United Parcel Service

and the Management of Change

Submitted to:
Dr. Reginald Bruce
Management 640-92

by:
Kathi Decker
Shara Engleman
Tony Petrucci &
Shirley Robinson
Introduction
"UPSer:.....As you know, our company is experiencing a series of dynamic
changes. We are, more than ever, questioning why and how we do everything
associated with running our business. During this time, we have come to realize
that many of the traditional processes we have become accustomed to need to
change because they continue to increase our operating costs. We all need to admit
to...shortcomings and then commit to becoming advocates for the change required
to move to a much higher level."
Kent C. "Oz" Nelson, Chief Executive Officer
"Change represents an opportunity to grow...to participate in the creation of the
UPS of tomorrow."
Jim Kelly, Chief Operating Officer
As the year 2000 approaches, the economy is changing from a manufacturing base
to an information/service base. What has brought about these changes?
Demographic and economic changes, technological advances, increased global
competition, emphasis on quality, customer demands forcing companies to look for
ways to be more efficient (outsourcing, part-time workers, self-directed work
teams), government policy changes (NAFTA), and other workforce issues such as
the decline of unions, influx of immigrants, etc. Internal and external forces are
forcing organizations to change from bounded to networked, hierarchical to flat,
fixed to flexible, homogeneous to diverse, and local to global.
UPS has always been a stable, smart company that knows where it wants to go and
how it was going to get there. Long-term profitability was never a question;
however, increased competition and technological advancements have been two of
the major forces behind UPS's wake-up call. In 1994, it was announced that UPS
would be undergoing some drastic changes in the future, which caused much stress
and concern company-wide. One of the changes that has affected every person at
UPS is the company's new quality initiatives. UPS is not known for rushing into
things, but finally realized that the 90s was a decade of necessary change. Upper-
level management began to contrast the "Old" and the "New" UPS, with one major
characteristic of the "New" UPS being a company-wide goal of customer
satisfaction achieved through eighteen quality initiatives. Change is not easy and
the transition from the "Old" to the "New" UPS while traveling down the "Road to
Quality" will prove to be long trip for a company deeply grounded in tradition.
The purpose of this project is to highlight some successful and unsuccessful
change efforts within United Parcel Service. Through first-hand experience, a
status of change survey, and internal and external research, we hope to show how
UPS identified the need for organizational change, how it started and is currently
managing the change process, and highlight three focus areas we feel UPS
identified as crucial to the success of its change efforts: emphasize and refocus its
philosophy from efficiency to quality, increase innovation by investing in
technology and expanding into different business opportunities (passenger
charters), and adopt more of a customer orientation.
As you can see, change has been identified as a source of future opportunities and
challenges for UPS. Because 75% of all re-engineering projects fail, it is essential
for managers to identify the criteria for activities in which their organizations must
excel in order to succeed in the market-place. Through this project, we hope to
show which activities UPS has identified as critical success factors, how the
company is handling its renewal process, learn from first-hand experience by
evaluating its successful and unsuccessful change efforts, and make some
recommendations based on the tools and principles we learn throughout the
semester. We will critically examine these changes, in order to accomplish two
major objectives:
1. To determine the relative success of each change effort from the overall
company viewpoint (examining indicators of the success of the changes) and
employee perspective (soliciting employee input on each change).
2. To identify areas where further development seems warranted (based on
inadequate company success or employee dissatisfaction).
Additionally, at the end of the study we will make recommendations to correct
deficiencies based on our results as well as the methods proposed in our course
work and texts.

Background
United Parcel Service (UPS), headquartered in Atlanta, Georgia, is the world's
number one package delivery company and the third largest private company in the
United States. The company was started in 1907 by James (Jim) E. Casey at the
age of nineteen. There was a great need in America for private messenger and
delivery services. Personal messages and packages had to be delivered privately.
Jim Casey borrowed $100 from a friend and started American Messenger
Company in Seattle, Washington. The company did well, despite the stiff
competition, because of Jim's strict policies: customer courtesy, reliability, round
the clock service, and low rates. He used the slogan: "Best Service and Lowest
Rates." (http://www.ups.com).
In 1913, the company began to focus on package delivery for retail stores. Jim
merged with a competitor, Evert McCabe, to form Merchants Parcel Delivery.
Charles W. Soderstrom joined the firm in 1918 and helped manage the growing
fleet of delivery vehicles.
The 1920s and 1930s were characterized by growth, ingenuity, and change. The
company expanded its operations to Oakland and Los Angeles, California. By
1930, delivery services were provided in all major West Coast Cities, and a
consolidated delivery service was established in the New York City area. Many
innovations were adopted included the first mechanical system for package sorting,
and a 180-foot-long conveyor belt was installed in Los Angeles. The company
changed its name to United Parcel Service. "United" because shipments were
consolidated, and "Service" because, as Charlie Soderstorm observed "Service is
all we have to offer" (http://www.ups.com). All UPS vehicles were painted the now
familiar Pullman brown color, selected by Charlie Soderstorm because it was neat,
dignified, and professional.
World War II prompted UPS to redefine itself. Retail stores encouraged their
customers to carry their packages home, rather than have them delivered because
of the fuel and rubber shortages. The trend continued after the war as much of the
population began moving into the suburbs, where shopping centers were being
built. The convenient shopping made it easy for customers to drive home with their
own packages. UPS managers began looking for new "common carrier" rights to
delivery packages between all addresses. This included any customer, private or
commercial and it placed UPS in direct competition with the U.S. Postal Service.
UPS was restricted from operating in any parts of the country. Federal authority
was needed for each state border crossed, and each state had to grant permission
for the movement of packages within its borders. It took UPS almost twenty-five
years to obtain authorization in all 48 mainland states. In 1975, national parcel
delivery service was finally a reality.
UPS began offering two-day service to major cities on the East and West coasts in
1953. Packages were flown in the cargo holds of regularly scheduled airlines. This
service was called UPS Blue Label Air and was available in every state by 1978.
As the demand for air parcel delivery increased in the 1980s, federal deregulation
of the airline industry provided new opportunities for UPS. UPS began to assemble
its own jet cargo fleet and by 1985 they were offering overnight air delivery. UPS
airline is among the ten largest airlines in the United States (http://www.ups.com).
UPS entered the international shipping market in the 1980s, establishing a presence
in several countries and territories in the Americas, Eastern and Western Europe,
the Middle East, Africa, and the Pacific Rim. Today UPS operates an international
small package and document network in more than 200 countries and territories
(Hoover's Handbook of American Business, 1996, p.1456).
Although UPS has experienced tremendous growth over the past eighty years,
increased competition has forced a shakeup in the company's strategy. After losing
business to such aggressive competitors as Federal Express and Roadway
Packaging System (RPS), UPS Chief Executive, Kent C. "Oz" Nelson, began
overhauling the way the world's largest package carrier does business. Gone is the
"we-know-what's-best-for-you" arrogance that was UPS hallmark for decades
(Hawkins & Oster, 1993, p. 93). UPS now stresses customer satisfaction.
These graphs show the Air Express market share:

