U.S. Postal Service: Labor-Management Problems Persist on the Workroom
Floor (Volume I) (Letter Report, 09/29/94, GAO/GGD-94-201A).

More than 800,000 people work for the U.S. Postal Service, making it the
nation's largest civilian employer. During the Postal Service's history,
relations between labor unions and postal management have often been
confrontational. Postal employees work under a highly structured system
of rules and autocratic management style. Working conditions at plants
and post offices reportedly have contributed to tension and frustration,
and the number of violent incidents involving postal employees has
increased since 1983. The results of GAO's review of labor-management
relations at the Postal Service are presented in two volumes. The first
volume summarizes (1) the labor-management conflict that exists on the
workroom floor of the vast mail processing plants and post offices and
(2) past and current efforts by the Postal Service, employee unions, and
management associations to end the conflict. GAO makes recommendations
concerning the adversarial labor-management relations at the national
level and long-standing quality of work/life issues on the workroom
floor. The second volume discusses in more detail the labor-management
environment in the Postal Service. Included are (1) postal management,
union, and management association views on the underlying causes of
workroom conflict; (2) employee opinions about the Postal Service on a
wide range of topics; (3) the work climate in mail processing plants and
post offices that GAO visited; and (4) past and current initiatives to
change that climate.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-94-201A
     TITLE:  U.S. Postal Service: Labor-Management Problems Persist on 
             the Workroom Floor (Volume I)
      DATE:  09/29/94
   SUBJECT:  Postal service
             Working conditions
             Collective bargaining agreements
             Labor-management relations
             Employee incentives
             Job satisfaction surveys
             Government employee unions
             Personnel management
             Personnel evaluation
             Work measurement standards
IDENTIFIER:  USPS Employee Involvement/Quality of Work Life Program
             
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Cover
================================================================ COVER


Report to Congressional Requesters

September 1994

U.S.  POSTAL SERVICE -
LABOR-MANAGEMENT PROBLEMS PERSIST
ON THE WORKROOM FLOOR

GAO/GGD-94-201A Volume I

GAO/GGD-94-201A

GAO/GGD-94-201A Volume I:  Postal Service Labor-Management Relations


Abbreviations
=============================================================== ABBREV

  AFL-CIO - American Federation of Labor-Congress of Industrial
     Organizations
  AMF - Airport Mail Facility
  APWU - American Postal Workers Union
  BMC - Bulk Mail Center
  CSI - Customer Satisfaction Index
  DPS - Delivery Point Sequencing
  EAS - Executive and Administrative Schedule
  EI - Employee Involvement
  EOS - Employee Opinion Survey
  EXFC - External First-Class Measurement System
  FLSA - Federal Labor Standards Act
  GMF - General Mail Facility
  LAMPS - Labor/Management Partners
  MBP - Management By Participation
  LISTEN - Letters of Warning In Lieu of Suspension
  MOC - Modern Operating Concepts
  NALC - National Association of Letter Carriers
  NAPS - National Association of Postal Supervisors
  NAPUS - National Association of Postmasters of the United States
  NLRB - National Labor Relations Board
  NO-TOL - No Time Off In Lieu of Suspension
  NPMHU - National Postal Mail Handlers Union
  NPR - National Performance Review
  NRLCA - National Rural Letter Carriers' Association
  PCES - Postal Career Executive Service
  PMG - Postmaster General
  QWL - Quality of Working Life
  RBCS - Remote Bar Coding System
  SET - Striving for Excellence Together
  UAW - United Auto Workers
  UMPS - Union/Management Pairs

Letter
=============================================================== LETTER


B-252682.2

September 28, 1994

The Honorable David Pryor
Chairman, Subcommittee on Federal Services, Post Office,
 and Civil Service
The Honorable Carl Levin
Chairman, Subcommittee on Oversight of Government
 Management
Committee on Governmental Affairs
United States Senate

This report responds to your request that we conduct a comprehensive
review of labor-management relations at the U.S.  Postal Service. 
Your request was prompted by the November 1991 shooting of postal
employees in the Royal Oak Mail Service Center in Royal Oak, MI, and
other incidents of workplace violence at Postal facilities.  These
acts of violence by a few individuals and their tragic consequences
have focused attention on the Postal Service and its problems, which
has generated numerous constituent complaints to Members of Congress. 
Specifically, you asked us to determine (1) the status of
labor-management relations\1

in the Postal Service, (2) evaluate past efforts to improve
relations, and (3) identify any further opportunities to improve
relations. 

The results of our review are presented in two volumes.  In this
first volume we summarize (1) the labor-management conflict that
exists on the workroom floor of mail processing and delivery
operations; and (2) past and current efforts by the Postal Service,
employee unions, and management associations to improve relations and
end the conflict.  This summary volume also gives our recommendations
on actions the Postal Service, unions, and management associations
should take to address adversarial labor-management relations at the
national level and long-standing quality of worklife issues on the
workroom floor.  Included as well in volume I is a discussion of
comments by the Postal Service, unions, and management associations
on a draft of volumes I and II.  Written comments from the Postal
Service, the American Postal Workers Union, AFL-CIO (APWU), and the
National Rural Letter Carriers' Association (NRLCA) are reproduced in
appendixes III to V of volume II. 

The second volume provides a more detailed discussion of the
labor-management environment in the Postal Service.  Included are (1)
the views of both national and local management, unions, and
management association leaders on the underlying causes of workroom
conflict; (2) employee opinions about the Postal Service on a wide
range of topics, such as employee-management relations, employee
treatment and participation in decisions affecting their work,
leadership and supervision, performance management, and recognition
and reward; (3) the work climate in mail processing plants and post
offices that we visited; and (4) past and current initiatives to
change the climate on the workroom floor. 


--------------------
\1 "Labor-management relations" as used in this report is a broad
term encompassing relations between postal managers/supervisors and
craft employees as well as the traditional meaning of relations
between postal management and labor unions. 


