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1. Using Galbraith’s Star model, write a few sentences describing strategy, structure, processes, rewards and people at the USPS. Draw on the study report as well as any other information and you can gather.

 

2. What kind of departmentalization currently exists in the USPS?

 

3.  What part did the USPS departmentalization play in the result s of the 2003 study? Was the departmentalization appropriate and aligned with the USPS mission?

 

4. What culture types do you think characterize the USPS?

 

5. Do you believe the culture at the USPS was aligned with its mission at the time of the report?

 

6. What do you think of the report’s four recommendations- are they primarily structures or cultured?

 

7. How effective do you believe the recommendations will be if implemented successfully?

 

1

United States Postal Service
Management Structure Study

July 8, 2003

Submitted to:

President’s Commission on the
United States Postal Service

President’s Commission on the United States Postal Service
Management Structure Study

a) Table of Contents

Page 2

Section Page Number
a) Table of Contents 2
b) Executive Summary 3
c) Assignment Objectives and Background 5
d) Research Methodology 7
e) Study Findings and Best Practices 9
f) Management Structure Design Criteria 17
g) Recommendations 19
h) Appendices 28

a. Glossary of Terms
b. Interview Guide
c. Focus Group Guide

President’s Commission on the United States Postal Service
Management Structure Study

b) Executive Summary

Page 3

Executive Summary

In the nearly two years since we designated the Service’s transformation efforts and
long-term outlook as a high-risk area, it has experienced financial difficulties and
struggled to fulfill its mission of providing high-quality universal service while remaining
self-supporting… One of the key challenges of the Service’s transformation will be
realigning its infrastructure and workforce to support its business model for the 21st
century.

Major Management Challenges and Program Risks (GAO Report, January 2003)

Unisys/Watson Wyatt is pleased to submit our study of the management structure of the
United States Postal Service (USPS). Highlights of our findings include:

 The fundamental management structure of the USPS – consisting of
Headquarters, Functional Staff, and Operations – is appropriate for an
organization that is committed to operational excellence. The mission of the
USPS is to deliver standard, regulated offerings on a massive scale in a manner
that is dependable, consistent, and cost effective. Some opportunity exists for
rebalancing tasks between the staff groups and the operating organization;
however, this is not a major impediment to managing the organization.

 The current management structure is appropriately lean, although there is a
real opportunity to continue to rationalize the network. Few levels separate
the front-line manager and the top USPS executive. This leanness is consistent
with contemporary best practice that suggests flattening the organization to
minimize bureaucratic decision-making and thereby enhance responsiveness and
flexibility.

 Roles are generally clear. Managers understand what they are to do and the
results they are expected to produce.

 Good line of sight exists. Managers understand the organization’s objectives and
how they align with it.

 Information is shared across management levels and boundaries. The ability
to integrate information in ways that enhance implementation is a major design
principle for an organization driven to achieve by operational excellence. For the
most part, information moves within the USPS based on well-established
relationships and clear roles.

We believe the USPS should preserve and, in some cases, continue to build upon these
and other existing strengths that characterize the organization’s existing management
structure.

President’s Commission on the United States Postal Service
Management Structure Study

b) Executive Summary

Page 4

Notwithstanding the organization’s strengths that are identified in our findings, in this
report we present four specific recommendations for improvement that could enhance
effectiveness and efficiency:

 Recommendation #1 – Accelerate Rationalization of the Network – matches the
organization structure to demand, enabling a continuing reduction in the number
of managers as appropriate.

 Recommendation #2 – Provide Increased Decision-Making Role for Operations

Managers – recognizes the benefits of the current management structure while
recommending a greater voice for the Area-VP role as strategy advisor and
sounding board, possibly through the creation of an Operating Council.

 Recommendation #3 – Improve Headquarters and Area Staff Coordination and

Integration with Operations – presents ideas for ensuring that necessary
coordination and shared service activities are delivered effectively, enabling a
potential reduction in duplicative staff roles.

 Recommendation #4 – Adopt a Consistent Performance Cluster Model –

establishes the District Manager as a single point of accountability for
Performance Clusters and clarifies the MPOO/POOM role and support
requirements.

President’s Commission on the United States Postal Service
Management Structure Study

c) Assignment Objectives and Background

Page 5

Assignment Objectives

Unisys/Watson Wyatt was retained by the President’s Commission on the United States
Postal Service (the Commission) in June 2003 to independently study and evaluate the
management structure of the United States Postal Service (USPS) and assess whether the
existing structure can be redesigned to facilitate more effective and efficient
organizational performance.

The key questions addressed in our research and analysis include:

 Will the current management structure enable the USPS, over the next three to five

years, to achieve the mission, vision, strategic objectives, and business imperatives
outlined in its Transformation Plan issued in April 2002? What structural changes, if
any, should be explored further? (We recognize that the USPS is considering
alternative models. Our review of the existing management structure is not based on
any of these models.)

 Moving forward, what should be the key drivers or criteria of the USPS’s
management structure design?

 Does the existing organization structure contain the appropriate number of
management levels given the organization’s size, geographic spread, scope and
diversity of services, day-to-day operational imperatives, and culture?

 Are spans of control set to levels appropriate for successful achievement of both
strategic and operational objectives?

 Does the USPS’s current management structure (i.e., number of management levels,
spans of control, accountability, levels of authority) promote the most effective
decision-making possible?

 What, if any, other barriers are currently operating that adversely impact effective and
efficient organizational performance?

This report addresses the above questions. We present the research methodology
employed, the results of our analysis, and a series of recommended modifications to the
existing management structure, supported by available published “best practice” data.

Given the short timeframe available to conduct the evaluation, this report represents a
high-level assessment and theoretical examination of fundamental improvements that
could be achieved through potential restructuring changes to the existing management
structure as of June 2003. Please note that Unisys/Watson Wyatt were not requested to
incorporate benchmark management structure data or develop implementation plans for
the recommendations put forth in this report.

