fixed to flexible, homogeneous to diverse,
and local to global.
UPS has always been a stable, smart company that knows where it
wants to go and how it was going to get there. Long-term profitability
was never a question; however, increased competition and technological
advancements have been two of the major forces behind UPS's wake-up
call. In 1994, it was announced that UPS would be undergoing some
drastic changes in the future, which caused much stress and concern
company-wide. One of the changes that has affected every person
at UPS is the company's new quality initiatives. UPS is not known
for rushing into things, but finally realized that the 90s was
a decade of necessary change. Upper-level management began to
contrast the "Old" and the "New" UPS, with
one major characteristic of the "New" UPS being a company-wide
goal of customer satisfaction achieved through eighteen quality
initiatives. Change is not easy and the transition from the "Old"
to the "New" UPS while traveling down the "Road
to Quality" will prove to be long trip for a company deeply
grounded in tradition.
The purpose of this project is to highlight some successful and
unsuccessful change efforts within United Parcel Service. Through
first-hand experience, a status of change survey, and internal
and external research, we hope to show how UPS identified the
need for organizational change, how it started and is currently
managing the change process, and highlight three focus areas we
feel UPS identified as crucial to the success of its change efforts:
emphasize and refocus its philosophy from efficiency to quality,
increase innovation by investing in technology and expanding into
different business opportunities (passenger charters), and adopt
more of a customer orientation.
As you can see, change has been identified as a source of future
opportunities and challenges for UPS. Because 75% of all re-engineering
projects fail, it is essential for managers to identify the criteria
for activities in which their organizations must excel in order
to succeed in the market-place. Through this project, we hope
to show which activities UPS has identified as critical success
factors, how the company is handling its renewal process, learn
from first-hand experience by evaluating its successful and unsuccessful
change efforts, and make some recommendations based on the tools
and principles we learn throughout the semester. We will critically
examine these changes, in order to accomplish two major objectives:
Additionally, at the end of the study we will make recommendations
to correct deficiencies based on our results as well as the methods
proposed in our course work and texts.
United Parcel Service (UPS), headquartered in Atlanta, Georgia,
is the world's number one package delivery company and the third
largest private company in the United States. The company was
started in 1907 by James (Jim) E. Casey at the age of nineteen.
There was a great need in America for private messenger and delivery
services. Personal messages and packages had to be delivered privately.
Jim Casey borrowed $100 from a friend and started American Messenger
Company in Seattle, Washington. The company did well, despite
the stiff competition, because of Jim's strict policies: customer
courtesy, reliability, round the clock service, and low rates.
He used the slogan: "Best Service and Lowest Rates."
(http://www.ups.com).
In 1913, the company began to focus on package delivery for retail
stores. Jim merged with a competitor, Evert McCabe, to form Merchants
Parcel Delivery. Charles W. Soderstrom joined the firm in 1918
and helped manage the growing fleet of delivery vehicles.
The 1920s and 1930s were characterized by growth, ingenuity, and
change. The company expanded its operations to Oakland and Los
Angeles, California. By 1930, delivery services were provided
in all major West Coast Cities, and a consolidated delivery service
was established in the New York City area. Many innovations were
adopted included the first mechanical system for package sorting,
and a 180-foot-long conveyor belt was installed in Los Angeles.
The company changed its name to United Parcel Service. "United"
because shipments were consolidated, and "Service" because,
as Charlie Soderstorm observed "Service is all we have to
offer" (http://www.ups.com). All UPS vehicles were painted
the now familiar Pullman brown color, selected by Charlie Soderstorm
because it was neat, dignified, and professional.
World War II prompted UPS to redefine itself. Retail stores encouraged
their customers to carry their packages home, rather than have
them delivered because of the fuel and rubber shortages. The trend
continued after the war as much of the population began moving
into the suburbs, where shopping centers were being built. The
convenient shopping made it easy for customers to drive home with
their own packages. UPS managers began looking for new "common
carrier" rights to delivery packages between all addresses.
This included any customer, private or commercial and it placed
UPS in direct competition with the U.S. Postal Service.
UPS was restricted from operating in any parts of the country.
Federal authority was needed for each state border crossed, and
each state had to grant permission for the movement of packages
within its borders. It took UPS almost twenty-five years to obtain
authorization in all 48 mainland states. In 1975, national parcel
delivery service was finally a reality.
UPS began offering two-day service to major cities on the East
and West coasts in 1953. Packages were flown in the cargo holds
of regularly scheduled airlines. This service was called UPS Blue
Label Air and was available in every state by 1978. As the demand
for air parcel delivery increased in the 1980s, federal deregulation
of the airline industry provided new opportunities for UPS. UPS
began to assemble its own jet cargo fleet and by 1985 they were
offering overnight air delivery. UPS airline is among the ten
largest airlines in the United States (http://www.ups.com).
UPS entered the international shipping market in the 1980s, establishing
a presence in several countries and territories in the Americas,
Eastern and Western Europe, the Middle East, Africa, and the Pacific
Rim. Today UPS operates an international small package and document
network in more than 200 countries and territories (Hoover's
Handbook of American Business, 1996, p.1456).
