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

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-94-201B
     TITLE:  U.S. Postal Service: Labor-Management Problems Persist on 
             the Workroom Floor (Volume II)
      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
             Federal agency reorganization
IDENTIFIER:  USPS Customer Satisfaction Index
             USPS External First-Class Measurement System
             USPS Striving for Excellence Together Program
             USPS Mail Condition Reporting System
             
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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-94-201B Volume II

GAO/GGD-94-201B

GAO/GGD-94-201B Volume II:  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
  FMCS - Federal Mediation and Conciliation Service
  GMF - General Mail Facility
  GM - General Motors
  LAMPS - Labor/Management Partners
  LISTEN - Letters of Warning In Lieu of Suspension
  MBP - Management By Participation
  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
  TVA - Tennessee Valley Authority
  UAW - United Auto Workers
  UMPS - Union/Management Pairs

PREFACE
============================================================ Chapter 0

This volume of GAO's report is a detailed analysis of
labor-management relations at the U.S.  Postal Service.  GAO's
analysis incorporates the views of both national and local
management, unions, and management associations leaders on
labor-management relations and the views of postal employees on their
work environment.  We report on the state of union-management
relations, the work environment in mail processing plants and post
offices that we visited, and the initiatives to improve relations. 
Specifically, we address four major topics: 

(1) the Postal Service's efforts to change its corporate culture in
order to succeed in a competitive marketplace (ch.  2);

(2) the status of union-management relations and the views of the
postal workforce on management style (ch.  3);

(3) the work environment and labor relations problems in mail
processing and delivery operations (chs.  4 and 5); and

(4) the efforts by the Postal Service, unions, and management
associations to improve the work climate and enhance labor-management
relations
(ch.  6). 

Any questions concerning this review can be addressed to J.  William
Gadsby, Director, Government Business Operations Issues, who may be
reached on (202) 512-8387. 

Johnny C.  Finch
Assistant Comptroller General


INTRODUCTION
============================================================ Chapter 1

Over 800,000 people work for the U.S.  Postal Service, making it the
nation's largest civilian employer.  The large majority of the postal
workforce is represented by unions that date, in some cases, back to
the 1880s.  Over the Postal Service's history, relations between
labor unions and postal management have often been confrontational. 
The culture on the workroom floor of the vast mail processing plants
and post offices throughout the country has been characterized by
postal management, management association, and union officials as
authoritarian, wherein employees work under a highly structured
system of workrules and autocratic management style.  Working
conditions at plants and post offices reportedly have contributed to
tension and frustration, and the number of hostile and violent
episodes involving postal employees has increased since 1983. 

Postmaster General Marvin Runyon, like many of his predecessors, has
said that the adversarial relationships between labor and management
must end.  Since Mr.  Runyon's appointment to Postmaster General in
July 1992, there has been a visible emphasis on working to establish
good relations between postal management and unions representing
postal employees.  He has attached great importance to improving
relationships between managers and employees, making better treatment
of people a high priority.  "Autocratic management is out," he has
said, and employee empowerment is one of the key elements of his
agenda as Postmaster General. 


   EARLY HISTORY OF
   LABOR-MANAGEMENT RELATIONS
---------------------------------------------------------- Chapter 1:1

Labor-management problems at the Postal Service are not new.  Poor
working conditions for postal employees go back to the end of the
19th century, when letter carriers were often forced to stay on the
job 10 or more hours daily.  An 1890 national survey showed that 90
percent of post office clerks worked an average of 14 hours a day. 
Along with long workdays, workrooms were filthy and the air was
polluted.  Tuberculosis was such a common occupational disease among
postal employees that it became known as the "clerks' sickness."

Unsatisfactory working conditions, along with low pay and arbitrary
management behavior, prompted postal workers to be the first federal
employees to join unions in significant numbers.  The city letter
carriers organized in 1889 and were the first "craft" to unite for
concerted action.  A year later the postal clerks established a
national organization, and by 1908 the rural letter carriers, the
postmasters, and postal supervisors had all formed national
associations.  In their early efforts, the postal union leaders
cultivated close relations with key Members of Congress to obtain
improvements in pay and working conditions. 

The primary focus of postal employee organizations was lobbying
Congress and administering employee benefit programs until 1962, when
President Kennedy issued Executive Order 10988.  The order
established the principle of limited collective bargaining.  However,
bargaining was severely limited because almost all policies on wages
and hours continued to be controlled by Congress. 


   THE POSTAL REFORM MOVEMENT
---------------------------------------------------------- Chapter 1:2

By the mid-1960s, the Post Office Department, then a cabinet
organization, was experiencing large increases in mail volume,
mounting operating deficits, and complaints of tardy deliveries.  In
1966, operation of the 13-story, 60-acre Chicago Post Office stopped
for over 2 weeks, as the volume of mail exceeded the handling
capacity of the nation's largest postal facility.  Six months later,
Postmaster General Lawrence O'Brien called for major reforms.  In
response, President Lyndon Johnson appointed the President's
Commission on Postal Organization, which was headed by Mr.  Frederick
Kappel and known as the Kappel Commission, to determine whether the
postal system was capable of meeting the demands of the nation's
growing economy and expanding population. 


      THE KAPPEL COMMISSION REPORT
-------------------------------------------------------- Chapter 1:2.1

The Kappel Commission concluded that the postal system was
deteriorating and likely to produce more disasters similar to
Chicago.  Some of the deplorable conditions found by the Commission
were antiquated personnel policies, a poor work environment, limited
career opportunities and training, an inadequate system for
supervision, and unproductive labor-management relations.  The
Commission's report, issued in June 1968, recommended that the Post
Office Department be replaced by a postal corporation owned by the
federal government and chartered by Congress.  The new corporation
would operate the postal system on a self-supporting basis and take
immediate steps to improve customer service and the working
conditions of employees.\1


--------------------
\1 Towards Postal Excellence:  The Report of the President's
Commission on Postal Organization, President's Commission on Postal
Organization, (Washington, D.C.:  Government Printing Office, June
1968). 


      THE 1970 STRIKE
-------------------------------------------------------- Chapter 1:2.2

The controversy surrounding the proposed postal reorganization and
demands for wage increases for postal workers contributed to the
largest ever federal walkout to that date in 1970.  President Richard
Nixon had predicated any wage increase on congressional approval of
the reorganization bill.  The postal unions wanted a pay raise for
their members but uniformly opposed radical postal reorganization. 
All attempts at compromise failed, and on March 18, 1970, city letter
carriers voted to strike in New York City.  The walkout quickly
spread to other cities, affecting more than 600 post offices
nationwide.  By the end of the 9-day strike, over 200,000 workers
were off the job. 


   THE POSTAL REORGANIZATION ACT
   OF 1970
---------------------------------------------------------- Chapter 1:3

Following the strike, Congress passed the Postal Reorganization Act
in August 1970, establishing the Postal Service as an independent
governmental establishment with a mandate to provide prompt,
reliable, and efficient mail services to all areas of the country. 
Congress envisioned that it would be self-sustaining by 1985.  The
act brought postal labor relations within a structure similar to that
applicable to companies in the private sector.\2

Collective bargaining for wages and working conditions was
authorized, subject to regulation by the National Labor Relations
Board.  A negotiated grievance procedure, including binding
arbitration, was also authorized to resolve employee and union
grievances.\3

However, Congress included several key provisions differentiating
postal labor relations from those in the private sector: 

  Postal employees could not be compelled to join or pay dues to
     the union.\4

  Strikes were prohibited.\5

  In lieu of the right to strike, binding (compulsory) arbitration
     was established to resolve bargaining deadlocks.\6

  Wages comparable to those of workers in the private sector were
     mandated.\7

  Associations were authorized for supervisors and managers to be
     represented in the planning and development of pay policies,
     schedules, and other programs affecting them.\8


--------------------
\2 Public Law 91-375, 39 U.S.C.  1001 et seq. 

