The Problem of Perspective

What postal issues are most important? That depends a lot on what your perspective is. Sooner or later, it comes down to the number, cost and productivity of postal employees. The postal unions can help or hinder the modernization of the organization. Their current position calling for the resignation of the Postmaster General and for the immediate halt of postal cost saving initiatives, is not helpful.

The Retiree Health Benefits Prefunding Requirement Can be Fixed

Perspective 1The single biggest labor related cost problem is the 2007 mandate to prefund retiree health benefits (RHB) at an accelerated and arbitrary rate. Few public or private organizations have this requirement. Adjustments to this requirement alone would return the Postal Service to a much stronger financial position, although considerable damage has been done by postponing needed capital investments. The unions have been strong supporters of legislative solutions, and have been willing to consider alternatives such as adapting their health care plans. Solving the prefunding problem will benefit everybody.

The State of Postal Pension Funds is Surprisingly Strong

Perspective 2Postal pensions and benefits are among the most generous in the nation. But they are also among the best funded. Some analysts suggest that if the funds were more aggressively invested (something like the federal Thrift Savings program, instead of the current mandated extremely conservative approach), the Postal Service would generate additional billions in revenue. If the Postal Service were a private sector firm, corporate raiders would find the Postal Service an attractive take-over target for control of those funds alone. The management of postal pension funds will be an issue for the future.

People Still Seek Postal Employment

The Postal Service is one of the largest employers in the nation, and labor-related costs represent the greatest single cost category. Most postal employees are dedicated and work hard, but they are well paid compared to other workers in similar jobs with similar skills.Perspective 3 There are almost always many people eager for postal employment. Quit rates and turnover are extremely low. Workplace satisfaction is reasonably high, as measured by independent studies. Safety, once a problem, is well within norms as established by the U.S. Occupational Safety and Health Administration (OSHA). Most postal managers and senior executives, including the current Postmaster General, are lifetime postal careerists who came up through the ranks. Almost all the decline in postal employment has come through voluntary attrition and retirements, rather than layoffs. The declining number of employees is critical issue for the postal unions, but almost every other stakeholder disagrees (with the exception of Congressional representatives eager to be seen as saving jobs in their district).

Labor Negotiations and Contract Disputes are Not Always Helpful to Union Members

Unions exist to protect their membership from unfair depredations of management. They exist to attempt to gain a fair wage and reasonable benefits for their members. The Postal unions have done an excellent job of doing just that. In the last several rounds of negotiations, unions have given a bit a ground back to management in terms of wage restraint, flexibility, and use of part-time employees. There is some resentment about these “givebacks”, but postal union members should note that most unions have been fighting rear-guard actions for years against the forces of modernization, and have been, for the most part, far less successful in preserving the status quo. Unions have not generally been at the forefront of voluntarily helping their organizations become more productive, innovative and competitive.

Postal Network Optimization and Cost Reductions Have Had Little Impact on Customers

Since Congress has been unable to develop relevant legislation to resolve the RHB issue, management had to take action to reduce costs dramatically.  They have closed 140 distribution centers since 2012. Perspective 4Despite some localized problems, overall service for almost all mail categories has actually improved over the last two years, based on evaluations conducted by the independent Postal Regulatory Commission.  Postal productivity, already among the highest among global postal operators, continues to increase.

Few postal employees lost their jobs as a result of management’s restructuring efforts, although many were inconvenienced and had to take positions elsewhere in the organization. Few consumers noticed any changes, although in some areas mail was delivered later than before. Firms engaged in distribution and logistics are constantly adapting their networks based on market conditions. Unions and their Congressional supporters are demanding that the Postal Service operate less efficiently.

Retail Optimization Actually Helps Customers

The same principle is true for modern postal retail operations.Perspective 5 Traditional retailers are facing enormous pressures from eCommerce competitors, and many are struggling to attract customers to physical stores. They are offering online service and experimenting with many other retail options to remain relevant and accessible to their customers. The Postal Service is trying to do the same kind of things, yet closing an unprofitable, underused post office is a federal case – unlike closing other services like bank branches, gas stations, grocery stores or even medical facilities. As a result, the number of post offices has not declined significantly and the unions have opposed postal efforts to offer convenient access to customers using other approaches.