Although UPS has experienced tremendous growth over the past eighty
years, increased competition has forced a shakeup in the company's
strategy. After losing business to such aggressive competitors
as Federal Express and Roadway Packaging System (RPS), UPS Chief
Executive, Kent C. "Oz" Nelson, began overhauling the
way the world's largest package carrier does business. Gone is
the "we-know-what's-best-for-you" arrogance that was
UPS hallmark for decades (Hawkins & Oster, 1993, p.
93). UPS now stresses customer satisfaction.
These graphs show the Air Express market share:
An important objective of UPS is to obtain World-class Quality.
Jim Kelly, Chief Operating Officer for UPS, stated, "Our
journey toward Quality began with the realization that we were
at a competitive disadvantage in several areas. We needed to improve
our time-in-transit performance and customer perceptions of the
dependability of our services. We needed to overcome the misconception
that our competitors were more technologically advanced than UPS.
And we realized that we were in danger of becoming the high-cost
carrier in the small package delivery business" (Management
Conference Highlights, 1996, p. 1).
Even though UPS is quickly becoming the high-cost carrier that
Kelly referred to, the company is prospering financially. A shareholder
report (November 16, 1996) shows that "revenue increased
8.7 percent for the quarter ending September 30, 1996, compared
to the same period in 1995. This growth resulted from higher rates
introduced earlier in the year and a 4.4 percent increase in domestic
U.S. volume, including a rise of over 11 percent in higher yielding
express packages. International revenue contributed to the growth,
primarily because of a 19 percent increase in export revenue.
Operating expenses increased by 2.1 percent. The comparison to
the third quarter of 1995 was affected by a one-time charge of
$353 million in that quarter for the voluntary early retirement
and separation programs. Excluding this charge, operating expenses
increased 10 percent" (Oz Nelson, CEO).
The driver steps from the truck moving quickly inside the office.
Handing the employee at the counter a package, the driver requests
a signature on a hand-held computer. Chatting amiably they talk
about the customer's satisfaction with this delivery as well as
services overall. Concluding the conversation, the driver steps
back in the brown truck setting the DIAD (Delivery Information
Acquisition Device) into the DIAD Vehicle Adaptor (DVA) and instantly
relays real-time package delivery information worldwide within
minutes of the transaction completion (Duffy, 1996: MacLeod, 1996).
Science Fiction? No. Science fact---UPS reality. But a few months
ago the scene would have been more stilted, the driver more hurried
and harried, the procedure and equipment more cumbersome, and
the focus not on customer satisfaction but on time restraints
and schedules. But with increased competition, changing technology,
and recognition that new strategies were needed to maintain a
competitive stance, United Parcel Service made a move to change
the corporate philosophy, create new ways of thinking about their
business and their customers, and align their procedures and ways
of work with tomorrow's package delivery needs.
While years past produced a corporate philosophy of efficiency,
honed a reputation for punctual and reliable service, and created
a "cookie-cutter" operation (Fabey, 1996) based on timing,
the present and future demand a focus on quality, customer satisfaction,
and creative solutions to organizational needs. Emphasis shifted
from training drivers to step out of the truck on their right
foot (to save precious seconds of delivery time), to training
drivers to interact with their customers and learn their needs.
Emphasis shifted from the needs of the organization to those of
the customer - all customers - both internal and external to the
organization. Emphasis shifted from playing it safe, to gambling
with innovative services, technology, and new markets.
As much as four years ago UPS began a plan to redesign its technical
support systems and distributed-computing network. Establishing
65 centers and installing remote-access hardware streamlined operations
for technical support staff and led to increased efficiency in
problem-solving (Duffy, 1996). However, it was the recent addition
of the DIAD and DVA in the package cars and the hands of the drivers
that has turned science fiction into fact, eliminating paperwork
and increasing real-time tracking operations. The addition of
the World Wide Web has completed the loop linking the customer
directly to an interactive engine that initiates the pick-up process/delivery
transaction.
Concurrently UPS shifted its gaze to broader use of the types
of things the corporation has always done well, looking for business
in the realm of logistics, just-in-time delivery of manufacturing
parts (Cleland, 1996), and information management (Fabey,
1996). With the establishment of a new technology and logistics
center in Louisville, Kentucky, in September of this year, UPS
launched a "pick-up, repair and return" service for
manufacturing facilities (Mitchell, 1996). To utilize its
resources more effectively, UPS is going into the charter passenger
airline business by putting idle Boeing 727 aircraft to work on
weekends.
While UPS faces an impending change of leadership with the retirement
of Kent Nelson and the arrival of incoming CEO, James Kelly, Kelly
flatly states "there will be no major changes" (Fabey,
1996). Given the sweeping changes implemented within the past
six months, concentration on continuing the plans already in motion
and capitalizing on the family atmosphere seems wise. Kelly also
cited a great espirt de corps and the employees' mutual
respect as factors he will use to strengthen and continue the
company's success. However Kelly cites issues beyond Nelson's
initiatives in quality, service, and technology as the top of
his list. These issues include getting the company finances into
the black and tapping the potential of the newly formed logistics
group (Mitchell, 1996); the achievement of/implementation of which
imply future change. However, for the time being change is likely
to be subtle as the behemoth whose "U" use to stand
for such things as "unyielding" and occasionally "unbeatable"
(in the words of one writer, Fabey, 1996) shifts to representing
a company whose revitalized world view and new vision now stand
for "unbelievable," and "unlimited."
