CEO Carol Tomé was an outsider hired to whip UPS into shape for the age of e-commerce. Some insiders and lifers worry she’s killing what made the company great in the process.

Carol Tomé, CEO of UPS.
UPS; Shayanne Gal/Insider

Carol B. Tomé took the helm at UPS just as the pandemic supercharged e-commerce.
Some insiders say her efforts to increase profits are generating anxiety among drivers.
Tomé’s leaner, faster style is ditching tradition and creating a UPS some veterans don’t recognize.
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When Carol B. Tomé took over as the chief executive of United Parcel Service on June 1, 2020, the headline wasn’t that she was the first woman to lead the shipping giant. It was that she was the first outsider to helm the 114-year-old company.
While her predecessor began his career unloading UPS trucks in the 1970s, Tomé was a banker by training who sat on the UPS board but had spent 25 years at Home Depot, most of them as CFO.
That was no fluke. Big Brown needed someone unbound by sentiment, who could make the changes that might revive its flatlining stock price at a time of industry upheaval and increasingly fierce competition.
As CEO, Tomé has nearly doubled UPS’ share price by dropping far-out research projects, focusing on high-value packages over high volume, and hustling to squeeze every dollar from an e-commerce boom supercharged by the COVID-19 pandemic.
Shareholders might be pleased, but some of Tomé’s efforts sit poorly with some employees across the company. While the CEO talks about being "better, not bigger" and says "legacy is about people," after months of working under Tomé’s policies, some drivers described her as "ruthless" and "bad news." Tomé’s push to do more with existing resources has led to package vans so stuffed, they trigger "package fever," some drivers told Insider.
Former higher-ups, too, have criticized Tomé, saying her changes are cementing the deterioration of the mindset that once made UPS a great place to spend a career.
"The culture there used to be, we will work you to death, but it will be worth your while and you’ll retire taken care of," an operations manager who left UPS in 2019 said. "It was understood from early on in your management career … if you stuck with it and got to a full-time management position, you would retire a millionaire."
Insider talked to eight current and former UPS employees at various levels of the company, some of whom asked for anonymity out of fear of retribution but whose identities are known to Insider. They painted a picture of a CEO who has been effective in her mission to guide UPS through turbulent times but whose strategies have undermined some of what drew them to the company to begin with. UPS declined to make Tomé available for an interview for this story.

Carol Tomé is the first CEO of UPS to come from outside the company.
UPS

Tomé’s overhaul comes at a critical time for UPS. As the US emerges from the pandemic, the 64-year-old CEO is tasked with solidifying gains made over the past year while fending off competitors including Amazon, FedEx, and gig-economy startups. She’s tangling with a union that represents half of UPS’ 500,000 employees.
And she must pull management along with her as she shakes up a culture some see as outdated and ill-equipped for a company navigating the 21st-century world of logistics.
A new focus on what’s ‘wildly important’Tomé inherited a company that was behind on tech and delivery times and had been slow to acknowledge the challenges of an industry full of new players and customers who expected ever-faster shipping. It had taken her predecessor until January 2019 to publicly admit Amazon was a competitor as well as his biggest customer.
In response, Tomé has applied an overarching strategy of "better, not bigger" to every aspect of UPS.
In interviews with LinkedIn’s "This is Working" podcast and the National Retail Federation, among others, she’s described how, early in her tenure, she invited her executive team to her 650-acre farm in Georgia. They wrote out the company’s current and planned initiatives on cards and stuck them on a wall. Then they put green dots on those they considered, in Tomé’s words, "wildly important" and red on those that could go. At first, the wall was all green – no one wanted to say their project wasn’t worth the time and resources.
Tomé grew up hunting and fishing in Wyoming and has proved her mettle in the corporate world. She has faced shareholders so angry she needed armed guards and been cursed at by Jamie Dimon. She knew how to hold her ground, and she wouldn’t let her team – many of them UPS lifers – keep working on projects that she wasn’t sold on.
"Many of them weren’t wildly important," she said on the LinkedIn podcast.