   BACKGROUND
------------------------------------------------------------ Letter :1

The Postal Service is the nation's largest civilian employer, with
over 800,000 employees.  When Congress passed the Postal
Reorganization Act in 1970, it provided a structure for postal labor
and management relations similar to that found in private sector
companies.  Specifically, the act authorized (1) collective
bargaining for wages and working conditions, subject to regulation by
the National Labor Relations Board; and (2) a negotiated grievance
procedure, including binding arbitration to resolve employee and
union complaints. 

During its 23 years as an independent governmental establishment, the
Postal Service has accomplished many of the goals Congress set forth
in the 1970 act.  Although the Postal Service is currently
experiencing delivery problems in some parts of the country, it has
modernized its operations, improved the compensation of postal
employees, forgone the direct taxpayer subsidies that previously
supported its operations, and maintained universal service--service
for the same price delivered anywhere in the country. 

Despite these accomplishments, the Postal Service has not been able
to change its corporate culture, which has long been characterized as
autocratic.  Employees continue to work in vast mail processing
plants and in post offices throughout the country under a highly
structured system of workrules and a highly autocratic management
style. 

About 82 percent of postal revenues, which totaled $47.4 billion in
fiscal year 1993, are spent on human resources--clearly making
employees the Postal Service's most valuable resource.  About 89
percent of the Postal Service career employees are craft workers in
either mail processing and distribution plants (about 221,300
employees); or in post offices, branches, and stations (about 459,400
employees).  The mail processing and distribution plants (352 in
total) are like factories, full of conveyors and machines that sort
and route mail and parcels.  The 39,392 post offices, branches, and
stations in 85 customer service districts deliver mail and provide
retail services. 

Clerks, carriers, and mail handlers are represented by four labor
unions that bargain collectively with management over pay and
conditions of employment.  The APWU and National Association of
Letter Carriers (NALC) are the two largest unions.  APWU represents
about 306,000 career employees (clerks, maintenance workers, motor
vehicle operators, and special delivery messengers); and NALC
represents about 211,900 career city letter carriers.  The other two
major unions are the National Rural Letter Carriers' Association
(about 43,700 carriers) and the National Postal Mail Handlers Union
(about 51,100 mail handlers). 

Under the 1970 act, postmasters and most supervisors also have
associations that represent their interests to the Postal Service. 
However, unlike the craft unions, they cannot bargain over pay and
benefits. 

Each year the Postal Service faces stiffer competition as postal
customers look to electronic communications and other suppliers to
satisfy their communication needs.  As a result, the Postal Service
is striving to improve the quality of postal services and become more
competitive in a dynamic communication marketplace.  A cornerstone of
its overall efforts is to change its corporate culture and improve
labor-management relations. 

As part of this review, we visited 7 mail processing and distribution
plants and 12 post offices in 5 of the Postal Service's 10 area
offices.  We held over 475 interviews with postal supervisors and
management officials, national and local postal labor leaders, and
national and local management association leaders.  We collected
their views on the state of labor-management relations in the Postal
Service and identified the factors that affect labor-management
relations on the workroom floor.  In addition, we reviewed
grievance/arbitration data to help document the nature, extent, and
causes of workplace problems that were identified through interviews. 
We also analyzed the results of the Postal Service's 1992 and 1993
employee opinion surveys and reviewed various other studies done for
and by the Postal Service on labor-management relations.  We also
compared the Postal Service's past and current initiatives to improve
relations and organizational performance with the approaches followed
by some other unionized organizations.  (See vol.  II, ch.  1.)


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Labor-management relations problems persist on the factory floor of
postal facilities.  These problems have not been adequately dealt
with over many years because labor and management leadership at the
national and local levels have been unable to work together to find
solutions to employee problems.  At the national level, the
relationships between postal management and three of the four unions
(the rural carriers union being the exception) have at times been
adversarial.  They have been characterized by dependence on
third-party intervention to resolve disagreements both in contract
negotiations and grievance resolution.  In mail processing plants and
post offices, many employees reported that they worked in an
atmosphere of intimidation and tension that was too often
characterized by the use of (1) formal disciplinary processes to
correct employee problems, (2) grievance processing to obtain relief
from disciplinary actions, and (3) arbitration to resolve the ensuing
conflict.  We concluded that the "us versus them" attitude and
behavior of both management and unions must end if the Postal Service
is to be successful in an increasingly competitive environment. 

The 1993 Postal Service employee opinion survey\2 showed that more
than three-fourths of all employees nationally liked their pay and
benefits and were proud to be a part of the Postal Service.  However,
many craft employees (40 percent) said that managers and supervisors
did not treat employees with respect or dignity and that the
organization was insensitive to individual needs and concerns.  Most
craft employees (74 percent) believed that performing well just gets
you more work and that high levels of performance were not adequately
recognized or rewarded.  Mid-level managers and first-line
supervisors were also frustrated by the performance management and
recognition and reward systems.  For example, most managers (70
percent) and supervisors (74 percent) also believed that performing
well just gets you more work.  Most managers (58 percent) and
supervisors (60 percent) said that poor employee performance was
usually tolerated. 

The negative opinions were more prevalent in mail processing plants
than in customer service operations.  These opinions were in contrast
to those of rural carriers who, for the most part, were satisfied
with their work environment and their relationship with postal
management.  An important factor influencing the contrasting opinions
of city carriers and rural carriers is the much greater independence
rural carriers have to carry out their daily work and some unique
incentives for doing good work that minimize conflict with postal
management. 

Overall, we found that labor-management problems are long-standing
and have multiple causes that are related to an autocratic management
style, adversarial employee and union attitudes, and inappropriate
and inadequate performance management systems.  Traditionally,
management's attitude has been that employees respond best, if not
only, to discipline.  Management officials said that the employees'
attitude has been that their needs should take precedence over the
Service's needs, and that the unions' belief has been that employees
must be continually protected against abuse by management. 

The overwhelming volume and tedious nature of the work create a
challenge for employees and supervisors alike to be strongly
committed to doing quality work as a unified team.  Unfortunately,
the performance management systems do not adequately (1)
differentiate good workers from poor ones, (2) reward work groups for
teamwork, or (3) reward individual employees for high levels of
performance.  In essence, they tend to perpetuate an already
dysfunctional organizational culture. 