"Once upon a time, there was a company named United Parcel
Service. It had spent decades leveraging tried-and-true practices
built upon tried-and-true strategies. It faced one competitor,
the U.S. Postal Service. At Christmas time, those brown trucks
were as reliable as Santa Claus' sleigh---which is why customers
always did business pretty much the way UPS asked them to. Then
one day the company looked upon its business and saw that times
had changed. The practices had become 'inoperative' because the
strategies had become outdated. The strategies had become outdated
because smaller upstart rivals and old foes had become competitive.
Profits declined. So UPS examined what its customers wanted, sought
ideas from its employees, swallowed hard, and decided it had better
start doing business differently--or there might not be any more
business to do. So it did. Now UPS is living happily ever after
once again. For now." (Day, 1995, p.15)
Organization development is a long-range effort to introduce planned
change throughout an organization and provides a renewal process
enabling managers to adapt their style and goals to meet the changing
demands of the environment. These changes---improving quality,
increasing innovation, adopting a customer orientation---are so
fundamental that they usually require changing the organization's
culture. As mentioned earlier, UPS is striving to manage its own
changes by emphasizing and refocusing its philosophy from efficiency
to quality, increasing innovation by investing in technology and
expanding into different business opportunities (passenger charters),
and by adopting more of a customer orientation. In recent years,
strong competition has forced UPS to realize that efficiency is
not necessarily synonymous with effectiveness. So, after more
than 80 years as an operations-oriented company, UPS has taken
significant steps to transform itself into a market-driven company
with a distinct customer focus. This transformation has affected
every part of its organization, including employee functions and
roles within the organization. UPS has realized that its corporate
culture must first change if any other organizational changes
were to be successful.
"A corporate culture is a system of shared values and beliefs
which interact with an organization's people, structure, and systems
to produce behavioral norms (the way things are done around here).
It gives the whole organization a sense of how to behave, what
to do, and where to place priorities in getting the job done"
(Harvey & Brown, 1996, pp. 68-69). Managerial factors
such as philosophy, values, actions and vision, combine with organizational
factors such as roles, structure, systems, and technology to form
the shared sayings, jargon, actions and feelings that make up
a corporate culture.
Because UPS is in the service sector, its culture (image) helps
set it apart from its competitors. The fast-moving UPS driver
in his "browns" is easily recognizable, while the clean
brown truck driving down the street is almost as American as apple
pie. UPS is synonymous with its brown color (Pullman brown), which
as noted earlier, was selected for its neat, dignified, and professional
qualities. In his November 3, 1996, article in The Courier-Journal
entitled, "Henry County misses its special UPS man,"
Byron Crawford writes: "Although most of his customers never
saw Bud Collins more than two or three minutes during his visits,
over his 21 years as the UPS man in Henry County they came to
know and admire the man in the brown truck who always had a smile
and a pleasant greeting. " This is just one story of a UPS
driver who helps UPS customers see him and the entire organization
in a different way.
Internal changes will allow the organization to become more effective
if its employees possess the skills and competence to implement
these changes. To give its managers these necessary skills, UPS
dedicated $550 million to training in 1996. Workshops, developed
by The Atlanta Consulting Group, Inc., were the major expense:
Trust & Teamwork (developed in 1994) and Quality at Work (developed
in 1995).
The objectives of the Trust & Teamwork workshop were as follows:
All management and full-time business professionals (non management)
were required to attend the three-day workshop, which was comprised
of lectures, games, and various learning exercises. The workshop
concentrated on showing the relationship between trust and organizational
performance, and how teamwork requires a win/win mindset as opposed
to a win/lose mindset. "We believe that trust in teams and
organizations is an essential ingredient. It is built slowly and
can be destroyed almost instantaneously" (Trust & Teamwork
Workbook, 1995, p. 16).
The workshop also dealt with five fundamental (HEART) principles of human interaction:
"The five principles of Managing From The Heart are
not a series of techniques to get other people to do what we want
them to. They are a way of life, a way in which we as human beings
can truly stand together and support each other. They build self-esteem
and strong relationships and, ultimately build satisfying and
productive workplaces" (Trust & Teamwork Workbook, 1995,
p. 22). Every person who attended the workshop received a copy
of the book referenced above (Managing From The Heart by
Bracey, Rosenblum, Sanford, and Trueblood, 1990) and was encouraged
to read it and apply its principles to his/her personal and professional
life. The HEART principles were seen as a definite indicator of
change at UPS---never had UPSers been asked to look for loving
intentions. In fact, the word loving was not heard around
the workplace prior to the workshop.
The Trust and Teamwork workshop portrayed a "soft-side"
to UPS, which is something many employees did not think existed,
and as a result, the principles of the workshop were not immediately
accepted. Many questions and suspicions had to be confronted by
workshop trainers in order for the participants to know that UPS
was serious about this part of the change process; however, the
workshop has been viewed as a success and one big step in the
direction of change. "To survive and prosper in today's and
tomorrow's global economy will be difficult, if not impossible,
for organizations in which people don't trust each other. Trust
is the `miracle ingredient in organizational life---a lubricant
that reduces friction, a bonding agent that glues together disparate
parts, a catalyst that facilitates action.' We believe that trust
is the most fundamental fabric of any organization. Without trust,
collaboration and teamwork are impossible" (Trust & Teamwork
Workbook, 1995, p. 5).
