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At the Postal Service, new reports reveal the strain of change

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“A change would do you good,” according to that noted management consultant, Sheryl Crow. But for the U.S. Postal Service, change has been wrenching,  particularly when it means shaking the habits acquired during years as a complacent semi-monopoly. A couple of recent reports highlight the rigors of reinvention for USPS leaders, not just in chasing new revenue and overhauling slipshod management practices, but in ultimately retooling their sprawling operation to survive in the digital age.

You might think, for example, that the Postal Service enjoys an inside track with its sister agencies in the federal government. Instead, it’s taking a beating from private-sector rivals in competing for a big part of agencies’ shipping business, according to  a review by the Postal Service’s inspector general. This is the piece awarded under General Services Administration schedule contracts that last year generated almost $337 million for participating shippers.

The Postal Service’s share of that pot amounted to $4.8 million, or 1.4 percent. Federal Express led with $190.1 million (56.4 percent), followed by UPS with $138.7 million (41.2 percent). If there’s any upside to be found, it’s that the Postal Service’s cut increased markedly from the year before. (It should be noted, incidentally, that the Postal Service got another $96 million worth of agencies’ shipping last year outside of the GSA schedule.)

In part, USPS prices just weren’t competitive, a fact that the inspector general blamed on a requirement that products like Express Mail and Priority Mail cover their costs (i.e., no using them as loss leaders to attract other business). But the Postal Service also didn’t bother to compete via the GSA schedule until 2009, eight years behind FedEx and UPS. “Consequently many federal agencies have long-term relationships with competitors and are reluctant to switch to the Postal Service,” the IG found.

Why were USPS execs so slow to look for customers in their own backyard? The report doesn’t give a reason, but they evidently just weren’t interested, lacking even ”a sales force or market strategy that targeted the federal sector.”  It has a sales force now, but the IG questioned whether the 13-member squad is adequate to meet agencies’ specialized needs.  In a written response, USPS executives acknowledged the need to be more nimble, but there’s obviously plenty of catch-up ahead.

Inertia of a different sort is evident in the findings of a separate IG audit that examined the Postal Service’s handling of its two largest advertising contracts, worth a combined $136 million in fiscal 2011. But for an organization in crisis, the Postal Service didn’t do a very good job of overseeing how that money was spent, the audit found. To take just one example, USPS officials signed off on almost $632,000 in “questionable” bonuses to the two contractors in fiscal 2011 and 2012 “even though the process for evaluating contractor performance was not clear.”

Also a problem: Keeping track of where money went and why. Some $4 million in invoices were missing from the contracting officer representative’s files and another $2.3 million worth of bills had not been certified properly. On the larger of the two contracts, the Postal Service went beyond the standard federal maximum to pay hourly rates of more than $302. While the agency was within its rights, the IG said, “the magnitude of these rates–particularly considering the Postal Service’s recent financial challenges–necessitated a corresponding amount of oversight to protect the Postal Service’s financial interests.” By the IG’s reading, that scrutiny was lacking; the relationship between the Postal Service and its ad companies was apparently so cozy that one of those firms was leaked a draft copy of the IG’s report. That no-no is under further investigation, according to the report.

Last fall, well before the report’s official release, the Postal Service had opted not to renew the larger contract with Michigan-based Campbell-Ewald (neither contactor is identified in the report, but the termination was reported in the advertising trade press). It has also redesigned its marketing and sales organization and is following up on the IG’s recommendations to improve oversight, according to a written response from Nagisa Manabe, who joined the Postal Service as its top marketer last year.

Of course, assuming that the IG’s findings are on base, the question is why it took so long to clean up basic business practices. At a time when management is pressing rank-and-file employees for concessions, these are the kinds of lapses that set the average clerk’s teeth on edge.

As Postmaster General Pat Donahoe frequently points out, he doesn’t have full command over the agency’s destiny. Congressional action (or inaction) will play a outsized role in the Postal Service’s long-term direction, not just in cutting costs but in finding new ways to adapt to a world that’s buying a lot fewer stamps.

