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2. REDUCE COSTS
Because the Postal Service is required to set prices to cover costs, many private sector measures of financial performance are not applicable to its operations. The Postal Service has adopted Total Factor Productivity (TFP) as an indicator of postal efficiency. TFP is a comprehensive measure similar to the multi-factor productivity index used by the Bureau of Labor Statistics to measure the productivity of different industries and the overall economy.
2006 Target
The target for 2006 is to continue the 5-year trend of positive productivity, increasing performance over 2005. The longer-term goal is to extend productivity improvements and cost reductions far into the future, enabling the Postal Service to reduce costs by an average of about $1 billion annually.
Recent Performance Trends
Economic trends also affect productivity performance. TFP can be volatile over the short-term as a result of time lags between investment expenditures and the actual capture of savings. The trend over several years is a more reliable indicator of performance.
| 2002 | 2003 | 2004 | 2005 (YTD Q3) |
|---|---|---|---|
| 1.0% | 1.8% | 2.4% | 1.4% |
Performance Indicator and Measurement System
TFP is a ratio of the workload to resources used. Workload includes the number and type of delivery points, and mail volume adjusted for weight, size, level of mailer preparation, and mode of transportation. Resources include labor, equipment, facilities, and transportation costs. The assessment is conducted by an independent firm, using audited postal financial data.
TFP is supplemented by a variety of other productivity measures which focus on the contribution of individual functions such as delivery, mail processing, and retail. Performance against functional and unit budgets is also used to assess cost control or reduction programs and to hold managers accountable for budget performance.
The Postal Service is refining additional performance objectives and indicators around operations quality, process standardization, and other activities.
3. ACHIEVE RESULTS WITH A CUSTOMER-FOCUSED AND PERFORMANCE-BASED CULTURE
The Postal Service is one of the largest employers in the nation, and its workforce is its most important asset. To achieve success, the Postal Service must fully engage employees and develop people to meet the challenges of the future.
2006 Targets
Develop People and Improve the Workplace Environment
One of the strategic objectives under this goal is to provide a workplace that encourages employees to give their best efforts to meet customer needs, provide service, and reduce cost. However, it is difficult to measure this directly. Every postal employee is given the opportunity every year to respond to a survey which is designed to assess progress in workplace improvement. The improvement is measured by an index rating (based on key questions) provided by the employees, and the target is to improve the workplace environment every year.