President’s Commission on the United States Postal Service
Management Structure Study
c) Assignment Objectives and Background

Page 6

Background

Executive Order No. 13278 established the President’s Commission on the United States
Postal Service (the Commission) for the purpose of examining the state of the United
States Postal Service, and preparing and submitting a report articulating a proposed
vision for the future of the USPS.

In early June 2003, the Commission sought specialized assistance from Unisys/Watson
Wyatt in examining and assessing the existing management structure in order to identify
possible areas of opportunity to improve the USPS’s productivity, reduce costs, enhance
customer service, and—overall—more effectively support the mission of the USPS.

In order to facilitate the rapid development of an objective, independent assessment by
Unisys/Watson Wyatt, the USPS was requested to provide immediate, unencumbered
access to various executives and managers who would be representative of the key levels
of its management structure and geographic service areas.

President’s Commission on the United States Postal Service
Management Structure Study

d) Research Methodology

Page 7

Research Methodology

Because of the compressed, three-week timeline for collecting information, conducting
analysis, and developing recommendations, our research was limited to gathering
qualitative data through a series of interviews and focus groups conducted at the USPS
Headquarters and across a representative sampling of geographic Areas (Northeast, East,
Great Lakes, and West) and Performance Clusters within those Areas. Approximately 80
executives and managers were randomly selected for in-person and teleconference
interviews or focus groups representing key levels of the management structure under
study, including:

 COO
 Area Vice President (A-VP)
 District Manager
 Plant Manager
 Manager of Post Office Operations (MPOO/POOM)
 Postmaster

(See Appendix A—Glossary of Terms for a description of each of these roles.)

Additional information was gathered through an interview with the Senior Vice President
of Human Resources as well as data collection sessions with Field Support, Strategic
Planning, and an Area Staff Representative. Finally, we conducted a number of on-site
visits to the Postal Services Headquarters, Area Headquarters (East, Northeast, Great
Lakes), Plants (Northern Virginia, Philadelphia), and five post offices (Northern Virginia,
Great Lakes) to gain a perspective on the role the management structure plays in day-to-
day operations of the larger enterprise.

Unisys/Watson Wyatt initially interviewed Pat Donohoe, COO, at the Postal Service
Headquarters in Washington, D.C. to discuss the current management structure and allow
Mr. Donohoe to share his thoughts on any barriers and facilitators inherent in the existing
structure. We also used this time to obtain an understanding of the organizational
challenges currently being faced within the context of the Transformation Plan.

Subsequently, between June 12th and June 20th, we conducted a series of on-site and
teleconference interviews and focus groups across the various geographies and
management levels mentioned above. Interviews typically ran one hour, while focus
group sessions ran from 60 minutes to two hours and included, on average, eight
employees. In all, we conducted 12 interviews and 10 focus groups. Topics centered on
the USPS’s strategic objectives and management structure (including such areas as spans
of control, management level, job scope and responsibilities), role clarity, levels of
authority, decision-making, and communication. (See Appendices B and C for a copy of
the interview and focus group guides.)

President’s Commission on the United States Postal Service
Management Structure Study
d) Research Methodology

Page 8

Interviewees and focus group participants were candid and forthcoming on issues such as
productivity, customer service, management structure, and the challenges arising from
the existing framework of legal constraints and union agreements. Our data collection
concluded with a follow-up teleconference with Mr. Donohoe to share preliminary
findings and gain additional insight into the data collected.

Simultaneous to our qualitative data collection exercise, we reviewed available published
management and organization behavior research literature and gathered relevant “best
practice” information on issues related to management structure. This best practice
information, combined with our qualitative data and subject matter expertise, served as
the foundation for our analysis and assessment of the USPS’s existing management
structure.

We identified key performance drivers and critical management structure design criteria
in the context of the organization’s mission, vision, and strategic objectives as laid out in
the Transformation Plan. We applied the structural design evaluation criteria to the
existing management structure and identified specific areas of opportunity we believe
could help the USPS achieve its mandate over the next three to five years.

President’s Commission on the United States Postal Service
Management Structure Study

e) Study Findings and Best Practices

Page 9

Discussion of Study Findings

Because of its mission, governance structure, scale of operations, geographic scope, and
history, the USPS is a unique organization operating under unique constraints (including
labor contracts, legal limitations, etc.). Consequently, there are no “true” comparator
organizations that can serve as a valid, comprehensive benchmark source. The USPS is
distinctive, in part, due to its multiple stakeholders: Congress, U.S. taxpayers, mass
mailers. The USPS must reconcile the often conflicting demands of these groups to
deliver on its mission. The management structure of the USPS must both address the
needs of these varying constituents and manage to its overall goals and objectives ─
providing universal access at the lowest possible price.

Although the USPS has evolved over recent years (e.g., the relatively recent effort to
enhance the “people management” skills of its managers), it nevertheless largely remains
structured as a command-and-control organization. We acknowledge the strength of
centralized decision-making in driving standardization and consistency in order to
maximize operating efficiency for such a vast organization.

Included below are our key findings:

Finding: USPS Management Structure Basically Sound

From our perspective, the current management structure has been designed to focus on
setting the strategic direction, managing daily operations, and providing requisite internal
support. The Headquarters staff bears primary responsibility for determining the strategy
and providing organizational oversight. Operations are primarily consolidated under the
Chief Operating Officer (COO), with the exception being the myriad program directives
run through both Headquarters and Area staff functions in various combinations.

Individuals across all management levels highlighted several critical factors unrelated to
management structure that will be key in determining the organization effectiveness of
the USPS, such as labor agreements and legal constraints.

President’s Commission on the United States Postal Service
Management Structure Study
e) Study Findings and Best Practices

Page 10

This organization chart represents our understanding of current managerial relationships:

Management fundamentally follows a command and control structure with significant
policy and operational decisions made at Headquarters. The “Field” (all organizational
components outside of Headquarters) is charged with implementation, but is managed
within relatively narrow constraints. In essence, Headquarters controls the “what,” and
the Field controls the “how.” All operations (i.e., the collection, processing, and delivery
of mail) are accountable to and managed by the COO, which ensures unified management
responsibility. Descending the levels of the management structure below the COO, the
organization is organized geographically in ever-smaller units.

