• on Mar 24th, 2014 in Labor | 6 comments

    When long-term, experienced workers leave companies, they take their know-how with them. It’s called “brain drain” and it happens at organizations of all sizes and kinds, most notably companies with a large number of baby boomers getting ready to retire and industries that are restructuring. The newspaper industry comes to mind, as does manufacturing, as does the U.S. Postal Service.

    Since 2004, the Postal Service has reduced the number of career employees by more than 200,000, primarily through attrition, early retirement incentives, and some contractual changes. This is part of its ongoing effort to right-size its workforce to better match the number of employees with a declining workload. Many of those who left were seasoned workers who took with them a wealth of experience and knowledge essential to running a vast and complex organization.

    Given that nearly 31 percent of current employees are eligible to retire now, and Postmaster General Patrick Donahoe plans to shrink the workforce by 10,000 positions in fiscal year 2015, it’s likely this brain drain will continue for a number of years. Is the Postal Service adequately prepared for this loss of institutional knowledge? What more could it do to ensure it has a comprehensive approach to collect, maintain and disseminate this information?

    Our recent audit, Postal Service Knowledge Management Process, looked at the subject and determined the Postal Service could do more. Notably, by mimicking the best practices of eight large organizations we reviewed, including the General Services Administration and Walmart, the Postal Service would be able to ensure important knowledge and expertise stay within the organization. These practices include conducting exit interviews aimed at gleaning key information; designating a knowledge management officer; developing knowledge maps that offer visual representations of the organization’s pockets of expertise; and conducting mentor-based training.

    Are you concerned about the flight of human capital from the Postal Service? Do you think it should do more to preserve the knowledge of its most experienced workers? What are your ideas for the Postal Service to retain and share valuable knowledge and expertise? 

  • on Mar 17th, 2014 in OIG | 2 comments

    “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”

    So said former Supreme Court Justice Louis Brandeis, who could be considered a forefather of Sunshine Week. No, not some Spring Break in Florida for government workers, but an annual initiative held the week of James Madison’s birthday to promote open and transparent government. The term “operating in the sunshine” means conducting business in a for-all-to-see way that enlightens and empowers people to play an active role in their government – one of the key elements of a democracy. Sunshine also serves to curb misdeeds or abuse.

    The sunshine concept took many years to evolve. It gained momentum in the 1960s and 1970s, when news reports of federal abuses and “enemies lists” prompted Congress to pass legislation to open up government to greater public view. The Freedom of Information Act (FOIA), Government in the Sunshine Act, and the Privacy Act were some of the products of a push for good government.

    Another sunshine initiative was the 1978 Inspector General Act, which created IGs in 12 of the largest federal agencies to detect and prevent fraud and misconduct in agency programs and to examine the efficiency and effectiveness of agency operations. The law has been amended over the years to increase the number of agencies with IGs to 73, including the Office of Inspector General for the Postal Service in 1996. Right off the bat, we took the concepts of openness and transparency to heart. Shortly after setting up the agency, we launched a website and started publishing reports online. In fact, we’ve posted so many reports on our website that you would have to comb through 143 pages of summaries just to find them all. (Fortunately, we have a search function that makes it easy to find what you want.)

    We created a webpage to notify stakeholders of audit projects before they start so we can gain your insights on those projects. We launched this very blog 5+ years ago to open a dialogue with you on issues affecting the Postal Service. Finally, we have fielded lots of FOIA requests, – formal, written requests for records maintained by the OIG. We handled 36 in FY 1998. Last year, that number topped 600 formal FOIA and Privacy Act requests; more than 4,500 total in our 18-year history.

    At a time when the future direction of the Postal Service is at stake, how government does business is of heightened public interest. (The Postal Service is considered part of the government.) And that is arguably at the root of the sunshine concept. It’s your government; you are entitled to know how it is carrying out its mission.

  • on Mar 10th, 2014 in Finances: Cost & Revenue | 4 comments

    Benjamins, dough, cabbage, coin, greenbacks. Most of us could rattle off a dozen or more slang words that mean money. But we might be unsure what certain financial terms -- operating income, liquidity -- mean. When you follow the U.S. Postal Service, this might put you at a disadvantage, especially when it’s quarterly financial statement time.

    Operating income measures earnings (revenues minus expenses) before interest and taxes. Liquidity is the amount of financial resources (cash, equity, assets, credit) that an organization can easily convert to cash for spending and investments. Postal officials often mention the Postal Service’s lack of liquidity. Chief Financial Officer Joe Corbett said in January that the Postal Service’s liquidity, at its highest point in the year, is only about $3 billion. This isn’t much cushion for a $65 billion entity. And the cushion shrinks at certain points in the year, such as in October, when the Postal Service makes its workers’ compensation payment to the Labor Department.

    UPS and FedEx, companies with revenues about $20 billion less than the Postal Service, have liquidity of about $12 billion and $14 billion respectively, he noted. But what does this mean exactly? Well, companies with strong liquidity positions, such as UPS and FedEx, have much greater access to capital than the Postal Service. They have more opportunity to invest, whether in capital projects or new businesses. The Postal Service’s weak cash position means it cannot invest in the infrastructure or innovation. It also has no margin for error. What happens if a catastrophe strikes in October right after the Postal Service has made its workers compensation payment?

    Finally, the Postal Service has no available cash to pay down its debt. It reached its statutory borrowing limit of $15 billion in FY 2012 and it has been unable to borrow from the Treasury Department for more than a year.

    The Postal Service says employees will get paid – this is not an issue. And it has enough cash on hand to pay suppliers. But it has had to forego needed investment in its infrastructure, such as facility maintenance and vehicle replacement. And as the Postal Service considers a new business model for the digital age, it has no available cash to invest in new opportunities. It has not had the funds to make its required prefunding payment to the retiree healthcare fund for the past few years. The postage price increase in late January should help its cash position, but it will not build the bigger cushion it needs.

    Share your thoughts on the Postal Service’s cash position. What is hurt most by the Postal Service’s lack of liquidity? Is it missing opportunities because of its cash shortage? If its liquidity position were to improve, what should be the Postal Service’s priorities (infrastructure investment, paying down debt, lowering postal rates, etc.)? 

Pages