\3 39 U.S.C.  1206. 

\4 39 U.S.C.  1204, 1205. 

\5 39 U.S.C.  410 provides for the application of other laws to the
Postal Service.  This includes 5 U.S.C.  7311, which prohibits
federal employees from striking. 

\6 39 U.S.C.  1207. 

\7 39 U.S.C.  1003. 

\8 39 U.S.C.  1004. 


   ORGANIZATIONS REPRESENTING
   POSTAL EMPLOYEES
---------------------------------------------------------- Chapter 1:4

As of September 1993, 612,826 employees (about 89 percent) of the
Postal Service's 691,723 career employees were represented by unions. 
These employees are called "bargaining unit" or "craft" employees. 
Although union membership is voluntary, approximately 80 percent of
those represented by unions have joined and pay dues to the various
postal unions.  General managers, postmasters, and supervisors,
totaling 57,240 as of September 1993, are "nonbargaining unit"
employees and are represented by management associations. 


      CRAFT UNIONS
-------------------------------------------------------- Chapter 1:4.1

Employees are organized along craft lines--i.e., by the nature of
their work--and most bargaining employees (612,600, or 99.7 percent)
are represented by 1 of 4 unions (see table 1.1.). 



                          Table 1.1
           
              Organizations Representing Career
             Bargaining Employees as of September
                             1993

                                           Number of
                                          employees\  Percen
Organizations and employee functions               a       t
----------------------------------------  ----------  ------
American Postal Workers Union, AFL-CIO,      305,937    49.8
 (APWU) represents clerks, maintenance
 workers, special delivery messengers,
 and motor vehicle operators.
National Association of Letter Carriers,     211,893    34.5
 AFL-CIO, (NALC) represents city letter
 carriers.
National Rural Letter Carriers                43,694     7.1
 Association (NRLCA) represents rural
 letter carriers.
National Postal Mail Handlers Union           51,078     8.3
 (NPMHU), a Division of the Laborers'
 International Union of North America,
 AFL-CIO, represents mail handlers.\
Other unions\b                                 1,647      .3
============================================================
Total                                        614,249   100.0
------------------------------------------------------------
\a The number of employees shown is the number of career craft
employees represented and not the number of union members. 

\b The other unions are the D.C.  Nurses Association (224 nurses) and
the Federation of Postal Police Officers (1,423 officers). 

Source:  Postal Service On-Rolls and Paid Employee Statistics,
Accounting Period 13, Postal Fiscal Year 1993. 

The headquarters and national offices of all four unions are located
in the Washington, D.C., area.  Union presidents and other national
officers are elected every several years at conventions or by mail
ballot, depending on the terms of each union's constitution.  The
union field structure of locals and branch offices generally is
aligned with the Postal Service field structure.  The local and
branch offices are serviced by national business agents who generally
are full-time paid staff of the unions.  At the local and branch
level, officers, who are full-time postal employees, are elected for
terms ranging up to 3 years in accordance with local constitutions. 
On the workroom floor of mail processing plants and post offices,
union shop stewards are granted time away from their work to
represent employees in grievances. 


      MANAGEMENT ASSOCIATIONS
-------------------------------------------------------- Chapter 1:4.2

The Postal Reorganization Act of 1970 included provisions unique to
the Postal Service in that it was required to consult with and
recognize organizations representing postmasters, supervisors, and
other managerial nonbargaining personnel.  The National League of
Postmasters (the "League") was formed in 1904 to promote the
interests of postmasters in smaller post offices; the older National
Association of Postmasters of the U.S.  (NAPUS), which was formed in
1898, continued to represent postmasters in large municipalities. 
Since 1970, the distinction between the League and NAPUS, with a
reported 1993 membership of approximately 19,000 and 23,000,
respectively, has become blurred, and the membership of the two
organizations overlaps, i.e., many postmasters belong to both
organizations.  The National Association of Postal Supervisors
(NAPS), which was formed in 1908 and had a reported membership of
approximately 35,000 in 1993, represents all supervisors and lower
level managers except those at headquarters and area offices. 

Unlike craft unions, the management associations cannot bargain with
postal management.  However, like the craft employee unions, the
associations have a long history of representing their members'
interests in congressional deliberations on postal policy and
exercising their rights under the Postal Reorganization Act of 1970
to consult with postal management on decisions that affect their
members.  Lacking access to a grievance/arbitration procedure to
address their concerns, employees represented by management
associations use an internal appeal procedure, the Merit System
Protection Board, and the U.S.  District Courts to seek redress for
adverse actions of postal management. 


   THE POSTAL SERVICE ORGANIZATION
   TODAY
---------------------------------------------------------- Chapter 1:5

An 11-member Board of Governors directs the Postal Service.  The
Board consists of nine governors, the Postmaster General, and the
Deputy Postmaster General.  Other Postal Service officials include 21
vice presidents, the Chief Postal Inspector, the Judicial Officer,
and 605 Postal Career Executive Service (PCES) positions.  In
addition, about 74,256 white-collar postal employees were under the
Executive and Administrative Schedule (EAS) at the end of September
1993.  EAS has 26 pay levels and includes people in support
functions, postmasters, and supervisors. 

Postal field operations are divided into two distinct functions--one
for processing and distribution and the other for customer service. 
Within each of these functions are 10 area offices.  The Area Offices
for Processing and Distribution oversee 352 mail processing and
distribution plants.  These include 271 Processing and Distribution
Centers/Facilities, 21 Bulk Mail Centers, and 60 Airport Mail
Centers/Facilities.  The Area Customer Service Offices oversee 85
customer service districts that focus on mail delivery and retail
services.  These districts are responsible for about 39,400 post
offices, stations, and branches, varying in size from 1-person
operations to facilities with as many as 7,500 employees.  (See
fig.  1.1.)

   Figure 1.1:  U.S.  Postal
   Service Headquarters and Field
   Alignment as of September 1993

   (See figure in printed
   edition.)

Source:  U.S.  Postal Service. 

At the end of fiscal year 1993, the Postal Service had 817,879
employees--85 percent (691,723) were career employees and 15 percent
(126,156) were noncareer employees.  Overall, this was 35,673 fewer
employees than in fiscal year 1989.  The Postal Service career
employee complement decreased during this 5-year period while the
noncareer complement increased.  Although the size of the workforce
is shrinking, the Postal Service's use of overtime has nearly doubled
over the last 5 years, rising from 69.0 million workhours in fiscal
year 1989 to 140.1 million workhours in fiscal year 1993.  The
increase in overtime hours is due to a number of factors:  higher
mail volume,\9 automation program not achieving anticipated workhour
savings, and the recent loss of experienced workers through the
retirement incentive program offered in 1992.  Taken together, the
increase in overtime and hiring of noncareer employees have more than
offset the reduction in career employees (see fig.  1.2). 

   Figure 1.2:  Changes in
   Employee Complement and
   Overtime Usage, Fiscal Years
   1989-1993

   (See figure in printed
   edition.)

Sources:  Postal Service On-Rolls and Paid Employees Reporting System
and Postal Service National Workhours Reporting System. 

Of the 691,723 career employees, 98.5 percent were assigned to field
operations--32.1 percent (222,046) in mail processing and
distribution and 66.4 percent (459,388) in customer service. 


--------------------
\9 In fiscal year 1993, for example, the postal workforce processed
and delivered over 171.2 billion pieces of mail--an increase of 2.9
percent over fiscal year 1992. 


      MAIL PROCESSING AND
      DISTRIBUTION
-------------------------------------------------------- Chapter 1:5.1

Mail processing facilities are large plants containing conveyors and
machines that expedite the sorting and routing of mail and parcels. 
As figure 1.3 shows, clerks represent the largest category of the
approximately 221,300 craft employees working in processing and
distribution facilities. 