The Area Vice President (A-VP) position serves as the critical control point for quickly
and consistently disseminating organizational directives into nine geographic entities.
Management levels within each Area are also organized on a geographic basis. The
impact of this design is to maximize operational consistency and achieve economies of
scale.

Office of the
Postmaster

General

COO CFO SVP
HR

CMO

Operations Area VP

District
Manager

District
Manager

Plant
Manager

Area

Staff

MPOO Plant
Manager

MPOO Staff

Postmaster Postmaster

Staff Staff Staff

Staff

PERFORMANCE CLUSTERS

STRATEGY and SUPPORT OPERATIONS

Etc.

Etc.

President’s Commission on the United States Postal Service
Management Structure Study
e) Study Findings and Best Practices

Page 11

In our review, we found a number of organization design “best practices” evident to some
degree within the USPS management structure including:

Best Practices USPS Examples
Delayering of the organization
levels

Elimination of some levels and roles
in recent years

Clarity among managerial roles
New performance measurement
system that is beginning to cascade
through the management structure

Matrix relationships to handle
growing organizational complexity

Interface among Headquarters and
Area functional staff

Integration of accountability of
processing and retail responsibility
further down in the organization

Creation of “lead” role in some
Performance Clusters

Given the magnitude and importance of operations to the USPS, it appears that the
“operations side” of the organization may be under-represented in the development of
key strategies and new programs.

The “processing” and “customer service” sides of operations are integrated at the
Performance Cluster level. However, there are at least two operating models at this level
that provide for this integration inconsistently:

Lead Model
Typically the District Manager fills the
lead role and is held accountable for all
aspects of the cluster performance and
management. Occasionally, the Plant
Manager fills this role.

Partnership Model
The District Manager and Plant Manager
partner as peers in managing all aspects
of customer service and operations
respectively. Under this model, there is
no single point of accountability for a
Performance Cluster.

President’s Commission on the United States Postal Service
Management Structure Study
e) Study Findings and Best Practices

Page 12

We should really take
the time to work out the
kinks out of the
programs first. Don’t
worry about being first.
Worry about being
accurate.

USPS Study Participant

Each POOM oversees anywhere
from 75 to 125 post offices. There
are Executive POOMs and about 20
non-executive POOMs in the Region.
Many operate with no staff. POOMs
are kept very busy, always on the go.
This is a significant job, with many
day-to-day fires to be put out in
addition to the administrative
component and keeping the
postmasters aligned around the
strategy.

USPS Study Participant

Finding: MPOO/POOM Lacks Clarity and Consistency

The MPOO/POOM role is important for program
and resource coordination and integration. It is the
first level of response when issues are escalated
from the front line (post office level). However,
our review found that the role is an area identified
as needing study and improvement.

For example:

 Deployment of the role within the
organization is inconsistent – in an
organization characterized by standardized
approaches, the MPOO/POOM role is an
exception to the norm. Difference is not necessarily bad, but the feedback we
collected suggests there is lack of clarity in the organization as to what defines the
role and what outcomes it is expected to produce.

 Span of control for some of the MPOO/POOM positions is high compared to best
practice standards.

 Exacerbating the large spans of control are the varying levels of support provided
to the position, ranging from an adequate level to no support.

Finding: Alignment Opportunities – Communication and Directives from
Staff Functions Cause Confusion

The clean “command and control” management approach of the USPS cascades strategy
and goals from the top into the organization to lower management levels for
implementation. However, Postmasters frequently receive
conflicting, duplicative, or competing directives from staff
functions in Headquarters and Areas. This causes confusion
and negates the effectiveness and efficiencies required of an
operational effectiveness model. To minimize the drag caused
by this inefficiency, staff groups need to clearly align their
initiatives and programs with overall organization strategies
and ensure that requests and requirements placed on operating
units are coordinated and vetted for impact prior to launch. In
some cases, a staff function that exists at both Headquarters
and in Areas provide different messages, suggesting a need for
better coordination within the functions.

President’s Commission on the United States Postal Service
Management Structure Study
e) Study Findings and Best Practices

Page 13

We have reduced the
employee population
by roughly 60,000 over
the past few years. I
believe a great line of
sight exists from
Headquarters down
through the Areas and
Districts.

USPS Study Participant

Finding: USPS Has Clear Line of Sight

The drivers of operational excellence for an organization like the USPS are uniformity
and consistency, repeatable streamlined processes, rapid information transfer, cost
efficiencies, and the capacity to execute. To manage an organization in light of these
drivers, it is critical to establish and maintain clear “line of sight” – meaning that all
employees understand the organization’s objectives, their individual roles and
responsibilities, and how they are performing against them.

The existing management structure consists of Headquarters,
functional staff, and operations. This approach is uniformly
applied across a huge organization allowing for consistent
messages about strategy, performance expectations, and
tactics. As these messages are communicated and reinforced,
they produce a clear line of sight across all levels of
management from individual postmasters to the Postmaster
General. We found a striking similarity in the understanding
of organizational challenges and potential solutions to address
these issues among managers and executives across various
levels and geographies. General themes we uncovered
include:

 Management structure is not the issue.
 People management is the bigger challenge (labor issues, etc.).
 There is a need for better alignment between corporate staff functions and Area

representatives.
 Most managers feel they have appropriate autonomy in decision-making.

In our experience, it is rare to find an organization of such size that has achieved this
degree of consensus across differing management layers.

Furthermore, our research indicates the crucial role that line of sight can play in an
organization’s success. The findings of Watson Wyatt’s WorkUSA® 2002 study show
organizations that achieve superior line of sight have Total Return to Shareholder levels
that are four times higher than those of organizations with poor line of sight. (Total
Return to Shareholder may be viewed as a proxy measure of economic value generation,
which in turn reflects operating effectiveness and efficiency.)

