How will Pat Donahoe Change the Postal Service?

A new Postmaster General can reflect either a change in business strategy and operating processes or just a change in tone.   With less than a week in office, Pat Donahoe clearly has created a change in tone.  Whether he changes more than the tone and presentation of continuing policies or makes real changes in the direction of the Postal Service set by Jack Potter remains to be seen.

The place where Pat Donahoe's mark is most clearly seen is in the new structure of Postal Management.   In particular, the new structure makes the follow statements about the future of the Postal Service:

• Strategic planning appears to have been split.   Financial issues are placed within the Finance Department under the VP of Finance and Planning.   Public Policy Issues are placed within the realm of Government Relations and Public Policy.    These two departments are going to have to work closely together as many of the policy issues and expected proposals to change postal law focus on changes designed to ensure the financial viability of the Postal Service.  
  
• The Postal Service organization of its marketing operation appears to recognize that it serves two different markets: retail (i.e. customers who send less than 500 pieces at a time) and wholesale (i.e. customers who send more than 500 pieces at a time).    What is unclear is whether the marketing department has the authority to focus the attention of operations management on making operating changes that reduce operating costs to the extent that regulated or unregulated prices can ensure margins that promote postal self sufficiency.  
  
• The Postal Service has placed greater attention on both customer communications and the presentation of its public policy positions.  Susan LaChance's new mandate should give the Postal Service's customers, and in particular its larger customers, a headquarters contact that can cut through the bureaucracy in dealing with service and other complaints.  
  
• Management at all levels faces continuing downsizing.   The new management structure reduces the number of officers, the number of areas by one and eliminates 10 districts.  The elimination of one area comes about a year after another consolidation in the Northeast.  The elimination of districts represents an initial effort to consolidate management at that level.   Postal Reporter has noted that the Postal Service is planning to use VERA and RIF rules to handle the reduction of 7,500 postal management employees that these reductions will require.  
  
  The announcement that RIF rules will be used suggests that the Postal Service may have shifted its strategy for reducing its workforce and will no longer primarily use attrition as a means to reduce the workforce.    The announcement of cut of an area  and 10 districts most likely represents only the first wave of reductions in postal management.    Given that financial challenges will likely remain beyond this fiscal year, additional reductions are likely in fiscal year 2012 and beyond.

Pat Donahoe's mark is less clear in other areas as many of the current legal, financial, marketing, and operating actions of the Postal Service were in place well before he was selected.  The most visible of these actions are the appeal of the Postal Regulatory Commission's recommendation on the exigent rate case, the negotiation of a new contact with the American Postal Workers Union, and the recent acceleration of plant consolidation studies.  Watching how he handles these two areas may provide guidance as to how he plans to change the Postal Service's efforts to modify current postal law and regulatory policy and manage postal operations.