Organizational Design
Introduction
FedEx is a logistics company focused on the overnight courier business, but with brand extensions into ground courier, office supplies, and customs-related business lines. Based in Memphis, the company operates a highly centralized system where most key operating decisions are made at headquarters, and the different national and regional subsidiaries are to carry out the instructions. There are two reasons for this structure. One is that the entire company must be virtue of its business operate in a tightly coordinated manner, such that the different elements cannot simply do their own thing or packages will not be delivered on time. The other is that the founder, Fred Smith, is a former Marine and brought a lot of military influence to the company's culture and structure. This paper will examine the organizational design at FedEx, and perhaps make recommendations for the transformation of some aspects of it.
Formal Structure
The formal structure of FedEx is as follows. The highest level breaks the company down into its multiple operating subsidiaries. Many of these were brought into FedEx via acquisition, and therefore not fully integrated into the structure of the company, but rather left as standalone entities with only thin links back to the core overnight business. The structure of the overnight business focuses operating decision-making in Memphis, but then fans out to allow for certain operational decisions to be made at the regional subsidiaries.
By and large, FedEx works with a strict hierarchy for its chain of command, within the overnight business. Each manager will have a manager above – so a manager of a city facility will report to a regional manager, who will report to a national manager. The national manager reports back to Memphis. Within that, Memphis provides considerable operating support, including most scheduling. The job of local managers is to adapt their practices to meet organizational...
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