Implementing Ethics into Leadership: A case of Fredrick w. Smith-Fouder and president of FedEx.
In the last decade, the world has witnessed high profile ethical failures. The accounting frauds at a company run by Bernard Madoff and the ones that led to the collapse of Enron and several other companies at the turn of the millenium, will not be forgotten soon. In these and other scandlous cases, ethical leadership has come into sharp focus. What however, is rarely seen, are stories about the numerous companies that are managed by ethical leaders. These leaders are people servants who adhere to the five principles of leadership: They offer service to people, demonstrate justice, manifest honesty, build communities and respect others (Mendonca & Kanungo, 2006). One such leader is Frederick Wallace Smith, commonly dubbed as “the Father of the Overnight Delivery Business”. This essay explores Frederick W. Smith- leader of FedeEx in light of how he achieves, exceeds or fails to meet the five principles of ethical leadership.
Fredrick Smith has had phenomenal success that can only be a result of discipline and adherence to certain principles and ethics. Born in 1944, Smith founded FedEx in 1971, a few years after leaving the US marines. He is still the chairman, CEO and president of FedEx. FedEx, headquartered in Memphis, Tennessee was the world’s first overnight express delivery company and is currently the largest courier company in the United States. The company currently has a revenue of $42 billion, operates a fleet of 687 planes and 87,000 land vehicles in more than 200 countries and has emplpyed more than 300,000 people (fedex.com, 2013). Over the years FedEx has featured prominenty among the world’s most enviable companies in the Forbes list and other business magazines. In 2013, it was for instance named among the 100 that many people would wish to work for by Fortune magazine (fedex.com, 2013). FedEx’s success can be atrributed to the adherence to ethical eadeship of its founder, Frederick Smith.
Smith’s adherence to ethics in ledership can be exemplified by the numerous ledership awards that he has amassed as the leader of FedEx. He was inducted into the Junior Achievement U.S. Business Hall of Fame in 1998 (achievement.org, 2008). He was awarded the CEO of The Year 2004 by the Chief Executive magazine. He received the 2008 Bower Award For Business Leadership, from the Franklin Institute (achievement.org, 2008). In the same year, he won the Kellogg Award for Distinguished Leadership from the Kellogg School of Management. In 2010 he also received the John Wooden Global Ledership Award. This award recognizes individuals in the American corporate culture who personify extraordinary standard of integrity, standard of performance, and achievements exhibited by thel legendary Coach-John Wooden. Presenting the award, Judy Olian affirmed Fred Smith’s as an exemplary ethical leader by stating, “Smith is so deserving of this award for his principled leadership and business legacy” (businesswire.com, 2010).
Smith’s leadership at FedEx shows that he has managed to buid a cohesive and efficient community. This is best embodied by several decisions he has always made when faced with ethical dilemmas. In 1997 during the UPS strike, FedEx was swamped with more than 800,000 packages per day. Thousands of the comany’s employees who had already worked for full days would voluntarily pour into the hubs before midnight and sort mountains of extra packages. Smith publicly thanked the employees in an 11-page newspaper pullout and ordered special bonuses to them (achievement.org, 2008).
Smith has ensured that his leadership is people-centered. In a 1998 interview, Smith stated that he championed the PSP (People, Service, Profit) corporate philosophy. According to Smith, commitment to employees should be at the core of any company that plans to grow into a high service organization. To quote Smith during that interview, “you can’t make people do what is right but you can lead and empower them to make the right decision.” Smith- (achievement.org, 2008).
Frederick Smith practices honesty in leading FedEx. In raising the starting capital of $80 million to start the Federal Express, Smith had borrowed some money from his siblings and friends. In the first two years after Fred Smith started Federal Express, the business lost $27 million! The company was on the verge of collapse but Smith came out in in the open and accounted for the losses (Murray, 2012). He was frank to admit his shortcomings, he sought the assistance of financial advisors and managed to renegotiate bank loans to keep the company afloat. Smith’s integrity was therefore intrumental in ensuring that the company retained the faith of financiers and partners.
