Management Approach

See 2018 UPS® Sustainability Progress Report - Preserving the Past, Preparing for Tomorrow, page 45. Data for this disclosure does not include acquisitions from 2015 on, including Coyote Logistics, Marken, Nightline, or STTAS.

New employee hires and employee turnover.

(Through September 2018 to account for year-round employees rather than seasonal peak hires.)

⁽¹⁾Retention rates for ISMEA region not available at this time.

Benefits provided to full-time employees that are not provided to temporary or part-time employees.

UPS provides health benefits for many employees, retirees, and their dependents through several plans administered to meet the health and wellness needs of various employee groups. In addition, we make contributions on behalf of UPS employees who are covered by union-administered plans. These contributions are for our employees and their eligible dependents.

While there are variations in available plans, the following is an example of typical benefits provided to UPS employees in the U.S., where a majority of our employees are located:

• Medical care, including a prescription drug program
• Dental care
• Vision care
• Life insurance
• Supplemental life insurance
• Business travel accident insurance
• Short-term and long-term disability coverage
• Child/eldercare spending accounts
• Pretax healthcare spending and savings accounts
• Work-life balance programs
• Employee Assistance Program, including work/life issues (financial concerns, child care, substance abuse, and more)

In most countries and territories around the globe, we contribute to the mandatory social security systems that generally provide health, unemployment, disability, and retirement benefits for employees in that country. In addition to these mandatory government systems, we provide healthcare, life, disability, and/or retirement benefits to more than 25,000 people outside the United States. Some of these programs are mandatory, whereas others are provided to employees as part of the normal market practice.

In many countries outside the United States, legislation or national practice provides citizens with benefits programs as an integral part of the social system. We offer private-benefit plans to our international operations to supplement these programs.

We further invest in our people by offering a competitive range of other benefits, such as paid time off, retirement plans, and tuition assistance, in addition to those for health and wellness. In the United States, these other benefits are generally provided to non-union employees without regard to full-time or part-time status.

Certain benefits are not available to all or some part-time employees. These include long-term disability coverage, business travel accident insurance, and tuition assistance; availability may vary by location and employee position. Furthermore, some of these benefits may, in practical terms, apply only to management employees, such as those taking advantage of our relocation programs. Our union employees bargain collectively for their benefits via their union representatives. Temporary employees and seasonal workers are generally ineligible for UPS benefits.

Parental leave.

Under the U.S. Family and Medical Leave Act (FMLA), UPS employees in the U.S. are eligible for parental leave if they have worked for UPS for at least 12 months, and 1,250 hours over the previous 12 months. Additionally, any UPS employee who is not eligible according to the FMLA requirements but has worked at UPS for a minimum of 36 consecutive months and for at least 625 hours during the previous 12-month period may still be eligible for leave under the UPS leave policy. In 2018, 386,771 employees qualified for FMLA leave as well as short-term disability maternity leave. In addition, there are state laws that offer greater protections or have eligibility requirements that differ from the federal law.

Due to changes in collective bargaining agreements and HR information tracking systems, UPS does not have visibility into the leave, return, or retention rates for union employees. There is currently no plan to begin collecting this data.

Management Approach

UPS is one of the world’s largest private employers. More than three-quarters of our employees in the U.S. are represented by unions, including almost everyone who handles or transports packages. In addition, approximately 2,800 pilots who flew for UPS Airlines in 2018 are represented by the Independent Pilots Association (IPA). Throughout its global operations, the Company works with many other unions, associations, and works councils where we have collectives.

We bargain in good faith on all matters involving our unions and the employees they represent. This includes dealing with union leaders at the national level and working with local chapters throughout the United States, and participating in works councils and associations outside the U.S., which allows us to respond to emerging regional issues. This work helps our operations to build and maintain relationships with our employees. We are not aware of any operations or suppliers in which the right to exercise freedom of association and collective bargaining may violate applicable laws or be at significant risk.