Overnight Deliveries (3 -70 lbs.)

Source: The Wall Street Journal
An important objective of UPS is to obtain World-class Quality. Jim Kelly, Chief
Operating Officer for UPS, stated, "Our journey toward Quality began with the
realization that we were at a competitive disadvantage in several areas. We needed
to improve our time-in-transit performance and customer perceptions of the
dependability of our services. We needed to overcome the misconception that our
competitors were more technologically advanced than UPS. And we realized that
we were in danger of becoming the high-cost carrier in the small package delivery
business" (Management Conference Highlights, 1996, p. 1).
Even though UPS is quickly becoming the high-cost carrier that Kelly referred to,
the company is prospering financially. A shareholder report (November 16, 1996)
shows that "revenue increased 8.7 percent for the quarter ending September 30,
1996, compared to the same period in 1995. This growth resulted from higher rates
introduced earlier in the year and a 4.4 percent increase in domestic U.S. volume,
including a rise of over 11 percent in higher yielding express packages.
International revenue contributed to the growth, primarily because of a 19 percent
increase in export revenue. Operating expenses increased by 2.1 percent. The
comparison to the third quarter of 1995 was affected by a one-time charge of $353
million in that quarter for the voluntary early retirement and separation programs.
Excluding this charge, operating expenses increased 10 percent" (Oz Nelson,
CEO).

Corporate Philosophy
The driver steps from the truck moving quickly inside the office. Handing the
employee at the counter a package, the driver requests a signature on a hand-held
computer. Chatting amiably they talk about the customer's satisfaction with this
delivery as well as services overall. Concluding the conversation, the driver steps
back in the brown truck setting the DIAD (Delivery Information Acquisition
Device) into the DIAD Vehicle Adaptor (DVA) and instantly relays real-time
package delivery information worldwide within minutes of the transaction
completion (Duffy, 1996: MacLeod, 1996).
Science Fiction? No. Science fact---UPS reality. But a few months ago the scene
would have been more stilted, the driver more hurried and harried, the procedure
and equipment more cumbersome, and the focus not on customer satisfaction but
on time restraints and schedules. But with increased competition, changing
technology, and recognition that new strategies were needed to maintain a
competitive stance, United Parcel Service made a move to change the corporate
philosophy, create new ways of thinking about their business and their customers,
and align their procedures and ways of work with tomorrow's package delivery
needs.
While years past produced a corporate philosophy of efficiency, honed a reputation
for punctual and reliable service, and created a "cookie-cutter" operation (Fabey,
1996) based on timing, the present and future demand a focus on quality, customer
satisfaction, and creative solutions to organizational needs. Emphasis shifted from
training drivers to step out of the truck on their right foot (to save precious seconds
of delivery time), to training drivers to interact with their customers and learn their
needs. Emphasis shifted from the needs of the organization to those of the
customer - all customers - both internal and external to the organization. Emphasis
shifted from playing it safe, to gambling with innovative services, technology, and
new markets.
As much as four years ago UPS began a plan to redesign its technical support
systems and distributed-computing network. Establishing 65 centers and installing
remote-access hardware streamlined operations for technical support staff and led
to increased efficiency in problem-solving (Duffy, 1996). However, it was the
recent addition of the DIAD and DVA in the package cars and the hands of the
drivers that has turned science fiction into fact, eliminating paperwork and
increasing real-time tracking operations. The addition of the World Wide Web has
completed the loop linking the customer directly to an interactive engine that
initiates the pick-up process/delivery transaction.
Concurrently UPS shifted its gaze to broader use of the types of things the
corporation has always done well, looking for business in the realm of logistics,
just-in-time delivery of manufacturing parts (Cleland, 1996), and information
management (Fabey, 1996). With the establishment of a new technology and
logistics center in Louisville, Kentucky, in September of this year, UPS launched a
"pick-up, repair and return" service for manufacturing facilities (Mitchell, 1996).
To utilize its resources more effectively, UPS is going into the charter passenger
airline business by putting idle Boeing 727 aircraft to work on weekends.
While UPS faces an impending change of leadership with the retirement of Kent
Nelson and the arrival of incoming CEO, James Kelly, Kelly flatly states "there
will be no major changes" (Fabey, 1996). Given the sweeping changes
implemented within the past six months, concentration on continuing the plans
already in motion and capitalizing on the family atmosphere seems wise. Kelly
also cited a great espirt de corps and the employees' mutual respect as factors he
will use to strengthen and continue the company's success. However Kelly cites
issues beyond Nelson's initiatives in quality, service, and technology as the top of
his list. These issues include getting the company finances into the black and
tapping the potential of the newly formed logistics group (Mitchell, 1996); the
achievement of/implementation of which imply future change. However, for the
time being change is likely to be subtle as the behemoth whose "U" use to stand for
such things as "unyielding" and occasionally "unbeatable" (in the words of one
writer, Fabey, 1996) shifts to representing a company whose revitalized world view
and new vision now stand for "unbelievable," and "unlimited."