Smith has great respect for his employees , customers financiers and other stakeholders. His style of leadership is made easy by “The Purple Promise” which is based on respecting the rights and wishes of employees by offering corporate training programs and setting realistic and achievable expectations for them. Smith believes in giving all employees, “the right tools for them to do their jobs right”-Smith, (achievement.org, 2008). His philosophy has driven FedEx employees to always place personal value for each item shipped be it a an engagement ring or an emergency surgical kit. As such employees work with a great sense of purpose and extend quality and efficient service to the company’s clients.
Service to other people is one facet of ethical leadership. Going by his selfless service in the US armed forces, Smith upholds service to other people. In spite of having come from a fairly rich background and having been educated at the prestigious Yale University, Smith joined the US Marine Corps and served his country from 1966 to 1969 as a platoon leader and also a Forward Air Controller. He flew with pilots for more than 200 combat missions including the mission to Vietnam. It was at the military that Smith planned to start “an overnight delivery service” (achievement.org, 2008). He was to start FedEx two years later and run the company on the string principles of people-sevice that he had acquired from military service.
Smith’s leadership also upholds justice. When the economy was receding in the 1970s, Smith reduced his own salary as well as that of many executives and top managers. He also cut advertisement costs and ended a long-term deal with the super bowl which was seen by may as a personal fetish that was ruining business for FedEx (Murray, 2012). In doing so, FedEx managed to remain profitable and continued its dominance in the courier industry in spite of other companies entering the lucrative industry.
Smith’s quest for justice can however be questioned by a fatal hit and run incident in which he killed a 54 years-old man named George Strughill on January 31, 1975. Smith was arrested and later charged with leaving the scene of an accident. He was also found to have been driving with an expired license. He was later released on a $250 dollar bond and eventually acquitted. These incidents could be said to be purely accidental and culd not impact greatly on Smith’s ethics in the leadership of FedEx.
Fredrick Smith founded FedEx in 1971 and has managed to drive the comoany to great profitability thanks to adherence to ethical leadership. He has managed to win several awards such as the Kellogg Management Award and the Jon Wooden Award thanks to his ethical leadeship. He exemplifies the five five principles of ethical leadership which are: Service to others; Demonstrates justice; Manifests honesty; Building communities; and Respect for others. Smith has built his company on a PSP (People, Service, Profit) corporate philosophy which has over the years been seen to uphold justice and respect especially for FedEx employees. Smith at one time gave bonuses and appreciated employees who worked overtime in an 11-page pullout in the newpaper. He also took salary cuts and managed to regain financing after running his company at a loss in its first few years. Though he was once involved in a hit and run incident, this never dented Smith’s image as a global icon in ethical leadership
Frederick W. Smith Biography -- Academy of Achievement. (2008, January 9).Academy of Achievement Main Menu. Retrieved April 7, 2013, from http://www.achievement.org/autodoc/page/smi0bio-1
Mendonca, M., & Kanungo, R. N. (2006). Ethical leadership. Maidenhead [u.a.: Open Univ. Press.
Murray, A. (2012, November 15). Frederick W. Smith, Chairman, President and CEO, FedEx Corporation - Ernst & Young - United States. Advisory, Assurance, Tax, Transaction Services - Ernst & Young - Global. Retrieved April 7, 2013, from http://www.ey.com/US/en/Services/Strategic-Growth-Markets/SGF_Article_Overview_Page_Main-EVTD-USDD-8Z8346
UCLA Anderson School of Management to Honor FedEx Global Visionary Frederick W. Smith with John Wooden Global Leadership Award | EON: Enhanced Online News. (2010, March 29). Online Press Release Distribution | EON: Enhanced Online News. Retrieved April 7, 2013, from http://eon.businesswire.com/news/eon/201