The effects of the problems are also multiple and include poor
quality of work life for postal employees and higher mail processing
and delivery costs for the Postal Service.  The Service recognizes
that it must improve customer satisfaction to enhance revenue and
retain market share.  It also recognizes that customers will not
remain satisfied in an environment where employees themselves are
dissatisfied.  An ever-present reminder of this is the annual cost to
process grievances, which the Postal Service estimated at about $200
million in fiscal year 1992 alone. 

Over the years, the Postal Service, the unions, and the management
associations have made attempts to improve labor-management relations
at the top and on the workroom floor.  The success of these efforts
has been limited because of a lack of participation of some unions
and a lack of sustained commitment by local management and union
officials.  Although these efforts have produced some positive
outcomes, they have not changed underlying values and systems that
affect labor-management relations. 

Since July 1992, Postmaster General Marvin Runyon, working with union
and management association leadership, has begun implementing several
initiatives to help build a labor-management partnership at the
national level and make the Postal Service a more customer- and
employee-oriented organization.  The new national leadership
structure and new management reward system are good first steps, and
they are consistent with approaches of other organizations that faced
similar problems.  But no clear framework or strategy exists for
moving agreed-upon values and principles down to first-line
supervisors and employees working at processing plants and post
offices. 

We reviewed approaches followed by the Ford Motor Company and the
Saturn Corporation and found that they have turned around acrimonious
labor-management relations by forming partnerships and making
long-term commitments to change traditional beliefs and values. 
Among other actions, management and the unions at these organizations
authorized increased flexibility in work units, changed the way work
was organized, and introduced new systems to emphasize employee
empowerment.  They also negotiated pay systems that based a certain
percentage of pay on corporate performance. 

Changing working relations on the workroom floor at the Postal
Service will require increased flexibility, necessitating changes in
union contracts and personnel systems to allow experimentation with
and evaluation of new approaches in relations between supervisors and
employees.  Upcoming contract negotiations between the Postal Service
and three of the four major postal unions will provide them an
opportunity to begin making the necessary changes. 

To deal with workroom problems, all the parties need to agree on a
framework for creating a work environment that minimizes the negative
dynamics between supervisors and employees.  Specifically, we are
recommending that the Postal Service, the unions, and management
associations develop a long-term agreement (at least 10 years) for
changing the workroom climate of both processing and delivery
functions.  This agreement should provide incentives that encourage
teamwork and give employees greater responsibility and accountability
for work results.  We are also recommending that the parties test new
approaches at pilot sites and evaluate their impact on employee and
customer satisfaction. 


--------------------
\2 The 1993 employee opinion survey was sent to all postal
executives, managers, supervisors, and employees.  About 513,000 (78
percent of the postal workforce) responded. 


   NATIONAL LABOR-MANAGEMENT
   RELATION PROBLEMS
------------------------------------------------------------ Letter :3

Relations between the Postal Service and the clerk, city carrier, and
mail handler unions both nationally and on the workroom floor have
generally been adversarial.  In recent years, the parties have had
difficulties reaching agreement at the bargaining table and have
relied on arbitration to settle disputes.  Interest arbitration\3 was
used by management and the two largest unions to settle disputes in
three of the five contract negotiations that have taken place since
1978.\4 The central focus of the issues in these negotiations has
been wage and benefit increases, job security, cost control, and
flexibility in hiring practices.  Consequently, policies affecting
quality of worklife issues have generally not been given the
attention needed in contract negotiations,\5 and some employees have
not been as satisfied with their working conditions as they could be
in performing their jobs.  (See vol.  II, chs.  3, 4, and 5.)

Like their national leaders, local union and management leaders also
have had difficulties in jointly settling disputes informally.  As a
result, the grievance arbitration procedure is overloaded.  In fiscal
year 1993, 51,827 grievances that were not settled on the factory
floor had been elevated to higher levels and were awaiting
resolution.  In 1992, the last year that data were available on a
national level, a backlog of 38,335 grievance cases were waiting to
be resolved through arbitration.  The average age of the grievances
in the backlog ranged from a low of 228 days in a former postal
region (now two postal areas) to a high of 696 days in another.  If
cases continue to be processed at the 1992 rate, many employees can
expect to wait a year or more for an arbitration resolution.  (See
vol.  II, ch.  3.)


--------------------
\3 Interest arbitration is arbitration over the terms of a new
contract. 

\4 Arbitration occurred in 1978 because the membership did not ratify
the agreement reached by management and union officials. 

\5 As discussed in volume II, chapter 6, some quality of worklife
issues, such as safety and health, have been dealt with at the
national level by the formation of joint labor-management committees. 


   WORK ENVIRONMENT IN MAIL
   PROCESSING PLANTS IS OFTEN
   TENSE AND CONFRONTATIONAL
------------------------------------------------------------ Letter :4

The work environment within the large factory-like operations of mail
processing plants often leads to tense and confrontational relations
on the workroom floor.  Much of the supervisor and employee
dissatisfaction on the workroom floor is related to (1) the treatment
of employees who are late or absent from work; (2) the lack of
employee participation in the decisions affecting their work; and (3)
the perception by both craft employees and supervisors that some
employees are not being held accountable for their performance,
leading to perceptions of disparate treatment.  (See vol.  II, ch. 
4.)


      ATTENDANCE PROBLEMS
---------------------------------------------------------- Letter :4.1

Although mail processing is a highly mechanized and automated
operation, a sizable workforce is required to process the mail. 
Having the necessary employees available for work when
scheduled--three "tours" or shifts, operating 24 hours a day, 7 days
a week--is critically important to meeting processing deadlines and,
in turn, customer expectations.  Employee absences, particularly
unscheduled absences, disrupt processing operations and affect
down-line delivery operations.  For these reasons, supervisors are
held accountable for minimizing employee absences. 

