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BALANCED MEASURES STUDY
USPS Site Visit Summary

Site: U.S. Postal Service HQ, L’Enfant Plaza, Washington D.C.
Date: Friday, April 16, 1999
Time: 1:00 – 4:00 PM

Participants: Pat Mendonca, USPS Operations Planning
Tom Fotey, USPS Operations Planning
Wanda Williams, USPS Operations Planning
Ed Jakubiak, USPS Quality Systems
BSM Team: J. Warden, K. Monahan, C. Marshall, B. Currie, A. Hertz, A. Singleton, P. Sun, M. Zack

OVERVIEW:

USPS is an agency of 800,000 career and 100,000 temporary employees. Personnel accounts for some 80% of USPS costs (approx 8% transportation, 12% for rental, services, and others). There are 40,000 Post Offices, and USPS maintains some 300 plants nationwide.

Historically, USPS measurements were very much internally-focussed. Under ODIS (Origin-Destination Info System) the USPS captured statistics on such outputs as mail movement, etc. Under the direction of PMG/CEO Marvin Runyon, the USPS began the development of a customer focus. In so doing, USPS found that many of the measurements they were keeping were not relevant to the customer. For instance, they learned that customers placed more value in reliability than speed.

The new focus caused the USPS to re-examine its mission and its relationship with its customers. They began asking questions of their business. What is the nature of the business? What do the customers need and want? How do you get employees committed to the vision? How do you get the organization committed to the employees?

They identified three key "aspirations" – business, customer, and employee commitment. From these, USPS developed it’s "Customer Perfect" performance management model. USPS discussed in detail the conception, development, and implementation of it’s four-stage "Customer Perfect" balanced set of measures management cycle. The "Customer Perfect" measurement model is founded upon three essential measurement pillars: (1) the Voice of the Customer, (2) the Voice of the Employee, and (3) the Voice of the Business. There should always be alignment among the three, and ideally, the voices of the customer and the employee will dictate the voice of the business.

ACCOUNTABILITY:

The Customer Perfect management cycle is made up of four phases, these are: (1) Establish, (2) Deploy, (3) Implement, and (4) Review.

ESTABLISH – In the Establish phase, Senior Management establishes direction, deriving from the Voices Goals, Sub-Goals, Indicators, and Targets. Targets include long-term goals, 5-year goals, and next year goals.

DEPLOY – In the Deploy phase, Voice goals, performance goals, and indicators are communicated throughout the organization. Programs and activities are aligned with the strategic direction, and performance targets are agreed upon. Resource allocation decisions are made based upon the performance targets.

Budget development is negotiated by means of the "Catch-Ball" technique, involving the participation of Headquarters, field, and the various performance clusters. Catch-Ball is both a top-down and bottom-up exchange.

IMPLEMENT – In the Implement phase, strategies developed are rolled out. Performance is tracked by performance cluster throughout the USPS, publicized, and executive (SES/GS) bonuses are based on results.

REVIEW – There is a continuous, real-time access to and review of performance information. In the Review phase, Management reviews performance data and evaluates/validates plans, targets, and programs. Performance clusters (there are 85) meeting certain target thresholds are celebrated as "breakthrough performers". It becomes clear to employees what’s important and who’s accountable.

DATA COLLECTION AND REPORTING:

Talk is cheap. USPS’s experience indicates that there must be a willingness to invest in a performance measurement system. The USPS spends $30 million/yr on performance measurement systems. Further, USPS suggests it is absolutely CRITICAL to communicate results and findings to the public; they issue: (1) quarterly reports/press releases to the public, and (2) quarterly reports to every employee (via intranet, union)

An outside consultant does some external measurements. Audits are done on the Financial indicators. Process indicators are measured daily and weekly.

In the effort to gauge employee satisfaction, USPS conducts feedback surveys of employees through out the year, drawing upon random selections of employees.

Performance data is available on the USPS intranet.

ANALYSIS AND REVIEW:

USPS has conducted two Baldrige assessments. The first assessment in 1995 led to the formulation of an Improvement Plan, and the identification of the "Voices", which were implemented in 1997. This was an effort led by USPS’s Quality Department. CEO/PMG Runyon provided the impetus for the initiative, drawing upon his experience with Ford and Nissan. The challenges, USPS observes, are recording the data, understanding the hand-offs, and understanding the nature of the work on a daily and real time basis.

A second Baldrige assessment in 1998 indicates that USPS still needs to make some advances with regard to Voice of the Employee.

EVALUATING AND UTILIZING:

COO is the process owner for implementation of the Customer Perfect. The Chief of Marketing is responsible for the Voice of the Customers, and the Deputy PMG is responsible for the Voice of the Employee, and Diversity and HR.

Consumer Advocate works with local and retail customers. Corporate Relations has responsibility for the general public.

There is a quarterly celebration for field folks when performance targets are met. The Performance clusters are invited to the celebration. For meeting the annual goals, a letter is sent out to all employees announcing who got rewarded and how much they received.

Working and understanding the needs of the Customer is the biggest challenge.

Account managers are assigned customers and have responsibility for measures for working with them. This is accomplished by establishing partnerships and planning groups to work with participants throughout the value-chain (companies, printers, truckers, sales etc. ). They look at the surges in business, resources, changes and impact; always concerned about capacity limits.

STRATEGIC PLANNING:

The Vice President for Strategic Planning is the process owner for USPS Strategic Planning. The USPS strategic plan looks out over a period of five years, and endeavors to understand and position the USPS for what the "Voices" will be saying in five years time. The Mission is linked to the "Voices" as indicated by performance trends. The USPS does not issue an annual strategic plan, rather it issues a new strategic plan every couple of years, depending on the need for course corrections.

BEST PRACTICES:

BENCHMARKING – Benchmarking performance measurement activities with Finland’s international postal operations.

BENCHMARKING – Ample opportunities within USPS for peer benchmarking and pilot/testing.

PRODUCTIVITY – Rethinking Productivity and determining how best to measure/capture.

LESSONS LEARNED:

SENIOR MANAGEMENT – Senior management engagement and commitment is essential to successful adoption of robust performance measurement program.

CATCH-BALL – Top/down and bottom/up internal negotiation technique.

COMPENSATION-BASED – Compensation based on performance and measures is very powerful.

ALIGNMENT – Important to have organization aligned with the Voices and strategic direction.

COMMUNICATION – Communication of performance measurements and results to employees is key.

INTERNAL CUSTOMER FOCUS – "Hand-offs"; USPS is beginning to understand internal customer/supplier relationships; and developing agreed-upon internal performance/delivery standards.

BONUS RAMPS – USPS created "ramps" for certain bonus thresholds to encourage performing clusters to continue to improve above the threshold.