Going Postal–Management Style

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James Hanley

James Hanley is a two-bit college professor who'd rather be canoeing.

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  1. Avatar Patrick
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    Idle thought which I’ll try and construct into a more formal comment in a bit:

    It’s not that businesses don’t fail, they do. It’s not that bureaucracies don’t fail, they do as well, and they are usually hugely impacted when they do in a way that modern large businesses aren’t.

    The size and scope does matter.

    Failure cases for business are usually small failure cases and the correction method is therefore most optimal when it’s fairly dynamic. Businesses create new product lines, drop old ones, shed departments, restructure, etc., fairly quickly. This makes them more nimble than bureaucracies, and better suited for a dynamic environment, which most markets generally are.

    Bureaucracies will tend more towards less dynamism because their failure cases are typically of a different class. I’ll note, as an aside, that most medium-sized failure cases for bureaucracies are a case of legislative meddling requiring changes that aren’t indicative of actual needs… but the fact that they’re legislative in origin rather than organizational rot (which is the usual scarecrow)… that doesn’t make them any less inevitable. The big failure cases of bureaucracies (see: the VA) are a whole other problem entirely.

    I would not want the post office to get involved in a dynamic environment. It’s fairly unsuited.

    But it’s not clear to me that basic banking services should be anything resembling a dynamic environment anyway.

    In fact, I suspect a really good argument I think can be made that most of our financial systems instability at the moment comes from coupling what was the boring old savings and checking services that yielded 2.5% a year return at best with high flying financial instruments that are by definition much riskier and giving a much higher return.

    Given the stodgy old nature of stodgy basic banking, it seems to me that a bureaucracy could easily be a better fit than a business anyway.

    Dynamism comes with less risk aversion than bureaucracies. Risk aversion in basic banking seems to be a feature, not a bug.Report

    • Avatar Kim in reply to Patrick
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      “Businesses create new product lines, drop old ones, shed departments, restructure, etc., fairly quickly. This makes them more nimble than bureaucracies, and better suited for a dynamic environment, which most markets generally are.”

      If you can find me a 50 year plan for a publically traded American company… They think in terms of the next quarterly statement, because that’s how they’re incentivized to think. The government has the ability to think on a longer time horizon, and that’s why the government is going to save our collective asses, by designing effective solutions to medium-term problems now, not when they become a critical problem.

      [German companies think in terms of 20-year plans and 50-year plans. They expect to be around that long]Report

  2. Avatar Saul Degraw
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    says:

    I am not sure if you are completely making your case.

    Yes you are right that private business sometimes to often does need to come up with solutions quickly or else but plenty don’t have to think to being pseudo-monopolies or because of regulatory capture. Once a corporation becomes big and ubiquitous enough, they can seemingly become as inefficient as any government agency. I will also give proof via one-anecdote and it involves one of my least favorite companies, UPS.

    I once ordered a pair of sneakers on-line. The company used UPS to deliver and apparently had a contract that required UPS to just drop off the package if the customer could not be reached. I live in a city and my apartment building has a gate. The gate is at street-level. In other words, leaving a package in front of the gate requires leaving it on the street. Is it really safe to do this in an urban environment? No. I called UPS and complained but they just mumbled something about the contract.Report

    • Avatar Matty in reply to Saul Degraw
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      says:

      This was my first thought, when a business gets large enough departments within it can function as bureaucracies, with all the issues James identifies, and the fact the business as a whole is looking at the bottom line may not be any more of a limit on this than expecting concern about the national debt to motivate post office managers.Report

    • Avatar James Hanley in reply to Saul Degraw
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      says:

      I didn’t spare business. And size clearly has much to do with organizational problems. That is, it’s not the sum of organizational problems, but it’s an independent variable all on its own.

      But look at Hewlett-Packard’s decision to split. Businesses can do that. Bureaucracies can’t make that decision on their own. There may be good political reasons for not allowing them to do that, mind, but it’s still a good reason that’s has as a cost an inherent inefficiency. But further, what we see with bureaucracies is frequently attempts to expand their scope, but rarely an attempt to push for a contraction of their scope. Even when they should, bureaucracies don’t tend to ask Congress to split them apart into separate agencies.