We communicate frequently with our people and their unions at many levels of the Company to ensure that all parties are working toward positive results for UPS employees and other major stakeholders.

Our U.S. agreements also have specific provisions regarding the methods for resolving grievances. These provisions mandate periodic meetings of union and Company representatives, with escalation to the next level if the parties cannot agree on a resolution. Non-union employees have an alternative process available for dispute resolution. To help us maintain and enhance successful relationships with our unions, we do not publish the number of grievances related to collective bargaining agreements filed, addressed, or resolved during current or prior reporting periods.

UPS also works with organized labor on key environmental issues. For several years we have served on the Corporate Advisory Board of the Blue-Green Alliance, a group of labor and environmental organizations, to discuss emerging environmental issues and solutions.

UPS evaluates the success of labor relations based on continued collaborative working relationships with unions, associations, and work councils, as we have over the past 90 years. In the U.S., the current National Master Agreement with IBT and related local agreements expire on July 31, 2023.

Minimum notice periods regarding operational changes.

UPS’s collective bargaining agreements include minimum notice periods regarding operational changes, which vary by master agreement and also according to specific requirements for local chapters of our unions. For example, the labor agreement covering U.S. package delivery operations requires a minimum notice period of 45 days.

Management Approach

UPS customers worldwide depend on us to meet important deadlines every day. As the world’s economies develop and e-commerce expands, the expectations of customers are changing. This, in turn, creates new challenges to ensuring employee health and safety.

Strong health and safety programs are the result of appropriate process and risk control, and depend on factors ranging from methods followed to proper employee training and engagement. We develop a culture of health and safety by:

• investing in safety training and audits;
• promoting wellness practices which mitigate risk; and
• offering benefits that keep employees safe in the workplace and beyond.

On-road safety is a priority focus area. Vehicle crashes have represented a significant portion of UPS employee fatalities and are the leading cause of death and injury in the workplace, according to the National Safety Council. In addition to providing in-depth training for drivers, we are equipping our vehicles with new technologies, such as advanced collision mitigation systems, to help reduce vehicle crashes. Telematics data gathered in our U.S. Domestic Small Package Operations allows us to promote and coach safe driving behaviors by leveraging data retrieved from the vehicle. In addition, we continue to enforce compliance with regulations pertaining to working hours, rest hours, and leave times for people who drive and operate vehicles.

Beyond training, we use a Comprehensive Health and Safety Process (CHSP) to improve the overall health and safety environment of UPS employees. Working closely with our unions, there are more than 3,250 CHSP committees worldwide, which are co-chaired by employees and management. The committees conduct facility and equipment audits, perform work practice and behavioral analysis, conduct training, and recommend work process and equipment changes. Meeting frequency of CHSP committees is determined at the local level. The framework for the Comprehensive Health and Safety Process allows for approximately 10 percent of the workforce to participate on safety committees, which represent all employees.

We follow a global wellness guide called the Five Being Habits that focuses on five areas of wellness: fitness, sleep, nutrition, stress management, and hydration. These habits serve as actionable steps that employees and their families can take toward creating healthy lifestyles.

We use Quality Validation Assessments (QVAs) to verify and measure the effectiveness of safety and wellness leadership; daily planning and execution; and communication and coaching. In 2018, the total number of UPS management employees who received Quality Validation Training increased to more than 11,350.

Our Safety Health Risk Management Information System (SHRMIS) tracks important H&S data in Canada, Puerto Rico, and the United States. Outside of those areas, we use the International Incident Report Tool to track injuries, auto crashes, and near-misses. The tools provide daily visibility of injury and auto crash trends globally as well as the ability to perform data analysis to identify risks and implement control measures.

Occupational health and safety management system.

UPS maintains a health and safety management process called the UPS Comprehensive Health and Safety Process (CHSP). UPS’s CHSP program is materially similar to national health and safety system standards such as OHSAS 18001 (U.K.) and ANSI Z10 (U.S.) in terms of its operational requirements and goals. While CHSP is not formally recognized under OHSAS18001 — in the limited sense that it is not accredited under that specific program — UPS believes that the CHSP provides an equivalent or greater health and safety management process for the Company.