A "New Language" resulted from the Trust & Teamwork
workshop and to reinforce the "new language" and remind
employees to use it, posters (Appendix A) can be found on walls
in almost every office. It is common for the phrase "I'm
going to trust my partners" to be heard around the office;
however, many times it is said in a reluctant tone. To encourage
workshop participants to keep the principles learned fresh, reminders
summarizing key learnings were sent out via housemail (Appendix
B).
Much of UPS's policies and vision are based on the founder's beliefs.
In 1907, Jim Casey founded what is now known as UPS. Pictures
of Casey and the other 3 founders can be found on the walls of
every UPS building. UPS traces its culture back to its influential
founder, who personified a value system and relentlessly hammered
in the basic values which became the cultural core of the company.
UPS's culture is based on past successes: "but we've always
done it like this...look how profitable we are." This strong
tradition enforced an operations-oriented approach that was warranted
to make UPS successful for most of its 89 years in business. However,
the company has had a difficult time transitioning from efficiency
to effectiveness because of the traditional policies and procedures.
UPS's transformation from an operations-oriented to a market-oriented
company with customer focus has drastically affected one groups'
function and role within the organization--- its industrial engineers.
When increasing competition forced UPS to take a hard look at
itself, the company began asking serious questions such as whether
it was really doing the right things to meet its customers' needs.
Did all those MOPs (master operating plans) on the shelf collecting
dust do anything for the customer? As a result, UPS reevaluated
many of its departments and made numerous changes. One of the
most significant changes was the formation of an IE Reassessment
Group in 1993. This group was formed to study ways to reengineer
UPS's industrial engineering department, which had not been seriously
modified since 1962. While the rest of the company was being redirected
towards the customer, the IE department was still geared for internal
operations. Instead of being responsible for tasks such as auditing,
reporting, and time measurement, the IE department was reengineered
around outcomes such as customer satisfaction, volume development,
and customer logistics.
With the help of consulting firm Coopers & Lybrand, the IE
Reassessment Group identified and eliminated a variety of sacred
cows that inhibited necessary changes. They determined that IEs
at UPS were spending up to 80% of their time doing work measurement,
planning, auditing and reporting. While efficiency and work measurement
was still important for keeping the operation running smoothly,
the daily tasks of the IE departments contributed little value-added
service for UPS customers. Which hand the UPS driver should hold
his keys in, which foot to use when stepping up into the package
car, and how long it should take to deliver one package were not
beneficial to the UPS customer; however, UPS still reminds its
managers of the need to "run the business" and not lose
sight of the importance of departing an aircraft on time or making
on-time deliveries. However, the "efficiency tradition"
and the goal of "running the tightest ship in the shipping
business" are being challenged and rethought.
Value-added activities have been given much attention. Today, if the value of an audit or report does not exceed its cost, the audit or report is simply eliminated. One recent example is a Daily Operation Report that automatically prints every morning at 6am at all UPS region offices around the world. This report gives a summary of the airline's activity for the night before; for example, which flights were late, why they were late, and what happened as a result. The UPS Air Service Center in Louisville, Kentucky, is responsible for updating this report; however, the report's effectiveness is being put to the test. On October 24, 1996, the report stated "No report." What better way to measure the value of the report than stop completing it to see if anyone notices? It was two weeks before someone noticed the report was not being completed. Tradition has a strong-hold on UPSers, but many are starting to see the importance of re-directing their time and energy into achieving internal and external customer satisfaction.
New goals were developed for UPS's industrial engineers:
To help realize these goals, the IEs were reorganized into three
functional groups that can work in any UPS environment or operations.
The planning support group assists operations managers with the
development and implementation of a master operating plan, while
the operations improvement group works closely with operation
managers to develop and achieve improvement goals, and the package
operations support group is responsible for supporting technology
applications in the operations.
In just three years, the IE Reassessment plan and the new IE structure
have resulted in excellent results. Many processes that do not
make sense are being eliminated and saving money. Non-value-added
activity is being assessed, customer interaction is being emphasized,
a better vision of the planning process is realized, and time
spent on work measurement has decreased from 20% to 8%. However,
the IE Reassessment Project has also resulted in some noticeable
adverse effects. With the emphasis of the IE departments identifying
the important tasks and discarding the rest, there has been some
lack of support identified. When traditional IE responsibilities
were no longer required, nothing was done to make up for this
change. For example, there have been many critical operational
changes that seem to be ignored. There have been many instances
where time and money have been wasted because of a lack of planning
and control was required of the IE departments in the past. It
seems as though the responsibilities that the IE departments gave
up were not delegated to anyone else; therefore, frustration and
disappointment are frequent results.
" 'Watching our people embrace the change has been the most
rewarding thing I've experienced, and the most enjoyable', says
Kent C. Nelson, the man who helped ignite it." "UPS
employees, Mr. Nelson recounts, "were ready for the change--more
ready than you might find in most companies." Nelson attributes
this readiness to the fact that UPS managers and supervisors are
also UPS owners. Their life's savings are tied up in it. Change
meant UPS people would have to tackle their jobs differently.
