Irac

IRAC#1

“FedEx Cozies Up To Employees”

(By Kelsey Swanekamp, Forbes.com, 3/18/10)

ISSUE:

Fed Ex cut the employee 401k benefits and merit pay increase during recession. This Quarter FedEx made a profit and announced that they will reinstate merit increase and partial 401K company match.

RULE:

“Fairness is the quality of being just, equitable, and impartial, and overlaps terms just as justice, equality, and morality. The three fundamental elements that motivates people to be fair are equality, reciprocity, and optimization. The Equality relates to how wealth is distributed between employees, within a company or a country or globally” (Business Ethics: Ethical Decision Making and Cases, Ferrell, Fraedrich & Ferrell, Chapter 3, page no 85).

ANALYSIS:

During the recession Fed Ex cut salaries of employees as a cost cutting measure. The company reduced the benefits by not offering company match for 401K and merit pay increase. This quarter company has posted net income of $239 million, an increase of 146% compared to last year’s earnings. The economy is slowly showing recovery. FedEx has decided to re-instating merit increase and partial 401K company match. Many other companies in the market who had slashed 401K programs during recession have not re-instated employee benefits. This action by FedEx shows how the company is acting in an equal and fair manner. Although the companies’ balance sheet may take a beating FedEx is renewing merit pay and 401K match.

CONCLUSION:

In 2008 FedEx saw a decline in volumes and responded with cuts in merit pay and 401K match. Now that the economy is improving the company is reinstating benefits. In my view the action taken by FedEx is ethical and justified. This action motivates the employee. The employee gains confidence in the company and stays loyal to the company. This in turn benefits the company in the long run.

RELIGIOUS REFERENCE:

(Quran 11:85): O my people! Give full measure and...