The system was voluntarily created by UPS to specifically establish methodology for employee health and wellness specific to UPS operations. The CHSP covers all UPS employees and workers, but not those of our contractors, agents, or outside service providers, who have their own health and safety programs and management systems.

Hazard identification, risk assessment, and incident investigation.

Hazards are identified by employees and by the local CHSP committees, which conduct facility and equipment audits, perform work practice and behavioral analysis, conduct training, and recommend work process and equipment changes. Results of these audits lead to improved safety processes at the local level which are shared with district health & safety managers for potential wider implementation. In addition, there are regularly scheduled audits and evaluations of the CHSP both internally and externally through our partnership with Liberty Mutual. In 2018, we conducted more than 100 examinations of the process.

Workers report work-related hazards and hazardous situations to management through local CHSP Committees which are co-chaired by employees and management and the UPS Ethics Hotline. This same process is used for workers to remove themselves from work situations that they believe could cause injury or ill health. UPS has an open door and non-reprisal policies for all of these methods.

Work-related incidents are investigated and reported through SHRMIS to track this data in Canada, Puerto Rico, and the United States, and the International Incident Reporting Tool (IIRT) internationally. These digital tools provide daily visibility of injury and auto accident trends globally as well as the ability to perform data analysis to identify risks and implement control measures. After investigation and true root causes are determined, precise educational and prevention activities are developed to address the causes. Prevention activities are developed for both the individual employee directly involved and other employees in the work group.

Occupational health services

The CHSP process is designed to assist the work group in identifying the key issues causing injuries and auto accidents at UPS and in developing the effective mitigation strategies needed to address those issues.

CHSP committees conduct worksite analysis regularly to identify risks and hazards. This analysis consists of several methods of examination aimed to identify not only existing hazards, but also conditions and operations in which changes might occur to create hazards. The methods are: data analysis, behavior observation and feedback, facility audit, and injury and auto accident investigation. Results are reported through SHRMIS and IIRT.

Data on workers’ personal health-related information from these analyses, investigations, audits, and similar processes are maintained confidential through UPS data privacy standards. UPS protects access to systems to assure that workers’ personal health-related information and participation in health services is not used for any favorable or unfavorable treatment of workers and in compliance with regulatory requirements.

Worker participation, consultation, and communication on occupational health and safety

See 403-2 Hazard identification, risk assessment, and incident investigation; and other descriptions of CHSP committees throughout GRI 403: Occupational Health and Safety.

Worker training on occupational health and safety

Training, coaching, and recognition are critical components to fostering a culture of safety. Safety professionals at UPS teach a comprehensive range of workshops, certifying frontline managers and supervisors who instruct employees in the specifics of each course. In 2018, UPS spent more than $224 million on safety training courses (23 percent of total training spend, a one percent increase) and UPSers spent more than 6.3 million hours (39 percent of total training time, a two percent increase) in safety training classes. Formal training is supplemented with mentoring programs that enable employees to learn from others with more experience. Our employees with exceptional safety records are recognized and encourage others to strive for the same high standards, such as through our Circle of Honor program and the Safety Relay, described in the 2018 UPS^® Sustainability Progress Report - Promoting Safety Around the Globe, pages 43-44.

Promotion of worker health

See 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees. In addition, UPS offers an Employee Assistance Program for all employees. This service is offered through Aetna, who maintains confidentiality of data, and assists with non-work related health and wellness issues, including work/life balance, financial concerns, child care, substance abuse, addiction counseling, and other wellness benefits.

Prevention and mitigation of occupational health and safety impacts directly linked by business relationships

The health and safety systems of contractors, agents, and outside service providers are reviewed prior to the beginning of any business relationship to ensure they are operating safely and to the level of compliance according to local laws. Audits are conducted on an irregular basis to ensure health & safety processes are being followed. UPS collaborates with contractors, agents, and outside service providers to share safety lessons learned and best practices.

