Sales Force Integration At FedEx (A) Case Solution

1. What should the compensation plan look like? Why are the Express and Ground Plans so different?

The express and ground plans are so different because they were created at different times to perform different kinds of functions. The express compensation plan had been in place since its establishment in 1974 whereas the ground plan was a relatively new development made in 1997. The former was directed at providing air services and shipment to international customers whereas the latter focused on home deliveries and ground shipping of packages to customers at various locations in the United States.

The two plans were not integrated together, and the express and ground units were working exclusively, disconnected to each other. It had made customer service and satisfaction a difficult task. At times, one customer had to deal with a ground salesperson as well as a different express salesperson to get his package delivered which had made documentation and service delivery so difficult. Moreover, the compensation plans of both the Sales force were so different that it had created internal problems for the company.

At this stage, a compensation plan was needed that could integrate the express, and the ground plans to make sure that all the employees of the company are on the same page, and the customers get satisfactory services. A compensation plan must look like a well-developed sales approach balancing the two segments of the company. It should also integrate international and domestic delivery services to increase customer satisfaction and reduce the hurdles faced by employees as well as clients due to the existence of parallel systems.

The compensation plan must also offer a single value proposition to the express as well as the ground sales team and similarly, the IT services must also be streamlined. The compensation plan must clearly distinguish between individual and collective revenues and should reward the employees of both units, according to some set standard. This standard must be decided collectively by the team designated for this purpose.

2. Compare the profitability of the Ground business vs. the Express business.

Even though the ground business was started many years after the establishment of Express business, but its profitability was greater. The operating margin of the ground business was 11 percent whereas that of the express business chain was only 3 percent. This high profitability was due to several factors described below:

• The mode of operation of the ground business was trucks and other similar cargo units and the costs associated with these were much lesser than the costs associated with air shipment or delivery. 

• Moreover, the RPS was led by independent contractors who made it more profitable than the express services.