2.3 MOVE TOWARD A PERFORMANCE-BASED CULTURE

To achieve the levels of performance necessary for transformation, the Postal Service is focusing on an effective, diverse, and motivated workforce, with individuals who know what is expected of them and are recognized for their personal and team accomplishments. A number of performance-based initiatives have been completed, some are in the initial stages of implementation, while others remain in development. The Postal Service's commitment is to position the right people, with the right skills, in the right places, at the right time.

RETAIN AND RECRUIT QUALITY EMPLOYEES

Generally the Postal Service's turnover and quit rates have remained relatively consistent during the past five years when compared with those in other sectors of the economy. This is due to a variety of factors, including the stability of the Postal Service working environment, the cross-functional integration opportunities found throughout the organization, and the developmental programs available to employees at all levels. However, the Postal Service must understand why employees leave and determine what it can do to retain key employees, particularly those in skilled positions. The Postal Service also must replace those who leave with trained and qualified individuals. The organization has increased its retention and recruitment efforts through a series of new initiatives.

A six-month pilot of the Exit Interview Questionnaire (EIQ) process was completed in March 2004. The EIQ process standardizes the methodology that captures the reasons employees voluntarily separate from the Postal Service. The EIQ process will continue to be utilized for nonbargaining unit employees in 2005.

The Postal Service is focused on ensuring the continuity in the succession of Postal Service leadership over the long-term. As a result, three intern programs were launched in 2003 to develop managerial, operational, and professional and technical skills. These programs have been incorporated into Postal Service normal business processes.

A two-year training program prepares professional and specialist interns for critical positions such as accountants, statisticians, economists, compensation specialists, and psychologists; another program provides future operating managers in the field with two-years of management training; the third intern program exposes industrial engineers to all facets of operations, preparing them to help position the Postal Service relative to the hardware, software, and human resources needed to maximize the efficiency of mail processing, distribution, and delivery. All of these programs are continuing, and all now have graduates placed in permanent positions.

A pilot program to test the electronic collection of suitability data has been completed. This pilot was designed to facilitate the collection of information used to determine whether an applicant is an acceptable candidate to hire. Electronic collection of this data streamlines the suitability screening process. The pilot program was successful and eScreening was offered nationwide in 2004.

In the fall of 2004 the Postal Service will implement new selection procedures for the five most populated entry-level positions: city carrier, sales and services associate, sales and services distribution associate, mail handler, and mail processing clerk. This effort is the culmination of an 18 month study of the skills and abilities most critical to success in these positions. While the current testing model is still a valuable decision making tool, other critical skills and abilities need to be measured, including customer service, teamwork, attitude, safety, and attendance. These tests are used to predict on the job performance using industry best practices.

DEVELOP CURRENT AND FUTURE LEADERS

The 2004 Corporate Succession Planning (CSP) process is complete. A total of 1,417 employees were identified at the Executive and Administrative Schedule (EAS) Level 22 and above level as potential successors to approximately 800 executive position pools. In response to corporate efforts to encourage minority participation, 29.1 percent of successors were minorities, an increase of nearly 16 percent above the former succession planning program.

Also, for the first time succession planning in 2004 was automated, from application submissions, to successors selected, to monitoring developmental activities of candidates. The Postal Service has become a leader in the federal sector with its CSP program and the Corporate Succession Planning Tracking System. A patent is currently pending on the overall process.

As part of the effort to develop its leaders, the Postal Service is committed to ensuring that a dynamic training continuum is available to employees. A variety of programs are being investigated and implemented to guarantee that Postal Service employees have access to the most up-to-date training available.

The Executive Development Program Phase I, a week-long training program for each of the approximately 800 Postal Service executives, was delivered throughout 2004. Phase II, which will also provide intensive developmental opportunities for Postal Service executives, was designed and piloted in October 2004.

In February 2004 the Postal Service implemented a new Human Resources (HR) Manager Development Program. The program is designed to provide HR managers training that focuses on the strategic, as well as the core operational aspects, of the job.

The Postal Service has expanded its ability to improve accountability through greater use of performance-based pay to recognize individual and team efforts. In 2003 approximately 800 executives participated in a new pay-for-performance program based on the National Performance Assessment (NPA) system and evaluations of core requirements of their positions. Performance goals are set for each individual based on that individual's position in the organization and the level of contribution that can be made from that position toward achievement of the corporate goals. In 2004, as a result of successful consultations with the three postal management associations, 78,000 other nonbargaining employees were placed under the same evaluation system and are participating in pay-for-performance.