UPS CEO Carol Tomé speaks before a group at a UPS faciltity in Pleasantdale, Georgia.
UPS

Tomé appealed to her team’s wallets, she said in other interviews. Employees hold roughly 70% of UPS stock, so they benefit from a rising share price. The red dots came out.
Ultimately, she narrowed UPS’ focus from those hundreds of projects to just 11. Exercises like the one on Tomé’s farm happen all over the company now, according to a spokesperson.
She used buyouts to reduce head count by at least 1,700, cut the services UPS sells by 20% in her first month, sold a margin-dragging freight business, and demanded the tech team recoup every dollar it spent within three years.
She spent $179 million to speed up UPS’ plan to increase automation and boost ground-service speed by about a year – 10% of its packages now arrive a full day earlier.
"There’s a lot more focus," the engineering lead Bala Ganesh told Insider. "It’s very clear what we’re trying to get done."
But clarity of mission doesn’t mean everyone’s happy with the plan of attack.
UPS for life"You’re gonna be put under a lot of pressure," Glenn Gooding recalled his superiors saying when he broke into management in the 1980s. "But we can promise you that you will retire a millionaire through our management-incentive program and the stock ownership." (Gooding left in 2007 after 21 years with UPS and is now president of iDrive Logistics.)
Over the decades, that promise bred generations of lifers. "We discussed it openly," another former manager said of the million-dollar prize. The average tenure of the UPS C-suiter is 16 years, according to their LinkedIn profiles. Three of the company’s top eight execs have been there for more than two decades. Tomé’s right-hand man and chief information and engineering officer, Juan Perez, started at UPS as an intern in 1990.
Complaints that UPS’ leadership has reneged on that promise predate Tomé’s tenure. The change started in 1999, when UPS went public and those outside the company got a stake in how it ran. The same former manager said soon after the 2008 financial crisis, bonus criteria for supervisors changed, leading to lower bonuses even in record years. In June 2017, UPS announced it would freeze a pension plan covering 70,000 nonunion UPSers.
Tomé has acknowledged low morale among her workers, saying in multiple interviews that per an internal survey, half said they wouldn’t recommend working at UPS.
One gesture she made on this front was allowing UPS drivers to have beards, natural hairstyles like Afros and braids, and visible tattoos. The shake-up of the strict appearance policy was meant to "celebrate diversity" and was widely appreciated by drivers, people said. Tomé also told Fortune she would work to win workers over with more celebration, recognition, and bonuses.

UPS CEO Carol Tomé sits in a UPS delivery van on a package route ride-along.
UPS

But former UPS managers say Tomé has pushed the real prize – the opportunity to become a millionaire – out of reach for good.
A UPS spokesperson acknowledged to Insider via email that the "retire a millionaire" assertion "may be made by some … but doesn’t reflect the reality of a large workforce with a wide range of levels and compensation structures."
The growing specter of ‘package fever’ Tomé also must continue to cut costs while managing a unionized workforce of 240,000 drivers and package handlers.
Tomé often refers to "sweating the assets" during earnings calls and investor presentations, but drivers say the phrase might be more literal than she knows. One driver with seven years at the company said the trucks are packed so tightly these days, the mere sight is causing anxiety.
"They call it ‘package fever.’ They look at their truck and they have so many packages, they freak out," one driver said.
A UPS spokesperson told Insider via email that "sweating the assets" is "not a people strategy," adding the sweat refers to capital allocation and how the company uses its technology, vehicles, and physical network.
Tomé is leaning into cost-effective fixes for the growing e-commerce volume, including seasonal drivers who drive their own cars and typically wear their own clothes, known as personal vehicle drivers or PVDs.
"The CEO came in, used the PVDs and said, ‘Look how much we’re able to take from the overhead," said another driver, who was worried using PVDs would set a precedent for more temporary labor instead of full-time drivers.
Drivers speaking to Insider said Tomé’s new brand of efficiency is making some of them nervous. Some newer drivers worry about long hours. Some veterans worry they’ll miss out on the comfortable retirements that they expected and their predecessors enjoyed.
While Tomé has made some UPS employees anxious, she’s pleased Wall Street: UPS’ stock has nearly doubled since the start of her tenure.
But Tomé says she wants her legacy to be more than boosting the stock price.
"I can talk about the stock price and the value that’s been created, and that’s all very cool," Tomé said in a 2019 interview. "That’s not it. That’s not it. Legacy is about people. It’s all about people."
Read the original article on Business Insider

Source: https://www.businessinsider.com/carol-tome-reform-ups-ecommerce-2021-6

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