The 1992 employee opinion survey showed that 45 percent of the
processing employees believed they had been disciplined for using
sick leave when they were legitimately ill.  According to our
interviews and our review of arbitration files, supervisors' focus on
making productivity and budget goals resulted in unwarranted
discipline of many employees who were using unscheduled leave. 
Regardless of the type of leave used or the reason for the absence,
employees may be disciplined for failure to be regular in their
attendance, as the following two examples illustrate: 

  At the San Francisco General Mail Facility, a union steward told us
     that supervisors tried to intimidate clerks into using their
     annual leave instead of sick leave because one tour manager
     wanted "zero sick leave usage." The steward said that
     supervisors under that manager were under pressure to discipline
     any employee who "gets in the way of meeting that goal."

  In New York, grievance-arbitration files showed that a clerk
     requested a night off to attend his father's birthday party on
     January 3, 1992.  He was told he could have 2 hours off, but
     then he would have to report for work.  According to the clerk,
     his father became ill at the party and was taken to the
     emergency room.  The clerk called his supervisor and said that
     he would not be reporting for the remainder of his tour.  He
     presented the supervisor with the emergency room's certification
     of his father's treatment when he returned to duty.  The
     supervisor rejected the certification and issued a 14-day
     suspension in February 1992.  The supervisor's position was that
     there were other relatives at the party who could have taken the
     employee's father to the hospital and that the clerk could have
     reported for work.  The suspension was rescinded in arbitration. 

In all the districts we visited, managers identified overtime as a
major cause of labor-management problems.  Employees were
increasingly expected to work overtime, and while some employees may
have welcomed the chance to regularly work overtime, the amount of
overtime worked was taking its toll on the mail processing workforce. 
Overall, the amount of overtime used by the Postal Service nearly
doubled in 5 years from 69 million workhours in 1989 to 140.1 million
workhours in 1993.  Part of the recent increase in overtime hours was
due to a larger than expected number of retirements taken by postal
employees during the 1992 downsizing.  In responding to the 1992
employee opinion survey, employees sometimes commented about the
overtime impact.  One employee at the Cincinnati plant wrote about
his long workhours: 

     "Working 6 days a week, 9 and 10 hours a day under a lot of
     pressure is finally taking its toll."

Another employee at that location wrote: 

     "I work six days a week and every third Sunday.  I have done
     this for almost seven years.  I am tired."


      LIMITED EMPLOYEE INVOLVEMENT
---------------------------------------------------------- Letter :4.2

Employee opinion survey results show that processing employees do not
believe that management values their input on how to organize and
accomplish their work.  In each of the postal districts we visited,
poor communications between supervisors and employees and the lack of
employee empowerment to effect changes in their work were cited as
significant labor-management problems.  The inability of employees to
influence how their work was organized and accomplished was also
mentioned by employees we interviewed.  Some supervisors said that
employees did not take their jobs seriously and did not feel
responsible for their work.  Union representatives said that
employees were most familiar with the problems in their work areas
and should have some say in running the operations. 

The Postal Service and unions have experimented with self-managed
work units.  At the time of our review, seven processing facilities
and five post offices were testing a "crew chief" program, which
allows craft employees to take greater responsibility for moving the
mail.  However, the program did not address some underlying issues
that create conflict between labor and management, such as the lack
of incentives for teamwork and procedures for dealing with poor
performers. 


      POOR PERFORMANCE OFTEN
      TOLERATED
---------------------------------------------------------- Letter :4.3

Employees and supervisors alike said the Postal Service is
ineffective in dealing with poor performers.  According to the 1993
employee opinion survey, 83 percent of processing workers responded
that some people do most of the work and the others do just enough to
get by.  Seventy percent of the workers believed that poor employee
performance was usually tolerated. 

The employee opinion survey also showed that 88 percent of first-line
supervisors reported that it was impossible to fire an employee who
should be terminated.  Our review of grievance-arbitration files
provided examples illustrating the difficulty of dealing with problem
employees.  For example, in one plant we visited, an employee was
grieving her removal from the Postal Service after having been
suspended and/or removed 7 times within 4 years (July 1986 through
June 1990) because of attendance problems related to substance
abuse.\6 As a result of an arbitration hearing in June 1990, she was
given a last-chance offer and returned to work in July 1990.  She was
removed 3 weeks later for failure to be regular in attendance, which
was challenged by the union.  In a July 1991 decision, an arbitrator
upheld management's decision to terminate the employee--5 years after
the attendance problems first surfaced. 

In the Denver Customer Service District, comments submitted with the
1992 employee opinion survey indicated that unions played a role in
shielding poor performers.  According to one manager: 

     "...Unions spend approximately 90 percent of their time
     defending the incompetent employees that the Postal Service
     can't get rid of.  Managers spend approximately 90 percent of
     [their] time dealing with these incompetent employees when their
     time could be better utilized doing more productive things..."

Union representatives told us that poor supervisory performance was
also tolerated by management.  They did not believe that supervisors
were held accountable for harassing employees or for purposely
violating the labor contract.  According to the 1993 employee opinion
survey, 60 percent of processing employees did not believe that
supervisors consistently followed the provisions of the national
agreements.  Union officials said contract violations occurred
regularly because supervisors did not receive contract training and
because supervisors were not held accountable for violating the
contract.  According to a postal headquarters official, there are no
criteria to identify a supervisor as a poor performer who warrants
disciplinary action.  He said that few supervisors get unacceptable
ratings.  The Postal Service typically tries to find out why a
supervisor is not performing up to standards and then provides
training, a transfer opportunity, or a mentor to improve performance. 
(See vol.  II, ch.  4.)


--------------------
\6 According to the employee opinion survey, 25 percent of mail
processing employees believed there was a drug problem, and 34
percent believed there was an alcohol problem in processing plants. 