   Figure 1.3:  Composition of
   Postal Career Workforce in Mail
   Processing and Distribution
   Facilities at the End of Fiscal
   Year 1993

   (See figure in printed
   edition.)

Source:  Postal Service On-Rolls and Paid Employees Reporting System,
Accounting Period 13, Postal Fiscal Year 1993. 

Most of the clerks perform mechanized or automated sorting tasks. 
Mail handlers constitute the next largest category of workers.  They
are assigned to unloading the incoming mail, operating equipment that
separates and cancels letter mail, performing parcel-sorting tasks,
and loading outgoing mail for further distribution or delivery.  The
remaining craft employees include motor vehicle operators; vehicle,
equipment, and building maintenance employees; and other specialized
workers. 

Managers or installation heads, along with the lower level
supervisors and support staff, represent about 7 percent of the total
processing and distribution workforce. 


      CUSTOMER SERVICE
-------------------------------------------------------- Chapter 1:5.2

About one-half of the approximately 459,400 customer service
employees are city carriers who sort and deliver mail to homes,
apartments, office buildings, and businesses.  The city carriers work
in urban and suburban post offices along with clerks who perform mail
sorting and window services.  Mail handlers, maintenance workers,
vehicle operators, and special delivery messengers also work in post
offices.  (See fig.  1.4.)

   Figure 1.4:  Composition of
   Postal Career Workforce in
   Customer Service Districts at
   the End of Fiscal Year 1993

   (See figure in printed
   edition.)

Source:  Postal Service On-Rolls and Paid Employees Reporting System,
Accounting Period 13, Postal Fiscal Year 1993. 

Rural communities, as well as some suburban post offices, are served
by "rural carriers." They perform the same work as city carriers plus
some of the duties of window clerks, such as selling stamps and
handling registered mail. 

Postmasters or installation heads and supervisors direct the
workforce in post offices of varying sizes and constitute, along with
support staff, about 11 percent of the customer service workforce. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:6

In March 1992, Senator David Pryor, Chairman of the Federal Services,
Post Office, and Civil Service Subcommittee, and Senator Carl Levin,
Chairman of the Oversight of Governmental Management Subcommittee,
Senate Committee on Governmental Affairs, asked us to conduct a
full-scale review of labor-management relations at the U.S.  Postal
Service.  Their 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 violence in the workplace.  As agreed with
the two Subcommittees, the objectives of the review were to determine
the status of labor-management relations\10 in the Postal Service,
evaluate past efforts to improve relations, and identify any further
opportunities to improve relations. 

Our review was done in two phases.  The first was done during the 4
months preceding the appointment of Mr.  Marvin Runyon as Postmaster
General in July 1992, and the second phase began after the
implementation of a new organization structure in February 1993 and
continued through to December 1993. 

During both phases, we interviewed a total of 479 Postal Service
supervisors and management officials, national and local postal labor
leaders, and national management association leaders (see table 1.2). 



                          Table 1.2
           
                Postal Service Bargaining and
             Nonbargaining Employees Interviewed


                                          Processing
                                Customer         and
                                 service    delivery   Total
----------------------------  ----------  ----------  ======
Nonbargaining employees interviewed
------------------------------------------------------------
Headquarters officials\a                                  38
Area offices                           8           4      12
District personnel                    40                  40
Postmasters, plant managers,          12          23      35
 and tour superintendents
First-line supervisors                23          71      94
Others                                 7          37      44
============================================================
Total nonbargaining                   90         135     263

Bargaining unit employees interviewed
------------------------------------------------------------
National officials                                        12
Local APWU representatives             0          55      55
Local NALC representatives            25           5      30
Local NRLCA representatives            7           0       7
Local NPMHU representatives            1          34      35
Local craft employees                 17          44      61
============================================================
Total bargaining                      50         138     200

Association representatives interviewed
------------------------------------------------------------
National officials                                         9
NAPS                                   1           2       3
NAPUS                                  3           0       3
League                                 1                   1
============================================================
Total associations                     5           2      16
============================================================
Total number of interviews           142         278     479
------------------------------------------------------------
\a Headquarters officials interviewed were in Labor Relations,
Employee Relations, Training and Development, Quality, Finance,
Operation Support, and the Inspection Service. 

The interviews were designed to address each objective as well as (1)
help us understand the relationships between management and unions,
between unions and their memberships, and between supervisors and
employees; and (2) identify the factors that contribute to good and
bad labor-management relations on the workroom floor. 

In phase I, our work also included the following steps: 

  reviewing relevant GAO reports (listed at the end of this report)
     and the results of other studies on labor-management relations
     done for or by the Postal Service labor relations or employee
     relations offices;

  examining the legislative history of the Postal Reorganization Act
     and other relevant literature on postal labor-management
     relations;

  analyzing grievance/arbitration data compiled at the national level
     to identify the types of disputes and disagreements between
     labor and management;

  analyzing the April 1992 results of a Postal Service employee
     opinion survey to identify factors causing employee
     dissatisfaction;\11 and

  visiting the then Eastern and Western Regions and the Baltimore,
     Honolulu, and San Francisco Divisions to assess the
     labor-management climate in field operations. 

Between August 1992 and February 1993, we suspended our field work
until Postmaster General Runyon had accomplished the unprecedented
reorganization and put his new headquarters and field operations
management teams in place.  During this time, we visited two
unionized companies--Ford Motor Car Company and Saturn Corporation, a
division of General Motors--to gain insight on what methods they used
to improve the climate on the workroom floor for comparison with the
actions planned by the Postal Service. 

On the basis of our phase one work and the new Postmaster General's
changes, we focused the second phase of our work on working
conditions and relations at selected processing and distribution
plants and customer service districts located in 5 of the 10 newly
established area offices, as follows: 

Allegheny Area

Cincinnati Processing and Distribution Center, OH
Loveland Post Office, Loveland, OH
Groesbeck Post Office, Cincinnati, OH

Mid-Atlantic Area

Southern Maryland Processing and Distribution Center, Capitol
 Heights, MD
Southern Maryland Bulk Mail Center, Capitol Heights, MD
Hyattsville Post Office, Hyattsville, MD
Clinton Post Office, Clinton, MD
Waldorf Post Office, Waldorf, MD

New York Area

Morgan Processing and Distribution Center, New York, NY
Carmel Post Office, Westchester, NY
Grand Central Station Post Office, New York, NY

Pacific Area

San Francisco Processing and Distribution Center, CA
Healdsburg Post Office, San Francisco, CA
Napolean Post Office, San Francisco, CA
Mission Annex, San Francisco, CA

Western Area

Denver Processing and Distribution Center, CO
Denver Bulk Mail Facilities, Denver, CO
Bear Valley Post Office, Denver, CO
Longmont Post Office, Longmont, CO

We selected the area offices and plants judgmentally with the primary
aim of providing both geographic coverage and a mix in the sizes of
plants and post offices.  During our review, we found that five of
the seven plants we visited were in the bottom half of all processing
facilities in employee dissatisfaction with management. 

At the processing and distribution centers and bulk mail centers
visited, we interviewed plant managers, tour superintendents, and
local officials of each union representing postal employees at the
location.  We also interviewed two or three first-line supervisors
for each craft for tours 1 (early morning) and 3 (late night).  We
selected supervisors for each tour on the basis of the advice and
concurrence of both plant management and local NAPS representatives. 
We selected tours 1 and 3 because each tour had more mail processing
activity and more employees than tour 2.  We also interviewed four to
six union shop stewards on each tour on the basis of the advice and
concurrence of both plant management and local union presidents. 

In addition to the extensive interviewing we did at the selected
plants, we reviewed grievance and arbitration data (contractual
disputes and disciplinary actions) to help understand and document
the nature and causes of workplace problems identified through
interviews.  Other information we collected and analyzed included
workhour statistics, such as overtime and sick leave usage. 