Delivery Optimization is a Compromise That Most Customers are Willing to Accept

The unions are objecting to management moves to slightly reduce the speed of service, change the mode of delivery (moving away from door delivery where possible), and even to eliminate a day of delivery (both FedEx and UPS already have a five day work week for normal deliveries). Consumers have indicated that they are willing to accept such service changes in order to keep postal costs down and to preserve universal service. The unions are fighting to preserve something that most postal customers do not value highly.

The Post Industrial Workplace Will Be Different

Perspective 6 The Postal Service is a classic “machine bureaucracy”, meaning that it is set up to do a limited number of routine and repetitive tasks according to a rigid set of rules. Unions can thrive in such an environment, and have the necessary function of protecting employees from both arbitrary applications and violations of those rules. There are plenty of examples, almost on a daily basis in an organization as large as the Postal Service, of administrative failures, uninformed or poorly trained management actions, and even illegal activities by managers.

Unions can help protect “whistle blowers” and keep management accountable. Machine bureaucracies and unions may also lock in rigid workplace practices that make innovation difficult. In the workplace of the future, employees will be much more connected and informed. Traditional hierarchies and job descriptions will be less important. The “us versus them” attitude between unions and management that sometimes exists must be changed. This is one of the real challenges facing postal unions and the Postal Service in the future, even after the RHB problem is resolved.

Making the Postal Culture an Unassailable Asset

It is hard to describe the postal culture to anyone who has not been part of it. The underlying “mail must go through” ethic that predated the Pony Express remains in force. It is evident especially in the service to customers provided by postal letter carriers (see The Fred Factor, a book on outstanding customer service that featured a letter carrier as a prime example of outstanding service).

Many postal workers make it a lifelong career, often following military service (USPS is the largest employer of veterans). A postal career is often a family tradition across generations, and many managers and executives have come up through the ranks.There is a phrase (“bleeding postal blue”) that exemplifies the sacrifices postal employees are willing to make that is an extraordinary asset that makes the organization work in spite of itself and the business environment.

This culture is not always well leveraged. But it can be the salvation of the Postal Service and the mailing industry. It can be harnessed to provide even greater productivity and service performance. It can be applied to make the organization more flexible, innovative and competitive. It will not require new legislation or significant capital investment.

Imagine having a familiar, friendly and well-informed representative of a trusted organization calling on you at home every day to see if your needs are being met, a representative who is empowered to connect you with information, services and merchandise you want. Reliable, accessible, friendly, easy to use, with services that are secure, private and protected by an effective consumer protection program and a federal law enforcement agency. Welcome to the U.S. Postal Service.

 

By Kent Smith

Kent Smith is Research Director, Ursa Major Associates / Postal Vision 2020. His 38 year career in the Postal Service included Rate Classification Research, Market Research, and Strategic Planning. Ursa Major Associates / Postal Vision 2020 is dedicated to taking a broader, longer-term perspective on the future of the mailing industry ecosystem. The thoughts expressed in this “Point of View” are his own.

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3 Replies

  1. An interesting perspective although much of it is debatable and a great deal of it depends on where you sit or what prism you sit through.
    Far too much to respond to in a comment but one point does bear a response. The postal institutional culture is and has been severely dysfunctional, the views expressed above are pollyannaish at best.

  2. AL B

    Nice article. can relate as a 28yr employee. thx

  3. Completely eliminate PSRHBP prefunding, which accounts for over 83% of USPS red ink since 2006, as there is enough in it now for every living retiree and currently employed future retiree.
    Change CSRS/FERS funding to Fortune 500 Gold standard static 80% vs. 100%+ dynamic actuarial formulas and refund 10’s of BILLIONS in overages illegally funneled into the Treasury.
    Refund $27 Billion in military obligations paid out as a result of 2003 legislation. These monies should’ve come out of the Treasury which they do for EVERY other federal agency.
    Stop any other unnecessary plant/branch office closings, VERA’s, talk of 5-day delivery, etc. They are hurting us, which a study commissioned by USPS Corporate itself shows, and are also a felony crime, as per US Code Title 39 Section 101 as it reads today.
    Do these and the Congressionally manufactured USPS financial ‘crisis’ is over. QED… No need to add to the nearly 400,000 career postal jobs, mostly craft, already lost forever.

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