      The primary reason for that, based on my reading of the literature, is that in the absence of profit as a signal, the size of the agency’s discretionary budget becomes the primary indicator of success. But that’s an indicator that is divorced from efficiency.

      Now as I keep saying–but which will probably fall on some deaf ears so this will be seen as just an anti-gummmint screed by the usual suspects (which does not include you, Saul)–there are good reasons we want our public agencies to be separate from the profit motive.Such as:
      1) They are often dealing with issues that are difficult, perhaps impossible, to price. E.g., collective goods like national defense and clean air, and quasi-public goods that have significant positive externalities.
      2) We don’t want excessive political meddling in some agencies because the inefficiency costs of incompetent political appointees is likely greater than the inefficiency costs of bureaucratic inertia (although, as I’ve noted before, technocracy does raise issues of democratic accountability that we shouldn’t too blithely ignore–there is no technological competency pertaining to political values).
      3. And at least some government services that aren’t true public goods we’ve decided politically should not simply be sold to the highest bidder, or even structured in a way that allows for price discrimination, and certainly for anything tax-funded we don’t want to allow discrimination based on race, political identity etc. For example, state/national parks, public museums, etc. Things where the existence of private sector counterparts demonstrate that market provision of something similar (a substitute good) is possible, and that can, unlike public goods, be priced. (These we can legitimately question as government functions, but to some extent, if the demos speaks that’s just the way things are going to be, and I’m not so curmudgeonly as to complain about the Smithsonian, Yellowstone National Park, or the Indiana State Historical Museum.)

      My point is not that all public bureaucracy is evil and rotten throughout. My point is that the very reason we sometimes create a public bureaucracy–public goods–and the necessary, I repeat necessary, political constraints that we put on public agencies are independent factors constraining responsiveness of bureaucracies to inefficiencies. The normal signals that a business faces–declining profits–aren’t signals for bureaucracy. The normal signals that non-profit orgs (churches, synagogues, the Elks, a private college) face–declining membership–often aren’t signals for a bureaucracy, either.

      This is largely inevitable. When dealing with public goods it cannot be reversed, and when dealing with quasi-public goods or private goods we’ve asked government to provide reversing it would mean relaxing political controls in a way that undermines the mission with which we’ve tasked them.

      That’s the nature of the game. It’s necessary that bureaucracy be inefficient. But given that;
      1. Those who defend bureaucracy should just admit to the inefficiencies and emphasize the necessary reasons why it is to some extent inevitable, instead of pretending it’s not really inefficient, and quit pointing to businesses examples as proof of something given that businesses do have efficiency incentives that bureaucracies must–necessarily– lack. DavidTC does this in the other thread to some extent, in-between bouts of arguing that the USPS actually is efficient. LWA on the other hand seems to think there’s no inherent inefficiency to government bureaucracy. I say own it, and point out the upsides and be honest about inefficiency being a cost that gets us the upside. (E.g., DavidTC being upfront about saying a taxpayer subsidized USPS is ok, because he thinks the service provided is worth it. Whether one agrees or not, that is then shifted into the realm of values, and cannot be disproven.)
      2. Given that we know there are inefficiencies, let’s stop pretending there aren’t, and let’s do what we can to minimize them. Even if we think the benefit gained from having a public agency do X is worthwhile, it’s even more worthwhile if we can constrain the inefficiencies; we’ll get more net benefit.
      3. I’d say we ought to look more closely at the private goods provisions of the government, and whether they really ought to be publicly provided. But that shifts the discussion back into the realm of values, so it’s substantively different. And as I said above, I support public museums and parks, so it’s not like I could take an absolutist stand on this issue. Damon might take that role for us, some of the liberals here will defend almost all the public provisions of private goods, and I’ll be in the mushy middle on that one, because I’m just totally anti-gummint. ;^)Report

      • Avatar Kim in reply to James Hanley
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        says:

        I know someone who just got a promotion (to department head) for defending his department from a takeover by another department. So I guess even in the government you do have mergers of departments (and I doubt this was legislative in scope).Report

      • Avatar Dave in reply to James Hanley
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        says:

        @james-hanley

        1. Those who defend bureaucracy should just admit to the inefficiencies and emphasize the necessary reasons why it is to some extent inevitable, instead of pretending it’s not really inefficient, and quit pointing to businesses examples as proof of something given that businesses do have efficiency incentives that bureaucracies must–necessarily– lack.

