Where Paying Dues Delivers

By Douglas Shuit

May. 10, 2005

One of Lea Soupata’s favorite photographs captures Jim Casey, the founder of United Parcel Service, standing in one of the company’s offices in Massachusetts staring wistfully off into the distance.

    Reflecting on his image, the company’s senior vice president of people programs says, “He is just standing there, probably thinking, ‘Gee, it’s a long way from Seattle,’ ” where he founded the company in 1907.

    After rising to the top of the world’s fourth-largest employer, Soupata might just as well look at her roots in a working-class neighborhood of New York and say of herself, “Gee, it’s a long way from Queens.”

    Separating her from UPS is almost impossible. She’s been at the company for 36 years in jobs ranging from truck driver to member of the board of directors of a firm whose time-tested organizational style dates back nearly a century to the days of foot and bicycle messengers.

    Workforce management is what UPS is all about, from its liberal employee benefits program to its highly structured, almost militaristic system of internal mobility. As its 384,000-member workforce holds on to its distinction as the largest delivery and transportation company in the world, those traditions are being tested as never before.

    Today it is being chased by archrival FedEx as well as two government-assisted mail delivery monopolies, the U.S. Postal Service and Germany’s Deutsche Post World Net, the German postal service that owns the delivery company DHL. Among the key players helping UPS stay the course in the face of such stiff competition is Soupata, the daughter of a working-class Greek immigrant family.

    Her hard-earned rise through the ranks of UPS is reflection of the company’s old-school corporate values. She joined UPS when she was 19, splitting her time as a receptionist and administrative assistant in human resources at an office in Queens.

    Today she is one of the highest-paid female human resources executives in the nation, as well as one of the wealthiest, amassing company shares over the years that were worth $17 million in early April.

    She has the rare distinction among human resources executives of holding seats on her company’s executive committee as well as its board of directors. She has met and worked with Presidents Clinton and George W. Bush on one of her favorite projects, a Welfare to Work program that has allowed 60,000 people to get off public assistance and into training and jobs at UPS.

    Despite her stature and influence, those who work closely with her say she’s never forgotten where she came from. “She’s a tough cookie,” says Don Cohen, who researched UPS for his book In Good Company. “You have to be tough to do what she did.”

    Until the 1960s, when Soupata joined the company, UPS was mostly a monolithic, male institution. “A lot of white guys worked there, a lot with military backgrounds, a lot of Irish Catholics,” Cohen says. “It still has kind of a feel of a military club, but it is much more diverse.”

    CEO Mike Eskew, whose office is across the hall from Soupata’s, credits her with improving the company’s diversity numbers.

    “Lea has never forgotten what it’s like to walk in the shoes of the people on the job,” he says. “She always puts us back in the drivers’ perspective, the sorters’ perspective. Lea has helped us know that diversity is not only the right thing to do but that it has made us a better company.”

Not the fast track
    Soupata, Eskew and other members of the company’s executive team came up through the ranks, and they expect others to do the same. Many company executives at one time wore the ubiquitous brown UPS uniform. Rather than promise glamorous jobs or interesting assignments, the organization makes it clear that new hires might be put into jobs they don’t want to do.

    UPS also offers better-than-average salaries and benefits, provides health care and stock buy-ins for part-time workers, and has many opportunities for promotion. Family members of founders, executives, employees and retirees own 90 percent of the company’s stock and control 99 percent of its voting shares.

    That’s how Soupata was able to accumulate 242,000 shares of stock.

    “You are going to be working nights, be hot, get dirty. That is the way it is,” Soupata says matter-of-factly, describing the UPS culture. “There are times when you have to take a deep breath and say, ‘Don’t give up.’ That is something we live by.”

    Many executives share middle-class backgrounds and state school educations. As a no-frills exec, Soupata flies coach, doesn’t have her own personal secretary, eats in the company cafeteria and wears a company ID card around her neck like an entry-level clerk.

    She says people who want a fast career track may not make it at UPS. Although today’s corporate demands mean that the company is hiring more midcareer professionals expert in fields like technology and finance, UPS still clings to the traditional approach of starting new hires in jobs they may not like. It doesn’t recruit at Ivy League schools. And UPS continues to be famous for exacting training standards that leave nothing to chance–down to an edict to drivers about which fingers they should hold a key ring on, a time-saving technique, to an insistence on first-name folksiness.

“Lea has never forgotten what it’s
like to walk in the shoes of the people on the job. She always puts us back
in the drivers’ perspective, the sorters’ perspective. Lea has helped us
know that diversity is not only the right thing to do but that it has made us a better company.
–Mike Eskew, UPS CEO

    “We pride ourselves in trying to take care of our people,” Eskew says. “We think our people return that to us in a lot of ways.”

    The chief executive says the company’s focus on its workforce makes Soupata and her 1,400-employee human resources division key to the company’s strategic vision.

    Marc Gunther, a senior writer at Fortune magazine, researched UPS for his book Faith and Fortune. He says UPS is in the vanguard of companies that he believes are creating “a values-driven approach” to business by treating their employees, customers and shareholders well.

    The company has “a very strong sense of togetherness and community and loyalty up and down the ranks,” he says. He likes the way people work their way up the system at UPS. “You are considered a newcomer until you are there 10 or 15 years. That is unusual in today’s world.”

    The company finished 2004 on an up note, generating $36.6 billion in revenue, a 9 percent increase, while net income rose 15 percent to $3.33 billion. The company is sitting on $5 billion in cash, a portion of which is earmarked for expansion that has taken the delivery business into banking, warehousing and retailing.