We selected two post offices for visits from each of the five area
offices.  We selected the post office that had the largest number of
carriers in each customer service district where the area offices
were located and a second post office that had a mix of city and
rural carriers.  We wanted to cover post offices with (1) enough
carriers to get a range of perspectives on working conditions and
relations and (2) a mix of rural and city carriers to compare and
contrast the working conditions and relations of rural and city
carriers.  At each post office, we interviewed the postmaster, at
least two shop stewards for city carriers, two shop stewards for
rural carriers, and two supervisors, using the same selection method
employed for processing and distribution plants.  At each post
office, we reviewed data on such issues as grievances and
arbitration, similar to the information collected at processing and
distribution plants. 

In addition to the facilities listed on page 21, we revisited
Oklahoma City, OK, and Indianapolis, IN, post offices where we had
done previous audits\12 to determine the current conditions of
employee relations on the workroom floor.  In addition, we visited
three additional processing and distribution plants in Birmingham,
AL; Royal Oak, MI; and Sacramento, CA, to obtain information on a
clerk craft crew chief pilot program being tested at these plants. 
This was a new initiative by the APWU and the Postal Service to give
clerks the opportunity to assume greater responsibility for their
work. 

In addition to the above field work, we did a second round of
interviews with Postal Service headquarters management officials and
national postal labor and management association leaders to obtain
their views on the Postmaster General's reorganization and announced
agenda for making the Postal Service more accountable, credible, and
competitive.  We also analyzed the September 1993 results of the
Postal Service employee opinion survey (EOS) to identify changes in
employee opinions since the 1992 survey.  Both the 1992 and the 1993
survey were done for the Postal Service by an independent contractor,
Market Facts, Inc.  Following are the response rates, survey periods,
and other information on the surveys.  Our work was done in
accordance with generally accepted government auditing standards. 



                          Table 1.3
           
            Information on Postal Service Employee
                       Opinion Surveys


                                            August     April
                                               and       and
Survey period                            September       May
--------------------------------------  ----------  --------
Number of questions asked\a
------------------------------------------------------------
For all employees                               84        77
Supervisors only                                 0         6
============================================================
Total questions                                 84        83

Response rate at national level
------------------------------------------------------------
Questionnaires delivered                   657,818   729,073
============================================================
Total returned                             512,818   586,073
Response rate                                  78%       80%
------------------------------------------------------------
\a In 1993, 10 questions were added, 9 were dropped, and 5 were
revised for a net change of plus 1. 

Sources:  1992 and 1993 Postal Service employee opinion surveys. 

We obtained written comments on this report from the Postal Service
and two of the four unions.  The other two unions and the three
management associations chose to provide oral comments.  We have
presented their comments along with our evaluation at the end of
volume I and reprinted the written comments in appendixes III to V. 


--------------------
\10 "Labor-management relations" as used in this report is a broad
term encompassing relations between postal managers/supervisors and
employees as well as the traditional meaning of relations between
management and unions. 

\11 This survey involved mailing a questionnaire to all postal
employees to determine their satisfaction on 12 performance
dimensions, such as employee treatment and participation.  (See ch. 
3 for a discussion of the survey and 1992 and 1993 results.)

\12 Postal Service:  Employee-Management Relations at the
Indianapolis Post Office Are Strained (GAO/GGD-90-63, April 16,
1990); and Postal Service:  Employee/Management Relations at the
Oklahoma City Post Office (GAO/GGD-90-02, Oct.  27, 1988). 


POSTAL SERVICE EFFORTS TO CHANGE
ITS CORPORATE CULTURE TO SUCCEED
IN THE COMPETITIVE MARKETPLACE
============================================================ Chapter 2

Every year the Postal Service is deprived of billions of dollars in
revenue as postal customers look to other media and suppliers to
satisfy their communication needs.  Recognizing this trend, the
current Postal Service leadership team is striving to improve the
quality of postal services and become more competitive in a dynamic
communications marketplace.  A cornerstone of the team's strategy is
a long-term effort to revitalize the organizational culture by
improving labor-management relations and eliminating a long-embedded
autocratic style of managing postal workers.  Although the idea is
not new--previous postmasters general have tried to change the
organizational culture in the past--the strategy is.  If this
strategy is not successful, the Postal Service's competitive
situation may cause further decreases in its market share, reduce
revenues lower than what is required to break even, and generate the
need for more frequent rate increases to cover revenue shortfalls. 
These outcomes, in turn, could further erode the Postal Service's
market share and create a recurring cycle of revenue shortfalls
leading to still more frequent rate increases.  Given this
possibility, postal management would face increased demands to cut
personnel costs (about 82 percent of budget) by eliminating jobs and
future wage increases. 


   CURRENT ENVIRONMENT IS
   CHALLENGING POSTAL SERVICE TO
   IMPROVE SERVICE
---------------------------------------------------------- Chapter 2:1

The Postal Service operates in an environment very different today
from what it was at the time of the 1970 reorganization.  During the
past 23 years, its competitive position in the marketplace has
eroded, especially in its parcel post and overnight mail markets. 
Competition for its core markets (first-class and third-class mail)
face similar erosions, not by direct competitors, but by growing
electronic alternatives that can substitute for printed
communications sent via mail.\1 According to Postal Service studies,
about half of its mail volume and 40 percent of its revenues are now
vulnerable to electronic alternatives.  Transactions subject to
electronic diversions include credit card billings and payments,
direct mail advertising and mail orders, utility bills, bank
statements, and tax form submissions.\2

The Postal Service is attempting to ease and defer the effects of
competition by improving customer satisfaction.  The Postal Service
has considerable data showing that slow or unreliable delivery of
mail is the leading cause of postal customer dissatisfaction.  The
Customer Satisfaction Index (CSI), a series of customer satisfaction
surveys conducted by the Postal Service since 1991, has consistently
shown that the drivers of customer satisfaction offering the greatest
potential for improvement are (1) the consistency and length of
delivery times for both local and nonlocal mail and (2) the time of
day mail is delivered as well as the consistency of the time of
day.\3

In addition, data from the Postal Service's Consumer Service Card
system show that inconsistent and late mail delivery are the leading
causes of customer complaints, accounting for 111,071 (26 percent) of
the total 421,230 complaints filed with the Postal Service in fiscal
year 1993. 

The Postal Service recognizes that improving customer satisfaction
hinges, to a large extent, on its ability to improve employee
satisfaction.  Although the Postal Service embarked on a massive
effort to automate mail processes in 1982, processing and delivery of
mail today is still labor-intensive.  We previously reported\4 that
total workhours increased through fiscal year 1991 even though the
automation program began in 1982.  As indicated in chapter 1, this
trend of increasing workhours continued through fiscal year 1993. 
Accordingly, the employees of the Postal Service play a vital role in
making sure that the mail is delivered to the right customer at the
right time--a key to competitiveness.  This significant role of
postal employees is not expected to change dramatically in the
foreseeable future. 

Various literature and official Postal Service documentation show
that management of the Postal Service has historically tried to
motivate employees to move the mail quickly through the various
processes using a "stick" rather than a "carrot" approach.  That is,
employees were often enticed to perform well through threats and
intimidation rather than reward and recognition.  Clearly, whatever
management style was used in the past has not caused employees to
move the mail fast enough to always meet customers' needs and
expectations.  Nor has it helped employees to feel very good overall
about their working conditions, as we will show in chapters 3, 4, and
5. 


--------------------
\1 In our March 1992 report to Congress entitled U.S.  Postal
Service:  Pricing Postal Services in a Competitive Environment
(GAO/GGD-92-49, March 25, 1992), we discuss the competitive threat
facing the Postal Service and some constraints and obstacles that
affect its efforts to compete effectively. 