This month, the Government Accountability Office released a handy overview of USPS efforts to boost revenue and move ahead with both new non-postal services and experimental postal products. The survey found plenty of ferment that so far hasn’t translated into a big effect on the bottom line. While the Postal Service is currently pursuing 55 new initiatives, most of them build on existing products and services, such as letting customers handle address changes through mobile phones. For fiscal 2011, non-postal revenue was $173 million. Nothing to sneeze at, but still a tiny fraction of that year’s total of $65.7 billion. And it’s hard to see non-postal income growing significantly without some help from Congress.

Under current (somewhat complicated) law, the Postal Service can introduce new non-postal products if they fall under the umbrella of something it’s already doing, subject to approval of the Postal Regulatory Commission.  Under the category of licensed retail products, for instance, post offices can sell items like stamp dispensers and framed postal art. But the Postal Service decided not to pursue more than two dozen other ventures, mainly on the grounds that they needed too much up-front investment or weren’t likely to be profitable.

USPS leaders see money-making potential in three other areas: Shipping alcoholic beverages, performing services for state and local governments, and selling non-postal services. But those would all require legislation, and involve knotty questions about competition with private business and other issues. In these times, however, lawmakers have a tough time dealing with relatively routine measures, let alone more complex ones. And those proposed new business avenues would be no cure-all. While postal leaders saw the potential to improve the agency’s financial position, the report said, “they emphasized that these additional innovations will not be sufficient to return USPS to financial solvency.”

Meaning more change–and more pain–lies ahead.

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Comments

  1. PostalVet Says:
    January 30th, 2013 at 9:45 am

    This is a good example of the the USPS promoting its own flunkies. How many of these so called executives just have a GED or even a high school diploma?

  2. truthteller Says:
    January 30th, 2013 at 1:10 pm

    i think the employees of the united states postal service WOULD definitely accept and welcome change IF that change led to better customer service and reduced costs. instead, we have a postal management, that apparently lacks any accountability, that routinely makes changes that reduce customer service and inflate the cost of processing and delivering the mail. absolutely absurd money losing/service busting changes are made and the employees in the trenches just look at each other and shrug their shoulders and say, ‘oh well, the idiots are at it again!’ the employees of the united states postal service have seen managements incompetence so often and for so long that it is just second nature now. intelligent change would certainly be welcomed at the united states postal service. however, there has been no evidence that intelligent change will ever gain much traction within the polluted enviroment that has become the united states postal service.

  3. lisa Says:
    January 30th, 2013 at 3:33 pm

    I have worked for the PO for a long time. the problem with the PO is there are too many people working at the post office that don’t “work” or have jobs that have absolutely nothing to do with the delivery of mail. We have a monopoly on the mail, yet we can’t make a buck. There are way too many managers and other people working at the post that don’t have their hands on the mail, you know,…the bean counters and the report writers and all the other wasted personnel that probably never even see a piece of mail each day. Here is what I think…we need truck drivers, mail handlers, clerks, and carriers. Other than that, everyone else needs to explain why they work at the post office and what their job description is.

  4. Me Says:
    January 30th, 2013 at 3:46 pm

    100% correct Truthteller. The root of ALL postal problems lies in our mgmt incompentence.
    Until their numbers are drastically cut, nothing will change.

  5. AK Mailman Says:
    January 30th, 2013 at 3:48 pm

    I feel like I’m workin hard in the bottom of that Italian cruise ship! What happens next?

  6. kingfisher552 Says:
    January 30th, 2013 at 4:08 pm

    The folks running the USPS are so out of touch with reality, it’s pathetic. Micromanagement is the watchword – never mind that it’s job justification at it’s finest. Same people with the same ideas regarding how to run things. As Truthteller pointed out – “oh well, the idiots are at it again”. The people who actually do the work are so used to the stupidity, the foolishness is seen as business-as-usual.

  7. laugher Says:
    January 30th, 2013 at 4:41 pm

    It is true the idiots are at it again. well, what can you espect for those morons to do something that is stunning?

  8. truthseeker Says:
    January 30th, 2013 at 5:00 pm

    truthteller says it all. i have 37 years in and i can’t remember more than a few good ideas out of the thousands that have been implemented.

  9. truthseeker Says:
    January 30th, 2013 at 5:03 pm

    i tried for 7 years to get backup warning buzzers in the trucks. when i was told by a regional safety officer that the carriers might take that as permission to back up, i gave up.

  10. Mailman Says:
    January 30th, 2013 at 6:21 pm

    Right on truthteller.