   EMPLOYEE-MANAGEMENT RELATIONS
   AND CARRIER JOB ATTITUDES
   AFFECT MAIL DELIVERY OPERATIONS
------------------------------------------------------------ Letter :5

Similar to the relationships between employees and management in mail
processing plants, the relationships between city carriers and
management are generally tense and often confrontational.  In
contrast, relationships between rural carriers and management are
generally cooperative.  While city and rural carriers have common
goals and in many cases work out of the same post office under the
same supervisors, they have different work environments, and their
attitudes about the Postal Service, their work, and supervision
differ significantly.  Rural carriers consistently rated the Postal
Service higher than did city carriers in all 12 dimensions covered in
the employee opinion surveys, and they also filed fewer grievances
than city carriers.  National grievance rates for the first 3
quarters of fiscal year 1992 showed that city carriers filed 11 times
more grievances per 100 employees than rural carriers. 

The differing views of these two carrier groups are associated
primarily with (1) the relative independence of rural carriers to do
their work compared to city carriers and (2) the differences in
incentives for good work offered to the two carrier groups.  These
differences in city and rural carriers' approaches to work,
supervision, and compensation date back to the origins of city and
rural mail delivery services and the formation of unions representing
the two carrier groups. 


      SUPERVISION DIFFERS
---------------------------------------------------------- Letter :5.1

While city and rural carriers have common responsibilities and in
some cases similar routes, they operate under different compensation
systems.  City carriers are hourly workers paid for a standard 8-hour
workday or 40-hour workweek.  Hours in excess of a 40-hour workweek
are paid at overtime rates.  Rural carriers, on the other hand, are
salaried employees, and the amount of their salary is based on an
annual evaluation of the estimated number of hours per week needed to
deliver the mail.  Most rural carrier routes have been evaluated at
more than 40 hours per week, with the first 40 hours paid at the
basic hourly rate and additional hours estimated over 40 hours paid
at a higher rate (1-1/2 times the basic hourly rate). 

Primarily because of the different provisions for "overtime"\7

pay under the two pay systems, city carrier daily schedules are more
closely supervised than rural carrier schedules.  At one of the post
offices we visited, which had about the same number of city and rural
carriers, the Postmaster said that on an average day he and his
first-line supervisor spend about 90 percent of their time monitoring
and managing city carrier activities and only 10 percent of their
time on rural carrier activities.  Rural carriers do not have to
negotiate daily with supervisors regarding the time it will take to
complete mail sorting or delivery, and their performance is not
closely supervised.  Rural carriers generally control their own
workdays as long as all the mail is delivered on time each day. 

City carriers have to negotiate their daily work schedules and are
routinely monitored against detailed performance standards for
specific daily tasks.  Each day, city carriers are accountable for
meeting specific productivity goals for many of their daily work
functions.  Delivery unit managers and supervisors routinely collect
data on mail volume, office and street hours, replacements, overtime,
auxiliary assistance, curtailed and delayed mail, and attendance--all
to determine if city carriers are meeting expected goals.  For
example, the Postal Service has set detailed standards for the
accurate and speedy sorting of the mail, which is viewed as a key
duty.  While they are sorting the mail, the city carriers' speed is
measured daily against these standards. 

On the other hand, rural carriers are not as closely monitored by
supervisors, are not required to meet similar daily time-based
standards, and are allowed to plan and keep track of their own times. 
On a daily basis, managers expect rural carriers to deliver all their
mail on time and keep the customers satisfied.  The autonomy afforded
rural carriers by the structuring of the rural route and the manner
in which they are compensated largely eliminate the need for rural
route supervisors to monitor how much time rural carriers spend
sorting and delivering the mail. 

Employee opinion survey data for 1993 show that city carriers were
more dissatisfied with working conditions than their rural
counterparts were.  A key cause of this dissatisfaction identified
during our field work was the level of supervision imposed on city
carriers, which engendered conflict mainly over the amount of time it
takes to do the work.  The daily pay and schedule negotiations
present numerous opportunities for confrontation and conflict. 
Officials in five of the seven districts we visited cited the daily
negotiations that occur over requests for assistance or overtime as
the most contentious issues between first-line supervisors and city
carriers. 


--------------------
\7 The "overtime" built into some rural carriers' pay is not really
daily or weekly overtime in the sense of unanticipated extra
workhours; rather, it represents the total number of hours necessary
to complete the work on that route. 


      WORK INCENTIVES DIFFER
---------------------------------------------------------- Letter :5.2

City carriers' performance standards tend to discourage carriers from
doing their best and completing work quickly.  If city carriers
return to the office early--before their 8-hour day ends--they are
assigned additional duties by management.  These duties often involve
sorting the next day's mail or "pivoting," i.e., being sent back out
on the street to help complete mail delivery on another carrier's
route.  However, carriers who stay out on the street and do not
return to the office until their 8-hour day is over are usually not
required to do additional work. 

Rural carriers do not have similar disincentives for good work.  If
rural carriers finish their work in less than the evaluated route
time, they are given the option upon returning to the office of
leaving for the day or getting an early start on the next day's work. 
Although they have the option of leaving early, they work more hours
on average than city carriers.  For example, national workhour data
showed that in fiscal year 1993, a rural carrier worked an average of
1,859 hours, versus an average of 1,797 hours for a city carrier. 
(See vol.  II, ch.  5.)


   PAST INITIATIVES TO IMPROVE
   LABOR AND MANAGEMENT RELATIONS
------------------------------------------------------------ Letter :6

Since 1982, the Postal Service, unions, and management associations
have tried a variety of programs to improve workfloor relations. 
These programs have included employee participation plans, such as
Employee Involvement (EI) and Quality of Working Life (QWL); a
monetary incentive program; and alternatives for resolving workfloor
conflicts.  However, commitment to improvement initiatives has been
sporadic, short-lived, and piecemeal, limiting their potential
pay-off for all the parties.  Although the initiatives have had some
positive results, they have not changed underlying management values
or systems affecting supervisor-employee relationships. 