\2 For more information on electronic diversions, see Postal Service: 
Role in a Competitive Communications Environment (GAO/T-GGD-94-162,
May 24, 1994). 

\3 The Postal Service is currently using two systems to independently
evaluate how well it is serving customers.  They are the Customer
Satisfaction Index (CSI) and External First-Class Measurement System
(EXFC).  CSI, administered quarterly by Opinion Research Corporation,
tracks residential customer satisfaction for such areas as
responsiveness, reliability, carrier services, post office box
service, mail forwarding, complaint handling, telephone experience,
window and lobby service, and post office property.  The quarterly
EXFC, administered by Price Waterhouse, measures the delivery time of
First-Class Mail from deposit to delivery (collection box to mail
slot).  The Postal Service does not yet have similar business
customer satisfaction data but awarded a contract in April 1993 to
obtain such data, which are expected to be available by October 1994. 

\4 Postal Service:  Automation Is Restraining But Not Reducing Costs
(GAO/GGD-92-58, May 12, 1992); Postal Automation and Pricing in the
1990s (GAO/T-GGD-92-39, May 12, 1992); and Postal Service's Role in a
Competitive Communications Environment (GAO/T-GGD-94-162, May 24,
1994). 


   POSTAL SERVICE STRATEGIES FOR
   CHANGING THE CORPORATE CULTURE
---------------------------------------------------------- Chapter 2:2

Shortly after taking office in July 1992, Postmaster General Runyon
said that a change in the corporate culture is needed if the Postal
Service is to succeed in today's competitive communications market
and become a world-class organization.  The change he is seeking is a
transformation from an "operation driven, cost driven, authoritarian,
and risk averse" culture to one 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 strategies for changing the corporate culture
have centered on (1) restructuring the organization, (2) establishing
a National Leadership Team that includes all Postal Service officers
and the national presidents of the unions and management
associations, and (3) changing the incentive systems for rewarding
managers. 


      RESTRUCTURING THE POSTAL
      SERVICE
-------------------------------------------------------- Chapter 2:2.1

One of the first actions taken by Postmaster General Runyon was a
top-down restructuring and downsizing of the Postal Service.  This
was undertaken to deal with a $2.2 billion deficit projected in
fiscal year 1993\5 and was part of Mr.  Runyon's broader strategy to
make the Postal Service more accountable, credible, and
"competitive." The restructuring, which was largely carried out over
a 120-day period between August and November 1992, was the most
sweeping reorganization since the Postal Reorganization Act of 1970. 
It realigned resources into two functions--mail processing and
distribution and customer service.  The goal was also to make the
organization flatter and reduce layers of management by eliminating
30,000 positions.\6 To make the overhead reductions without resorting
to layoffs, the Postal Service offered an early-out retirement option
to most employees.\7

As of October 1993, the new structure had 22,956 fewer overhead
positions nationwide, which was 7,044 jobs short of the goal of
30,000 fewer overhead positions.  The positions eliminated were 18
senior management officers, 631 PCES positions, and 22,307
supervisor/management and administrative positions\8 in headquarters
and in field operations.  This reduction was in keeping with Mr. 
Runyon's goal for less direct supervision of the workforce, and the
downsizing reduced supervisory/management workhours in mail
processing and distribution facilities and customer service districts
by 19 percent and 10 percent, respectively.  In field installations
at the beginning of fiscal year 1993, there was 1 supervisor/manager
for every 15 career employees who handled the mail.  By the end of
fiscal year 1993, the ratio had changed to 1 supervisor/manager for
every 19 career employees. 

Approximately 48,000 employees took advantage of the special option
retirement and many were in nonoverhead positions, such as clerks,
city carriers, postmasters, and mail handlers.  To make up for a
leaner workforce and increased mail volumes, the Postal Service had
to resort to record overtime hours for employees and the use of more
temporary or transitional employees. 

Nevertheless, the data show that following the restructuring, at
least until recently, service to customers generally improved or
remained constant.  For example, customer satisfaction data compiled
for the Postal Service by Opinion Research Corporation (i.e.,
Customer Satisfaction Index data--CSI) showed that 88 percent of the
nation's households rated their overall satisfaction with the Postal
Service as "excellent," "very good," or "good" in the first quarter
of fiscal year 1994.  This was 1 percentage point higher than the
national rating received during the first quarter of fiscal year
1993, which followed the restructuring.  Another indicator, the
External First-Class Measurement System (EXFC) compiled by Price
Waterhouse, showed that the Postal Service delivered overnight
First-Class mail on time about 84 percent of the time from the
beginning of the first quarter of 1993 through the first quarter of
1994.  However, the EXFC score dropped to 79 percent during the
second quarter of 1994, which ended March 4.  (The CSI score for the
second quarter of 1994 was 89 percent.)


--------------------
\5 Due to the restructuring efforts, major cost savings initiatives,
and a resurgence in revenue growth from an improving economy, the
Postal Service ended the fiscal year with a $371 million operating
loss.  However, the total net loss was substantially higher ($1.8
billion) due to an $857 million retroactive interest assessment
imposed by the Omnibus Budget and Reconciliation Act of 1993 and a
debt refinancing item of $537 million incurred in fiscal year 1993. 

\6 In June 1994, the Merit Systems Protection Board (MSPB) ruled that
the restructuring violated the rights of middle managers with
veterans preference by demoting them and eliminating their jobs
without following reduction-in-force regulations.  In August 1994,
Postmaster General Runyon announced that the Postal Service would
drop its appeal of the MSPB ruling. 

\7 The retirement incentive permitted most employees to retire at age
50 with at least 20 years of service or any age with at least 25
years of service.  It was extended to include craft employees as part
of a plan to free up positions that could be filled by (1) employees
who occupied positions that were abolished and who either were not
eligible or chose not to retire or (2) new noncareer "transitional"
employees.  For more information on the downsizing, see Postal
Service:  Restructuring, Automation, and Ratemaking (GAO/T-GGD-93-15,
March 25, 1993). 

\8 Includes some bargaining unit positions. 


      BUILDING A LABOR-MANAGEMENT
      PARTNERSHIP
-------------------------------------------------------- Chapter 2:2.2

A second action the Postal Service took was to establish a National
Leadership Team by inviting union and management association
presidents to participate in top-level corporate meetings.  All four
major unions and three management association leaders accepted the
invitation--marking the first time in the Postal Service's history
that employee organization leaders joined postal executives in
regularly scheduled meetings.  This National Leadership Team meets
weekly to share information and discuss a full range of corporate
issues--such as budget, pricing, and productivity.  One of the team's
accomplishments was agreeing to a "Purpose, Vision and Guiding
Principles" statement that was released in the fall of 1993.  (See
app.  I for the full text of the statement.) This statement
articulates the organization's vision to be a world-class
organization and premier provider of 21st century postal
communications services.  It also commits the organization and all of
the parties to a set of guiding principles and three major goals: 
(1) customer satisfaction, (2) commitment to employees, and (3)
revenue and income generation. 

Our interviews showed that national union and management association
leaders welcomed the opportunity to discuss business issues with top
Postal Service officials.  They commended Mr.  Runyon for opening the
"doors of opportunity" and allowing them to play a role in shaping
the Postal Service's future.  The President of the National League of
Postmasters said that the message being sent is that power sharing is
okay and input from many people produces better decisions.  According
to the NALC President, employee representatives should have a say
about how operational decisions are made because craft employees'
interests are strongly intertwined with organizational success.\9 The
NRLCA President said that the leadership team concept "is a great
change" and has been "a positive thing for all [those]
concerned--unions, associations, officers, and the Postal Service."
The APWU President, who has resisted participative management
programs in the past, said that he attended the weekly meetings only
"for information and input."


