UPS finds success by making things personal

NRF Retail Converge: UPS CEO Carol Tomé on the importance of listening to your customers and your employees

Carol Tomé, who spent 18 years as chief financial officer of The Home Depot, was announced as the incoming CEO of UPS in March of 2020. Her initial thought was to spend the first three months traveling the world and getting to know the company. A week after she was named CEO, however, the world was dealing with the biggest global health crisis since the 1918 influenza epidemic.

In an NRF Retail Converge keynote conversation with Stephanie Mehta, editor-in-chief of Fast Company, Tomé discussed the highlights and lessons learned in her whirlwind first year and a half at the helm of the giant freight company, beginning with managing the pandemic.

“I thought it would all come to a crashing halt,” Tomé said, “but it didn’t. Instead, it took off as ecommerce exploded. In the second quarter of 2020, we had to hire 40,000 people just to handle the packages coming our way.”

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Carol Tome
Carol Tomé, CEO of UPS

Tomé said she brought an important leadership insight from her years at The Home Depot to her new position: The answer to all of your problems can be found by listening to your customers.

“What our customers at UPS were telling us was, ‘You’re too slow,’” she said. “I asked the leadership team what’s it going to take to fix this, and they said, ‘Just a little bit of money.’ So I said, ‘We got some money,’ and we started fixing it.”

Outsider at the helm

Tomé is the first outside CEO UPS has ever had in its entire 114-year history. One thing she learned early was that the company was what she calls over-engineered: All management decisions were made at the committee level — and there were 21 committees.

If you had an idea, you had to wait for the next committee meeting to introduce it. If your idea needed some tinkering or revising, you had to wait for the committee meeting after that to take it to the next step. “I disbanded the committees and increased nimbleness,” she says. “I said we have to move from working on a calendar to working on a watch.”

Something else she learned was that there were a lot of employees at UPS who were not happy there. One reason was a strict and inflexible appearance policy. Employees couldn’t have facial hair or natural Black hairstyles; the tattoo policy, Tomé said, was more restrictive than the Army’s. “We changed all that,” she said. “If you work for us, we want you to be able to bring your authentic self to work.”

Shipping and the environment

Just recently, UPS announced a goal of becoming carbon-neutral by 2050. To get there, the company has set 2035 targets of reducing CO2 per package by 50 percent from 2020 levels in its small package operations, powering all company facilities with solar and other renewable electricity sources, and using sustainable aviation fuel for 30 percent of aircraft fuel.

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Tomé admitted it won’t be easy. “We emit a lot of greenhouse gas: 37 metric tons per year. To offset that with trees, we’d have to plant the state of Washington every year. We can’t do that, so we’re approaching it in a financially responsible, engineered way.” The company has, for example, 13,000 vehicles powered by alternative fuel. As other vehicles come up for replacement, the number will grow. “Candidly,” she said, “we don’t have it all figured out. But we have time, and we will figure it out.”

The role of technology

Turning from the environment to infrastructure, Mehta asked Tomé to characterize the role of technology in the company’s future. The key, Tomé responded, is data. UPS has an extremely well-integrated data network, founded on technology the company has built itself, supplemented by SaaS-based technology for business applications: billing, HR, payments, etc.

Data, Tomé said, is an issue: The company needs to figure out how best to use the data it has, some of it fairly old and resident on antiquated systems. When asked by Mehta what kind of technologists come to work at UPS, Tomé replied, good-naturedly, “You mean why would a data scientist want to work for UPS? Because we’re working on a lot of cool stuff. We have robots loading and unloading trucks. We have drones. We have VTOLs — vertical takeoff and landing aircraft. We’re also getting rid of legacy systems.”

A thought for the retailers

As the discussion drew to a close, Mehta turned to the retail industry. “Based on the data you’re seeing,” she said, “and the ecommerce traffic over the last 15 months, what predictions about the future of retail do you feel comfortable making?”

Tomé touched on two topics, one strategic, one existential. Strategically, she said, “Personalizing the experience is critically important. I see from the letters I get from customers how personal it is: ‘That was my daughter’s wedding dress. Thank you for getting it to her in time.’ At UPS, we focus on the end-to-end experience: It needs to be personal all the way from the shipper to the addressee.”

Finally, Tomé said, “Retailers should ask themselves, ‘What is the purpose of my store?’ I go into stores, and I see, for instance, a lot of out-of-stocks — which is not good for the customer experience. What is the purpose of the store? The question needs to be asked and answered. If that doesn’t happen, you’ve got to wonder what the future is.”

Watch a clip of Stephanie Mehta, editor-in-chief of Fast Company, with Carol Tomé, CEO of UPS. Register now to watch complete sessions from NRF Retail Converge.

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