    The incredible incompetence of our mgmt. is at the root of ALL usps problems.

  11. truth teller Says:
    January 30th, 2013 at 6:52 pm

    Management as far as I have seen in the last 30 years, only “manages” employees by imtimidation. So many of these so called managers could’nt think their way out of a wet paper bag.Grossly over paid and for the most part unnessary.

  12. Pluto Says:
    January 30th, 2013 at 6:53 pm

    Sales was mentioned in the article. Who in the heck is that spiked haired dude running Sales in Marketing these days?

    “Grow-the-Volume” seems to be the tale to grow revenue, but then some fool high in the sky makes the decision to price the second ounce for free covering automated First-Class mailers. There are more discount contracts floating around than flies on a turd for other mail categories. They don’t seem to understand that excess labor supply might be the problem. Hello?

    Marketing and Operations run the show, and Finance takes the back seat. What a cluster funk.

  13. Tyfamom Says:
    January 30th, 2013 at 7:37 pm

    Agree 100% with truthteller…..Have worked for the USPS for nearly 30 years and the root of the problem is poor management.

  14. bob komar Says:
    January 30th, 2013 at 7:39 pm

    some KLOWN in product developement SAYS..sell more ornaments,storybooks,ten dollar postage roll holders, and coffee mugs..THAT’S THE ANSWER!

  15. bob komar Says:
    January 30th, 2013 at 7:42 pm

    …..HE or SHE makes around…190K per yr..THEIR WORTH IT!

  16. TERRY Says:
    January 30th, 2013 at 8:57 pm

    I DID 36YRS AS AN CARRIER UNDER CSRS AND I’M 55YRS. OLD AND RETIRED AND ALL I HAVE TOO SAY IS, IF YOUR UNDER CSRS REMEMBER THE TITANIC. I DID.

  17. sojournor Says:
    January 30th, 2013 at 9:12 pm

    Managing takes a back seat to Crisis Management. Whatever is on the plate for the day becomes the larger issue. You will never solve the problems of the post office if you do not have a well thought out plan

  18. Bob Says:
    January 31st, 2013 at 6:14 am

    If management would actually come to the people who do the work (carriers and clerks) and ask us what it would take to fix the post office we could have it running like a fine tuned clock.
    But they won’t there egos get in the way. You will always have somebody who has never touched the mail or done anything related to the job trying to tell us how to do it. How many times have they changed something in your office just to see it not work then have a delivery manager tell tou to go back to the way you have done it in the past to make it work.2

  19. @postmanjay Says:
    January 31st, 2013 at 7:01 am

    just look at the comments from the people who work here! ’nuff said?

  20. Lacy Says:
    January 31st, 2013 at 8:37 am

    Lots of comments. Lots of truth. Just glad to be a retired city carrier under CSRS and away from the mayhem. No easy solutions. Everybody needs to sacrifice to right the ship. Not likely to happen in this environment of me first and corrupt politicians at every level. Whatever the outcome, all are likely to be dissatisfied. Just be thankful for what you have.

  21. Sucka Says:
    January 31st, 2013 at 10:56 am

    It’s a well know fact the post office promotes the worst craft workers to management and they become the worst supervisors.

  22. Brian Says:
    January 31st, 2013 at 11:11 am

    First, one must ask how many executives have a business management or business administration degree of any kind? That will tell us a lot about the dire situation of the post office, beyond the typical excuse of blaming the electronic age. I don’t blame these people personally; they are the product of an antiquated internal promotion system. But now, district managers and managers of operations are being directed to come up with solutions to problems they really don’t understand. These people have no business making the decisions they are being forced to make. This agency NEEDS to hire a team with business knowledge, strong financial backgrounds, and logistics degrees. This is not a time to rely soley on experience and longevity or seniority. The decisions I see being made from within are going to make this business implode. For instance, my district wants to increase efficiency by stripping our already strained workforce by 20%. Did they pull this decision out of a top hat? —- Another problem is their PRODUCT MIX. It is too diverse and confusing. Most internal employees don’t have a clue about the products USPS offers, and the list certainly sends customers’ heads spinning. Apple Computer paved it’s way to success by condensing their product offering to just a few core products that encompassed all the features the customers wanted by varying a few offerings. We need to analyze Apple’s approach and apply some of their principles.

