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Box case 8.1

United Parcel Service – culture and innovation

UPS is one of only 16 Fortune 100 companies from 1900 that have survived
and it attributes much of its success to its strong company culture. At UPS
culture is perceived as ‘myths, rituals, language, ideas, goals, and values’
that are shared by the company’s 350,000 employees. Some of the aspects of
the culture are tangible. For example, the Policy Book and Code of Business
Conduct give specific advice on dealing with customers and conflicts.

Employees receive detailed feedback annually in their Quality Performance
Review, in which managers, peers and team members contribute to the evaluation.
Promotions are largely internal. Regular communications are key and
most departments use the Prework Communications Meeting approach,
where employees informally update each other of the current issues at the
start of their shift.

Less tangible are the drivers of technical innovation at UPS. These can be
traced back to the founder, Jim Casey, who was the first to modify the Model-
T Ford for parcel deliveries, the first to utilize conveyer belts for parcel sorting,
and also led UPS to be the first logistics company to experiment with air
freight (in 1925). UPS is still clear that being at the forefront of technology is
important and has recently made significant investments in the development
of databases.

All of the company’s routines, rituals and control systems focused on being
a provider of cost-effective package shipping (rather than premium priced fast
delivery). A strong culture can, of course, have its disadvantages and UPS was
relatively slow to react when Federal Express launched its next-day service.
This shows that, just as formal organizational structures need to be reviewed
regularly, so does culture. Corporate culture should not be left in abeyance.
The culture at UPS now focuses on offering customers a choice of services
(options on delivery and price), and optimizing the coordinated flow of
goods, data and funds through advanced information technology.