"But first we had to change the mindset of our people,"
Mr. Nelson says. In the past, UPS was always focused on how to
become more efficient and reliable in order to effectively serve
its customers. UPS went so far as to tell its customers why it
was in their best interests "to use the services we provide
in the way we want you to use them." Ownership is the key
to a successful change effort at UPS.
In late 1994, UPS CEO, Oz Nelson asked all UPSers: "Are we
using the Total Quality approach to manage all parts of our business?
Not yet. Not completely. But we see progress. We are committed
to making UPS quality the best in the world, and we believe our
Total Quality initiatives are the means to achieve the goal."
UPS undertook the TQM philosophy as its OD intervention to improve
productivity, efficiency, and quality. An outline of TQM is provided.
UPS's rollout is examined relative to the outline. The actual
results of the rollout are then analyzed.
TQM is an intervention process that focuses on continuous improvement.
It is a cross-functional, management led philosophy which results
in improved customer satisfaction. There are some characteristics
of TQM that need to be in place in order for it to be effective.
Top management must actively support it. Every department in the
organization must be involved. TQM must be a part of the company
culture. Suppliers and customers must be a part of the process.
Products and services need to be done faster, and they need to
be right the first time.
In order to make the development work, empowerment and involvement
must take place. Self-managed work teams are an important part
of ensuring empowerment and involvement take place. The teams
must understand the vision and their role in bringing the vision
to life. So information must be openly shared.
The design of jobs revolves around five core job dimensions: feedback,
autonomy, task significance, task identity, and skill variety.
If these dimensions are executed well, then the work teams are
more self-directed. In order for self-managed work teams to be
successful, the organization must be flat. Senior management must
provide a network for support, and there needs to be rewards involved.
There are some problems that can occur with self-directed work
teams. There is a possibility that the work teams may not fit
into the context of the product or service process. There may
be morale problems due to a lack of internal promotion from the
flattening of the company. A lack of training and rewards can
cause problems. In addition, if roles are not clearly defined,
execution is almost impossible. Also, if the organization's leadership
does not truly believe it must change, it will not change. It
is imperative that job enrichment takes place to ensure that people
are energized about the quality of their work.
TQM is not a quick fix program. It must be a way of life for a
company. Many companies have tried it as part of the latest management
fad. Most have found out that it does not work if the company
does not own the entire process. UPS wanted to change to ensure
their number one position in the industry would be maintained.
They brought their management together to inform them of the status
of the company and to roll out TQM. A special management session
of DOF (Delivering Our Future - Taking a Leadership Role in Total
Quality) was designed to create an awareness of the competitive
reasons for Total Quality and the role all management at UPS would
play in the process. In some of their introductory material (Delivering
Our Future Workbook, 1994) there seemed to be some doubt about
whether they really needed to change since they were already the
leader.
During the DOF training, each managers need and ability to change
was assessed. UPS planned to teach TQM principles throughout the
entire organization, and felt it was critical to have everyone
buy into the process. They surveyed all the employees in the organization
to find out their feelings about many areas of interest. The results:
67% were satisfied with their jobs, 13% were not satisfied and
20% were neutral. Only 50% of management surveyed felt it was
possible to balance work and personal life at UPS. There were
significant communication issues from management to the employees
that were identified: 50% felt teamwork took place, 50% felt they
could trust the company, 43% felt they received cooperation from
other units in the company, 60% responded favorably to the quality
of training, and 50% felt there was good opportunity for advancement
in the company. Based off this information, UPS employees showed
the need for change and the difficulty that might be involved
with trying to change such a large, traditional company. In fact,
UPS compares the difficulty of the change process to a ship turning
around in a bathtub---a long slow process.
Then the program moved into quality improvement. Four percent
of the customers being dissatisfied, 42% were very satisfied,
and 54% were satisfied. Some exercises and presentations were
then conducted to teach trust and management led change. Training
on empowerment and possible breakdowns during empowerment was
conducted. Soft skill development, such as listening, was conducted.
Throughout the training, it was mentioned several times that UPS
was really good at what it did, but still needed to change. It
may be hard, when presented in this manner, to successfully implement
an intervention process such as TQM.
Senior management offered their total commitment to the change.
A change was needed to move from an efficiency based organization
to a customer-driven company. Everyone now had a customer. Whether
the customer was internal or external, they were the top priority.
The Quality process started in November of 1994. It started with
the highest level of management in UPS. The Atlanta Consulting
Group was contracted and started in 1994. The following eighteen
strategies were developed in August 1995 and identified as key
or critical to UPS's future success. The first eight are priority
initiatives which were started in January of 1996 and will be
accomplished first within the first 18 months (by May 1997). The
remaining strategies will be worked on after the 18 months (beginning
May 1997).
| Retention, Hiring, Orientation & Mentoring | Employee Scheduling |
| Cost Factors | Customer Point of Contact |
| Asset Utilization | Support and Service |
| Training and Education | Peak Season Aircraft (Leased) |
| Measurement (**Finished by 11/96) | Leadership |
| Technology Investment | Employee Involvement |
| Communication | Labor Union Partnership |
| Gateway Reassessment | Planning Activities |
| Fleet Planning | |
| Regulatory Reform |
The "Road to Quality" will be a long one for UPS. The
Quality at Work workshop gives employees a clearer vision of where
the company is heading and how it plans to get there. The first
day of the workshop calls for the instructor to ask the management
member class to contribute to three lists: what to take with them
on the road to quality, what to leave behind, and what new things
to acquire for the trip. This shows the company's recognition
of the need to change the way UPSers think.