Corporate Culture
"Once upon a time, there was a company named United Parcel Service. It had
spent decades leveraging tried-and-true practices built upon tried-and-true
strategies. It faced one competitor, the U.S. Postal Service. At Christmas time,
those brown trucks were as reliable as Santa Claus' sleigh---which is why
customers always did business pretty much the way UPS asked them to. Then one
day the company looked upon its business and saw that times had changed. The
practices had become 'inoperative' because the strategies had become outdated. The
strategies had become outdated because smaller upstart rivals and old foes had
become competitive. Profits declined. So UPS examined what its customers
wanted, sought ideas from its employees, swallowed hard, and decided it had better
start doing business differently--or there might not be any more business to do. So
it did. Now UPS is living happily ever after once again. For now." (Day, 1995,
p.15)
Organization development is a long-range effort to introduce planned change
throughout an organization and provides a renewal process enabling managers to
adapt their style and goals to meet the changing demands of the environment.
These changes---improving quality, increasing innovation, adopting a customer
orientation---are so fundamental that they usually require changing the
organization's culture. As mentioned earlier, UPS is striving to manage its own
changes by emphasizing and refocusing its philosophy from efficiency to quality,
increasing innovation by investing in technology and expanding into different
business opportunities (passenger charters), and by adopting more of a customer
orientation. In recent years, strong competition has forced UPS to realize that
efficiency is not necessarily synonymous with effectiveness. So, after more than 80
years as an operations-oriented company, UPS has taken significant steps to
transform itself into a market-driven company with a distinct customer focus. This
transformation has affected every part of its organization, including employee
functions and roles within the organization. UPS has realized that its corporate
culture must first change if any other organizational changes were to be successful.
"A corporate culture is a system of shared values and beliefs which interact with an
organization's people, structure, and systems to produce behavioral norms (the way
things are done around here). It gives the whole organization a sense of how to
behave, what to do, and where to place priorities in getting the job done" (Harvey
& Brown, 1996, pp. 68-69). Managerial factors such as philosophy, values, actions
and vision, combine with organizational factors such as roles, structure, systems,
and technology to form the shared sayings, jargon, actions and feelings that make
up a corporate culture.
Because UPS is in the service sector, its culture (image) helps set it apart from its
competitors. The fast-moving UPS driver in his "browns" is easily recognizable,
while the clean brown truck driving down the street is almost as American as apple
pie. UPS is synonymous with its brown color (Pullman brown), which as noted
earlier, was selected for its neat, dignified, and professional qualities. In his
November 3, 1996, article in The Courier-Journal entitled, "Henry County misses
its special UPS man," Byron Crawford writes: "Although most of his customers
never saw Bud Collins more than two or three minutes during his visits, over his
21 years as the UPS man in Henry County they came to know and admire the man
in the brown truck who always had a smile and a pleasant greeting. " This is just
one story of a UPS driver who helps UPS customers see him and the entire
organization in a different way.
Internal changes will allow the organization to become more effective if its
employees possess the skills and competence to implement these changes. To give
its managers these necessary skills, UPS dedicated $550 million to training in
1996. Workshops, developed by The Atlanta Consulting Group, Inc., were the
major expense: Trust & Teamwork (developed in 1994) and Quality at Work
(developed in 1995).
The objectives of the Trust & Teamwork workshop were as follows:
 Build teamwork and collaboration in our work with others.
 Understand the role trust and credibility play in our personal effectiveness.
 Create an environment of win-win problem solving.
 Listen with skill and understanding.
 Take responsibility for producing desired results.
 Give and receive feedback effectively.
 Confront others in a caring and constructive way.
 Build self-confidence.
All management and full-time business professionals (non management) were
required to attend the three-day workshop, which was comprised of lectures,
games, and various learning exercises. The workshop concentrated on showing the
relationship between trust and organizational performance, and how teamwork
requires a win/win mindset as opposed to a win/lose mindset. "We believe that
trust in teams and organizations is an essential ingredient. It is built slowly and can
be destroyed almost instantaneously" (Trust & Teamwork Workbook, 1995, p. 16).
The workshop also dealt with five fundamental (HEART) principles of human
interaction:
1. Hear and understand me.
2. Even if you disagree, please don't make me wrong.
 3. Acknowledge the greatness within me.
4. Remember to look for my loving intentions.
5. Tell me the truth with compassion.
"The five principles of Managing From The Heart are not a series of techniques to
get other people to do what we want them to. They are a way of life, a way in
which we as human beings can truly stand together and support each other. They
build self-esteem and strong relationships and, ultimately build satisfying and
productive workplaces" (Trust & Teamwork Workbook, 1995, p. 22). Every person
who attended the workshop received a copy of the book referenced above
(Managing From The Heart by Bracey, Rosenblum, Sanford, and Trueblood, 1990)
and was encouraged to read it and apply its principles to his/her personal and
professional life. The HEART principles were seen as a definite indicator of
change at UPS---never had UPSers been asked to look for loving intentions. In
fact, the word loving was not heard around the workplace prior to the workshop.
The Trust and Teamwork workshop portrayed a "soft-side" to UPS, which is
something many employees did not think existed, and as a result, the principles of
the workshop were not immediately accepted. Many questions and suspicions had
to be confronted by workshop trainers in order for the participants to know that
UPS was serious about this part of the change process; however, the workshop has
been viewed as a success and one big step in the direction of change. "To survive
and prosper in today's and tomorrow's global economy will be difficult, if not
impossible, for organizations in which people don't trust each other. Trust is the
`miracle ingredient in organizational life---a lubricant that reduces friction, a
bonding agent that glues together disparate parts, a catalyst that facilitates action.'
We believe that trust is the most fundamental fabric of any organization. Without
trust, collaboration and teamwork are impossible" (Trust & Teamwork Workbook,
1995, p. 5).
A "New Language" resulted from the Trust & Teamwork workshop and to
reinforce the "new language" and remind employees to use it, posters (Appendix
