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Work in progress

December 4, 2013

An unprecedented fall in mail volumes has left many postal operators feeling expensively over-manned in recent years. The parcels business may be booming, but this often requires greater flexibility of people and processes due to different delivery models such as locker boxes and time-specific deliveries. At the same time, deregulation and competition are making it imperative to minimise costs.

Simultaneously juggling headcount reduction, cost-cutting initiatives and increasing flexibility presents major challenges in such a highly unionised and high-profile industry. There is a strong temptation to ‘race to the bottom’ by cutting pay, reducing employment rights and replacing salaried staff with casual workers on zero-hours contracts. But this can easily backfire if it results in bad publicity, a demoralised workforce and a compromised postal service.

So how can posts successfully keep all three balls in the air? A key element is the ability to align the workload with the workers.

“Workload volumes vary by week of the year, day of the week and hour of day, so scheduling and staffing flexibility are critical to efficient mail processing,” explains Douglas Tulino, vice president, labour relations at the US Postal Service (USPS).

“It’s a growing challenge as mail processing and transportation wrestle with changing windows of compressed activity, and as delivery wrestles with the evolving needs of two distinct product markets: mail and packages. All these changes will demand flexibility in staffing, greater use of part-time and non-career employees, and sensitivity to unit labour cost.”

Casual workers

The USPS has substantially increased the use of ‘non-career’ (i.e. casual) workers, who now account for around 16% of total hours worked. They are used particularly in processing centres to cover peaks of demand, and in delivery operations to cover for absence and to reduce overtime on days when mail volumes reach their peak.

In the Netherlands, PostNL has even more radical plans, and expects its workforce of the future to be roughly 30% full-time employees and 70% part-time contract workers. “We’re moving from a full-time organisation to a part-time one,” says PostNL’s group HR director, Roger Muys. “You could say we’re eliminating the traditional mailman.”

At SingPost in Singapore, a third of outdoor delivery staff are employed under the company’s Neighbourhood Postmen Scheme, first introduced in 1996.

“By offering flexible and shorter working hours, we successfully attracted part-time job seekers, especially housewives and retirees returning to the workforce,” says Woo Keng Leong, SingPost’s executive vice president and head of postal services.

The Neighbourhood Postmen Scheme has helped increase diversity in the workforce, which in turn helps to boost flexibility. For almost two decades, for example, SingPost has been actively re-hiring its retired employees. This simultaneously provides the organisation with access to a skilled and flexible workforce and enables retirees to remain active and boost their personal income.

Above and right: USPS has reduced its permanent workforce by 20% in the past five years

This sort of thing is classic good practice, says Peter Mooney, head of consultancy at the UK firm Employment Law Advisory Services. “Employers should
take a constructive approach to labour flexibility and look at how the required hours can be
worked to the advantage of
both the company and its staff.”

Legal standpoint

Any changes to working hours or employee status should be handled with care, warns Mooney. If an employer cuts working hours too far – especially if workers go from full-time to part-time – it can count as enforced redundancy, with all the pay-off obligations that entails. A change from employed to casual status can also be equivalent to redundancy.

Timescales and consultation processes when determining changes to labour contracts are often laid down in law and should be followed to the letter, Mooney advises. “If there’s a due process, employers are tempted to cut stages out of it, but this always causes problems.”

And although casual staff may have fewer employment rights than full-time employees, the company has an equal obligation to ensure their health and safety at work, says Mooney.

If employees use their own vehicles, for example, the company must have evidence that the employee is licensed and insured, and that the vehicle is safe. In addition, if they lift heavy loads, inspectors would expect to find documentary evidence that they have received proper training.

Flexible working

One innovative strategy to cope with changing delivery patterns is to ‘move the weekend’ for postal workers. From 2014, PostNL will no longer be legally required to deliver mail on Mondays (subject to Senate approval as we go to press). This raises the possibility of treating Saturday as a normal working day – with normal working pay – and introducing a ‘mailman’s weekend’ of Sunday and Monday.