Watson Wyatt WorkUSA® 2002

President’s Commission on the United States Postal Service
Management Structure Study
e) Study Findings and Best Practices

Page 14

Finding: USPS Management Has a Lean Structure

Given the size of the USPS organization, we
found the management structure to be
extremely lean. There are few levels of
management overall and the number of
managers as a percentage of total USPS
employment is similar to other production-
driven organizations, such as light
manufacturing and warehousing operations.

The USPS deserves credit for the actions it
has taken in this regard. As noted in the
USPS 2001 Annual Report: “We
restructured our organization to bring more
focus to priorities and the core business.
Changes in our headquarters and field
organization are enabling us to better serve
the American people by establishing a leaner
management structure.”

We knew we had to take some strong
steps. We did. They included
sweeping organizational changes
that started at the top when we
reduced the number of officers by 20
percent. We eliminated 800
Headquarters positions. We
realigned our field management
structure, eliminating 20 percent of
our Area offices.

Postmaster General John Potter
testimony to Senate Subcommittee,
September 27, 2002.

The senior management spans of control (A-VP and below) appear to be in line with best
practices (see Span of Control Data following). However, within the Performance
Clusters, we found the span of control to exceed best practice ranges.

Overall, the current management structure is similar to organizations with well-defined
missions, large employee populations, and geographically-dispersed operations, such as
airlines and military organizations. The current five-level organizational hierarchy
appears in line with organizational best practice in large organizations where five levels
typically separate the senior executive and first-level manager.

Though lean, the USPS’s consistently applied management structure supports and
enables the organization to maintain a focus on its key mission and objectives.

President’s Commission on the United States Postal Service
Management Structure Study
e) Study Findings and Best Practices

Page 15

We feel we are getting to
the outer limits with
regards to spans of
control. We need to
balance consolidation
with spans of control.
We could be getting
close to “cutting to the
bone.”

USPS Study Participant

Finding: Span of Control is Generally Consistent with Best Practice

Our review of USPS’s data indicates that span of control at
the USPS is consistent with accepted best practice trends.
However at certain levels (e.g., MPOO/POOM), there are
some variances from best practices.

Research from the Bureau of Labor Statistics supports the
delayering trend, indicating an increase in the spans of
control for front-line supervisors. For example, since 1989,
spans of control have increased by 21 percent for
supervisors within the light manufacturing and consumer
products industries.

Following is a span of control overview at the USPS derived from data provided by the
organization and our interviews and focus groups:

COO has 11 direct reports (8 Area VPs plus 1 Cap Metro, 1 SVP operations, 1 VP Labor
Relations)

8 Area Vice Presidents plus 1 Capitol Metro Area head

 Average 90,000 employees per Area
 Average 150 Area support staff
 Average 9 Districts per Area
 Direct Reports include 9 district managers plus senior Area support staff (about 8

executives per Area) = about 15 direct reports

85 District Managers

 Average 8,500 employees per District
 Average 4-5 MPOOs per District
 Direct reports typically include 4–5 MPOO/POOMs, possibly 1–3 Plant

Managers, Postmasters for large cities in the District, and district support staff =
about 10 direct reports

President’s Commission on the United States Postal Service
Management Structure Study
e) Study Findings and Best Practices

Page 16

377 Manager, Post Office Operations (MPOO/POOM)
 Average 1,900 employees in post offices overseen by MPOO/POOM
 Directly oversee an average of 70–100 post offices, excluding any large city post

offices that report to District Manager
 Some MPOO/POOMs have secretarial support
 Some MPOO/POOMs behave as if local post offices report to them, some District

Managers insist Postmasters report to the District Manager; varied approaches
results in direct reports ranging from 0 to 100 depending on Performance Cluster

27,621 Postmasters

 Widely divergent role from 0 to 2,000 employees; average = 26

Span of Control Trends

If companies reduce the number of management layers and spans of control excessively, they risk
eliminating valuable leadership development positions and future leaders. Alternatively, if
companies do not eliminate excessive management layers, they may lack efficiency and flexibility
to deal with external market changes.

Trend #1: Executives and directors comprise less than three percent of the total employee
population at all companies.

Trend #2: Profiled companies are reducing the layers of management and will continue to do so
in the near future.

Trend #3: Managers are responsible for managing a greater number of direct reports.
Corporate Leadership Council. Management Layers and Span of Control. Washington: Corporate Executive Board (June 2002).

A 1995 Conference Board survey determined that the downsizing of middle management caused
managerial spans of control to increase from six in 1990 to an average of nine or more in 1995.
Additionally, research from the Bureau of Labor Statistics determined that the average span of
control moved from 9.52 in 1989 to 11.6 in 1998.
Corporate Leadership Council. Management Determining Effective Spans of Control. Washington: Corporate Executive Board
(October 2001).

President’s Commission on the United States Postal Service
Management Structure Study

f) Management Structure Design Criteria

Page 17

In the “old days,”
Postmasters had
more accountability
/authority. Now we
feel like we are being
micromanaged. We
can’t hire an
additional person-
now. It’s up to the A-
VP who may not have
personal knowledge
of the situation (e.g.,
long-term leave). We
can’t move people.
This makes it difficult
to develop people.

USPS Study Participant

Management Structure Design Criteria

Criteria for examining organization design and management structure include, first and
foremost, that the structure should enable accomplishment of strategies and goals – form
follows function. Next, the design should take advantage of best practices, including
those that facilitate good governance. Specific organization design principles addressing
areas such as role clarity, decision-making and accountability, staff performance,
knowledge sharing, and career progression paths are also relevant concerns.

We believe the principle of “flexible standardization” should underpin the optimal design
criteria for application to the USPS so the organization can become more nimble as it
moves toward implementing the Transformation Plan. Ideally, autonomy should be
pushed as close to the customer level as is practical, while preserving the centralized
control necessary to assure the level of standardization and consistency required to
maximize efficiency.