A) can be found on walls in almost every office. It is common for the phrase "I'm
going to trust my partners" to be heard around the office; however, many times it is
said in a reluctant tone. To encourage workshop participants to keep the principles
learned fresh, reminders summarizing key learnings were sent out via housemail
(Appendix B).
Much of UPS's policies and vision are based on the founder's beliefs. In 1907, Jim
Casey founded what is now known as UPS. Pictures of Casey and the other 3
founders can be found on the walls of every UPS building. UPS traces its culture
back to its influential founder, who personified a value system and relentlessly
hammered in the basic values which became the cultural core of the company.
UPS's culture is based on past successes: "but we've always done it like this...look
how profitable we are." This strong tradition enforced an operations-oriented
approach that was warranted to make UPS successful for most of its 89 years in
business. However, the company has had a difficult time transitioning from
efficiency to effectiveness because of the traditional policies and procedures.
UPS's transformation from an operations-oriented to a market-oriented company
with customer focus has drastically affected one groups' function and role within
the organization--- its industrial engineers. When increasing competition forced
UPS to take a hard look at itself, the company began asking serious questions such
as whether it was really doing the right things to meet its customers' needs. Did all
those MOPs (master operating plans) on the shelf collecting dust do anything for
the customer? As a result, UPS reevaluated many of its departments and made
numerous changes. One of the most significant changes was the formation of an IE
Reassessment Group in 1993. This group was formed to study ways to reengineer
UPS's industrial engineering department, which had not been seriously modified
since 1962. While the rest of the company was being redirected towards the
customer, the IE department was still geared for internal operations. Instead of
being responsible for tasks such as auditing, reporting, and time measurement, the
IE department was reengineered around outcomes such as customer satisfaction,
volume development, and customer logistics.
With the help of consulting firm Coopers & Lybrand, the IE Reassessment Group
identified and eliminated a variety of sacred cows that inhibited necessary changes.
They determined that IEs at UPS were spending up to 80% of their time doing
work measurement, planning, auditing and reporting. While efficiency and work
measurement was still important for keeping the operation running smoothly, the
daily tasks of the IE departments contributed little value-added service for UPS
customers. Which hand the UPS driver should hold his keys in, which foot to use
when stepping up into the package car, and how long it should take to deliver one
package were not beneficial to the UPS customer; however, UPS still reminds its
managers of the need to "run the business" and not lose sight of the importance of
departing an aircraft on time or making on-time deliveries. However, the
"efficiency tradition" and the goal of "running the tightest ship in the shipping
business" are being challenged and rethought.
Value-added activities have been given much attention. Today, if the value of an
audit or report does not exceed its cost, the audit or report is simply eliminated.
One recent example is a Daily Operation Report that automatically prints every
morning at 6am at all UPS region offices around the world. This report gives a
summary of the airline's activity for the night before; for example, which flights
were late, why they were late, and what happened as a result. The UPS Air Service
Center in Louisville, Kentucky, is responsible for updating this report; however,
the report's effectiveness is being put to the test. On October 24, 1996, the report
stated "No report." What better way to measure the value of the report than stop
completing it to see if anyone notices? It was two weeks before someone noticed
the report was not being completed. Tradition has a strong-hold on UPSers, but
many are starting to see the importance of re-directing their time and energy into
achieving internal and external customer satisfaction.
New goals were developed for UPS's industrial engineers:
 Become more focused on the external customer;
 Set as a goal a 90% rating for internal customer satisfaction;
 Identify and apply new technology that would improve existing operations
and develop new business;
 Decrease time spent on auditing and reports;
 Concentrate on improving operational areas that have value to the external
customer; and
 Spend less time on time study, and more time on training UPS management
and hourly employees in job methods.
To help realize these goals, the IEs were reorganized into three functional groups
that can work in any UPS environment or operations. The planning support group
assists operations managers with the development and implementation of a master
operating plan, while the operations improvement group works closely with
operation managers to develop and achieve improvement goals, and the package
operations support group is responsible for supporting technology applications in
the operations.
In just three years, the IE Reassessment plan and the new IE structure have resulted
in excellent results. Many processes that do not make sense are being eliminated
and saving money. Non-value-added activity is being assessed, customer
interaction is being emphasized, a better vision of the planning process is realized,
and time spent on work measurement has decreased from 20% to 8%. However,
the IE Reassessment Project has also resulted in some noticeable adverse effects.
With the emphasis of the IE departments identifying the important tasks and
discarding the rest, there has been some lack of support identified. When
traditional IE responsibilities were no longer required, nothing was done to make
up for this change. For example, there have been many critical operational changes
that seem to be ignored. There have been many instances where time and money
have been wasted because of a lack of planning and control was required of the IE
departments in the past. It seems as though the responsibilities that the IE
departments gave up were not delegated to anyone else; therefore, frustration and
disappointment are frequent results.
" 'Watching our people embrace the change has been the most rewarding thing I've
experienced, and the most enjoyable', says Kent C. Nelson, the man who helped
ignite it." "UPS employees, Mr. Nelson recounts, "were ready for the change--more
ready than you might find in most companies." Nelson attributes this readiness to
the fact that UPS managers and supervisors are also UPS owners. Their life's
savings are tied up in it. Change meant UPS people would have to tackle their jobs
differently. "But first we had to change the mindset of our people," Mr. Nelson
says. In the past, UPS was always focused on how to become more efficient and
reliable in order to effectively serve its customers. UPS went so far as to tell its
customers why it was in their best interests "to use the services we provide in the
way we want you to use them." Ownership is the key to a successful change effort
at UPS.