        So so anti-government.Report

      • Avatar LWA in reply to James Hanley
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        says:

        No, actually I don’t claim that there isn’t an efficiency to bureaucracy. I acknowledge it and own it, as you say, for the reasons you point out.
        I suppose we could quibble and say that they are as efficient as anyone could be given the identical criteria, but that becomes a bit circular.

        Your last point is the one that needs to be aired, since oftentimes, an assertion of inefficiency is a proxy attack on the core mission and values it represents.

        If we all agree on the core mission of USPS, then we are all just chatting about ways to make it deliver the mail more efficiently.Report

      • Avatar Dave in reply to James Hanley
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        says:

        @lwa

        Your last point is the one that needs to be aired, since oftentimes, an assertion of inefficiency is a proxy attack on the core mission and values it represents.

        You mean this point:

        Is it total, dispositive, unchallengeable proof? Of course not. But watch closely to see if my critics come up with documented evidence, or respond only with abstractions and red herrings.

        All I’ve seen from you is abstractions, red herrings, and frankly, false accusations.

        Keep up the good work.Report

    • Avatar Mike Dwyer in reply to Saul Degraw
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      says:

      @saul-degraw

      When it comes to deliveries, UPS is required to follow the customer’s instructions. Most customers don’t want to pay for a higher level of service. Believe me, UPS would love to charge them for it. Your beef should be with the company that sold you the sneakers or you should have checked to see if delivery options were provided when you made the purchase.Report

      • Avatar Road Scholar in reply to Mike Dwyer
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        says:

        Ah, yes. Delivery options. Reminds me of the time I ordered a new power supply for my laptop from Dell. Sorta needed it right away so I paid the extra vig for the expedited shipping via DHL (estimated 3 days) vs. standard shipping via Parcel Post (estimated 5 days). They even gave me a tracking number so I could know when to expect it.

        So I tracked it as it left the warehouse on the west coast, then to a hub in San Fran. Thence through a sorting facility in Salt Lake and then on to another sorting facility east of me, St. Louis if memory serves. By that time three days had already elapsed and then they sent it to Kansas City where it got passed on to… wait for it… USPS. From Kansas City I had it two days later.

        Seriously, I’m not particularly impressed with the “efficiency” of private carriers over the “gross inefficiency” of the USPS. At least in that instance and measuring efficiency as performance for customer dollar.Report

      • Avatar Kim in reply to Mike Dwyer
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        says:

        Road,
        The only time Smart Post has ever delivered something same day was when the Post Office deliberately decided to not send the package to where it was supposed to go, but instead deliver it then and there.

        Smart Post still has a package of mine orbiting America, from practically the first day the service started… (it’s a GPS — the tracking number is still valid).

        I remember getting “next day delivery” from Amazon, which cost about $500 for them, and $5 for me.

        … yes, we do call this “working the bugs out.”Report

      • Avatar James Hanley in reply to Mike Dwyer
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        says:

        measuring efficiency as performance for customer dollar

        I wouldn’t call that a good measure of efficiency. One of the articles I linked to also suggested the USPS was efficient because it delivered for so cheaply. Well, partly, but not exactly. Economic efficiency requires that there be no net loss of value from an activity. So if USPS can deliver a letter from me to you for no greater cost to itself than it’s charging me–49 cents, I think*–then it’s an efficient delivery. Of course even for-profit firms have loss leaders, so we shouldn’t focus on individual transactions, but say that if on average its deliveries cost it no more than it charges customers, then it’s efficient.

        But if USPS loses money delivering mail, as presumably delightful as that is to the person paying the postage, it’s actually no more efficient than GM selling passenger cars for less than it costs to make them.

        In fact it’s ultimately a waste of resources–we’re misled into buying more stamps/cars than we actually desire at their real cost, so the resources that go into delivering-mail/building-cars would be better used elsewhere.