Union participation in these initiatives has been uneven, and
commitment by management and unions at field locations was often
lacking.  For example, APWU and NALC, representing about 85 percent
of the craft employees, have chosen not to participate in the
monetary incentive program because union leaders believe that such
pay would replace negotiated wage increases and also encourage
competition among employees.  APWU has also not participated in the
EI or QWL programs because the union leadership sees these
initiatives as an effort by management to bypass the union and work
directly with the employees that APWU represents.  Management and
unions at the national and local levels said that in many cases the
initiatives were used for political gains, lacked sufficient
commitment of resources for implementation, and were abandoned
because of a loss of interest or lack of budget.  For example, a
management official at the Cincinnati District said that the local
NALC president used union participation in EI as a "bargaining chip."
NALC officials at the Waldorf and Clinton, MD, post offices in the
Southern Maryland District said that employees lost interest in EI
because few suggestions were implemented, and attending EI meetings
only increased employees' workhours. 

When local management, unions, and employees were committed to
improvement initiatives, the results were often positive.  At the
national level, we were told that EI and QWL helped to develop mutual
trust and cooperation, change management styles, and increase an
awareness that quality of worklife is just as important as the
"bottom line." A headquarters labor relations official told us that
the alternatives for discipline and dispute resolution "legitimized"
concerns over workfloor relations, forced supervisors and employees
to pay attention to discipline and labor-management relations,
provided for communications training, and pushed labor and management
to work together.  Two analyses done by the Postal Service showed
that offices using the alternative procedures sent fewer cases to
arbitration after the procedures were implemented. 

Management and union officials at processing plants and post offices
that we visited also said that the results of improvement efforts
were beneficial.  For example, Mail Handlers representatives for the
San Francisco, CA, general mail processing plant said that QWL had
opened lines of communications and improved operations.  The Denver
Postmaster and the local NALC president cited an EI project, called
the Customer Service Management program, which reduced friction
between carriers and supervisors and improved morale and trust at the
Bear Valley Post Office in Colorado. 

Overall, past and ongoing efforts to deal with union-management and
employee-supervisor relations, however, have focused to a large
extent on resolving conflicts rather than preventing them.  Relations
between management and unions continue to be adversarial, and
employees still have major concerns about their work environment. 
Attitudes and relations of those participating in improvement
initiatives were about the same as those who did not participate. 
Further, in two key areas--performance management and
reward/recognition--employees' attitudes became worse overall from
1992 to 1993, according to the Postal Service employee opinion
surveys.  (See vol.  II, ch.  6.) In nine areas, however, there was
some overall improvement in employee responses, which was encouraging
given the major reorganization and downsizing that had taken place
when the 1993 survey was administered.  (See vol.  II, ch.  3.)


      APPROACHES OF OTHER
      ORGANIZATIONS FOR BUILDING A
      COMMITTED WORKFORCE
---------------------------------------------------------- Letter :6.1

Private sector unionized organizations that we visited (Ford and
Saturn) succeeded in improving labor-management relationships, and
their corporate performance, by, among other actions, changing
traditional beliefs and practices.  Saturn has made extensive use of
employee empowerment and labor-management partnerships, while Ford's
employee involvement program is more traditional.  However, at both
Ford and Saturn, union and management officials formed partnerships
and made long-term commitments to change the way they interacted with
each other.  Management at both plants, together with the United Auto
Workers, authorized increased operational flexibility in work units,
changed the way work was organized, and introduced new systems to
emphasize employee empowerment.  They also negotiated pay systems
that based a certain percentage of pay on corporate performance. 
(See vol.  II, ch.  6.)


   CURRENT INITIATIVES TO IMPROVE
   LABOR AND MANAGEMENT RELATIONS
------------------------------------------------------------ Letter :7

Shortly after becoming Postmaster General in July 1992, Mr.  Marvin
Runyon began working to change the Postal Service's corporate
culture, which he characterized as "operation driven, cost driven,
authoritarian, and risk averse," to a culture that is
"success-oriented, people oriented, and customer driven." According
to Mr.  Runyon, management, unions, and employees all need to work
together to improve relationships and organizational performance, so
the Postal Service as a whole can focus on meeting customers' needs. 

The Postal Service's current strategies for changing the corporate
culture have centered on (1) restructuring\8 and downsizing the
organization, (2) holding National Leadership Team meetings that
include all Postal Service officers and the national presidents of
the unions and management associations, and (3) changing the
incentive systems for rewarding managers.  The development of a
labor-management partnership through the National Leadership Team
structure and management reward systems that encourage teamwork and
organizational success are good first steps that are consistent with
approaches of other organizations and National Performance Review
recommendations.  However, there is a lack of any overall union and
management agreement for change at the field operations level.  No
clear framework or long-term strategy exists for moving agreed-upon
values and principles down to first-line supervisors and employees at
processing plants and post offices.  (See vol.  II, chs.  2 and 6.)


--------------------
\8 Under the new postal structure, key postal mail processing and
customer service managers are organized in geographic-based teams,
called "performance clusters," which are to plan and manage efforts
to achieve the Postal Service's corporate goals of customer
satisfaction, commitment to employees, and revenue generation. 


   CONCLUSIONS
------------------------------------------------------------ Letter :8

Improving service to postal customers requires that both union and
postal management effectively tend to the long-standing employee
problems discussed in this report.  The National Leadership Team has
not agreed upon the actions that are necessary to cascade changes
made and envisioned at the national level down through the
performance clusters to the processing plants and post offices.  To
be successful, unions and management associations at all levels must
share with postal management the responsibility for resolving
problems.  The "us versus them" approach of the postal, union, and
association leadership must end if employees are to have an improved
quality of life and produce greater results from their work.  Large
numbers of postal customers and employees are dissatisfied with
current conditions, which demand change. 

To deal with workroom problems, all the parties need to agree on a
framework for creating a work environment that recognizes positive
values in the postal workforce, such as pay and benefits, and
minimizes the negative dynamics between supervisors and employees. 
Changing working relations on the workroom floor will require
increased flexibility, necessitating a change in union contracts and
personnel systems to allow experimentation with and evaluation of new
approaches in relations between supervisors and employees.  This
might be best done on a pilot basis, which would allow all the
parties to demonstrate their commitment to change and determine if
the change produced positive results.  Successful approaches could
then be used at all plants and post offices in all 85 districts. 
Upcoming contract negotiations between the Postal Service, APWU,
NALC, and Mail Handlers will provide an opportunity for the parties
to begin making the necessary changes in national agreements for
experimentation and evaluation. 