--------------------
\9 In this regard, NALC and the Postal Service signed a series of
memoranda of understanding in the fall of 1992 that paved the way for
union-management cooperation in implementing delivery point
sequencing (DPS) of mail.  DPS is part of the automation program that
is to automate letter carriers' manual task of sorting mail into
delivery sequence.  (See ch.  5 for further details.)


      CHANGING PERFORMANCE
      MANAGEMENT SYSTEMS FOR
      POSTAL OFFICERS AND
      EXECUTIVES
-------------------------------------------------------- Chapter 2:2.3

A third action to change the corporate culture was to modify certain
Postal Service performance management incentive systems in order to
measure and reward officers and executives for "people skills" and
encourage organizational success through teamwork.  The old incentive
systems were based on individual achievements relating to budget,
productivity, and other goals, such as controlling sick leave usage
and injury rates. 

In the summer and fall of 1993, 550 members of the PCES plus the
Postmaster General, Deputy Postmaster General, and 23 other corporate
officers participated in a new management style assessment process
called the "360-degree feedback process." Under this process, these
individuals were evaluated by their subordinates, peers, and bosses
on their leadership and interpersonal skills.  The data are being
evaluated blindly (i.e., without their names or locations identified)
by a subgroup of the corporate leadership team.  All executives are
to receive detailed feedback, and those receiving lower ratings are
to undergo intensive training and development. 

Initially, the 360-degree feedback process is to apply only to Postal
Service officers and executives.  At the time of our review, postal
management was discussing with the three management associations
expanding a form of this kind of feedback process to EAS managers and
supervisors.  Postal headquarters officials told us that they hope
the process can be implemented at the EAS levels in fiscal year 1995. 

In addition to the 360-degree feedback process, postal officers and
executives are developing a "succession planning" process to identify
potential successors to their positions.  The goal of the planning
process is to recognize, train, and promote individuals capable of
enhancing employee commitment and teamwork.  The potential successors
will be evaluated on their "track record" of relevant experience and
their management style as assessed through the 360-degree feedback
process.  According to a previous Vice President for Employee
Relations, the succession planning will minimize "cronyism" because
officers and executives will be held more accountable for the
individuals they select as successors. 

Another aspect of the new management incentive systems is the
replacement of individual-based with team-based measurement and
reward systems to encourage teamwork and organizational success.  Key
postal mail processing and customer service managers are organized in
geographically based teams, called "performance clusters," which are
to plan and manage efforts to achieve the Postal Service's corporate
goals in its 85 districts.  Although postal leadership encouraged the
involvement of union and management association representatives in
performance cluster activities, postal managers in each cluster are
to decide if participation of others is needed and how to involve
them.  The performance cluster sets goals for customer satisfaction
as measured through CSI surveys, commitment to employees as measured
by the EOS Index (see definition on p.  42), and revenue generation. 
Rewards for executives at every level are to be tied to overall
corporate success in the three goal areas. 

For fiscal year 1993 performance awards, the Postal Service
eliminated an annual merit evaluation program for all EAS employees,
including postmasters, managers, and supervisors, and instead based
their annual pay increases on the same factors used in a Striving for
Excellence Together (SET) program developed for certain craft
employees.  SET provides for annual lump-sum payments on the basis of
Postal Service financial performance and CSI results.  (See ch.  6
and app.  II for additional details on the SET program.)


   CONCLUSIONS
---------------------------------------------------------- Chapter 2:3

Strategies to change the Postal Service culture have, for the most
part, been implemented only at the national level and the executive
management levels in field offices.  If implemented at the local
level, these strategies have the potential to improve labor relations
and employee satisfaction in the Postal Service.  As we will describe
in the following three chapters, change is needed on the workroom
floor, where labor-management relations are adversarial and many
employees are unmotivated and stressed. 


ADVERSARIAL LABOR-MANAGEMENT
RELATIONS ARE AN IMPEDIMENT TO
CULTURAL CHANGE AND POSTAL SERVICE
COMPETITIVENESS
============================================================ Chapter 3

If it is to meet the economic and competitive challenges of the
1990s, the Postal Service cannot afford the confrontational and
adversarial labor-management relationship that has long existed.  A
significant change is needed.  As described in chapter 2, Postmaster
General Runyon and the National Leadership Team have made progress in
cultivating better relations at the national level.  This initiative
has been viewed as a positive first step by Postal Service officials
and the presidents and top officers from the three management
associations and four unions. 

However, some of the leaders that we interviewed were skeptical about
the Postal Service's ability to sustain these efforts and to cascade
change down to the workroom floor because of (1) a persistently
acrimonious union-management relationship, as evidenced by a
dependence on third-party interventions to resolve grievances of
day-to-day problems in the workplace; (2) an autocratic
organizational culture that causes conflict among managers,
supervisors, and craft employees; and (3) a stressed and disgruntled
workforce that does not believe the Postal Service is operating
efficiently or fairly. 

This chapter examines the extent and causes of these problems as
perceived by key Postal Service officials and the presidents and top
officers of the four major postal unions and three management
association officials.  It also presents the views postal employees
expressed in the 1992 and 1993 employee opinion surveys. 


   CONTRACT NEGOTIATIONS AT TIMES
   HAVE BEEN CONTENTIOUS
---------------------------------------------------------- Chapter 3:1

Contract negotiations, which take place at the national level every 3
or 4 years, have at times been difficult, making arbitration
necessary to resolve bargaining deadlocks with three of the four
major unions.\1 Interest arbitration\2 occurred in 1978, 1984, and
1990 with APWU and NALC; and in 1981 with the Mail Handlers. 
According to APWU officials, the parties have "occasionally failed"
to negotiate collective bargaining agreements because of "the basic
differences in the interests of workers and their employer" and
management's regressive demands on the pay and benefits of postal
employees. 

Negotiations in recent years have also been protracted, with old
issues resurfacing at each negotiation.  To illustrate, the most
recent negotiations between the Postal Service and APWU and NALC
began in 1990 and took 3 years and two arbitration hearings before
all disputes were finally resolved in June 1993.  The issues
generally remained the same as in earlier bargaining talks:  the
unions pushed for wage and benefit increases and job security, while
cost-cutting and flexibility in hiring practices were the goals of
postal management.  One top postal management official described
these negotiations as quite bitter and very damaging to the
relationship with the unions.  She said that collective bargaining
interferes with an ongoing labor-management relationship because
contract negotiations are disruptive.  They inject hostility into the
"regular" relationship, and a long and bitter negotiation process can
have a devastating impact on the relationship. 


--------------------
\1 The rural carriers have a cooperative relationship with the Postal
Service and generally have been able to negotiate contracts without
arbitration. 

\2 Interest arbitration is arbitration over the terms of a new
contract. 


   TOO MANY GRIEVANCES ARE
   REFERRED FROM THE WORKROOM
   FLOOR
---------------------------------------------------------- Chapter 3:2

The grievance/arbitration procedure is the primary mechanism for
rank-and-file employees in most unionized organizations to voice
work-related concerns.  A procedure that is working effectively would
result in most disputes being resolved quickly at the lowest
organizational level, e.g., by the supervisor, employee, and union
steward. 


      POSTAL SERVICE GRIEVANCES
      PROCEDURE
-------------------------------------------------------- Chapter 3:2.1

A "grievance," as defined in postal labor agreements, is "a dispute,
difference, disagreement or complaint between the parties related to
wages, hours, and conditions of employment."

The Postal Service's procedure for resolving grievances is similar to
that used in the private sector and other public organizations.  It
is a 4- or 5-step procedure, depending on the type of grievance. 
Each of the first three or four steps in the process involves lower
to higher union and management level officials in their respective
organizations, with the final step involving outside binding
arbitration by a neutral third party.  Both employees and the four
unions that represent them can initiate grievances.  The steps of the
procedure are shown below. 