SingPost has also introduced a range of flexible working arrangements, says Woo. These include enabling workers to telecommute where feasible, choose their own start and finish times, and work reduced hours or a shorter week.

Ironically, alongside the increase in part-time working, full-time staff may actually be expected to work longer hours. At PostNL the working week became shorter in the 1990s, but the company is now in discussions to increase it again, as well as reduce holidays.

Changes to wages and pensions must also be considered by postal operators as ways of reducing labour costs. For newly hired employees at the USPS, starting salaries have been reduced by up to 22% and top-step salaries by up to 8%, with cost of living adjustments also reduced for many. There was also a two-year wage freeze after the 2010-11 round of bargaining, with modest base increases for the following three years.

Left: In future 70% of PostNL’s workforce will be part-time contract workers

It all added up to a unique change, says Tulino. “The savings realised in the last round of bargaining were substantial and unprecedented. The new contracts accomplished something extremely rare in bargaining – an actual reduction in unit labour costs from one contract period to another.”

Workforce reductions

Alongside efforts to make their workforces more flexible, many posts are being forced to reduce overall numbers. Nobody wants to lose their job, but there are ways of softening the blow.

“Redundancy can be very stressful, and in our view it should always be on a voluntary basis with the fullest possible consultation, which includes an active role for the trade union,” says a spokesperson for the Communication Workers Union in the UK.

“A clear redundancy procedure and scheme should be published and followed so that all staff understand the situation. This should include decent, fair redundancy payments and suitably long notice periods.”

Starting early is key, says Tulino. “By using early retirement incentives and strategic consolidations of the network, we reduced the career complement from over 600,000 in 2008 to roughly 480,000 today. The USPS did not resort to layoffs, but relied on voluntary attrition and incentivised retirements.”

PostNL has considerably downsized its workforce, but the company has already actively helped the great majority of leavers – around 7,500 – to find new jobs.

“Our philosophy is to guide people from work to work,” says Muys. PostNL’s Mobility Centre acts like a combined outplacement service and recruitment agency, providing leavers with retraining, helping them gain certificates and qualifications, and working with other employers to find them work.

This mobility concept will continue for the employees who remain after the current restructuring is complete, says Muys. “It’s unlikely that we shall be able to retain all our remaining staff until retirement, so we want to make them very well-positioned to find another employer if necessary. It’s a big change from the culture of employment for life.”

And with current pension arrangements widely viewed as unsustainable, many posts, including the USPS and PostNL, are also looking to move from salary-based to contributions-based pensions.

“We’ve had quite a lot of debate on changing our pension arrangements, especially with regards to the way we finance them, and we’re close to agreeing a new formula,” says Muys. “We’ve also introduced employee contributions from executive as well as collective-bargaining workers.”

Listen to your employees

Whatever measures postal operators take to increase flexibility and reduce costs, proper consultation with workers and unions is vital.

At PostNL, an earlier attempt at reorganisation by the previous management team failed because the process was too top-down, and ignored signals coming up from middle managers and workers, says Muys. “The new team is much better at listening and dialogue, and thanks to this, our reputation, service quality and employee relations have recovered enormously.”

“Successful collective bargaining and contract administration requires good relationships, and you have to work on these every day,” comments Tulino. “You have to respect the interests of the other side and the integrity of the contract, live up to your commitments, honour and reward the efforts of your employees, and respect their bargaining representatives. You also have to be transparent in negotiations, explaining the operational and financial needs underlying specific bargaining demands.”

Achieving greater labour force flexibility may not be easy, but the rewards can be immense. “A restructured workforce can dramatically improve the bottom line by reducing unit labour cost, improving efficient staffing, lowering overtime, enhancing flexibility, and improving service and operational performance,” says Tulino.

Right: PostNL has helped 7,500 leavers to find new jobs

“The cost savings measured
over the term of four-plus year labour agreements are many billions of dollars, and have enabled the US Postal Service
to survive and maintain liquidity in the face of the severe and prolonged recession,” he concludes.

December 4, 2013


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