Send the right message

Posted by Dave
December 19, 2008

FedEx, the company trusted by millions of people to deliver their Christmas presents to loved ones, recently announced some belt-tightening initiatives.  That’s the real tragedy of the economic downturn, that even great companies get affected negatively.  You get most things right, avoid the icebergs and get the ship headed in the right direction, and out of nowhere you get hit over the head with a recession.

There’s an old cliche that goes “A rising tide raises all boats”.    For the purposes of this post, I’ll turn that around to say “A receding tide exposes your Leadership”.  Let’s look at how FexEx’s has provided a business leadership lesson for dealing with this recession.

What did they do?

While FedEx income and earnings per share beat analyst’s expectations and were up over the same quarter last year, much of the gain could be traced to the drop in fuel costs and FedEx CEO Fred Smith acknowledges that “our financial performance is increasingly being challenged by some of the worst economic conditions in the company’s 35-year operating history”.

So what was their response?

Instead of simply laying off workers, Fred Smith exhibited some true leadership and character by:

(Credit CNN.com for quotes and data)

The Leadership lesson

While not highlighted in the CNN article, the piece I heard indicated that the other measures FedEx took greatly reduced the number of jobs that were cut.  I think the other great benefit of the approach FedEx took is the message it sends to employees.

A few years back I was part of a very similar program.  The company I work for is a non-profit, and while our funding sources are very diverse, we found ourselves one year facing a rather large cut to one of  our funding sources.  Our President’s response was a real leadership lesson for me.

Yes, we cut some staff.  However, our President also instituted an across the board salary reduction for all employees.  The leadership lesson was that from the top down management took a larger percentage cut than the rest of the employees, with our President taking the largest percentage reduction of all.

What was the impact?

First and foremost, we were able to weather the economic impact and come out the other side stronger than before.  I predict the same will happen to FedEx, and probably lots of other well run companies.

More important I think, as I mentioned above, was the message that was sent to employees; a message I took as two-fold:

  1. We value you enough to take some bitter medicine for the good of everybody, and
  2. Our leaders are going to contribute more, as they should

Ultimately, while there was some mumbling in the hallways, I think most employees appreciated and understood the shared belt-tightening.  The effect of the program, and how it was communicated by our President, was that “we’ve encounted some hard times, we’ve made some hard choices, and now it’s time to move on and get back to work.”  From what I gathered talking to my team and employees at large was that:

Final Thoughts

There has been countless articles written discussing these “challenging times”, “how to survive the economic crisis”, etc. etc.  I do not intend to minimize in any way the seriousness of the business environment we are currently in.  Let’s keep our heads about us though – it still comes back to Leadership.  I would submit that leadership skills of character, courage, decisiveness, and yes, compassion will serve us all well not only to weather this storm, but come out stronger on the other side.  If you do not have these skills in abundance on your leadership team, now may be the time to make some changes.  One outcome of the unpleasant employment situation is the abundance of great talent available.

Positive Leadership

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