The next Postmaster General, who will be appointed by the Board of Governors of the Postal Service, faces formidable challenges, the likes of which few CEOs or political appointees today must confront.
An iconic American institution, the Postal Service is fast approaching bankruptcy. Its revenues are contracting, its business model is widely acknowledged to be broken and there is uncertainty about its mission, or in postal speak, the universal service obligation.
Compounding this, Congress is avoiding dealing with major postal reform legislation like the plague but is ready to second guess and micro-manage a bevy of decisions by the Postmaster General and his or her lieutenants.
There are three steps that are essential for the next Postmaster General to take, with the strong support of the Board of Governors.
Define the core mission. What must the Postal Service do that is in the public interest? With the movement of much personal correspondence and bill paying to the Internet, the Postal Service remains important, but is less essential to America than decades ago.
Its core mission should include the delivery of mail, which accounts for approximately 70 percent of revenues. There will continue to be a lot of this, including safety notices from companies and legal notices from government agencies to every home and business in America. On the package side, delivering essential medications should be part of the mission.
Right-size the organization. Mail volume has been declining since the 2008 recession, largely due to the growth of the Internet. But package volume has also started to drop since the quarter ended June 30. The most important step to right-sizing is understanding costs and managing them accordingly.
On September 17, the Postal Service’s Office of Inspector General issued a report, Costing Best Practices, which called on the Postal Service to modernize its costing system. The report largely reiterates findings from a major 2014 report urging the Postal Service to transform its costing methodology and replace “the current system with a modern, bottom-up costing and revenue analysis system.” As the Postal Service did not have a quorum on its Board from 2014 until two months ago, the earlier report could not be implemented.
Ring the Alarm Bell. The U.S. Postal Service is on track to lose approximately $9 billion this fiscal year. It has huge, unfunded liabilities of more than $140 billion. The next Postmaster General must make clear the seriousness of these problems, that holistic changes must be made, and even be willing to hold Congress’s feet to the fire to push postal reform.
The next Postmaster General will also benefit substantially from the counsel of outgoing Postmaster General Megan Brennan, who announced her retirement yesterday, effective January 31, 2020. Indeed, the public owes Ms. Brennan an enormous debt of gratitude for her service since 2014, which has been during one of the most challenging and difficult operational periods in the Postal Service’s history. She has been a true public servant and under her leadership the Postal Service has continued to bind the nation together.
About the Author: Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia.
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