Workers covered by an occupational health and safety management system

See 403-1 Occupational health and safety management system.

Work-related injuries

See 2018 UPS^® Sustainability Progress Report - Goals & Progress, pages 9-10; How Today’s Challenges Are Shaping Tomorrow’s Opportunities, pages 11-12; and Crunching the Numbers on Safety, pages 48-49.

We had a 0.7 percent improvement in Auto Crash frequency (per 100,000 driver hours) with our continued investments in driver training and vehicle technology. In 2018, we experienced an increase of 7 percent in Lost Time Injury Frequency (per 200,000 hours worked) which was impacted by capacity demands of e-commerce growth and shipment dynamics; however, we continue to maintain rates below transportation and warehousing sector benchmarks.

In the United States, Canada, and Puerto Rico, our largest area of operations, 76.5 percent of injuries involved men and the remaining 23.5 percent involved women. UPS saw 8 fatalities worldwide, seven in the U.S., with one being female. Outside the U.S., there was one male employee fatality in Germany. Our rate of fatalities per 200,000 hours worked is 0.002.

The total number of hours worked by UPS employees was more than 748.3 million in 2018. The main types of work-related injuries to UPS employees are auto accidents, slips and falls, and lift-lower injuries.

We categorize lost-time injuries by severity as required by the laws in the areas we operate. For instance, in the US, we categorize injuries based on OSHA standards.

Actions to eliminate these work-related hazards are explained in 403 Occupational Health and Safety Management Approach.

Due to confidentiality constraints, UPS does not currently track or report this data for contractors.

Work-related ill health

We are not aware of any occupational diseases among UPS employees, or of any incidence or high risk of disease related to occupations at UPS. UPS manages for occupational disease to regulatory compliance levels in the areas of our owned operations. Due to confidentiality constraints, UPS does not currently track or report this data for contractors.

Management Approach

We believe that UPS employees are among the most motivated, highest-performing people in the industry, and they represent a meaningful competitive advantage for our Company. This makes it critical to recruit the best people and keep them for the long term - an especially important aim amid changes to our industry, customers, and the world’s transportation infrastructure.

Once we have successfully recruited new employees, we retain them by promoting from within, offering a range of continuous training and talent development opportunities, and identifying employee potential early to accelerate career development. These offerings combine experience, exposure, and education for employees at every level of our organization.

We continue to focus our human capital strategies on the employee experience. This extends to recruitment efforts, our point-of-entry in the employee life-cycle. Our approach spans both hourly and professional recruitment efforts, where we tailor our methodologies to suit the needs of these two distinct candidate pools. Communicating a compelling Employee Value Proposition (EVP) is key to our ability to successfully recruit a qualified, diverse workforce in competitive markets. As we evolve our EVP to remain competitive, we continually enhance recruitment messages in advertising, social media, recruitment events, and other communication vehicles.

U.S. veterans are an ongoing focus of our recruitment efforts. Veteran-specific recruitment and engagement tools drive our success among this important demographic, and we continue to expand our efforts to recruit veterans. The UPS Veteran Career Gateway was designed to help U.S. veterans and transitioning service members find information about the job process at UPS.

In addition to recruiting the right people, we also want to ensure we are developing our people. Central to our EVP is our investment in the careers of our people through the Education Assistance program. UPS helps our people finance their education through one of the more generous tuition reimbursement programs in the marketplace. Students can use up to $25,000 for their education and attend school while working part-time or full-time at UPS. This is an important recruiting and retention tool; turnover among program participants in part-time positions is significantly lower than among nonparticipants. Since the program began in 1997, UPS has invested in the college tuition of more than 300,000 employees, including more than 13,000 in 2018.