Key to the new system is an intranet-based tool that manages each employee's annual evaluation using automated workflow. An objective-setting process, that includes the approval of individual objectives, allows employees to align individual contributions to both unit and corporate successes. The system also documents evaluators' feedback at the midyear performance review and end-of-year evaluation. This reinforces the Postal Service's commitment to provide specific and tangible feedback on individual progress toward established targets. The new system also calculates end-of-year performance ratings based on individual achievements against targets, in addition to unit and corporate results.

The new pay systems are based solely on these performance evaluations. There are no automatic or across-the-board pay increases for executives or nonbargaining employees. All pay actions are made within a salary structure that is market-based according to an independent and comprehensive market analysis of postal positions. Salary structures at the top levels of the organization, however, remain compressed because of the statutory salary cap.

BUILD A HIGHLY EFFECTIVE AND MOTIVATED WORKFORCE

In the transformation effort to build a highly effective and motivated workforce, the Postal Service built on existing programs to institute additional managerial accountability for workplace environment issues. By focusing on improving the workplace, as measured by the percentage of favorable responses to questions on the Voice of the Employee (VOE) survey, which now is a part of the NPA, the Postal Service successfully raised VOE scores to an all-time high.

In 2004 the Postal Service worked through trained field coordinators to encourage employees to view the VOE survey as an opportunity to voice their concerns about the workplace. The Postal Service also developed two VOE communication tools for 2005, a VOE video series and an informational direct mailpiece.

At the national level the VOE index score has improved steadily since 1999. In 2003 the Postal Service VOE index score increased 2.3 percentage points to 61.1 percent, while the response rate increased to 58 percent. By the end of 2004, the Postal Service attained a national index score of 62.1 percent favorable responses and a response rate of 64 percent, the highest ever recorded. The postal quarter IV 2004 VOE survey index score was 63.6 percent, an increase of 2.5 percentage points, and the response rate was 66 percent.

In the area of diversity, supervisors and managers in the field supported the work of the District Joint Employee Assistance Program Advisory Committee and Diversity's continuous education initiatives. Also, each Postal Service district maintains both a Threat Assessment Team and a Crisis Management Team and provides violence prevention awareness and sexual and workplace harassment prevention training.

The Workplace Environment Improvement Advisory Committee continues to identify troubled worksites based on established criteria and track progress of action plans for remediation. Work to organize data so that it becomes a reliable predictor of future behavior in the workplace and as a basis for proactive intervention, has been deemed to be infeasible and has been discontinued. From 2002 to the end of 2004 the number of troubled Postal Service worksites has been reduced from 39 to 8. These efforts will continue in 2005.

A cornerstone of having a motivated and effective workforce is a safe workplace. The Postal Service has achieved significant reductions in employee injuries in the past few years. Workforce safety is a corporate Government Performance and Result Act goal and is part of the Annual Performance Plan. A major accomplishment in 2004 has been a reduction in Occupational Safety and Health Administration (OSHA) injuries and illnesses by 36 percent from the 2001 baseline. Motor vehicle accidents have been reduced by 11 percent from the 2001 baseline.

To further workplace safety the Postal Service signed two agreements with its unions in 2004. One agreement was to implement the Voluntary Protection Program (VPP) between the Postal Service and the American Postal Workers Union (APWU). The VPP process is designed to improve safety and health at the worksite by reducing the number and severity of job-related illnesses and injuries. In the other agreement, the Postal Service and the National Association of Letter Carriers (NALC) established a national level task force to reduce city carrier motor vehicle accidents and injuries. Pilot tests are being jointly implemented in the Eastern, Pacific, and Great Lakes Areas.

In addition, the Postal Service, the APWU, the National Postal Mail Handlers Union, and OSHA entered into a landmark Ergonomic Strategic Partnership to work together to reduce employee musculoskeletal disorders (MSD) and injuries at major Postal Service mail processing facilities. MSDs associated with ergonomic risk factors account for about 40 percent of injuries and illnesses among postal employees. An Ergonomic Risk Reduction Process (ERRP) was implemented in 53 mail processing facilities in 2003 and 2004. ERRP will be deployed in another 32 mail processing sites in 2005, in 40 sites in 2006, in 40 sites in 2007, and in 11 sites in 2008. As of the end of 2004 the Postal Service had trained more than 40,073 employees in ergonomic risk reduction. Of the total, approximately 5,000 were managers; the rest were from the clerk, mail handler, maintenance, and vehicle services functions.