Total Quality Management

In late 1994, UPS CEO, Oz Nelson asked all UPSers: "Are we using the Total
Quality approach to manage all parts of our business? Not yet. Not completely. But
we see progress. We are committed to making UPS quality the best in the world,
and we believe our Total Quality initiatives are the means to achieve the goal."
UPS undertook the TQM philosophy as its OD intervention to improve
productivity, efficiency, and quality. An outline of TQM is provided. UPS's rollout
is examined relative to the outline. The actual results of the rollout are then
analyzed.
TQM is an intervention process that focuses on continuous improvement. It is a
cross-functional, management led philosophy which results in improved customer
satisfaction. There are some characteristics of TQM that need to be in place in
order for it to be effective. Top management must actively support it. Every
department in the organization must be involved. TQM must be a part of the
company culture. Suppliers and customers must be a part of the process. Products
and services need to be done faster, and they need to be right the first time.
In order to make the development work, empowerment and involvement must take
place. Self-managed work teams are an important part of ensuring empowerment
and involvement take place. The teams must understand the vision and their role in
bringing the vision to life. So information must be openly shared.
The design of jobs revolves around five core job dimensions: feedback, autonomy,
task significance, task identity, and skill variety. If these dimensions are executed
well, then the work teams are more self-directed. In order for self-managed work
teams to be successful, the organization must be flat. Senior management must
provide a network for support, and there needs to be rewards involved.
There are some problems that can occur with self-directed work teams. There is a
possibility that the work teams may not fit into the context of the product or service
process. There may be morale problems due to a lack of internal promotion from
the flattening of the company. A lack of training and rewards can cause problems.
In addition, if roles are not clearly defined, execution is almost impossible. Also, if
the organization's leadership does not truly believe it must change, it will not
change. It is imperative that job enrichment takes place to ensure that people are
energized about the quality of their work.
TQM is not a quick fix program. It must be a way of life for a company. Many
companies have tried it as part of the latest management fad. Most have found out
that it does not work if the company does not own the entire process. UPS wanted
to change to ensure their number one position in the industry would be maintained.
They brought their management together to inform them of the status of the
company and to roll out TQM. A special management session of DOF (Delivering
Our Future - Taking a Leadership Role in Total Quality) was designed to create an
awareness of the competitive reasons for Total Quality and the role all management
at UPS would play in the process. In some of their introductory material
(Delivering Our Future Workbook, 1994) there seemed to be some doubt about
whether they really needed to change since they were already the leader.
During the DOF training, each managers need and ability to change was assessed.
UPS planned to teach TQM principles throughout the entire organization, and felt
it was critical to have everyone buy into the process. They surveyed all the
employees in the organization to find out their feelings about many areas of
interest. The results: 67% were satisfied with their jobs, 13% were not satisfied and
20% were neutral. Only 50% of management surveyed felt it was possible to
balance work and personal life at UPS. There were significant communication
issues from management to the employees that were identified: 50% felt teamwork
took place, 50% felt they could trust the company, 43% felt they received
cooperation from other units in the company, 60% responded favorably to the
quality of training, and 50% felt there was good opportunity for advancement in
the company. Based off this information, UPS employees showed the need for
change and the difficulty that might be involved with trying to change such a large,
traditional company. In fact, UPS compares the difficulty of the change process to
a ship turning around in a bathtub---a long slow process.
Then the program moved into quality improvement. Four percent of the customers
being dissatisfied, 42% were very satisfied, and 54% were satisfied. Some
exercises and presentations were then conducted to teach trust and management led
change. Training on empowerment and possible breakdowns during empowerment
was conducted. Soft skill development, such as listening, was conducted.
Throughout the training, it was mentioned several times that UPS was really good
at what it did, but still needed to change. It may be hard, when presented in this
manner, to successfully implement an intervention process such as TQM.
Senior management offered their total commitment to the change. A change was
needed to move from an efficiency based organization to a customer-driven
company. Everyone now had a customer. Whether the customer was internal or
external, they were the top priority.
The Quality process started in November of 1994. It started with the highest level of management in UPS. The
Atlanta Consulting Group was contracted and started in 1994. The following eighteen strategies were developed in
August 1995 and identified as key or critical to UPS's future success. The first eight are priority initiatives which
were started in January of 1996 and will be accomplished first within the first 18 months (by May 1997). The
remaining strategies will be worked on after the 18 months (beginning May 1997).

