This Postmaster Really Runs the Place

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Every postmaster general has his own personality, leadership style and objectives. Jack Potter is not unique in having his own persona. But what does seem unique, at least among recent PMGs, is that he really seems to want to run the place. And he is doing it.

Recall that the Board of Governors named Potter postmaster general June 1, 2001. He soon was faced with the 9/11 attacks and the anthrax mailings. Both incidents had a devastating effect on the economy and mail volume.

What was needed was a clear external message that steps were being taken to ensure that the mail was safe and a clear internal message of the need for cost control and cost reduction. The cost-control results have been amazing.

The number of career employees has dropped from 775,200 at the end of fiscal year 2001 to 745,100 at the end of December 2002. Attrition also has shown itself in other areas. In the same period, the number of active USPS-owned vehicles used in administrative areas was reduced from 5,612 to 5,409. Vehicles used by operations declined from 202,700 to 201,200. Even the number of post offices showed the first meaningful decline in some time, from 27,873 to 27,722.

The declines in post offices and vehicles are significant in that they indicate reductions in physical infrastructure. Infrastructure declines, in these two examples, mean potentially less money spent on vehicle repair, maintenance and custodial services.

Most, if not all, manpower reductions have occurred through attrition. However, the postal service has indicated that it does not think attrition will satisfy its workforce reduction needs. USPS chief operating officer Pat Donahoe sent a letter Jan. 23 to the federal Office of Personnel Management stating that there will be 16,000 more American Postal Workers Union members than needed by Sept. 30.

It is expected that half of these APWU members will leave through attrition. The postal service is asking OPM for Voluntary Early Retirement Authority to get closer to the staff reduction requirement. It is interesting that the USPS request does not include a request to offer incentives to employees who decide to take early retirement.

Clearly, the USPS is on a path of continued staff reduction. One challenge that Potter faces is to keep personnel-reduction actions ahead of the continuing declines in mail volumes. So far, so good, but as the economy remains weak and financial transactions move inexorably toward the Internet, his challenge grows greater.

Another challenge is the Civil Service Retirement System pension funding. Based on numerous studies, it's clear that at the current contribution level the postal service will overfund its CSRS pension plan.

However, because of federal budget deficit problems and other budget reconciliation issues, getting the Appropriations Committees to correct the problem seems unlikely. Bipartisan bills were introduced Feb. 12 in the House of Representatives and Senate to reduce the postal service's CSRS payment. If this legislation doesn't pass, expect the USPS to proceed with a rate-increase filing later this year. The fate of this legislation will tell us something about the strength of the mailing industry, the unions and their friends in Congress.

As for the other important postal activity, public comments were due Feb. 12 to the presidential postal commission. I've seen only a few of them. It's my early impression that if the commission is looking for industry consensus on thoughts that could lead to legislative change, it may be disappointed.

The first few submissions suggest that the USPS has a mission to provide universal service, should stick to its knitting and needs to do more to reduce costs and get more productive. Frankly, that's what this management team is doing.

The question is, will industry or union filings suggest changes that provide legislative assistance to the long-term postal problem of a high-cost, expanding delivery network faced with declining volumes?

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