As a direct result of the ERRP success experienced in plants thus far, a Customer Service ERRP pilot was implemented in Albany, NY. The goal of the pilot is to extend the success of ERRP to customer service employees.

IMPROVE LABOR/MANAGEMENT RELATIONS

The Postal Service successfully worked with the APWU, NALC, and Mail Handlers to improve communications by producing and publishing manuals that provide a joint understanding of the interpretation and administration of the provisions of the various national agreements. Joint labor/management training on these documents has been conducted across the country.

IMPROVE WORKFORCE PLANNING

Complement management remains critical to an organization with approximately 700,000 career employees. The Postal Service has been planning, adjusting, and tracking complement, as well as projecting complement needs based on changes in business and operational requirements, using the tools it has developed.

These efforts to plan for and optimize employee complement needs provide the Postal Service with the ability to determine the right people and skills to handle current mail volumes, to project what skills will be required in a changing environment, and to facilitate employee movement to meet those needs.

EXPAND SHARED SERVICES AND EXPLORE OUTSOURCING

No matter how successful its retention efforts or how effectively it relocates current employees to areas of greater need, the Postal Service always needs to hire new individuals. Hiring has long been a labor-intensive, paper-intensive, and time-consuming process. In 2004 the Postal Service continued to explore with the Office of Personnel Management (OPM) a process that reduces the amount of time, energy, and paper involved in hiring new Postal Service employees.

In addition, the Board of Governors in 2004 approved funding for a new initiative called PostalPEOPLE, which will change the way the Postal Service does business with employees. PostalPEOPLE will replace existing, outdated technology with a single, fully-integrated system featuring redesigned processes that are streamlined, standardized, and automated. The result will be a single view of the employee; that is, one secure system from which all employee information may be accessed. Deployment is planned for 2005.

In 2004 the Postal Service also completed its initiative to outsource equal employment opportunity investigations. The Postal Service maintains internal, centralized management while investigations are conducted by independent contractors retained by the Postal Service. The Postal Service will continue to seek additional outsourcing opportunities in 2005 and beyond.

IMPROVE THE COLLECTIVE BARGAINING INTEREST ARBITRATION PROCESS

Of particular importance in the performance-based culture initiatives in the Transformation Plan is the Postal Service's commitment to improve the Collective Bargaining Interest Arbitration Process. The Postal Service has met with representatives of the labor organizations to discuss mutually beneficial changes to that process. As a result, agreement was reached with labor unions to support modification of the current interest arbitration process. While such modification would require legislation, the Postal Service and the four major unions supported the recommendation that mediation be substituted for fact-finding within the steps of the current negotiations and dispute resolution process.

REDUCE WORKERS' COMPENSATION COSTS

Like all federal agencies and private sector employers, the Postal Service faces continually rising costs attributable to providing health care to employees who are injured on the job.

The Postal Service's agreement with First Health Corporation continues to be effective. In 2004 through association with First Health and its hospital and physician network, the Postal Service received more than $2.3 million in gain share payments, and avoided more than $74 million in medical payments. The First Health contract is at no cost to the Postal Service. First Health buys the incoming injury compensation medical bills if they are from providers within their network. First Health submits the medical bills to the Department of Labor's Office of Workers' Compensation Programs (OWCP), which processes the bill and sends a check back to First Health according to the fee schedule. First Health then reimburses its provider according to established contract terms. The difference between the OWCP fee schedule and the First Health contract with the providers becomes the gain share amount. The gain share is then split according to the contract between the Postal Service and First Health. The larger savings has been the cost avoidance achieved by having a standardized process of the bills going to the OWCP. There is a much higher detection rate for redundant items when they go through First Health.

For the past two years the Postal Service and the OWCP have been cooperating to identify outplacement opportunities in the federal or private sector for injured Postal Service workers who have been rehabilitated. Because of operational changes at the Postal Service, the successful outplacement of employees with new employers is critical. Currently, 356 employees have been outplaced, have retired, or have received compensation reductions through the rehabilitation program.