Priority Initiatives Remaining Strategies

Retention, Hiring, Orientation & Mentoring Employee Scheduling
Cost Factors Customer Point of Contact
Asset Utilization Support and Service
Training and Education Peak Season Aircraft (Leased)
Measurement (**Finished by 11/96) Leadership
Technology Investment Employee Involvement
Communication Labor Union Partnership
Gateway Reassessment Planning Activities
Fleet Planning
Regulatory Reform
The "Road to Quality" will be a long one for UPS. The Quality at Work workshop
gives employees a clearer vision of where the company is heading and how it plans
to get there. The first day of the workshop calls for the instructor to ask the
management member class to contribute to three lists: what to take with them on
the road to quality, what to leave behind, and what new things to acquire for the
trip. This shows the company's recognition of the need to change the way UPSers
think.
The objectives of the Quality at Work workshop were as follows:
 View the world and your work from a systemic viewpoint.
 Compare and contrast the present management method with the new
management method, based on systemic thinking.
 Follow the Quality at Work Improvement Process necessary to implement
the continuous improvement cycle.
 Begin to use tools to diagnose and improve a process.
The two day workshop helped UPSers analyze and improve their work methods in
order to better serve their internal and external customers. UPS is using several
methods to follow-up and re-iterate the training that employees received in the
Quality at Work Workshop. One method is a weekly E-mail message called the
"Quality Update" (Appendix C).

Survey
The survey (Appendix D) was targeted to the Air Service Center employees which
includes three "departments:" Contingency, Crew Scheduling, and Flight Dispatch.
The survey was distributed to 30 employees. We received 21 completed surveys for
a return rate of 70%.
As mentioned earlier, the purpose of our project is to highlight some successful and
unsuccessful change efforts within UPS. This status of change survey will help us
gain timely, pertinent information about the renewal process in one specific
department, by soliciting employee input through an anonymous survey.

Survey Methodology
In assessing employee reaction to the recent changes, as well as how well UPS
appears to have used change methodology cited in change texts, a survey was
created from a rubric formed of said technology. Specifically, questions were
formulated in seven basic areas: corporate philosophy, organization culture,
communication, quality initiative, team building, employee satisfaction, and
reinforcement of change.
Five of these directly reflect major components of change cited by Galpin's Human
Side Of Change (1996) as essential to successful change implementation:
managing culture through both dissemination of the new vision and philosophy as
well as the broader culture, communication, implementation methods (in this case -
team building), and reinforcing change. Two elements reflect major change
movements cited by Harvey and Brown (1996). For example, team building
questions centered around the elements of effective teams cited by Galpin (p. 30),
while cultural questions used his ten components of an organization's culture (p.
54) as specific items to be addressed. Another set of questions were built from
Harvey and Brown's description of job characteristics theory (pp. 355-356).
Using recommendations from Sudman and Bradburn's Asking Questions: A
Practical Guide to Questionnaire Design (1982), the survey used a funnel approach
beginning with the broader organization issues of corporate philosophy and culture
through the specific change methods (team building and quality programs) and
building to the employee's feelings of job satisfaction in light of the recent
changes. Likert scales were used for speed of response as well as their greater
reliability and built-in strength of attitude scale needed to assess attitudes. There
were a few forced choice and open-ended questions for variety and to eliminate
response effects. Likert scales were reversed in one set to combat automatic
response set. The survey began with closed, less threatening questions and
progressed to a few open ones at the end.
Question categories were prefaced with transitional information that explained why
that topic was of interest in the survey. Most instructions were simple, positively
worded, and bolded for visual clarity. All demographic information was retained
until the end of the survey, and was optional. As much as possible specific item
language was tailored to the audience department. Finally a cover letter was
included with overall purpose, instructions, and a hook to increase response rate.