By “flexible standardization” we mean a management approach that is as consistent as
possible across the country yet allows flexibility at the A-VP level through MPOO /
POOM level. For example, we believe a review of specific responsibilities at the A-VP
and District Manager levels, in conjunction with the metrics tracked by the new
performance measurement system, will identify some that can be “safely” delegated
downward. We believe such delegation will enable the management structure of the
USPS to quickly recognize and act upon opportunities for additional operating
effectiveness and efficiencies.

We have identified several management structure design
criteria for the USPS. These criteria have been derived from
our review of the USPS Transformation Plan, our
understanding of the organization’s mission and strategic
objectives, our preliminary assessment of the current state
management structure, and a review of prevailing best
practices that could be appropriate for an organization of this
scale. These criteria should serve as a framework for the USPS
to achieve organizational effectiveness.

Suggested management structure design criteria for the USPS
include:

 Strategic and tactical flexibility to enable rapid and
effective response to changes in the organization’s
mission and accommodate fluctuations in day-to-day
operations

 Empowered operations staff to continue to enhance the
consistent delivery of the customer experience in
accordance with predetermined, published standards

President’s Commission on the United States Postal Service
Management Structure Study
f) Management Structure Design Criteria

Page 18

 Maximizing operating efficiency through the continuing standardization of
processes and programs while allowing for appropriate differences driven by local
market requirements

 Active knowledge sharing to drive operating efficiency and ensure that internal
best practices are fully leveraged

 Defined career paths that logically provide exposure to customer service,
operations, and strategic or function support to improve talent development and
promote internal mobility so capable leaders can replace retirees

 Clear managerial accountability pushed as deeply as possible in the organization
to enhance customer service

Below we compare the design criteria to the existing management structure of the
organization:

DESIGN CRITERIA FOR USPS, THIS MEANS…

Strategic and tactical flexibility “Operations” playing a larger role in strategic decision-making

Empowered operations staff
Allow greater decision-making flexibility

for A-VPs, DMs, MPOO/POOMs, and
Postmasters

Maximizing operating efficiency Explore changes to certain roles and deployment (e.g., MPOO/POOM)

Active knowledge sharing Deploy more cross-functional teams and
leverage internal best practices

Defined career paths
Encourage more rotational opportunities

and specifically define paths between
“processing” and “retail” operations

Clear managerial accountability

Continue to push accountability and
decision-making further down into the

organization (e.g., DM freeing up A-VP
to concentrate on strategic issues)

President’s Commission on the United States Postal Service
Management Structure Study

g) Recommendations

Page 19

Recommendations

During the course of this study we uncovered several areas of opportunity with the
potential to enhance effectiveness and efficiency of the USPS management structure. We
found significant agreement across the organization that these are, in fact, the areas that
would benefit from closer examination and action.

In this section of the report, we present four specific recommendations that link to our
findings:

 Recommendation #1 – Accelerate Rationalization of the Network – matches the
organization structure to demand, enabling a continuing reduction in the number
of managers as appropriate.

 Recommendation #2 – Provide Increased Decision-Making Role for Operations
Managers – recognizes the benefits of the current management structure while
recommending a greater voice for the Area-VP role as strategy advisor and
sounding board, possibly through the creation of an Operating Council.

 Recommendation #3 – Improve Headquarters and Area Staff Coordination and
Integration with Operations – presents ideas for ensuring that necessary
coordination and shared service activities are delivered effectively, enabling a
potential reduction in duplicative staff roles.

 Recommendation #4 – Adopt a Consistent Performance Cluster Model –
establishes the District Manager as a single point of accountability for
Performance Clusters and clarifies the MPOO/POOM role and support
requirements.

President’s Commission on the United States Postal Service
Management Structure Study
g) Recommendations

Page 20

Recommendation #1 – Continue to Rationalize the Network

The organization recognizes and has been acting upon the need to rationalize its
comprehensive network of customer service and processing facilities in response to
shifting population demographics and changing volumes and types of mail. Many of the
executives and managers interviewed during the course of this study expressed hope that
this process will be accelerated, although they well recognize it is subject to factors far
outside the scope of this study (e.g., political influence).

Rationalization could include both a reduction of the absolute number of units into which
the organization is divided and a redefinition of the geographic boundaries of those units.
Thus, rationalization also means a possible reduction in the number of management
positions and the number of managers needed to staff them, and the redeployment of
managerial staff from shrinking to growing areas of need.

The clearest opportunities for continued rationalization appear to exist at three levels:

 The Performance Cluster (or District Level)
 The Post Office Level
 The Processing Plant Level

However, recognize that rationalization of the network at these levels could affect the
Area management structure as well. We believe it is important for the Areas to remain
reasonably balanced in size and geographic scope. Otherwise, the larger Areas could
come to dominate decision-making within Operations and override legitimate regional
operating differences.

Additionally, continued rationalization of the network could enable a reduction in the
number of Areas, although such a structural change would result in the displacement of
Area staff.

President’s Commission on the United States Postal Service
Management Structure Study
g) Recommendations

Page 21

Recommendation #2: Provide Increased Decision-Making Role for
Operations Managers

The vast majority of the organization’s activities and employees are concentrated within
the purview of the COO. This consolidation of activities within a unified management
structure enhances both control and accountability. However, given the magnitude of the
“operations” side of the USPS, such consolidation may inadvertently diminish the weight
of its voice at the top of the organization.

Without changing the existing A-VP reporting relationship, we would encourage an
expansion of their role in providing input to strategic decisions.

Many large organizations have established an Operating Council to ensure that senior
leadership effectively functions as a team bearing collective responsibility for the success
of the organization. In some respects, an Operating Council may be thought of as a de
facto Board of Directors for a business, a major business segment, or a specific function,
providing unified governance and applying collective experience to the review of
significant decisions. In other respects, an Operating Council may be considered an
extension of the business, segment, or function head, sharing responsibility for pursuing
various significant initiatives or implementing large-scale change.

Effective Operating Councils usually comprise all of the direct reports of the business
segment or function head, meet monthly, and share accountability for their collective
performance while continuing to bear responsibility for the performance of their
individual part of the organization. Of course, the business, segment, or function head
retains “51% of the vote” on critical issues even while striving to achieve consensus.