  23. Jay Underwood Says:
    January 31st, 2013 at 11:48 am

    I recently saw an I initiative to utilize Six Sigma – which seems hilarious to attempt to employee while you are hemorrhaging cash. In business if what you are doing is lossing money – STOP! We need to plug the leaks before we delve into parts per thousand type of management. I am a grateful USPS employee but definitely wished I could see the transparency in management of their true commit to the success of my jobs future. They do not inspire me with their ability to lead or encourage me to desire to invest by making anymore sacrifices on my part to ensure financial stability of the USPS.

  24. JaneM Says:
    January 31st, 2013 at 2:21 pm

    To the poster that said all you need are carriers, clerks, mailhandlers and drivers.

    Why are mailhandlers separate from clerks. Merge those two.

    You also need mechanics and cleaners.

  25. barbydoll Says:
    January 31st, 2013 at 4:28 pm

    You said it “Sucka”!!!!! Friends of friends or relatives. Sorry, sorry, sorry. “Truthteller” is right too. We need the union but it also protects the sorry ones who do not work. It also frustrates the good supervisors who try to fire the bad ones by getting them their jobs back. It is a totally frustrating situation for everyone. The good supervisors give up and do no discipline and the co-workers are frustrated with the supervisors for not doing the discipline it needs to do. So the good employees feel frustrated and overworked because of the inability of management to make the sorry ones do anything.

  26. Cleanupguy Says:
    January 31st, 2013 at 5:37 pm

    How many companies do you know where a manager could cost his company over a half a million dollars and not be held accountable? We are a small city and we had just that occur. Management CHOSE to violate the contract and when it was brought to their attention, continued to violate the contract for over a year, and ended up costing over $500,000 in a grievance settlement. And no one was held accountable. Any private sector company would have fired the manager responsible. And this happens daily all across the country.
    Management IS the cause of the decline in customer service.

  27. Mike S Says:
    January 31st, 2013 at 9:41 pm

    This place is just like the Titanic….except Titanic had a band.

  28. reddog_2169 Says:
    February 1st, 2013 at 12:11 pm

    Truthteller/seeker: if things are soooo bad why don’t you retire? 30 – 37 years of making great wages should put you in great shape! Bitch bitch bitch…find something else if you don’t like it. Be thankful! You have a 50 k plus a year job when alot are trying to make ends meet! One more thing. Try to make a difference….instead of the problem :)

  29. ohiohillbilly Says:
    February 2nd, 2013 at 7:41 pm

    My daughter just got a job w/ the PO. College degree and is a clerk.

    All I can say is this: I had such respect for everyone at our PO until I heard from someone in their ranks. My heart is so disillusioned w/ the manner and innerworkings of her job.
    I hope things change but the dysfunction seems to be coming from the top : (

  30. Retired (Letter Carrier,28Yrs.) Says:
    February 3rd, 2013 at 11:55 am

    The biggest problem with the PO, is incompentent management. Good quality people are never promoted. Personal friends and relatives are promoted. Postal/Vet and Truthteller have it right!!! Thank God,I am retired. Best decision I could have made. Meaningful, change has to start at the top. Fat chance that will ever happen!!

  31. postal worker Says:
    February 3rd, 2013 at 4:15 pm

    I think the core problem of the Postal Service is: Management is afraid of Management. The best ambassadors of the P O are the clerks and carriers,because they hear from customers on what is right or wrong, yet management refused to listen to what thay have to say and, instead “just do what we tell you to do.” Why is a supervisor unable to express his/her true opinion to upper management? They are in a position to have the best answers because they hear it from both management and the workers.

  32. Captn Says:
    February 4th, 2013 at 1:29 am

    I started as a clerk in 1968 and worked for promotions for 1 reason. By 1980 the direction was seen. Out at level 22 in march ’03 with a pension higher than employee wages. The biggest problem with the PO is the union and extreme wages of employees. Notice, they are called employees as very few could be described as a worker. How many millions does the workers comp cost every year? At least 85% on WC are fraudulent. All offices should be closed on Sunday and Thursday and all lower than a LV 18 should be closed if there is another office within 11 miles. All routes should be evaluated like rurals- that would cut the carrier employees by at least 20%. Eliminating Thursday delivery would eliminate the need for at least 8% of city carriers. So many easy options……..