The objectives of the Quality at Work workshop were as follows:
The two day workshop helped UPSers analyze and improve their work
methods in order to better serve their internal and external customers.
UPS is using several methods to follow-up and re-iterate the training
that employees received in the Quality at Work Workshop. One method
is a weekly E-mail message called the "Quality Update"
(Appendix C).
The survey (Appendix D) was targeted to the Air Service Center
employees which includes three "departments:" Contingency,
Crew Scheduling, and Flight Dispatch. The survey was distributed
to 30 employees. We received 21 completed surveys for a return
rate of 70%.
As mentioned earlier, the purpose of our project is to highlight
some successful and unsuccessful change efforts within UPS. This
status of change survey will help us gain timely, pertinent information
about the renewal process in one specific department, by soliciting
employee input through an anonymous survey.
In assessing employee reaction to the recent changes, as well
as how well UPS appears to have used change methodology cited
in change texts, a survey was created from a rubric formed of
said technology. Specifically, questions were formulated in seven
basic areas: corporate philosophy, organization culture, communication,
quality initiative, team building, employee satisfaction, and
reinforcement of change.
Five of these directly reflect major components of change cited
by Galpin's Human Side Of Change (1996) as essential to
successful change implementation: managing culture through both
dissemination of the new vision and philosophy as well as the
broader culture, communication, implementation methods (in this
case - team building), and reinforcing change. Two elements reflect
major change movements cited by Harvey and Brown (1996). For example,
team building questions centered around the elements of effective
teams cited by Galpin (p. 30), while cultural questions used his
ten components of an organization's culture (p. 54) as specific
items to be addressed. Another set of questions were built from
Harvey and Brown's description of job characteristics theory (pp.
355-356).
Using recommendations from Sudman and Bradburn's Asking Questions:
A Practical Guide to Questionnaire Design (1982), the survey
used a funnel approach beginning with the broader organization
issues of corporate philosophy and culture through the specific
change methods (team building and quality programs) and building
to the employee's feelings of job satisfaction in light of the
recent changes. Likert scales were used for speed of response
as well as their greater reliability and built-in strength of
attitude scale needed to assess attitudes. There were a few forced
choice and open-ended questions for variety and to eliminate response
effects. Likert scales were reversed in one set to combat automatic
response set. The survey began with closed, less threatening questions
and progressed to a few open ones at the end.
Question categories were prefaced with transitional information
that explained why that topic was of interest in the survey. Most
instructions were simple, positively worded, and bolded for visual
clarity. All demographic information was retained until the end
of the survey, and was optional. As much as possible specific
item language was tailored to the audience department. Finally
a cover letter was included with overall purpose, instructions,
and a hook to increase response rate.
Survey results (Appendix E) revealed some interesting trends in
employee perceptions in four key cultural change components: communication
efforts, leadership commitment to the change, employee understanding
of the elements of the change effort, and the implementation of
new goals, measurements, and reward systems.
Overall, UPS seems to have communicated its new corporate philosophy
well. On a weighted scale where 1 was high, 5 low and 3 was clearly
tagged as a "don't know" response, average scores of
2 for most of the philosophy/mission questions indicates that
employees feel they can define both the new mission and their
role in its implementation. However, there seems to be some breakdown
at the departmental level, where the average drops to a 3 due
to several respondents disagreeing (7 of 21 respondents, mode
is 4) and strongly disagreeing (1 respondent) that the department
manager's actions (Question 7) support the new philosophy. Question
four's responses also indicate that employees are not sure whether
coworker's believe/buy-in to the new philosophy with a mode of
3, the "don't know" response.
Specifically, employees clearly indicated (with 57.89% of responses)
that they received information on all three levels of changes
-- organizational, departmental, and team -- and that they did
so in a systematic, ongoing manner (52.63% response rate). Communication
clearly has not stopped now that change is being implemented on
the grassroot level. However, employees also indicated (68.2%)
that the information they have received on the changes was incomplete
prior to the beginning of that the grassroot implementation.
Nevertheless, there is an implied lack of communication by the
departmental managers/leaders regarding buy-in to quality issues
and teamwork. Scores of 3 on three quality questions which dealt
with leader communication and open communication channels indicate
a large degree of ambiguity about manager's commitment, and the
communication of their commitment, to the tenets of the TQM initiative.
A full 38% of the respondents disagreed or strongly disagreed
that their leader regularly asks for input to improve operations,
while 42.8% disagreed that interdepartmental communications enhance
quality work.
Teamwork responses were ambiguous or largely negative across the
board with the questions regarding the effective use of team meetings
being most negative -- average response being a 4 (disagree).
