FedEx. The multinational courier delivery services company, known for its clever logo, purple and orange vans, and its appearance on one of the nation’s favourite films, Castaway. However, what doesn’t get as much recognition is its unique approach to people management. And this is something many small businesses could learn valuable lessons from.
Unfortunately, HR is a function that is often overlooked. Especially for SMEs, where the business growth and other things take priority. In fact, our research revealed SME business owners ranked business development and client satisfaction as their top priorities. This leaves HR in the ‘nice to have’ category.
Often small businesses absorb HR jobs into more general business administration and add it to the work-load of non-qualified individuals; or they simply pile it on the desk of an HR professional, further restricting their ability to deliver real value – such as fostering a positive workplace culture or recruitment strategy.
This attitude is reflected in a survey from consultants at McKinsey, who found that SMEs generally underestimate the positive impact that a strong HR strategy can have when it is closely aligned to their wider business ambitions. Instead, the role of HR leaders is seen to be less critical than other senior team leaders. Not surprisingly, HR professionals have noted this lack of enthusiasm; a recent report revealed that two-thirds said that they are undervalued by their CEO.
And yet, thanks to companies such as FedEx, there is plenty of evidence to show that strategic HR delivers real dividends – especially in improving the longevity and success of an organisation. FedEx’s 50-year track record is testament to this.
FedEx was one of the first companies in the world to develop a formal HR policy that viewed employees as the direct reason for the organisations growth and profitability. Far from viewing HR as a ‘nice to have’, this policy is still in place today, and all management decisions stem from this. This innovative approach has been a key factor to the company’s success, as it creates a positive working environment for employees which, in turn, provides better service quality to customers, ultimately leading to customers using FedEx products and services. Something that others can learn from and in particular, small businesses.
What can be learnt?
It’s worth noting that FedEx worked on its people strategy from its inception, developing its "People-Service-Profit" philosophy back in 1973. It developed the processes that became the fundamental foundations of its HR strategy – and recognised the difference between these processes and tasks, and the strategic role of forward-thinking HR managers and consultants.
Establishing which tasks and activities are necessary, but not a source of value, and those that add value to the organisation, SMEs can start to allocate them more appropriately. For instance, should the CEO be managing holiday requests? Probably not. Yet we’ve found they are spending a fifth of their working week on HR admin. Equally, there’s not much value in an HR manager or external consultant getting caught up in the paperwork either. These kind of process-oriented tasks can be better performed by dedicated HR software. This can free up valuable time for businesses.
Small business owners often point out that the pricing of HR software is the biggest hurdle in finalising a purchasing decision, especially given the number of competing demands for investment at a crucial stage in their business development. But automating these processes actually saves a significant amount of time and money – resources that could be spent putting HR at the centre of the business.
Many also link the need for a more advanced HR function with the number of employees. Smaller companies and start-ups often claim that they are ‘too small’ to do HR and rely on professional employee organisations (PEOs) to support their people-management requirements. However, this attitude often lingers long after the company has grown. And although economies of scale mean that larger companies spend proportionally less time on HR admin than their earlier, smaller incarnations, it still amounts to 22 hours a week. That time is surely better spent on supporting staff, planning celebrations of milestones achieved – and propelling the business forward to the next phase of growth, and sustainable long-term success.
Think about Netflix Co-founder Reed Hastings, Amazon CEO Jeff Bezos and Ginni Rometty of IBM – it’s unlikely any of these CEOs spend their precious time approving holidays manually. They are focused on the company’s vision, ensuring the business is on the right track, and growth. Just as FedEx put it – people are the foundation of success and the key to our future – therefore need to be looked after.
About the author
Jonathan Richards is CEO of breatheHR, a user-friendly HR platform to help businesses effectively manage their people. With a background in finance and building businesses, he previously ran a software consultancy that implemented bespoke HR systems for larger companies. Jonathan also co-founded MARSC, a market research software company, and is now the non-executive chairman. Outside of business, he has sailed the Atlantic and trekked in the Himalayas (twice).