We believe the USPS could benefit from the establishment of a formal Operating Council
to ensure all key voices are integrated as the organization manages through the significant
changes that will arise as it pursues implementation of the Transformation Plan. If
established at the highest level of the organization, such an Operating Council would
most likely comprise the Postmaster General and all his direct reports. However, to
increase the strategic input provided by operations, it may benefit the USPS to include up
to three A-VPs on the Council. In keeping with best practices, A-VPs could rotate
through the Operating Council annually, thereby providing all Areas with direct
representation over a three-year period.

President’s Commission on the United States Postal Service
Management Structure Study
g) Recommendations

Page 22

No one in Area staff
functions has worked
in a post office for at
least fifteen years;
they don’t know what
it’s really like down
here today, so they
come up with all
these ideas that don’t
make any sense.

USPS Study Participant

Recommendation #3 – Improve Headquarters and Area Staff
Coordination and Integration with Operations

The USPS depends upon staff at multiple levels to work with
managers to collect and evaluate performance data, investigate
and propose potential process improvements, administer the
implementation of new programs, and engage in many other
activities that pertain to running the organization. The various
staff levels interface on a matrix basis, with each other and
with their respective management. This multi-tiered matrix
creates some degree of uncertainty and confusion that is
evident in the duplicate initiatives and competing requests for
information or action that flow through the management
structure. Postmasters in particular feel increasingly hard-
pressed to sift through and prioritize conflicting demands.
District Managers also believe they would benefit from greater
staff coordination.

We believe there is a significant opportunity to more clearly define staff responsibilities,
identify potential duplication, improve coordination and control over new initiatives,
and—ultimately—possibly reduce the number of support staff roles.

Michael Goold and Andrew Campbell, authors of Designing Effective Organizations:
How to Create Structured Networks, propose a method for considering organizational
structures. They suggest organizations use two types of tests to balance the “right
amount of hierarchy, control, and process – enough for the design to work smoothly but
not so much as to dampen initiative, flexibility, and networking.” Their Parenting
Advantage Test seems applicable to the USPS. Existing management structure is a
command and control structure, with a strong matrix overlay. We believe this test will
provide for better clarity for the Headquarters going forward.

This test involves defining the corporate-level or “parent” activities that add value to the
entire organization and, therefore, should be allocated to the corporate center (e.g.,
managing government relations, broadly maintaining key organizational capabilities) and
evaluating whether the design supports these propositions.

President’s Commission on the United States Postal Service
Management Structure Study
g) Recommendations

Page 23

Based on our initial observations, the “Current” column below represents Headquarters’
role in these best practice activities. Note that our organization design experience leads
us to conclude that all of these roles are vital to the USPS.

Role Best Practice Description Current Future

Broker

Creates value by acquiring
units/people for less than their
worth and discarding
activities for more than their
worth

Collaborator
Helps units expand size/scope
of activity by supporting
growth initiatives

Director

Helps units improve costs,
quality, or profitability by
setting stretch targets and
providing benchmarks

Liaison

Helps units work together in
ways that might otherwise be
difficult by setting incentives
or centralizing certain
activities

Proprietor Finds ways to exploit central
resources such as brands,
competencies, relationships or
patents across business units

Note: the degree of shading in each circle indicates the degree to which the role is being
performed or should be performed. The greater the shading, the greater the role should
be filled.

President’s Commission on the United States Postal Service
Management Structure Study
g) Recommendations

Page 24

Every MPOO in the
organization does things
differently. There is little
consistency about the role,
the kind of people who fill
that role, their skill set, or
even how they do what
they do.

I never get help from my
MPOO because he is
always tied up in telecons.
I bet he spends two days a
week feeding the
information monster, so he
can’t be out here working
with us.

I think the MPOO’s role is
to squeeze us. They never
provide guidance in how to
fix something; they only
point out problems that I
already know about.

USPS Study Participants

Recommendation #4 – Adopt a Consistent Performance Cluster Model

The USPS would benefit from more consistency within Performance Clusters, both with
respect to the overall management of the Performance Cluster and to the discharging of
the MPOO/POOM role.

As noted in the Findings section, some Performance Clusters are managed on a
collaborative basis wherein the District Manager and Plant Manager share responsibility.
In many others, one of these two roles serves as a “lead.” We believe the “lead” model is
superior because it represents a continuation of the unified management structure that
otherwise prevails across the organization. Establishing such a “lead” role ensures a
single point of accountability for each Performance Cluster. Furthermore, if decision-
making is to be pushed to lower levels of the management structure, such a single point
of accountability will be required to ensure effective control is preserved through the
alignment of autonomy and accountability.

We suggest that the ‘lead” role in a Performance Cluster
should generally be filled by the District Manager, who
bears responsibility for customer service. The
organization should, however, remain open to allowing
rare exceptions in cases where the local Plant Manager
as an individual has more relevant experience to serve as
“lead.” Nevertheless, we are aware that the Plant
Manager’s primary responsibility is to run processing as
effectively as possible to meet the customer needs
advocated by the District Manager. Thus, these
exceptions should be rare.

A second inconsistency with the Performance Cluster
level of the organization pertains to the MPOO/POOM
role. Even the differing names for this role—MPOO vs.
POOM—reflect this inconsistency. We believe
rectifying this inconsistency by clarifying the role and
standardizing key processes would enable
MPOO/POOMs to function more effectively. They
could more readily anticipate and meet the
organization’s expectations because their role would be
commonly understood. Also, they could more readily
leverage best practices.