When it comes to ongoing development, we focus on helping UPSers hone the skills needed to excel in their roles and achieve their long-term career goals. We are working toward a more self-directed development model in which UPSers and their managers collaborate to determine the most beneficial training programs and development opportunities on an individual basis.

Training and development includes constructive feedback, coaching, and counseling from managers and co-workers. Employees receive formal and informal development delivered through live and virtual classrooms, on-the-job tasks, committee participation, and special assignments. Additionally, self-development opportunities are available around the clock through an extensive eLearning library in UPS University, our enterprise-wide learning management system and component of our global talent management system, My Talent Center. In 2018, UPS devoted more than $976 million to training programs, and UPSers dedicated more than 16 million hours in training, to an average investment-per-learner of approximately $1,162.

Data for this disclosure does not include acquisitions from 2015 on, including Coyote Logistics, Marken, Nightline, or STTAS.

Average hours of training per year per employee.

2018 Employee Training

Programs for upgrading employee skills and transition assistance programs.

In many cases, the best candidates for open positions are already working at UPS. When business cycles or other forces drive changes in our staffing needs, we take steps to retain and promote our people. This includes promoting part-time workers into full-time positions, transferring employees into equivalent positions in other departments, and training employees for new assignments with greater responsibility. In 2018, there were more than 1,460 employees who elevated from nonmanagement positions to roles on our management team.

See also Disclosure 403-5 Worker training on occupational health and safety.

Percentage of employees receiving regular performance and career development reviews.

Management teams prepare and identify meaningful career development plans throughout the year utilizing performance discussions, assessments on leadership skills and UPS values, and constant feedback. To develop plans for future growth, management employees identify areas of interest, aspirations, and opportunities for career progression. Through regular discussions, assessments, and feedback, employees determine their strengths and opportunities, and are encouraged to focus on career goals.

In 2017, we embarked on an enterprise-wide initiative involving the redesign of many talent management processes and the implementation of a newly integrated technology platform. This initiative included comprehensive behaviors training on managing performance and career development to help effectively execute the new processes. In 2018, 99 percent of females and males in Senior and Middle Management roles in the U.S. received regular performance and career development reviews. We anticipate beginning to include international data in our 2019 reporting cycle.

Management Approach

UPS’s values are rooted in the diversity and inclusion that thrives inside and outside our walls. By leveraging diverse perspectives and creating inclusive environments, we have the opportunity to improve organizational effectiveness, cultivate innovation, and drive growth. Diversity and inclusion also enable us to adapt and excel in an ever-evolving global marketplace.

As a global company serving more than 220 countries and territories, we recognize that diversity is defined differently around the world. The process of building a diverse global workforce begins with recruiting talented people, regardless of visible characteristics such as race, gender, and age, or less obvious characteristics such as personality, ethnicity, ability, sexual orientation, education, religion, lifestyle, values, beliefs, experiences, backgrounds, preferences, family situations, or behaviors. We then reward and promote people based on their skills, knowledge, experience, and performance.

UPS approaches diversity and inclusion based on our mission to connect and empower our employees, customers, suppliers, and communities for success, embracing the dynamics of different backgrounds, experiences, and perspectives to propel our growth. UPS's Chief Diversity and Inclusion Officer leads these efforts globally, supported by the UPS Diversity & Inclusion Steering Council. The Council, which meets regularly throughout the year, is chaired by our CEO and composed of senior leaders who set and support strategies for the organization while serving as visible champions for diversity and inclusion.

Diversity and inclusion benefit the economic sustainability of our business by helping us to better understand and meet customer needs, as well as strengthen our workplace environment so that employees can be more successful. We strive to be a model for how diversity and inclusion can create business value.

One key measure of inclusion is UPS Business Resource Groups (BRGs). BRGs offer networking and learning opportunities to UPSers domestically and internationally from a variety of backgrounds. All BRGs have advisors and sponsors among senior management. BRG sponsors, who are members of our Management Committee, help connect BRGs with people at the highest levels of UPS, so the BRG can best align their objectives with those of the Company. With more than 200 chapters across the globe, BRGs at UPS make significant contributions to growing the business, developing our people, and supporting the communities we serve.