        Granted, efficiency is just a value, and not the only value. On a pure financial cost basis, executing the terminally ill would be more efficient. But if we dig deeper, actual efficiency depends on satisfying our values at an appropriate cost–so if we value giving better end-lives to the terminally ill, then it is worth it to pay the cost.

        At least in theory–if we have no mechanism for matching actual resource expenditures to actual cost appropriately, then it may actually be quite inefficient, and the hiddenness of the cost and resource expenditures may just allow us to deceive ourselves about its efficiency.

        Maybe for the terminally ill we can tolerate a lot of inefficiency before it becomes more inefficient at matching cost to values than executing them. That is, I think the overwhelming proportion of Americans would prefer that more than necessary gets paid to care for the terminally ill than that we execute them.** For production of automobiles, I suspect there’s an overwhelming proportion of Americans who agree it’s wasteful for GM to lose money on each car. For delivery of mail? I think the values are less shared there than in the other two cases, and that’s why it’s the one of those three cases we argue most about.
        ________________________
        *Although it may be that the greater inefficiency is in the junk mail.
        **I’m not saying too much is. I truly don’t know, and knowing would require a good estimate of the public’s valuation of caring for the terminally ill. It could be we’re underspending relative to what the public would, in aggregate, prefer.Report

      • Avatar Saul Degraw in reply to Mike Dwyer
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        says:

        @road-scholar

        for about 5-7 dollars, USPS could have had that to you in 2-3 days with priority mail.Report

      • Avatar Patrick in reply to Mike Dwyer
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        says:

        @james-hanley

        But if USPS loses money delivering mail… In fact it’s ultimately a waste of resources

        At the organizational level, yes. Not necessarily in a macro sense, though. If cheap postage was leading to some other economically positive activity, that is.

        Granted, subsidized postage probably gets us more bulk mail, not more letters, nor even more financial transactions.

        But the efficiency of the economy is not the efficiency of the firm… and the efficiency of the economy is usually something that starts butting up against normative principles other than profit motives.

        I don’t want to sound like I’m making a big defense of the post office here, because I largely think the normative principles that led to sticking the post office into the Constitution in the first place were a great idea back then but largely massively less important now. I’d rather fight for net neutrality than the continued existence of the post office.Report

      • Avatar James Hanley in reply to Mike Dwyer
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        says:

        @patrick

        Yes, that’s what I meant when I mentioned other values.Report

    • Avatar Dave in reply to Saul Degraw
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      says:

      Once a corporation becomes big and ubiquitous enough, they can seemingly become as inefficient as any government agency. I will also give proof via one-anecdote and it involves one of my least favorite companies, UPS.

      Not to defend UPS (leaving something that’s basically on the street in an urban environment may as well have a “steal me now” label on it) I’m not sure how that example demonstrates corporate inefficiency nor am I sure the problem with your example was UPS or the company that you chose to do business with.

      I like where you went with your idea so I’d like to give you two examples of this. Yes, I think both of these companies were every bit as inefficient if not worse than what I think is happening at the USPS:

      General Motors and Eastman Kodak (pre-bankruptcy).

      Both of these companies came to completely dominate their respective industries at their respective peaks. There wasn’t a company that could knock them off of their respective perches. They were the 800 lb gorillas in the room and they knew it. The corporate cultures reflected it.

      Both companies did a terrible job anticipating the impact foreign competition would have on their business lines and both companies did a terrible job adjusting to the realities of the marketplace with respect to changing consumer preferences.

      When the companies become that large, what @matty says is absolutely correct “the fact the business as a whole is looking at the bottom line may not be any more of a limit on this than expecting concern about the national debt to motivate post office managers.”

      It isn’t a limit because the corporate fiefdoms are only going to care about how well their business lines do since compensation, especially at the management level, is tied to the group performance. Eastman Kodak, who was, I believe, one of the first companies to develop a digital camera never aggressively pursued that line of business until it was far too late. If you’re on the film side on the business, would you have wanted corporate resources devoted to a potentially new business line that was not only risky but would have taken away from its cash cow? The same can be said for GM, as they were way late to the game with efficient cars. That the trucks and SUV sold well gave those fiefdoms a lot of pull in the organization.

