At a recent performance management conference, I attended a talk by the Manager of Strategic Business Planning at the U.S. Postal Service (USPS) who described how they used performance management concepts to dramatically improve the agency. I showed up at the talk with skeptical attitude, as the post office does not have the best reputation for performance. There’s a reason the phrase ‘going postal‘ has become common American slang. In fact, the presenter addressed this common perception; using this slide to demonstrate the quantitative assessment of the agency’s performance is significantly better than the qualitative (subjective) one.
Before I highlight some of USPS’ successes, it’s instructive to consider its scale. In 2005 the USPS was a $70B profitable organization with nearly 700,000 employees that delivered 212B mail pieces to 145M locations. By way of comparison, Federal Express is a $30B company with 260,000 employees that delivers less than 1B mail pieces to only 7M locations.
The presenter shared some impressive statistics about how the USPS had improved over the last few years. The most compelling: $1B in annual savings due to six successive years in productivity gains and 106,000 fewer career employees. They also eliminated $11B in debt. If one of their for-profit competitors had achieved these results, there’s no doubt their stock would have skyrocketed.
While impressive, as consumers we don’t really care about these internal improvements. Instead, we care more about stamp prices and how easy it is to use their services. The presenter showed that stamp prices have essentially matched the inflation rate over the last 15 years. To drive this point home, I would have liked to see a similar comparison with the prices of the commercial delivery services. Even without that information, however, it’s telling that US stamps are significantly less expensive than other industrialized nations.
I found the changes in customer satisfaction to be the most compelling improvement. As shown in the attached logic model style diagram, the USPS started its performance management program with very low customer satisfaction scores. To combat this low satisfaction, the USPS instituted a strategic objective to improve service which it tracked using a key performance indicator of ‘% of deliveries that were timely‘. Rather than thinking the could improve overnight, they set a long-term target of 95% for the KPI, and published expectations for annual incremental improvements. They reached their service target earlier than expected and, not surprisingly, customer satisfaction increased dramatically.
This is a strong example of how to approach a performance improvement initiative:
- Clearly state the outcome you want to achieve (customer satisfaction)
- Choose a simple objective everyone can understand (improve service)
- Rely on a consistent measure to track progress (% timely deliveries)
While I never expected to write this: Kudos to the USPS. I hope they can continue their current success.