    Despite a drop-off in expected earnings during the last quarter of 2004, the firm expects earnings in 2005 to increase 13 percent to 17 percent, polishing its already stellar AAA credit rating.

    But the weaker earnings in the last quarter of 2004, accompanied by a loss of market share, led analysts at investment firm UBS to predict below-market growth beyond this year. Analysts at UBS cited intense competition from FedEx.

    The verdict is not unanimous, though. Analysts at Morningstar and Smith Barney both view the soft fourth quarter as a hiccup and say they expect UPS to continue growing, fueled by markets opening up around the world, particularly in Asia.

Brown’s blues
    With a workforce of 384,000 employees moving 14.1 million packages a day–about 2 percent of the world’s gross domestic product every 24 hours–there are many bumps in the road.

    A poor safety record caused the company to revamp its safety and training procedures, leading to a significant drop in reportable injuries and time lost because of injury. More than half of the company’s employees are in unions, primarily the Teamsters, meaning labor issues are always on the front burner.

    UPS is negotiating with the union representing its pilots, who have already taken a strike vote. Teamsters walked off the job in 1997 in a strike that was one of the company’s most painful episodes. As part of the settlement, the company agreed to make more part-time workers full time.

    The company also has defended itself against lawsuits claiming discrimination. In recent years the company has settled a suit filed by black hourly part-time employees alleging discriminatory practices in initial job assignments and other problems.

    In October, UPS lost a suit in U.S. District Court in San Francisco that was filed by deaf and hard-of-hearing workers who challenged the company’s policy excluding them from driving delivery trucks. UPS is appealing the decision.

    Part-time workers, who sometimes figure in labor and legal issues, are key to the success of UPS. The company likes to bring in new hires as part-time workers, often while they are still attending school, and groom them for bigger jobs. The part-timers and students, who receive tuition reimbursement as well as health benefits, work the hard-to-fill night shifts, when the company hubs are often busiest.

    The system is deeply ingrained in each UPS employee. Araceli Ramirez, 25, has been a part-timer at UPS for six years in a Los Angeles County office, working at different jobs while attending community college and then Cal State Los Angeles.

    Now, with a degree in hand, she is awaiting a full-time job on a management track. There are jobs available, but she is waiting for the right one. Meanwhile, she pays the bills by working as a dispatcher. “I want to wait for the perfect job opening,” she says.

    Amy Whitley, the company’s vice president of organizational development and a 21-year veteran of UPS, concentrated on human resources in getting her bachelor’s degree at Pace University in New York.

    “I knew HR was what I wanted to do,” she says. “They said, ‘That’s nice, but everyone starts at the bottom.’ I started as a driver.”

    Soupata calls experiences like those of Ramirez and Whitley getting a “UPS degree.”

Circuitous route
    These days, Soupata seems to be a long way from her start in a low-level administrative job in the human resources department and the browns she wore as a driver. She worked for UPS in New York, New Jersey, Maryland and Pennsylvania before landing at the corporate headquarters in Atlanta in 1994. Along the way she worked in sales, engineering and central sorting.

    As chief of human resources, Soupata is responsible for health and safety programs, employee relations, organizational development, workforce planning, compensation and benefits, and the UPS Foundation. She joined the company’s management committee in 1995, the same year she became chief of human resources, and became a member of the board of directors in 1998.

    Despite living in Atlanta the past 11 years, she still speaks with an accent that reveals her Queens upbringing. Her father, a florist, emigrated from Greece. Her mother, born in the U.S., was a hotel telephone reservations clerk. Soupata recalls her mother bringing her to work with her when she was 5. “To me, it was the neatest thing,” she says.

    Her husband, Sotirios “Terry” Zervoulias, is also a Greek immigrant. The couple met in 1984 through family introductions when she was 35 and he was 42. She says one of her favorite things to do is to roll back the rug and dance. “We are talking ’60s Motown,” she says.

    She attended Long Island University, a private university with campuses in the New York area, and worked at UPS to help support her family. She says she always liked work better than school.

    Soupata first met Casey, the company’s beloved founder, in New York when she was 24. She was a corporate human resources manager for a much smaller UPS. At the time, there were 400 executives in management at the company. Today there are 2,000.

    She remembers seeing Casey waiting for a bus outside the company’s New York headquarters. “I thought if I had that kind of money I would have a limousine waiting for me,” she says. She eventually realized that his personal values–such as humility, prudent spending and equality–were the foundation of his corporate philosophy.

    Soupata is less than a year away from the company’s retirement age of 55 for executives, and is not disclosing her plans. There is speculation that she may stay until the company celebrates its 100th anniversary in 2007.

    Meanwhile, the company continues to grow and break into new markets. Soupata says she loves the ride. For many years, the growth of UPS was slow. The company had to spread through the U.S. literally state by state, bound by federal regulations requiring the transportation company to get individual state approval to conduct business. Now, of course, its reach is global.

    Soupata recently visited employees in Japan. She watched a group of Japanese drivers in their trademark UPS brown uniforms line up next to what appeared to be freshly polished trucks. The workers went through a ritual recitation of safety practices familiar to every driver in the U.S., first in Japanese and then in English.

    “It was just amazing,” she says. “When our people are wearing browns, you don’t know what country you are in.”

    There was one problem, though: the first-name thing.

    “People are so respectful in Japan that using the first name is just not proper. I say, call me Lea, and they are really not sure if they are supposed to do that.”

    She assures them it’s not only OK, it goes with wearing a brown uniform.

Workforce Management, May 2005, pp. 38-44Subscribe Now!

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