      Personally, I think people that were making attempts at various levels of quality to defend the Post Office in the last thread best take note of what happened with these companies, not because of the fact that the Post Office will eventually fall into bankruptcy (it won’t), but because the longer the organizations experience problems, the harder it becomes to reverse those problems. As it is, it doesn’t seem that much has changed at GM.Report

      • Avatar Kim in reply to Dave
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        says:

        What’s your theory on the… inefficiencies… of legit businesses that derive most of their customers from sleeping with them? It doesn’t seem like they’d have much incentive to actually do well legitimately… OTOH, if everyone’s doing it (for a particular category), then you’re just looking another “perk” to the customer.

        … How much risk is there involved in upscale prostitution in America?Report

      • Avatar Dave in reply to Dave
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        says:

        @kim

        I can’t say I’m an expert in those matters. I usually give it away for free.Report

  3. Avatar Saul Degraw
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    says:

    I’ve also heard plenty of stories about departments in corporations going on buying sprees at the end of the year so they don’t lose their budgets.Report

    • Avatar Kim in reply to Saul Degraw
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      says:

      Corporations never came up with the Navy Accounting Trick — Take Money Needed, Divide by number of goods wanted, and that’s price per good. This is how you got some of the exhorbitant “You spent $20,000 on 10 pencils?”Report

  4. Avatar Burt Likko
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    says:

    I think we have to look at the decline in EEOC claims from 2002 to the present day as a significant success story, at least on the basis of the data presented here.

    What we know here is that USPS halved an immense number of claims, over the scope of one of the largest and most geographically diverse workforces around. Substantially all of the oversight of substantially all of the workers is done by local postmasters, who come in a pretty broad range of personalities. It brought its numbers to be rather closely in line with its proportion of Federal workers altogether.

    In my consulting and advising practice, I take the position that even one claim of this nature is one too many, and no claim is inevitable, and the standard for excellence that every employer should shoot for is uniformly high morale and zero claims. So to some extent, I can say that the fact that USPS has any claims at all means it has an unacceptably high number. But there’s also the fact that we’re looking at such a large number of people moving away from a culture where there were twice as many such claims made within the living memory of a high percentage of the employees. And come on, zero claims just aren’t going to happen in an organization of this size. It’s a realistic goal to say that USPS should have claims in roughly the same proportion as the rest of the government and similar sorts of employers. (What’s the claim rate at FedEx? UPS?)

    And this is all without breaking down the data to see what the EEO problems are, where they arise, and how they are getting resolved.

    I do not know if active-duty military personnel have EEO complaints handled by EEOC or by some other administrative structure within the military itself and would not be surprised to learn that it was the latter; I have never had occasion to represent a servicemember with an EEO issue. I do know that civilian employees of DoD get their EEO issues handled by EEOC.

    Also note that many governmental employees bring “mixed claims” involving both EEO type actions alleging discrimination as well as abuse of governmental resources (whistleblower claims, etc.) which are not handled by EEOC typically, but rather go before the civil service adjudicative agency, the Merit Systems Protection Board. MSPB is also where claims within the family of “office politics cost me my job” are resolved. Is data available comparing USPS to the government as a whole regarding MSPB claims?Report

    • Avatar Alan Scott in reply to Burt Likko
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      says:

      Even if the EEOC handled military claims, I’d frankly expect to see only a tiny number of them. Everything I’ve heard from acquaintances who are former service-members suggests that military culture is incredibly hostile to those who make formal complaints of that nature, and that people who are being mistreated are expected to either “suck it up” or to seek revenge through pranking and similar behaviors.Report

    • Avatar James Hanley in reply to Burt Likko
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      says:

      Also, the USPS has about a 99% rate of resolving the complaints in the allotted time, and that’s no small thing.Report

      • Avatar Kim in reply to James Hanley
        Ignored
        says:

        What does that mean?
        “We don’t train our managers terribly well, but we have a strategic strike force that fixes issues for good?”
        [sorry, I’ve been around a bit too much combat footage recently, may be affecting my analogies]Report

      • Avatar James Hanley in reply to James Hanley
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        says:

        I don’t know. There wasn’t enough information given to determine that. But I wouldn’t be surprised if you’re on the right track–maybe a specialized office for dealing with EEOC complaints, and perhaps it gets more pressure if the EEOC criticizes the resolution rate than it does if it reprimands local postmasters, or something like that.

