United Parcel Service (A)

Submitted by:

Group O1

Abi Philip Joseph

Kanika Gupta

Nandini Hegde

Mridul Agarwal

Prateek P S
Problem statement
Senior management at UPS has to come up with a plan for the inevitable issue of assimilation
of new hires into its rapidly growing business environments especially its Information
Services department.

PESTC

Political

The Motor Carrier Act of 1980 deregulated the entire truck industry. Geographical
restrictions were lifted. There was major impact on three main services- common carriers, air
freight forwarders and existing air express carriers. This led to many small time competitors
to enter into market gaining share.

Economical

Due to deregulation other factors like economies of scale, infrastructure, service recognition
etc became major differentiating factors. Cost became extremely important and also a source
of rivalry and high competition.

Social

The competition intensified due to deregulation. Highly skilled employees were required.

Technological

A rapid change in technology and its approaches began to take place. A revolution of
technology provoked businesses to comply with them to keep up to date and make their
business run faster.

SWOT

Strengths

1. Rapid expansion
2. Equal pay across departments
3. Strong and well trained attorneys over the years
4. Fresh technical support
5. Regularly and standardized policies
 6. Strong union partnership
7. Most cost efficient package freighters in the market
8. Largest transportation company
9. Highly trusted by customers
10. Fast, reliable, low cost, effective package tracking capabilities, computerized
documentation
11. Daily pickup and delivery service
12. Low attrition rates
13. Deliberate decentralization led to good customer contact
14. Adherence to service standards
15. Effective internal training led worker to promote to high level positions

Weaknesses

1. Less skilled employee power

2. Low salaries as compared to other industries
3. Late entry into the overnight air service
4. Manual loading and unloading of packages led to furious work station procedures
5. Payment hike was on hierarchy

Opportunities

1. Business expansion into other geographical regions

2. Use of faster and better technology to get more customer service
3. Employ higher skilled staff for daily works

Threats

1. Challenging business
2. High competitor rivalry
3. Low rate of adapting to new technology may affect business and trust of customers
4. Low pay rates may reduce the employee morale

Factors

 Hiring outside talent for IS presented a challenge to the long established practice of
equal pay across departments
  Competitors were chipping away at all parts of the business making it mandatory for
UPS to need marketing and technological challenges.
 UPS invited International Brotherhood of Teamsters to represent UPS drivers and part
time employees since it believed that labour unions were unavoidable in the future.
 A “Policy Book” was created to standardize traits and ideals expected to be followed
by all UPS employees
 Placing of internal recruits in junior position even after 10 weeks of training
 IS department was also run like a hub, with 15 min coffee breaks and stringent
policies. This culture did not auger well with some new recruits.

Critical Factors

 Data processing jobs were considered as “cushy” since it did not involve and physical
exertion. This attitude resulted in the corporate neglect of the IS department for a
long time before UPS actually woke up to the fact that its competitors were actually
competing fiercely based on technology. UPS thus had a lot of catching up to do.
 UPS believed that given the right tools, its employees could achieve anything hence
the option of outsourcing the technology aspect for IS was ruled out and it was
decided to develop it internally.
 As the IS department expanded, it was required to equip it with specialists in
computer science. Internal promotion in this case was impossible, since people
possessing such skill sets were non-existent with the organisation.
 The option of sending UPSers to schools so that they could develop the required skill
sets and delaying the service by a few years till they acquired the skills would have
abysmally affected their competitive position in the market with competitors moving
forward by leaps and bounds.
 The salaries paid at UPS even at higher levels were traditionally low, this required
that only employees to be willing to have stock options as an alternative and willing
to stay long term with the company.
 Specialized personnel had to be hired for the IS department. This required that UPS
attract the talent with competitive salaries which were offered in the industry. This
frustrated several employees since, they were initially promised promotion from
within the company.
  The treatment for internal hires and external hires were vastly different due to the
skill sets involved. Internal hires were sent to a 10-week long training and even post
that were placed in junior positions. External hires on the other hand, were hired to
start working immediately post a three day orientation program.

 UPS had a myopic view when it came to competency development. It believed that
lateral training equipped the employees to perform tasks adequately. It lost out on
having an external perspective on developing new talents when it didn’t hire
outsiders. This in turn led to the crisis of haphazard hiring of new recruits causing
friction with the existing policies.

Alternatives recommendations

1. Outsource the entire IS operations to a smaller technology company with the aim of
acquiring it in the future.
2. Outsource the IS operations to a larger technology company having expertise in
implementation of supply chain operations.
3. Gradually move existing unskilled employees out of IS and replace the entire
department with specialized hires, who would be able to implement the system faster
by avoiding friction.
4. Operate the IS department as a separate entity independent from the UPS core
organisation. This would mean that the hiring and promoting policies followed at IS
would not affect employees working for core UPS.

Plan of Action

As time is an important constraint for UPS, we recommend option 4 to be implemented.

 Place the IS department in a separate building with upgraded infrastructure to

support its expansion. This would send out a message to the existing employees of
its independence
 Create a separate policy book for the entire IS department, retain features essential
to UPS , however include new policies to make the assimilation of outsiders
smoother
 Attract talent for the IS department by offering competitive salaries instead of just
stock options because there is a huge Talent War in the market.
 Gradually implement a new hire policy for the entire UPS, with a percentage of
outsiders being hired at every level.
 Ensure that more talented recruits are hired even at the junior level other than
college students. This would ensure that UPS does not run out of skilled
employees for internal promotion in the future.
 Communicate “Change” as a new policy for Competency development so internal
hires are not overwhelmed by internal strategy changes implemented within the
company.
 Ensure Knowledge Sharing by new recruits, so competency is not stagnant with a
particular resource but is shared for all to acquire.