Responses concerning communication among members produced some
curious results. While the average score for Question 49 concerning
respect for others during meetings was a 2 (indicating agreement
with the positive wording of the statement), average response
to Question 50 concerning listening to other's ideas during meetings
was a noncommittal 3. Examination of the individual scores reveals
a wide range of responses to these two questions (which ought
to, and did, contain a high degree of alignment within an individual's
response set) with answers ranging the complete breadth of the
scale choice. One case in particular, an outlier, seems to account
for the noncommittal average score cited above. This individual
strongly disagreed (a 5 on the response scale) that members show
respect for each other, but agreed (with a 2 on the scale) that
members listen to other's ideas. In a sample this small this outlier
did affect the average response enough to imply that employees
may not listen well. In this set of questions, this would seems
to be a faulty conclusion. Looking then at the mode (instead of
the average) reveals that for Question 50, 57% of the respondents
selected response 2, agreement that members listen, while an additional
9% strongly agreed that they do so. This seems to more clearly
indicate that members do listen well, aligning response of Question
50 with respondents feelings about team respect.
Teamwork questions and their response results as a whole indicate
a disconnect with UPS's profession to their use as part of the
TQM effort and the actual implementation of a team approach to
date in this particular department. Most question averages and
modes indicate that while employees feel a sense of cooperation
and "teamwork" in a broad sense (Questions 39 through
42, modes of 2 - "agree" - for all), they are uncertain
that they use team methods effectively (Questions 45 through 47,
modes of either 4 - "disagree" - or 3 - "don't
know"), or use them at all.
In all three sets of questions focused on goals, measurements,
and reward alignment employees clearly indicated that goals and
measures had changed while they saw little evidence that rewards
had changed accordingly. Comments offered in open ended format
indicate that teamwork, quality, and customer focus all came through
clearly as the new "goal" and has been translated into
some actual revision of measurements. Likewise remarks reinforce
that the reward system has not kept pace with new behavior expectations:
"no recognition framework exists for accomplishments,"
"....old policies and performance evaluations are still determined
by...years of top down management," and "our department
responds to everyday `fires' - big successes...seem to go unnoticed"
are just three examples of the employee's perception. Further,
comments recognize that there are managers who talk the talk but
do not walk the walk, or in the words of one: "...when it
comes time to `strut' quality we seem to be forgetting everything
that the `quality movement' really stands for." Several employees
expounded that they had a long way to go to achieve the change
envisioned.
As might be expected in the early stage of any change effort,
employee responses to questions designed to assess job satisfaction
based on the recent change, produced a variety of results that
ranged from those whose negative responses indicated disgruntled
employees to those whose positive responses demonstrate belief
that the changes have been beneficial. The mode response to Question
51 "I am happy with the changes that have been made"
was 2 - agree; the mode response to Question 53 "I feel the
changes have disrupted operations in my department" was 4
- disagree. Despite some negative attitudes toward the changes,
overall employee ratings of elements of their job indicate they
feel that skills required have a high degree of variety (average
4.13 with 5 as high), are relatively well defined (average 3.61)
and are significant tasks (average 3.87). Individual scores of
each of these three elements were clustered from 3 to 5 on the
rating scale. Conversely, ratings of the degree of autonomy and
of feedback swing across the full scale. While the averages (3.25
and 3.1 respectively) would indicate a moderate amount of both,
the individual ratings shed more light. A full 20% of the responses
cite a very high degree of autonomy with an additional 28% who
gave autonomy a high degree. Feedback, on the other hand, is the
most variable with 25% stating they receive a high amount of feedback
while 28% stated they receive a low amount..
Survey responses on the various facets of a change effort demonstrate
a high evidence of change (over 50% for seven facets) in at least
eight of the ten arenas cited by Galpin (1996) as essential to
change success. Two very low scores, in the physical environment
(26.3%) and in ceremonies (31.6%), reinforce anecdotal evidence
as well as other results obtained within the survey results. We
had been told that little had changed in the arrangement of the
departments' workspace despite the purported adoption of a team
approach. Barriers between groups remain, and teams have not been
formally recognized or given "team" space for meetings
or problem solving sessions. Further, the lack of evidence of
ceremonies and visible events corroborates the discussion of reward
alignment above.
Typical examples of change cited range from dress down days to
"hands-off" management, from flatter organization structure
to more lateral "promotions," from allowing non-managers
to attend training to initiating a newsletter, from more verbal
praise and pizza parties to receiving a new policy book, from
team building activities to "constant re-analysis of the
`way' to do things." All but two responses found positive
examples of UPS's effort to change policies, goals and measurements,
customs, training, management behavior, rewards, communications,
and organization structure.
These results lead us to question at least
one aspect of the plan for change currently underway at UPS, specifically
the timing of employee involvement in team implementation, indeed
clarifying the actual intent of teams and their use. The ambiguous
responses collected from the team portion of the survey indicate
that employees are unclear about the use of teams and whether
they truly are a "team" expected to use team processes
in day to day functions and in problem solving. TQM uses the term
"self-managed workteams" to mean exactly that -- teams
of people formally organized into teams who have regular team
meetings, problem solving sessions, team-specific norms and roles,
team goals, and who "manage" everyday work. Obviously
employees in this department -- despite the "team training"
they were given -- do not recognize themselves in this description.
On August 28, 1995, UPS celebrated its 88th Anniversary. "We
enter our 89th year proud of our past, excited by our future,
seeing change as opportunity, and most importantly, convinced
that our best days are ahead of us. We believe that the way to
succeed in the future is to engage all employees within our business---exciting,
energizing, involving, and rewarding everyone." Over a year
ago, UPS was encouraging employee participation in guiding the
business; however, a framework for formalizing this participation
has not been implemented.
