This is what it looks like for the private sector to figure things out.
Supply Chain Dive reports: “FedEx has reached ‘appropriate staffing levels’ in its frontline workforce for the peak season, President and COO Raj Subramaniam said on its Q2 earnings call Thursday, after the company endured months of labor constraints that hurt service levels.” In a time when staffing shortages seem to be everywhere, this is welcome news.
The company was bleeding money due to a shortage of labor, losing $470 million in the past quarter because of it. “In September, FedEx Ground was rerouting more than 600,000 packages a day just to work around staffing shortages at company hubs,” the story says.
The company went on an aggressive hiring tear to bridge the gap, with 10,000 to 12,000 hires a week in the past quarter. Since September, the company is up more than 60,000 frontline employees. They were able to add so many by increasing pay, giving more paid time off, and offering tuition reimbursement, the story says.
Subramaniam doesn’t see these new employees as temporary hires to cover a shortage. He said that FedEx is “focused on retaining recently hired employees for the long haul to keep its network efficient,” Supply Chain Dive reports.
These changes won’t have an immediate effect. “Labor constraints will keep costs high through the second half of the fiscal year, though hiring challenges and network efficiencies are expected to ease in Q3,” the story says. (FedEx’s fiscal year begins June 1; Q3 is December 1 through February 28.) But FedEx is thinking long-term in response to a short-term crisis.
This is one example of a company taking initiative to rethink the way it does business in the wake of the pandemic disruptions. It responded to profit-loss signals, increased compensation to hire more workers, and is reorganizing the way it hires to respond to seasonal changes. This is what it looks like for the private sector to figure things out.
Whether this all pans out for FedEx (or any other company) remains to be seen. But it’s a private-sector response to the labor situation, and FedEx thinks it has the people it needs to do business right now.