        A complexity we haven’t really dealt with here is that there are sub-bureaucracies within bureaucracies that may have distinct pressures, incentives and organizational cultures that make them either more or less functional and efficient than the larger bureaucracy within which it’s nested.Report

      • Avatar Citizen in reply to James Hanley
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        says:

        *Due to budget constraints there have been major staff cutbacks in the Department of Complaints. Assume only 1/3 of complaints are currently being recorded.Report

  5. Avatar Alan Scott
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    says:

    So, I don’t want to defend the post office in particular. I don’t really have much experience with the post office, and your points about its performance seem pretty solid. If you were attacking the DMV, I might be objecting–despite it being the poster-boy for civil serve indifference, I’ve never had anything but wonderful service at the DMV. But I have no interest in defending the USPS until my dying breath.

    But I think you’ve highlighted a very flawed interpretation of WalMart. Employees at WalMart aren’t dedicated to the mission. They’re not smiling and engaged because they believe in the cause. They’re giving fake smiles and singing along with the cheers because if they don’t they’ll get fired. It is, frankly, a soul deadening experience. The only government employees I know that are as screwed-up as the WalMart employees I know are the psychiatric technicians who work in mental hospitals for the criminally insane.Report

    • Avatar Kim in reply to Alan Scott
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      says:

      Yeah, I’d actually appreciate a psychologist analyzing the Walmart employees’ facial expressions.Report

    • Avatar Chris in reply to Alan Scott
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      says:

      It’s not by accident that Walmart always fails to make the “best retail employers to work for” lists. Their measures of employee satisfaction (aside from the results of their own surveys, as they’ve reported them), are always pretty low because they really do treat employees pretty badly. Most people who work at Walmart aren’t there for the long hall, and I suspect that they’d be happy with consistent hours, and enough of them, along with better working conditions and treatment by management, and those are precisely the areas where Walmart tends to screw its employees. But it doesn’t have to do better, because there’s a pretty much endless supply of labor.Report

  6. Avatar Saul Degraw
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    says:

    TimeWarner and Comcast are other companies that seem immune to poor customer service reviews or techniques.Report

    • Avatar James Hanley in reply to Saul Degraw
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      They have legally authorized monopolies, though, so like bureaucracies they’re somewhat protected from competitive pressures.Report

      • Avatar Kim in reply to James Hanley
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        says:

        Competitive sure. But that doesn’t stop the FCC from sticking Verizon with a $70,000 fine.
        I figure that one stung.

        (So, here is a different read on why monopolies suck: you have to know the regulatory bureaucracy inside and out in order to properly file complaints and have them be actionable).Report

  7. Avatar Damon
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    says:

    Business > Gov’t (bureaucracy)

    Simple example. The CEO noted that one Business Group was spending 20M dollars more a year that the sum of all three other groups. That group entity is gone now. All 30 people fired. The president of the group, his entire staff, and a few functionaries. All the companies in that group were absorbed into various other groups and the entire corporate structure was re-organized. Total savings to the corporation exceed 20+ million a year. Time to make the change: Less than one year.

    Ever seen anything close to this happen in gov’t, outside of maybe the military? It doesn’t. And it can’t. There aren’t any incentives to do so.Report

    • Avatar Saul Degraw in reply to Damon
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      says:

      Except plenty of CEOs are able to stack the Board of Directors with cronies who will not get rid of them or are willing to give each other golden parachutes that are way too generous. Dov Charney is a brilliant example of someone who got away with shit for way too long because of a crony packed Board of Directors.

      I don’t think business is as perfect and uncorruptable as you make it out to be.Report

      • Avatar Damon in reply to Saul Degraw
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        says:

        @saul-degraw

        My comment wasn’t addressing business as perfect or incorruptible. Hardly. But they damn sure can MOVE AND REACT much faster. The slowest private sector company, hidebound by tradition and bureaucracy is still a road runner compared to a gov’t bureaucracy.Report

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