Survey Results
Survey results (Appendix E) revealed some interesting trends in employee
perceptions in four key cultural change components: communication efforts,
leadership commitment to the change, employee understanding of the elements of
the change effort, and the implementation of new goals, measurements, and reward
systems.
Overall, UPS seems to have communicated its new corporate philosophy well. On
a weighted scale where 1 was high, 5 low and 3 was clearly tagged as a "don't
know" response, average scores of 2 for most of the philosophy/mission questions
indicates that employees feel they can define both the new mission and their role in
its implementation. However, there seems to be some breakdown at the
departmental level, where the average drops to a 3 due to several respondents
disagreeing (7 of 21 respondents, mode is 4) and strongly disagreeing (1
respondent) that the department manager's actions (Question 7) support the new
philosophy. Question four's responses also indicate that employees are not sure
whether coworker's believe/buy-in to the new philosophy with a mode of 3, the
"don't know" response.
Specifically, employees clearly indicated (with 57.89% of responses) that they
received information on all three levels of changes -- organizational, departmental,
and team -- and that they did so in a systematic, ongoing manner (52.63% response
rate). Communication clearly has not stopped now that change is being
implemented on the grassroot level. However, employees also indicated (68.2%)
that the information they have received on the changes was incomplete prior to the
beginning of that the grassroot implementation.
Nevertheless, there is an implied lack of communication by the departmental
managers/leaders regarding buy-in to quality issues and teamwork. Scores of 3 on
three quality questions which dealt with leader communication and open
communication channels indicate a large degree of ambiguity about manager's
commitment, and the communication of their commitment, to the tenets of the
TQM initiative. A full 38% of the respondents disagreed or strongly disagreed that
their leader regularly asks for input to improve operations, while 42.8% disagreed
that interdepartmental communications enhance quality work.
Teamwork responses were ambiguous or largely negative across the board with the
questions regarding the effective use of team meetings being most negative --
average response being a 4 (disagree). Responses concerning communication
among members produced some curious results. While the average score for
Question 49 concerning respect for others during meetings was a 2 (indicating
agreement with the positive wording of the statement), average response to
Question 50 concerning listening to other's ideas during meetings was a
noncommittal 3. Examination of the individual scores reveals a wide range of
responses to these two questions (which ought to, and did, contain a high degree of
alignment within an individual's response set) with answers ranging the complete
breadth of the scale choice. One case in particular, an outlier, seems to account for
the noncommittal average score cited above. This individual strongly disagreed (a
5 on the response scale) that members show respect for each other, but agreed
(with a 2 on the scale) that members listen to other's ideas. In a sample this small
this outlier did affect the average response enough to imply that employees may
not listen well. In this set of questions, this would seems to be a faulty conclusion.
Looking then at the mode (instead of the average) reveals that for Question 50,
57% of the respondents selected response 2, agreement that members listen, while
an additional 9% strongly agreed that they do so. This seems to more clearly
indicate that members do listen well, aligning response of Question 50 with
respondents feelings about team respect.
Teamwork questions and their response results as a whole indicate a disconnect
with UPS's profession to their use as part of the TQM effort and the actual
implementation of a team approach to date in this particular department. Most
question averages and modes indicate that while employees feel a sense of
cooperation and "teamwork" in a broad sense (Questions 39 through 42, modes of
2 - "agree" - for all), they are uncertain that they use team methods effectively
(Questions 45 through 47, modes of either 4 - "disagree" - or 3 - "don't know"), or
use them at all.
In all three sets of questions focused on goals, measurements, and reward
alignment employees clearly indicated that goals and measures had changed while
they saw little evidence that rewards had changed accordingly. Comments offered
in open ended format indicate that teamwork, quality, and customer focus all came
through clearly as the new "goal" and has been translated into some actual revision
of measurements. Likewise remarks reinforce that the reward system has not kept
pace with new behavior expectations: "no recognition framework exists for
accomplishments," "....old policies and performance evaluations are still
determined by...years of top down management," and "our department responds to
everyday `fires' - big successes...seem to go unnoticed" are just three examples of
the employee's perception. Further, comments recognize that there are managers
who talk the talk but do not walk the walk, or in the words of one: "...when it
comes time to `strut' quality we seem to be forgetting everything that the `quality
movement' really stands for." Several employees expounded that they had a long
way to go to achieve the change envisioned.
As might be expected in the early stage of any change effort, employee responses
to questions designed to assess job satisfaction based on the recent change,
produced a variety of results that ranged from those whose negative responses
indicated disgruntled employees to those whose positive responses demonstrate
belief that the changes have been beneficial. The mode response to Question 51 "I
am happy with the changes that have been made" was 2 - agree; the mode response
to Question 53 "I feel the changes have disrupted operations in my department"
was 4 - disagree. Despite some negative attitudes toward the changes, overall
employee ratings of elements of their job indicate they feel that skills required have
a high degree of variety (average 4.13 with 5 as high), are relatively well defined
(average 3.61) and are significant tasks (average 3.87). Individual scores of each of
these three elements were clustered from 3 to 5 on the rating scale. Conversely,
ratings of the degree of autonomy and of feedback swing across the full scale.
While the averages (3.25 and 3.1 respectively) would indicate a moderate amount
of both, the individual ratings shed more light. A full 20% of the responses cite a
very high degree of autonomy with an additional 28% who gave autonomy a high
degree. Feedback, on the other hand, is the most variable with 25% stating they
receive a high amount of feedback while 28% stated they receive a low amount..
Survey responses on the various facets of a change effort demonstrate a high
evidence of change (over 50% for seven facets) in at least eight of the ten arenas
cited by Galpin (1996) as essential to change success. Two very low scores, in the
physical environment (26.3%) and in ceremonies (31.6%), reinforce anecdotal
evidence as well as other results obtained within the survey results. We had been
told that little had changed in the arrangement of the departments' workspace
despite the purported adoption of a team approach. Barriers between groups
remain, and teams have not been formally recognized or given "team" space for
meetings or problem solving sessions. Further, the lack of evidence of ceremonies
and visible events corroborates the discussion of reward alignment above.
Typical examples of change cited range from dress down days to "hands-off"
management, from flatter organization structure to more lateral "promotions," from
allowing non-managers to attend training to initiating a newsletter, from more
verbal praise and pizza parties to receiving a new policy book, from team building
activities to "constant re-analysis of the `way' to do things." All but two responses
found positive examples of UPS's effort to change policies, goals and
measurements, customs, training, management behavior, rewards,
communications, and organization structure.

Recommendations

These results lead us to question at least one aspect of the plan for change currently
underway at UPS, specifically the timing of employee involvement in team
implementation, indeed clarifying the actual intent of teams and their use. The
ambiguous responses collected from the team portion of the survey indicate that
employees are unclear about the use of teams and whether they truly are a "team"
expected to use team processes in day to day functions and in problem solving.
TQM uses the term "self-managed workteams" to mean exactly that -- teams of
people formally organized into teams who have regular team meetings, problem
solving sessions, team-specific norms and roles, team goals, and who "manage"
everyday work. Obviously employees in this department -- despite the "team
training" they were given -- do not recognize themselves in this description. On
August 28, 1995, UPS celebrated its 88th Anniversary. "We enter our 89th year
proud of our past, excited by our future, seeing change as opportunity, and most
importantly, convinced that our best days are ahead of us. We believe that the way
to succeed in the future is to engage all employees within our business---exciting,
energizing, involving, and rewarding everyone." Over a year ago, UPS was
encouraging employee participation in guiding the business; however, a framework
for formalizing this participation has not been implemented.
The projected schedule of quality change implementation we were given may
indicate that the implementation of teams on this level has been reserved for
another stage of the change process, that the initial training on team building was
only meant to set the stage for later development and reorganization. However, as
noted earlier, teams are an integral part of successful implementation of TQM and
were cited as a part of the UPS vision of business as well as their culture in the
future. This being the case, an emphasis on team structure and teamwork would
seem warranted now, not six months or a year from now. Teams need time to
develop.
Recognizing this, we would recommend:
 Clarifying the role of teams.
 Stepping up team implementation.
  Bolstering the initial training sessions with follow-up courses in teamwork
methods and problem solving.
 Potentially identifying/reorganizing "team" workspaces.
 Implementing team goals with subsequent congruent "team" recognitions.
 Reevaluate the priority of the Leadership and Employee Involvement quality
initiatives. These should be accomplished by May 1997.
Survey results also reveal a lack of alignment of rewards to the new goals and
measurements in quality and customer focus aspects of the new philosophy.
Without adequate recognition to reinforce the change effort, permanent changes in
individual behavior or in work processes cannot be expected. People do what they
are rewarded for doing -- in the words of one respondent: "business as usual." The
only way to achieve business as envisioned is with new recognition, ceremonies,
management behaviors, and rewards on both an informal and formal basis. More
pats on the back and pizza parties indicate some degree of a change in informal,
management recognitions. A new newsletter provides a venue for recognition, if
used for that purpose. But these are not as tangible as bonuses for reaching a
quality goal, or department wide recognition ceremonies. We recommend redesign
and propitious implementation of a reward system that highlights those who
display the new behaviors, and honors those who reach the new goals.
Survey responses also indicate that managers are not yet fully displaying the new
management behaviors that would reinforce the philosophical changes.
Remedial/follow-up training in team methods, quality measurements, and
communication processes (especially feedback) seems warranted.