         STEP 1:  INFORMAL
------------------------------------------------------ Chapter 3:2.1.1

  The employee or union steward discusses the grievance with the
     supervisor within 14 days of the action giving rise to the
     grievance. 

  The supervisor renders an oral decision within 5 days. 

  The union has 10 days to appeal the supervisor's decision. 


         STEP 2:  INSTALLATION
         HEAD OR DESIGNEE (E.G.,
         POSTMASTER, PLANT
         MANAGER)
------------------------------------------------------ Chapter 3:2.1.2

  The grievance is filed in writing on a standard grievance form with
     the installation head or designee. 

  The installation head and the union steward or representative meet
     within 7 days. 

  The installation head's decision is furnished to the union
     representative within 10 days. 

  The union has 15 days to appeal the installation head's decision. 


         STEP 3:  AREA OFFICE
------------------------------------------------------ Chapter 3:2.1.3

  The union files an appeal with the Area Office's director of human
     resources. 

  The union's Area representative meets with the representative
     designated by the Postal Service within 15 days. 

  The Postal Service's step 3 decision is provided to the union
     representative within 15 days. 

  The union has 21 days to appeal the decision to arbitration (step
     5). 


         STEP 4:  NATIONAL LEVEL
         REVIEW OF GRIEVANCES
         INVOLVING AN
         INTERPRETATION OF THE
         NATIONAL AGREEMENT
------------------------------------------------------ Chapter 3:2.1.4

  If either party maintains that the grievance involves a matter
     concerning the interpretation of the National Agreement, the
     union has 21 days to refer the matter to the national level of
     the union and the Postal Service. 

  Representatives of the national union and the postal headquarters
     meet within 30 days. 

  The Postal Service issues a written decision within 15 days. 

  The union has 30 days to appeal the Postal Service's decision to
     arbitration. 


         STEP 5:  ARBITRATION
------------------------------------------------------ Chapter 3:2.1.5

  An arbitrator is selected and a hearing is scheduled under the
     terms of the National Agreement, depending on the type of
     grievance. 

  The arbitrator's decision is final and binding. 


      AVAILABLE DATA SHOW LARGE
      VOLUME OF GRIEVANCES LEADING
      TO A BACKLOG OF ARBITRATION
      CASES
-------------------------------------------------------- Chapter 3:2.2

A key problem that has arisen under the Postal Service's
grievance/arbitration procedure is the high number of grievances
being filed and the inability of supervisors or installation heads
and union stewards to resolve them at the step 1 and 2 levels.  The
Postal Service's national grievance arbitration database showed that
in fiscal year 1993, there were 51,827 grievances that were not
settled at steps 1 or 2 and were appealed to step 3 at the area
level.  That means that, on average, approximately 1 in 12 bargaining
employees had problems that could not be resolved at the installation
level and were elevated to the area office.  This number is a
decrease of 8,093 grievances from fiscal year 1992 but still is
higher than the numbers reported in fiscal years 1989, 1990, and 1991
when the workforce was larger (see fig.  3.1). 

   Figure 3.1:  Postal Service
   Grievances Appealed to Step 3,
   Fiscal Years 1989 Through 1993

   (See figure in printed
   edition.)

Source:  U.S.  Postal Service. 

Also, both union and management officials agreed that the total
volume of grievances is too high.  However, we could not determine
the total number of grievances filed annually by postal employees
because the Postal Service's national grievance arbitration database
does not contain information on grievances at steps 1 and 2.  Such
data are kept at individual post offices and processing facilities. 
The volume and type of issues grieved at the facilities we visited
are discussed in chapters 4 and 5. 

According to Postal Service officials, the national database recorded
grievances appealed to step 3 but has not reported the disposition of
step 3 grievances since fiscal year 1991.\3 In that year, 47,084
cases were appealed to step 3 and 47,495 cases were decided by then
regional (now area) level management.  Management denied 30,524 (64
percent) of the grievances (denials that the unions could appeal to
arbitration) and sustained 282 grievances in favor of the union, or
less than 1 percent of the total.  Management and the unions settled
27 percent of the cases.  The remaining cases (about 8 percent) were
either withdrawn by the union; closed for administrative reasons
(e.g., issue became moot or grievant died); remanded to local parties
for further factual development; or collapsed into one case to
represent those parties that grieved the same issue (referred to as
representative cases).  (See fig.  3.2.)

   Figure 3.2:  Postal Service
   Disposition of 47,495 Step 3
   Grievances Decided in Fiscal
   Year 1991

   (See figure in printed
   edition.)

Source:  U.S.  Postal Service. 

The Postal Service also stopped tracking the number of grievances
awaiting arbitration.  The last available data on this were as of
October 1992, which showed a backlog of 38,335 cases (33,417 contract
cases in which the grievant or union alleged a violation of a union
contract; and 4,918 discipline cases in which the grievant or union
alleged that a disciplinary action was unwarranted or taken without
just cause).  The average age of contract grievances in the backlog
ranged from a low of 228 days in the former Southern Region (now the
Southeast and Southwest area offices) to a high of 696 days in the
former Eastern Region (now the Allegheny and Mid-Atlantic area
offices).  (See fig.  3.3.)

   Figure 3.3:  Average Age of
   Open Arbitration Cases as of
   October 1992

   (See figure in printed
   edition.)

Source:  U.S.  Postal Service. 

These data mean that if contract cases continue to be processed at
that same rate, employees filing grievances in the former Eastern
Region could expect to wait, on average, almost 2 years for an
arbitration resolution after processing the grievance through three
or four Postal Service grievance steps.  Figure 3.3 shows that the
average elapsed time for arbitration of discipline cases was lower
than for contract cases and ranged from 97 days in the Southern
Region to 400 days in the Eastern Region. 


--------------------
\3 At the time of review, the national database was being modified to
accommodate the 1992 reorganization of the field structure, which had
an impact on the availability of data. 


      THE HIGH VOLUME OF
      GRIEVANCES IS COSTLY TO THE
      POSTAL SERVICE
-------------------------------------------------------- Chapter 3:2.3

Some academic research\4 has shown that a negative impact on
organizations occurs when employees perceive that managerial actions
are unfair and the methods available to them to voice their concerns
(such as grievance and equal employee opportunity proceedings) are
ineffective.  In this situation, employees voice their frustration by
quitting, withdrawing from the situation (increasing absenteeism),
reducing their efforts, or engaging in disruptive behaviors.  These
unproductive behaviors exist at the Postal Service, and they impose a
heavy cost on all the parties and can limit the Postal Service's
ability to effectively serve customers and meet competitive
challenges. 

A high grievance rate can also translate into high dollar cost to an
organization.  In an attempt to estimate these costs\5 in 1989, the
Postal Service did a study and estimated that it spent $136 million
on processing grievance cases (including arbitration) in fiscal year
1988.  The majority of this cost was attributable to salaries and
benefits for EAS personnel who process grievances for the Postal
Service.  Other large-cost items were steward time and back pay. 
Unions also incurred costs, but the study did not include an estimate
of these costs.  At our request, the Postal Service updated its 1989
study for inflation.  The update showed that the estimated cost to
the Postal Service for grievance processing was $196.8 million in
fiscal year 1992, assuming the same grievance and arbitration case
levels as in 1988.  The Postal Service estimated that about 80
percent of estimated costs are incurred at steps 1 and 2. 


--------------------
\4 See, for example, Peter Cappelli and Keith Chauvin, "A Test of an
Efficiency Model of Grievance Activity." Industrial and Labor
Relations Review, Vol.  45, No.  1 (October 1991) pp.  3-6. 

\5 No Postal Service data exist to accurately quantify all the myriad
costs associated with grievance and arbitration activities. 