The specifics of these agreements must be worked out by the parties,
and doing so will require a high degree of trust and a collective
focus on the overall, longer term interests of the Postal Service. 
Success will ultimately hinge on meeting the expectations of postal
customers, who increasingly have other choices for satisfying their
communications and merchandise delivery needs.  The history of
labor-management relations and recent experience with collective
bargaining indicate that agreement may not be possible without some
assistance from outside the Postal Service.  It may be necessary for
postal management, union, and management association officials at the
national, district, as well as plant and post office levels to learn
new techniques for reaching bilateral agreement on difficult issues,
rather than deferring to an arbitrator for a decision.  Leadership
teams at all levels of the Postal Service can learn from the
experiences of some other organizations in (1) developing a
union-management partnership; (2) modifying national agreements; (3)
organizing and empowering work teams; and (4) determining pay, in
part, on the basis of organizational and unit performance. 

To be successful, management and unions must together change the
culture and achieve breakthrough improvements of the workplace
climate.  This will require that management and the unions form a
partnership for achieving corporate goals and, toward that end, give
employees who handle the mail more freedom to be creative and
innovative in their jobs.  These employees have needs, expectations,
and aspirations that management and unions must respond to if they
want the commitment of employees to meet the competitive challenges
in the marketplace.  Those not carrying their share of the burden
must be appropriately dealt with to ensure a committed workforce. 
Collective bargaining over wages cannot continue to be the central
focus of negotiations.  The evidence suggests to us that quality of
worklife issues are just as important to postal employees, and these
issues need the urgent attention of both management and union
leadership. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :9

We recommend that the Postmaster General and the National Leadership
Team, which includes the heads of the unions and management
associations, develop and sign a long-term (at least 10 years)
framework agreement outlining overall objectives and approaches for
demonstrating improvements in the workroom climate of both processing
and delivery functions.  Specifically, the agreement should provide
for the following principles and values: 

(1)Structure the work to assign employees greater responsibility and
accountability for results by clearly defining the composition and
structure of work teams and the measurements of team success. 

(2)Provide incentives that encourage all employees in work units to
share in the tasks necessary for success and that allow work units
and employees to be recognized and rewarded primarily on the basis of
corporate and unit performance. 

(3)Train employees and hold them accountable for working as members
of work teams, focusing on serving the customer, and participating in
efforts to continuously improve unit operations. 

(4)Select and train supervisors who can serve as
facilitator/counselors and who will have the skills, experience, and
interest to treat employees with respect and dignity, positively
motivate employees, recognize and reward employees for good work,
promote teamwork, and deal effectively with poor performers. 

(5)Counsel, train, and, if necessary, remove supervisors and
employees who demonstrate a lack of commitment to work unit goals,
values, and principles. 

To accelerate and demonstrate positive change across the
organization, we recommend that the National Leadership Team, working
with management and union counterparts in area offices, identify
pilot sites (performance clusters, including some with the worst
problems, such as Chicago and some of the districts we visited) where
management and union officials are willing to implement and evaluate
(using employee opinion, Customer Satisfaction Index, and External
First-Class Measurement System data) the above principles and values. 
We recommend that the National Leadership Team give the pilot sites
the flexibility needed by authorizing local union and management
leadership at test sites to develop approaches for improving working
relations, operations, and service quality. 

  For mail processing employees, we recommend that the approaches
     include developing, implementing, and evaluating self-managed
     work units.  This could be done by expanding the crew chief and
     service captain efforts to include a redefined role for
     supervisors, new incentives for achieving corporate and unit
     goals, and effective means of holding employees accountable for
     results. 

  For delivery employees, we recommend that the agreements include
     greater independence for employees in sorting and delivering
     mail, incentives for early completion of work, and a system of
     accountability for meeting delivery schedules.  We are not
     advocating that city carriers merely adopt the rural carrier
     system.  Rather, city carriers and management should build a
     system that incorporates known positive attributes of the rural
     system, e.g., greater independence and incentives for fast and
     reliable mail delivery. 

To help ensure that agreements are reached in a timely manner, we
recommend that the National Leadership Team consider arranging for
outside advice and assistance to (1) facilitate the development of
agreements at the national and performance cluster levels and (2)
learn new techniques for reaching agreement and resolving differences
through negotiation rather than resorting to binding arbitration. 
The assistance of the Federal Mediation and Conciliation Service
might be considered, as well as the expertise and experience of
successful practitioners of constructive negotiation in the private
industrial sector. 

Finally, we recommend that after sufficient time has passed for test
units to have implemented agreed-upon changes, the National
Leadership Team arrange for an independent evaluation to determine
(1) the extent to which units have achieved the objectives in the
framework agreement; (2) the impact on employee and customer
satisfaction; (3) any additional changes in policies, contracts, or
systems needed for success; and (4) whether and how best to make
similar changes in work units throughout the Postal Service. 


   MATTER FOR CONGRESSIONAL
   CONSIDERATION
----------------------------------------------------------- Letter :10

In the past, postal management, the four major unions, and three
management associations have not formulated overall agreements to
make changes needed in the workplace.  In light of this,
congressional oversight committees should monitor the progress of the
parties in developing and implementing an agreement to address the
problems discussed in this report and should request a progress
report from the Postal Service, the four unions, and the three
management associations within 1 year from the date of this report. 

Further, if the various parties involved cannot reach a framework
agreement within 2 years from the date of this report, Congress may
want to reexamine any aspects of the employee and management
relationships within the Postal Service that are prescribed in the
1970 act but constitute barriers to reaching a framework agreement
during these 2 years. 