Conclusion
The emerging organization of the twenty-first century will be networked, flat,
flexible, diverse, and global. An organization transitioning from the old to the new
will undergo constant change. This process is not fixed, logical or discrete simply
because it has never been experienced before. Today's managers do not have the
tools they need to manage the organization through constant change. Plans are put
in place and visions are formed of where an organization wants to be in the future;
however, the transformation is not so simple or stable. It is first necessary to
understand what characterizes the organization of the future before attempting to
understand how to manage change. Kurt Lewin's model of change, which consists
of three phases (Unfreezing, Moving, and Refreezing), can be applied to better
understand the success of UPS's change efforts.
Traditionally, UPS's management style has been sluggish---based on low risk, with
formalized procedures and a high degree of structure and control (Harvey &
Brown, 1996). The "old" UPS possesses all the characteristics of this sluggish-
thermostat management style: "very stable goals, highly centralized structure, more
managerial levels, a higher ratio of superiors to subordinates, emphasis on formal
control systems, tendency to value tradition, tendency to value seniority more than
performance, and an aversion to accepting new ideas. In looking at the Model of
Adaptive Orientation in Organizations (Harvey & Brown, 1996, p. 33), UPS needs
to embrace a renewing/transformation management style if it wishes to maintain a
competitive edge and even survive. This management style is characterized by
proactive steps to take advantage of new opportunities and innovations, increased
responsiveness to competitive changes, and more participation in getting
commitment and involvement of organization members in the renewal process. It
seems as though UPS is attempting this transition. Some evidences are as follows:
 As a result of The Atlanta Consulting Group's recommendations, the first
voluntary early retirement and separation program was offered---4500
 management accepted the early-out program. UPS was and still is trying to
eliminate levels of middle managers in order to delegate responsibility to
those actually serving the customers. This should result in UPS becoming
more flexible, entrepreneurial, and effective; however much stress due to
lack of experience and expertise in many areas has resulted.
 Empowering employees (Trust & Teamwork/Quality at Work workshops).
 IE Reassessment Group
UPS was always known for its stringent management practices that were
characterized by "My way or no way" or "My way or the highway." This is one
area in which the company has realized that it must not only change, but get rid of
the looming perception if it was going to get employee support and buy-in to
implement changes. Lewin's first phase of change--Unfreezing--calls for an
organization to realize that the old way of doing things is no longer acceptable and
that the past must be separated from the future. The Unfreezing that we have
identified are the shift in corporate focus from efficiency to effectiveness measured
in terms of customer satisfaction and the identification of 18 quality initiatives.
Lewin's second step of Moving involves taking the visions and changes identified
in the unfreezing stage and devoting the time and resources necessary to
accomplish them. The moving tools we identified are the numerous workshops,
communication newsletters, Quality Update E-mail, and the "new language" and
various changes in culture. However, because of UPS has not established
improvement teams, this is the stage where the company appears to be at this
present time.
Lewin's last step is Refreezing, which calls for an organization to reinforce and
reward the new behaviors that employees have been conditioned to learn. By
refreezing them, the organization is making them part of the corporate culture in
terms of policies and norms. By following our recommendations cited earlier, we
feel that UPS will be able to move into the Refreezing stage and realize the
benefits of undertaking this change process.
In a letter to shareholders (November 16, 1996), CEO Oz Nelson stated: "The
timetable for implementing our Quality initiatives is continuing on schedule. The
planned training and education phase is nearing completion. While work groups
begin to apply what they have learned to improve the way we serve our customers,
a major, long-term initiative has begun at the corporate level with the formation of
teams focusing on several specific strategic processes that are vital to meeting
customer needs and creating competitive advantage. The processes include
customer and people development, billing, providing information to customers,
and such basic operations as pickup, delivery, and sorting packages. Succeeding
with our Quality initiatives is critical to maintaining customer confidence. We
remain committed to continuously improving our business practices so that we
enhance customer and employee satisfaction, financial performance, and
shareowner value."

References
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Out." The Wall Street Journal, 17 September 1996, sec. B, p. 4.
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Business Week, 30 May 1993, pp. 92-93.
14.Isidore, Chris. "Teamsters Leadership Fight Could Bruise Union Carriers."
The Journal of Commerce, 22 July 1996.
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Appendices
Appendix A - "New Language" from Trust & Teamwork workshop
Appendix B - Follow-up reminder of Trust & Teamwork principles learned
Appendix C - "Quality Update" weekly E-mail
Appendix D - Survey
Appendix E - Survey Results