Unlocking Real Incentives for Project Success: FedEx's Journey to the Early Leave

In the early days of FedEx, the company’s signature service—overnight delivery—was an ambitious, revolutionary idea. However, it came with a massive logistical challenge: getting packages from all over the country to its central hub in Memphis, sorting them, and then re-shipping them overnight to ensure they arrived by the morning. FedEx's success depended on the ability to meet tight deadlines and transfer thousands of packages quickly and accurately, but at times, that deadline seemed impossible to meet.

The problem was clear: the central hub, where the sorting happened, was flooded with packages late at night, and workers were struggling to process them in time for the outbound flights. FedEx tried various solutions over the years, all aimed at improving efficiency. Yet, none of them seemed to fix the problem completely.

FedEx initially poured resources into upgrading its technology. The company invested in state-of-the-art sorting machines and computerized systems that would supposedly streamline the process. These upgrades allowed for faster sorting, but there was still a bottleneck when it came to physically moving packages through the facility quickly enough. Automation helped, but it didn’t address the underlying issue of worker productivity during the long shifts.

Seeing the growing pile of unsorted packages, FedEx hired additional workers, increasing the number of hands on deck. But this didn't lead to the desired improvements. With more people, coordination became even more difficult, and more workers meant even more complexity in managing the flow of packages. In fact, the chaos was only magnified, and efficiency didn’t significantly improve. It soon became clear that simply adding more bodies wasn’t the solution.

Next, management adjusted work schedules to try and tackle fatigue. They experimented with splitting shifts to allow workers more breaks and rotation, but the problem persisted. Workers still struggled with the long hours, and when tiredness set in, productivity dropped. Despite offering more flexibility, the pressure of the midnight deadlines still loomed large, leaving many workers exhausted and inefficient.

Finally, after experimenting with these various solutions, FedEx executives realized they were missing the key element that could drive real performance: incentives. They introduced a breakthrough policy that would become a hallmark of FedEx's operations: if workers met a set quota for sorting packages by a certain time, they could leave their shift early.

The new incentive structure empowered workers to take ownership of their productivity. The goal was simple—get the work done faster, and you get to go home sooner. The offer of early departure resonated deeply with employees who were eager to get rest after long, tiring hours. With this new incentive in place, workers not only met their quotas, but many exceeded them, sorting packages more efficiently than ever before.

The results were immediate and remarkable. Productivity skyrocketed. Instead of dragging through the night shift, workers were energized by the prospect of earning time back for themselves. The atmosphere transformed from a tired, routine shift to a competitive, goal-driven effort. Workers shared tips and strategies to maximize efficiency, while management ensured quality control checks were still met. The positive reinforcement of an early leave created a culture of collaboration, teamwork, and accountability.

The Impact

The early leave incentive not only solved the immediate problem of meeting deadlines, but it also became a cornerstone of FedEx’s operational success. With workers driven by a clear, personal incentive, FedEx could process more packages in less time, ultimately ensuring their promise of overnight delivery was fulfilled, night after night.

This story illustrates how simply throwing more resources, technology, or workers at a problem doesn’t always solve it. The breakthrough came when FedEx shifted focus from external fixes to an internal incentive that truly motivated workers: the promise of an early exit. By aligning incentives with performance, the company was able to unlock its true potential and create a more efficient, motivated workforce. It proved that sometimes, the simplest and most effective solutions come when you add a bit of “skin in the game.”

Often times a key element of project success can be traced back to a proper incentive structure for the team responsible as well as subcontractors hired to perform their scopes of work. Creativity, experience, and an understanding of what motivates individuals to act in accordance with project goals can make or break the success of a project.

What incentives have you considered during project planning to achieve the results you seek?