The USPS could benefit from two other modifications to
the MPOO/POOM role that should be explored more
fully. (1) MPOO/POOMs generally confront a large
span of control, yet often lack any designated support.
Preliminary indications suggest that MPOO/POOMs

President’s Commission on the United States Postal Service
Management Structure Study
g) Recommendations

Page 25

with such support are able to dedicate more time to working with their assigned
Postmasters. We believe it would be worthwhile to explore this observation during the
course of clarifying the MPOO/POOM role. (2) Several District Managers have called
for the creation of a “senior” MPOO/POOM role in larger, more complex Performance
Clusters. This role would bear responsibility for addressing the needs of the most
significant post offices and major operating issues that arise within their assigned Area.
Another MPOO/POOM in the Performance Cluster could assume responsibility for the
functional interface with departments such as Finance and HR. This concept should also
be explored in greater depth when clarifying the MPOO/POOM role.

President’s Commission on the United States Postal Service
Management Structure Study
g) Recommendations

Page 26

We should be able to close post
offices through attrition –
consolidation efforts should result
in better service being provided;
flexibility is needed.

USPS Study Participant

Capitalize on Existing USPS Strengths

In addition to the above recommendations, we
have identified a number of operational strengths
that are facilitated by the existing USPS
management structure. These positive attributes
should be preserved and leveraged as any future
structural changes are implemented:

 Promoting a clear line of sight—The broad cross-section of executives and
managers interviewed for this study were found to be universally committed to
the USPS and the transformation effort and keenly aware of the significant
challenges faced by the organization. As discussed in the Findings section,
achieving a clear line of sight between each individual and the organization’s
strategic goals is critical to success. Otherwise, management would be working at
cross-purposes in pursuit of misaligned goals. The relatively flat management
structure currently in place has fostered tangible objectives, performance metrics,
and performance targets for each management role that visibly link to the USPS’s
objectives and provide a remarkably clear line of sight.

 Maintaining a lean management structure— As noted by the Corporate

Leadership Council (Determining Effective Spans of Control, October 2001), the
1990’s demonstrated a trend towards reorganizing corporate design and structure.
Companies started flattening or “delayering” to reduce the hierarchy within the
organization. They decreased the number of middle managers and increased
spans of control of remaining managers. Four primary reasons are cited for this
expansion:
 Maximizing cost efficiencies by eliminating unnecessary processes or

assets
 Leveraging the benefits of globalization
 Shortening the distance between executive decisions and line-level

execution
 Outsourcing production elements to third-party providers

Clearly some of these factors have influenced the USPS in moving toward a lean
organization.

 Defining job scope broadly—The streamlined organization structure with few

levels of management has enabled the scope of each management role to be
broadly defined and therefore offer challenge and flexibility to executives and
managers. The USPS has traditionally grown its leaders from within due to the
unique nature of the organization. The existing management structure has
allowed employees to move from less demanding to more complex positions as

President’s Commission on the United States Postal Service
Management Structure Study
g) Recommendations

Page 27

From a national systems
perspective, communication works
well—8 A-VPs meeting with
Donohoe, lots of input. They
discuss implementation issues and
then let our people know about it.
At local levels, the approaches are
diverse. With an organization this
large, it requires pressure to keep
things aligned through a chain or
line of command.

USPS Study Participant

their individual skills develop while remaining in the same type of role simply by
moving across geographies.

It is worth noting that the Transformation Plan observes: “The challenge to assure
continuity of leadership has never been more important than it is today.
Approximately 55 percent of Poster Service officers and senior executives and 36
percent of managers will become eligible to retire over the next five years.”

 Sharing information openly—The
streamlined organization structure also
promotes sharing information and
leveraging best practices because large
groups of managers occupy the same
role, confronting similar challenges
while striving to perform well against
identical metrics. Managers are able to
exchange relevant information and best
practices because they understand the
role they share with their peers.
Promoting such free transit of
information is essential because there are
no true comparators to the USPS that
could serve as ready sources of best practices.

 Fostering internal competition—Despite the open flow of information described

above, the geographic basis of the management structure enables the USPS to
promote internal competitiveness against NPR metrics and thereby drive USPS
performance. Because so many individuals occupy the same role measured by the
same metrics, their performance can be readily arrayed for periodic comparison.
As we heard often during our interviews, “No one wants to be last.”

********

In conclusion, Unisys/Watson Wyatt believes that the overall management structure is
appropriate with some areas of opportunity. The four recommendations put forth in this
report, with proper implementation and oversight, can enhance the overall operating
effectiveness and efficiency of the USPS. We respectfully urge the USPS to more
closely examine the merits and viability of these recommendations.

h) Appendices

Page 28

President’s Commission on the United States Postal Service
Management Structure Study

Appendix A – Glossary of Terms

Area, Area Vice President
(A-VP)

The USPS presently divides the country into eight Areas.
(A ninth, large geographical unit functions like an Area
and has been treated as such for purposes of this report.)
Each of the eight Areas is headed by an officer-level
Area Vice President who bears responsibility for postal
operations within that geographical area.

Best Practice Practices, programs, or policies, widely implemented by
successful organizations that are coping with similar
conditions and facing similar opportunities or challenges.
Best practices are a valuable source of insight, though not
a prescriptive decision-making guide.

Career Path A predetermined path through succeeding positions—
generally of increasing responsibility and authority—that
has been identified as a logical progression for the
development of employee skills and leadership ability.

Command and Control The philosophy underlying an organization structure that
is designed to reinforce the consistent, efficient execution
of strategic initiatives established at the very top of the
organization. Command and control organizations are
very hierarchical and tend to discourage the upward flow
of input on strategy. However, they excel at standardizing
processes across a broadly dispersed organization.

Chief Operating Officer
(COO)

The Chief Operating Officer (COO) of the USPS is
presently responsible for overseeing nationwide field
operations and Headquarters Operations and Labor
Relations departments. The COO reports directly to the
Postmaster General.

Drivers (e.g., of strategy,
organization design)

A driver represents a significant force that helps shape or
determine various aspects of an organization’s existence.
Drivers may represent material opportunities, challenges,
resource constraints, or other factors.

Bold words are defined elsewhere in the Glossary of Terms

h) Appendices

Page 29

President’s Commission on the United States Postal Service
Management Structure Study

District, District Manager The USPS presently divides each postal Area into a

number of Districts. Presently there are 85 Districts
nationwide, each headed by a District Manager who
reports to the respective A-VP. District Managers are
responsible for overseeing operations for all post offices
within their District. (Please see Performance Cluster
for additional information.)

