Aug. 10 2006 05:30 PM

I'm not talking about the 11-page Executive Summary, or an article outlining what's in it. What I am talking about is the entire 76-page Transformation Plan with 23 appendices. If you haven't, you should soon!


I'll admit this isn't the most enjoyable read of the year. (I'd prefer a Robert Ludlum thriller.) But it's one of the most important. The plan lays out the U.S. Postal Service's immediate and long-term strategies for remaining a fiscally sound and operationally efficient organization.


There are some sections that are more difficult than others and may not have a direct impact on you. For example, Appendix D is entitled "Escalating Retirement Costs." I had to re-read some sections to make sure I understood them correctly, and I'm still not sure I did. But you should read these sections to get a better understanding of the challenges facing the Postal Service.


To readers of Mailing Systems Technology, the significance of the Transformation Plan should be evident, but its impact on the nation's economy may not be. It's important to remember that we're part of a $900 billion a year industry that's excluding paper, envelope and equipment manufacturers. We're all stakeholders in the Postal Service and have a vested interest in its success.


For its long-term strategy, the Postal Service has outlined three alternatives to the current quasi-governmental model:


Government Agency provide essential services that are supported by government subsidies.


Privatized Corporation act as a business entity with private shareholders.


Commercial Government Enterprise perform as a government-owned enterprise operating more commercially in the market.


The Transformation Plan recommends the Commercial Government Enterprise as the best option to implement. Under this model, the Postal Service would have more freedom to improve its business practices while maintaining universal service. A major undertaking, this new model is neither a retreat to the days of the Post Office Department nor the drastic move to privatization.


As made clear in the Transformation Plan, this ultimately is a public policy issue that will be determined by the legislative process (meaning further delays as the process becomes politicized). Also, any real transformation will take years to achieve. Meanwhile, the Postal Service is faced with a financial crisis that must be addressed now. To meet that challenge, the Transformation Plan discusses how the Postal Service will:


  •            Foster growth by increasing the value of postal products and services to its customers

  •            Improve operational efficiency

  •            Enhance the performance-based culture


    However, the implementation of these strategies is daunting. The Postal Service's human resources system is 30 years old. Much of its information technology infrastructure is out of date, and some systems are no longer supported by vendors. The Postal Service is just now creating a national database to track the operational, fiscal and demographic factors affecting the 38,000 post offices, stations and branches, and it's still mired in a 13-period accounting year with four-week cycles. ·


    There's a lot of information in the Transformation Plan, and a lot of ideas on how to improve the system. Some ideas hold promise, while others may not be the best choice. Since it's easier to criticize something than to praise it, let's start there.


    The Transformation Plan overstates the threat of the Internet to the Postal Service. While this report provides one of the more balanced approaches toward this subject, it still suggests that "the sky is falling."


    The Internet has made it easier for some people to adopt electronic bill presentment and payment. But that adoption rate remains much slower than previously predicted and will probably remain slow for some time. Many are still not connected to the Internet and most are using a dial-up connection. The "dot-bomb" implosion and the Enron and WorldCom scandals will reverberate for years to come. In this climate of fear, people will be wary about conducting financial transactions online. Also, as the report states, the Postal Service remains the primary delivery service for packages sent to the home. Let's acknowledge the importance of the Web, but let's not overrate it.


    And I don't agree that eliminating the salary cap for senior executives will lead to increased efficiencies. Are the current managers saying they aren't as qualified as others who get paid more money? Or will they suddenly become better managers if we pay them more?


    Excellence in management is not guaranteed by higher salaries. In 2001, Kenneth Lay was paid $1.3 million to lead Enron into disaster. Meanwhile, Alan Greenspan shepherds the nation's economy as the Chairman of the Federal Reserve while he is paid the same salary as the Postmaster General. Likewise, for approximately $150,000 a year, the Chairman of the Joint Chiefs, General Richard Myers, heads the Department of Defense, the world's largest enterprise. These leaders, and the men and women who work in their organizations, have long recognized that money is overrated in its power as a motivator. Strong leadership is needed. But leadership can't be bought.


    The Transformation Plan does have many good ideas. First and foremost is the idea of becoming a Commercial Government Enterprise, which will bring about substantial change and will counter the rabid calls for privatization. The postal worker strikes in Germany and the financial woes of Consignia, the British postal service, have shown that privatization isn't a cure-all.


    The Transformation Plan is also infused with a customer-centric focus. In today's economy, the customer must be the focal point of any business strategy. The Postal Service recognizes that it has a variety of customers (businesses, direct-mailers and the public). The Transformation plan includes ways to improve value and service for all Postal Service customers, while preserving universal service: the right of every American.


    The closing of unprofitable post offices is a good idea. A better idea is to open the extensive network of Postal Service retail outlets to other parties. Supermarkets have already done this with bank branches, increasing traffic and customer loyalty. The Postal Service should be as creative as possible with potential partners. Wouldn't it be great to sip a cup of gourmet coffee while waiting in line to send a certified letter?


    The Postal Service's Transformation Plan is the first step in an era that will bring the greatest changes this industry has seen for more than 30 years. The plan is sure to be the subject of many enthusiastic perhaps heated discussions. Read the entire plan, and be an informed participant in these discussions. It's worth the effort.


    Mark M. Fallon is the president and CEO of the Berkshire Company, a consulting firm specializing in mail and document processing strategies. For more information, visit

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