   POSTAL SERVICE, UNIONS, AND
   MANAGEMENT ASSOCIATION COMMENTS
----------------------------------------------------------- Letter :11

The Postal Service, APWU, and NRLCA provided written comments on a
draft of this report.  The National Association of Letter Carriers,
National Postal Mail Handlers Union, National Association of
Postmasters, National League of Postmasters, and National Association
of Postal Supervisors did not choose to provide written comments. 
However, we discussed the draft with officers of these organizations,
and they agreed with our assessment of the labor-management climate
on the workroom floor, and each agreed with most or all of our
recommendations. 

The Postal Service agreed with our major conclusions and accepted our
recommendations.  The Service was concerned, however, that the 1-year
time period that we proposed for developing a framework agreement may
not be sufficient to do the job properly and said it was hopeful that
Congress would not act hastily to impose a legislative remedy.  In
our view, agreement on the basic principles for changing the current
work environment must be a high priority of the Service, the unions,
and the management associations if, together, they are to succeed in
the increasingly competitive marketplace.  We believe, as does the
Postal Service, that improving employee commitment and satisfaction
is key to improving delivery and retail services.  Even so, after
considering the Postal Service's comments and other comments on the
draft report, we agree that a period of 1 year to reach consensus on
a framework agreement may not be practical.  Therefore, we revised
the matter for consideration to suggest that Congress provide 2 years
for the parties to reach agreement, with a progress report to
Congress after 1 year. 

The Postal Service said that our report for the most part presents an
accurate description of labor-management problems in post offices and
large mail processing facilities.  However, the Service believed that
our report dwelt too much on the negative side of the
labor-management climate and failed to examine the root causes of
those problems. 

This report does provide an assessment of the labor-management
climate on the workroom floor that we found all too often to be
negative.  The report addresses some underlying assumptions, values,
and attitudes that we found to be widely shared, i.e., the
organizational culture, and that help to explain the tense and
adversarial relationships that exist in the Postal Service.  In this
context, we agree that there is no single, clear-cut root cause for
the Service's labor relation problems, and we do not believe the
problems can be easily solved.  Rather, multiple factors within the
Postal Service's work environment contribute to bad relations. 

Our report points to a number of Postal Service policies and
practices that we believe reflect current assumptions and values and
that should be changed in an effort to encourage, facilitate, and
reward more productive relations.  For example, on the delivery side,
we discuss at some length the structure of relationships between mail
carriers and the Postal Service that, in our opinion, explains in
large measure the tense and confrontational relationships that exist
between supervisors and city carriers in contrast to the
relationships between supervisors and rural carriers.  In mail
processing plants, we identify other Postal Service practices that
need reexamining, such as tying supervisors' incentive systems to
numerical goals and limiting employees' involvement in daily
decisions affecting their work. 

The Service also said that we virtually ignored the many improvements
and initiatives underway to deal with the problems.  This was not our
intent.  Clearly, the current leadership is taking significant and
promising steps to change the Service's culture and improve its
performance.  Chapters 2 and 6 of volume II of our report discuss in
some detail current and past initiatives to improve labor-management
relations.  We thought we had achieved a balanced presentation. 
However, in light of the Service's concern, we expanded our
discussion in volume I of these initiatives and the positive changes
in the employee survey results between 1992 and 1993.  (See vol.  II,
app.  III, for the text of the Postal Service's comments and our
detailed response to these comments.)

APWU objected to our recommendations, maintaining that we were
meddling with the collective bargaining process.  APWU also said that
our report overstates the number of times national agreements have
had to be resolved in interest arbitration and fails to recognize the
union's duty of fair representation in grievance litigation.  APWU
also took exception to our use of employee opinion survey data to
reflect employees' views about their working conditions, contending
that this was inconsistent with the National Labor Relations Act. 

We agree that union and management differences have to be worked out
in the collective bargaining process.  We are not recommending
specific changes to the collective bargaining agreements.  However,
the parties may recognize that changes are needed in the union
contracts in order to implement an overall framework agreement that
deals with the long-standing workroom problems identified in this
report.  We revised and clarified the report text on the reasons and
extent to which APWU and the other unions have resorted to interest
arbitration.  We recognize that APWU owes a duty of fair
representation to all members, but this does not mean that APWU is
compelled to take every case to arbitration, nor are we saying that
this occurred.  Rather, our basic point is that the unions and
management need a basic reorientation of their relations.  As
partners, they need to establish a framework that provides
recognition and reward for good employee performance and, of equal
importance, allows those employees who perform poorly to be dealt
with appropriately. 

The report does rely, in part, on the employee opinion survey to
gauge the climate on the workroom floor, but the survey is not the
only source of information used or cited.  We also use testimonial
evidence obtained from union and management representatives and
grievance/arbitration data obtained from Postal Service records. 
These two sources of information corroborate employee opinions about
the conditions they face on the workroom floor.  To respond to the
congressional request, we determined that in addition to interviewing
139 union leaders and stewards, it was necessary to obtain the views
of employees directly.  Further, we do not believe that our use of
the employee opinion survey results is inappropriate or inconsistent
with the National Labor Relations Act because the act governs only
the relationships between employers, employees, and labor
organizations.  (See vol.  II, app.  IV, for the text of the American
Postal Workers Union's comments and our detailed response to these
comments.)

The National Rural Letter Carriers' Association concurred with the
information contained in the report on the rural letter carrier
craft.  (See vol.  II, app.  V, for the text of the National Rural
Letter Carriers' Association's comments.)


--------------------------------------------------------- Letter :11.1

As arranged with the Committee, unless you release its contents
earlier, we plan no further distribution of this report until 30 days
from the date of this letter.  At that time, we will send copies to
the Board of Governors and the Postmaster General of the U.S.  Postal
Service, the House Committee on Post Office and Civil Service, the
postal unions and management associations, and other interested
parties.  Copies will also be made available to others upon request. 

This report was prepared under the direction of J.  William Gadsby,
Director, Government Business Operations Issues, who may be reached
on (202) 512-8387 if there are any questions.  Other major
contributors are listed in appendix VI of volume II. 

Johnny C.  Finch
Assistant Comptroller General