An increasing number of companies establish goals to measure progress in hiring, promoting and retaining women, minority employees, employees with disabilities and others belonging to underrepresented groups. In 2016, UPS established internal aspirational goals for numbers of women in our full–time management workforce across the globe and numbers of minorities in the U.S. We continue to monitor trends and report our progress internally on a quarterly basis to Company leadership, including the Management Committee. Our goals are referred to as aspirational as our emphasis is on a positive approach including outreach, training, and inclusion while selecting the best candidates and preparing future candidates for success.

Lasting change requires shifting our culture, and we are driving this transformation from the top as well as through grassroots efforts. We continue to provide transparency to senior leadership in the form of reports, education, and training. In performance reviews for managers, we evaluate how well the individual fosters an inclusive environment in which everyone is afforded opportunities to contribute and develop.

Data for this disclosure does not include acquisitions from 2015 on, including Coyote Logistics, Marken, Nightline, or STTAS.

Diversity of governance bodies and employees.

2018 Governance Body Diversity

(as of 12/31/18)

⁽¹⁾ Minority group restricted to U.S. employees.

⁽²⁾ Indicates two or more.

⁽³⁾ Our data includes board members who served in 2018 but were not counted in the 2019 Proxy Statement due to board service concluding at the 2019 Annual Meeting.

2018 Statistical Snapshot of UPS Diversity⁽⁴⁾

⁽⁴⁾ Data collected on 9/30/18 to account for year-round employees rather than seasonal peak hires.

Employment Type by Category (Global)⁽⁴⁾

Ratio of basic salary and remuneration of women to men.

UPS provides for equal remuneration policies globally with regard to women and men and has policies and procedures in place to support our compliance with applicable laws and regulations.

Management Approach

See Disclosure 402 - Labor Relations Management Approach.

Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk.

We are not aware of any operations or suppliers in which the right to exercise freedom of association and collective bargaining may violate applicable laws or be at significant risk.

Management Approach

See Disclosure 204 — Supply Chain Management Approach.

New suppliers that were screened using social criteria.

Due to confidentiality constraints, UPS does not report specific numbers or percentages related to screening or impact assessments, as this information is subject to confidentiality constraints of our supplier contracts. In 2018, we were not aware of any significant environmental, social, or labor concerns related to our suppliers.

Negative social impacts in the supply chain and actions taken.

Due to confidentiality constraints, UPS does not report specific numbers or percentages related to screening or impact assessments, as this information is subject to confidentiality constraints of our supplier contracts. In 2018, we were not aware of any significant environmental, social, or labor concerns related to our suppliers.

Management Approach

UPS operates more than 123,000 vehicles and one of the world’s largest air cargo fleets from more than 2,500 facilities, data centers, and office sites around the world. The safety of our employees and the security of our customers’ shipments are top priorities for UPS. As potential threats to digital and physical assets evolve — from cybercrime and terrorism to increased traffic congestion and aging transportation infrastructure — we constantly work to adapt and improve our ability to operate our business effectively and sustainably.

We apply comprehensive risk mitigation techniques globally and across all business segments to help keep our people and customer shipments secure. Confidentiality and customer relationships are critical components of our asset security program, and therefore we cannot disclose specific details about the techniques employed.

Access to relevant, actionable, and real-time threat information is a critical component of protecting our digital and physical assets. To that end, we use threat information from authorities in both the public and private sectors to allow us to take necessary actions to protect our people and our digital and physical assets.

Substantiated complaints concerning breaches of customer privacy and losses of customer data.

UPS had no significant breaches of customer privacy or losses of customer data in 2018.

Management Approach

See Disclosure 205 — Anti-Corruption Management Approach.

Noncompliance with laws and regulations in the social and economic area.

No significant fines were paid for noncompliance with laws and regulations in 2018.