The projected schedule of quality change implementation we were
given may indicate that the implementation of teams on this level
has been reserved for another stage of the change process, that
the initial training on team building was only meant to set the
stage for later development and reorganization. However, as noted
earlier, teams are an integral part of successful implementation
of TQM and were cited as a part of the UPS vision of business
as well as their culture in the future. This being the case, an
emphasis on team structure and teamwork would seem warranted now,
not six months or a year from now. Teams need time to develop.
Recognizing this, we would recommend:
Survey results also reveal a lack of alignment of rewards to the
new goals and measurements in quality and customer focus aspects
of the new philosophy. Without adequate recognition to reinforce
the change effort, permanent changes in individual behavior or
in work processes cannot be expected. People do what they are
rewarded for doing -- in the words of one respondent: "business
as usual." The only way to achieve business as envisioned
is with new recognition, ceremonies, management behaviors, and
rewards on both an informal and formal basis. More pats on the
back and pizza parties indicate some degree of a change in informal,
management recognitions. A new newsletter provides a venue for
recognition, if used for that purpose. But these are not as tangible
as bonuses for reaching a quality goal, or department wide recognition
ceremonies. We recommend redesign and propitious implementation
of a reward system that highlights those who display the new behaviors,
and honors those who reach the new goals.
Survey responses also indicate that managers are not yet fully
displaying the new management behaviors that would reinforce the
philosophical changes. Remedial/follow-up training in team methods,
quality measurements, and communication processes (especially
feedback) seems warranted.
The emerging organization of the twenty-first century will be
networked, flat, flexible, diverse, and global. An organization
transitioning from the old to the new will undergo constant change.
This process is not fixed, logical or discrete simply because
it has never been experienced before. Today's managers do not
have the tools they need to manage the organization through constant
change. Plans are put in place and visions are formed of where
an organization wants to be in the future; however, the transformation
is not so simple or stable. It is first necessary to understand
what characterizes the organization of the future before attempting
to understand how to manage change. Kurt Lewin's model of change,
which consists of three phases (Unfreezing, Moving, and Refreezing),
can be applied to better understand the success of UPS's change
efforts.
Traditionally, UPS's management style has been sluggish---based
on low risk, with formalized procedures and a high degree of structure
and control (Harvey & Brown, 1996). The "old" UPS
possesses all the characteristics of this sluggish-thermostat
management style: "very stable goals, highly centralized
structure, more managerial levels, a higher ratio of superiors
to subordinates, emphasis on formal control systems, tendency
to value tradition, tendency to value seniority more than performance,
and an aversion to accepting new ideas. In looking at the Model
of Adaptive Orientation in Organizations (Harvey & Brown,
1996, p. 33), UPS needs to embrace a renewing/transformation management
style if it wishes to maintain a competitive edge and even survive.
This management style is characterized by proactive steps to take
advantage of new opportunities and innovations, increased responsiveness
to competitive changes, and more participation in getting commitment
and involvement of organization members in the renewal process.
It seems as though UPS is attempting this transition. Some evidences
are as follows:
UPS was always known for its stringent management practices that
were characterized by "My way or no way" or "My
way or the highway." This is one area in which the company
has realized that it must not only change, but get rid of the
looming perception if it was going to get employee support and
buy-in to implement changes. Lewin's first phase of change--Unfreezing--calls
for an organization to realize that the old way of doing things
is no longer acceptable and that the past must be separated from
the future. The Unfreezing that we have identified are the shift
in corporate focus from efficiency to effectiveness measured in
terms of customer satisfaction and the identification of 18 quality
initiatives.
Lewin's second step of Moving involves taking the visions and
changes identified in the unfreezing stage and devoting the time
and resources necessary to accomplish them. The moving tools we
identified are the numerous workshops, communication newsletters,
Quality Update E-mail, and the "new language" and various
changes in culture. However, because of UPS has not established
improvement teams, this is the stage where the company appears
to be at this present time.
Lewin's last step is Refreezing, which calls for an organization
to reinforce and reward the new behaviors that employees have
been conditioned to learn. By refreezing them, the organization
is making them part of the corporate culture in terms of policies
and norms. By following our recommendations cited earlier, we
feel that UPS will be able to move into the Refreezing stage and
realize the benefits of undertaking this change process.
In a letter to shareholders (November 16, 1996), CEO Oz Nelson
stated: "The timetable for implementing our Quality initiatives
is continuing on schedule. The planned training and education
phase is nearing completion. While work groups begin to apply
what they have learned to improve the way we serve our customers,
a major, long-term initiative has begun at the corporate level
with the formation of teams focusing on several specific strategic
processes that are vital to meeting customer needs and creating
competitive advantage. The processes include customer and people
development, billing, providing information to customers, and
such basic operations as pickup, delivery, and sorting packages.
Succeeding with our Quality initiatives is critical to maintaining
customer confidence. We remain committed to continuously improving
our business practices so that we enhance customer and employee
satisfaction, financial performance, and shareowner value."
Appendix A - "New Language" from Trust & Teamwork
workshop
Appendix B - Follow-up reminder of Trust & Teamwork principles
learned
Appendix C - "Quality Update" weekly E-mail
Appendix D - Survey
Appendix E - Survey Results