Focus Group To facilitate information gathering, a Focus Group may
be convened whereby several individuals who typically
occupy the same role within an organization are brought
together and asked certain questions. Often, the group
will amplify what a single individual may say and
thereby provide more detailed insight and understanding.

Job Responsibilities and
Scope

Jobs—or roles—are established to help an organization
complete certain activities or tasks. Job responsibilities
define those tasks and desired outcomes, whereas job
scope delineates the outer limit of those responsibilities.

Line of Sight Employees typically ask three questions: (1) What is the
organization trying to accomplish? (2) What am I
expected to do that contributes to achieving the overall
objectives? (3) How will I be rewarded? Line of sight
refers to the degree to which the answers to these three
questions are linked. In organizations with a strong line
of sight, employees clearly understand how their own
activities support the organization’s goals, and how
actual results will determine their individual rewards.

Matrix A matrix is a set of relationships across an organization,
wherein an individual employee reports to more than one
manager. Some degree of conflict is inherent in a matrix
organization structure.

MPOO (Manager, Post
Office Operations)

Reporting to each District Manager is a small number of
Managers, Post Office Operations. These MPOOs, also
known as POOMs in some sectors of the USPS, oversee
an average of seventy post offices within their respective
districts.

h) Appendices

Page 30

President’s Commission on the United States Postal Service
Management Structure Study

Organization Design
Criteria

Organization design criteria represent an organization’s
ideal characteristics and are developed in response to the
various drivers that have shaped that organization. The
optimal organization design best promotes the realization
of those ideal characteristics.

Performance Cluster The USPS presently divides each Area into a number of
geographically-defined Districts that are also known as
Performance Clusters. For all intents and purposes,
Districts and Performance Clusters represent the same
geographic boundaries, operating facilities, and staff.

POOM See MPOO

Postmaster Perhaps the most familiar management role within the

USPS to the general public, the Postmaster is responsible
for all aspects of the daily operation of a specific postal
facility. The role varies widely in scope, ranging from
small offices where the Postmaster may be the only
regular employee to large city offices where the
Postmaster may manage a very large staff and even
oversee small post offices nearby. Large city
Postmasters may report directly to a District Manager
rather than an MPOO/POOM.

Span of Control Span of Control indicates the number of individuals that
report to a specific manager.

h) Appendices

Page 31

President’s Commission on the United States Postal Service
Management Structure Study

Appendix B – Interview Guide

United States Postal Service
Interview Guide

June 2003

Thank you for meeting with me as we review the USPS management structure in support
of the President’s Commission on the United States Postal Service. Your own responses
to the following questions will remain confidential, although the responses from all
interviewees will be synthesized and integrated into our report findings.

Strategic Direction

1. As an organization, what is the USPS trying to achieve? What will be the key

organizational drivers over the next three-to-five years?

2. What are the barriers/challenges that may be hindering the performance of the

organization?

3. What are the greatest risks that need to be mitigated?

4. What are the internal implications of these challenges and risks?

5. What strengths does the current organization bring toward meeting these future

challenges?

Organization Structure

6. Do you feel the organization is structured effectively to drive the USPS mission and

vision? Why or why not?

7. How are key decisions made within the organization (i.e., how well are decision-

making and autonomy aligned?)

8. Are there informal ways that work gets accomplished within the organization?

9. How does the physical structure (e.g., geographic spread) affect how things are done?

h) Appendices

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President’s Commission on the United States Postal Service
Management Structure Study

Roles

10. Tell me about your current role and responsibilities.

11. What does your role specifically provide to the level above it and the level below it in

the organization (e.g., content expertise, decision-making support)?

12. How do you interact with your peers who occupy the same role (e.g., role

interdependency)?

13. Do you interact with other managerial roles across boundaries? If so, how?

14. In your opinion, is there role clarity across the organization?

Culture

15. What workplace behaviors are promoted and reinforced?

16. How effective is communication upwards, downwards, and across the organization?

Close

15. Is there anything else you would like to add regarding the USPS management
structure?

h) Appendices

Page 33

President’s Commission on the United States Postal Service
Management Structure Study

Appendix C – Focus Group Guide

United States Postal Service
Focus Group Guide

June 2003

Thank you for meeting with me as we review the USPS management structure in support
of the President’s Commission on the United States Postal Service. We have brought you
together to solicit your views on various aspects of structure. We would like everyone to
participate in the discussion, recognizing there are no “right” or “wrong” answers. We
also ask that you keep each other’s opinions confidential—what’s shared in this room
stays in this room.

I will be taking notes during our discussion, but we will not attribute any comments to
specific individuals. The notes from today will be combined with input from others in
the organization and integrated into our report findings.

Before we begin, please let me know how long you have been with the USPS.

Strategic Direction

1. As an organization, what is the USPS trying to achieve?

2. What are the barriers/challenges that may be hindering the performance of the

organization?

3. What are the internal implications of these challenges and risks?

Organization Structure

4. Do you feel the organization is structured effectively to drive the USPS mission and

vision? Why or why not?

5. How are key decisions made within the organization (i.e., how well are decision-

making and autonomy aligned)?

6. Are there informal ways that work gets accomplished within the organization?

7. How does the physical structure (e.g., geographic spread) affect how things are done?

h) Appendices

Page 34

President’s Commission on the United States Postal Service
Management Structure Study

Roles

8. Tell me about your current role and responsibilities.

9. What does your role specifically provide to the level above it and the level below it in

the organization (e.g., content expertise, decision-making support)?

10. How do you interact with your peers who occupy the same role (e.g., role

interdependency)?

11. Do you interact with other managerial roles across boundaries? If so, how?

12. In your opinion, is there clarity of roles across the organization?

Culture

13. What workplace behaviors are promoted and reinforced?

14. How effective is communication upwards, downwards, and across the organization?

Close

15. Is there anything else you would like to add regarding the USPS management

structure?