      POSTAL AND UNION OFFICIALS
      DISAGREE ON THE CAUSES OF
      UNRESOLVED GRIEVANCES
-------------------------------------------------------- Chapter 3:2.4

Both management and union officials acknowledged that there are far
too many grievances and that the process is not working.  However,
they saw the causes of the situation differently and tended to blame
each other for the high volume and backlog of grievances. 

From management's perspective, grievances have always been high at
the Postal Service because of employees' frustration and because
stewards flood the system with grievances to (1) get management to
give attention to an issue and (2) demonstrate that they are
executing their responsibility to represent employees.  One example
cited was the grievances that were filed in 1992 by city letter
carriers and NALC stewards nationwide over the same issue.  The issue
was a policy change by postal headquarters in anticipation of the
implementation of automated letter-sorting equipment.  The new policy
required carriers to spend less time sorting mail at their stations
and more time on the street delivering mail. 

A management official noted that shop stewards are postal employees
who are paid by the Postal Service to process grievances during
workhours.  Therefore, he said, the more grievances that stewards
have to process, the less time they have to spend doing their regular
jobs.  Another management official said that if the union does not
like the grievance resolution, it will sometimes continue to file a
grievance over the same issue, starting the process over again. 
Another top management official attributed the high volume of
grievances to frustration of stewards and supervisors and assessed
blame to both sides.  He added that first-line supervisors sometimes
purposely and flagrantly violated the union contracts.  In this
regard, the 1993 employee opinion survey (discussed in more detail
later) showed that 52 percent of all craft employees responding
believed that supervisors violated union contracts.  In contrast, 73
percent of first-line supervisors said that they consistently
followed the provisions of the contracts. 

According to union officials, management is largely responsible for
the huge volume of backlogged grievances.  One union president noted
that local managers are unwilling to settle disputes, and that
decisions that should be made at lower levels are bumped to a higher
level, adding to the delays.  Another union leader added that postal
management is "backlogging" the grievances instead of facing
labor-management problems.  Another union president blamed the high
volume of grievances on a bad labor relations climate that undermined
a good grievance procedure. 


   AN AUTOCRATIC MANAGEMENT STYLE
   PROMOTES CONFLICT ON THE
   WORKROOM FLOOR
---------------------------------------------------------- Chapter 3:3

A critical problem identified by Postal Service, unions, and
management association officials we interviewed is a pervasive,
autocratic management style in post offices and mail processing
plants throughout the country.  A union president said that an
autocratic culture is prevalent at every level of the Postal Service,
which creates tension on the workroom floor.  Another union president
added that communications are poor at the local level. 

Complaints of an autocratic climate at the Postal Service are not
new.  The Kappel Report, which led up to the 1970 reorganization
mentioned earlier, observed that an authoritarian style of
supervision had become the rule in the Postal Service.  A study by
Duke University in 1989 for the Postal Service showed that the Postal
Service had a strong culture that was "autocratic, task-focused,
functionally driven, non-strategic, and moderately risk averse."\6 On
leaving office, a recent postmaster general cited the supervision
style as the one problem he wished he had been able to solve. 
Similarly, in earlier reviews of labor-management relations at
individual postal facilities, we found tense and stressful working
conditions and in some cases recommended corrective actions.  (See
Related GAO Reports at the end of this report.)

Top postal management officials whom we interviewed acknowledged that
an authoritarian management style existed in the Postal Service.  One
official said that the style has been ingrained through many years of
autocratic management.  New supervisors tend to treat employees the
same way they were treated when they were craft employees.  Another
official said that postal supervisors are in a "pressure cooker" and
that they do not have time to practice human relations skills. 
Another official added that postal supervisors, who are pressed for
time, sometimes manage their workforce through discipline. 

Union leaders believed that the Postal Service perpetuated the
autocratic culture.  As one union official saw it, supervisors and
managers are under pressure from postal headquarters and operate "by
the numbers." That is, if they meet budget targets they are rewarded
with good ratings regardless of how employees are treated.  Another
official added that since there is little human relations training
for new supervisors, their role models are other autocratic managers. 
A union president told us that supervisors or managers who mistreat
employees often are dealt with by a transfer to another location. 

Management association officials saw the situation differently.  They
told us that the problems of high stress levels and tension are
caused by understaffed facilities and budget constraints. 
Postmasters and supervisors are under constant pressure to meet
budget estimates and cut costs.  A former association official
acknowledged that sometimes, in the pursuit of "meeting the numbers,"
employee relations are neglected.  He added that there are no
adequate performance standards for many employees, so it is difficult
for a supervisor to identify and deal with employees who are not
performing adequately.  Another top management association official
said that postmasters and supervisors have no authority to dismiss
employees--only to make recommendations for discipline.  Another
management association leader also referred to a "vigilante
mentality" of some union leaders as a serious matter and believed
they conducted "witch hunts" to get postmasters/supervisors removed. 

Management association officials also emphasized that supervisors
only implement policies and do not set them.  They told us that
supervisors and managers have been given conflicting goals.  First,
they were taught how to whip employees into "making budget numbers."
Then the emphasis shifted to making craft employees happy.  One
association official told us that upper management should not expect
a culture change quickly because

     "employees have been used to an authoritarian `whip them into
     shape' mentality.  Employees may not be as willing to burst into
     action once supervisors are out of the way--maybe in Montana
     they will, but not in Philadelphia."


--------------------
\6 The study was commissioned by the Postal Service's Training and
Development Department.  It was based on an analysis of data obtained
from over 400 postal division general managers and field directors
who attended a Duke/Postal Service Executive Development Program in
fiscal years 1988 and 1989. 


   THE POSTAL WORKFORCE GENERALLY
   GIVES THE POSTAL SERVICE LOW
   MARKS
---------------------------------------------------------- Chapter 3:4

In April 1992, the Postal Service conducted its first nationwide
employee opinion survey (EOS) to assess the organization's strengths
and shortcomings as an employer.\7 A second survey was administered
in August 1993, 13 months after Postmaster General Runyon took
office.\8 For reporting purposes, the Postal Service groups the
survey results into 12 performance dimensions (see table 3.1). 



                          Table 3.1
           
             Employee Opinion Survey Performance
                          Dimensions

-----------------------------  -----------------------------
1. Job Attitudes and Employee  7. Performance Management
Commitment

2. Working Conditions          8. Recognition and Reward

3. Career Development and      9. Communications
Training

4. Employee-Management         10. Quality Focus
Relations

5. Employee Treatment and      11. Customer Satisfaction
Participation

6. Leadership and Supervision  12. Management of Change
------------------------------------------------------------
Source:  Employee Opinion Survey:  Feedback and Action-Planning
Guide. 

The results of both surveys showed that more than two-thirds of all
bargaining and nonbargaining employees nationally enjoy the work they
do, rate pay and benefits as very good to good, and are proud to work
for the Postal Service.  At the same time, the surveys showed that
many craft employees felt that managers and supervisors did not treat
employees with respect and dignity and that the organization was
insensitive to individual needs and concerns.  However, there was
some improvement overall in employee responses between the 1992 and
1993 survey in 9 of the 12 dimensions relating to attitudes and
commitment, working conditions, employee-management relations,
employee treatment and participation, leadership and supervision,
communications, quality focus, customer satisfaction, and management
of change.  For three dimensions (career development and training,
performance management, and recognition and reward), employees'
responses were generally less favorable in 1993 than they were in
1992.\9


--------------------
\7 The employee opinion survey questionnaire was sent to all
bargaining and nonbargaining Postal Service employees in 1992.  About
586,000 employees (80 percent participation rate) completed the
83-question survey instrument. 

\8 About 513,000 employees (78 percent) responded to this 1993
survey, which included 84 questions.  Ten new questions (many
relating to discrimination) were added to the survey instrument.  Six
questions were revised, and nine questions asked on the 1992 survey
were dropped. 

\9 The changes between the 1992 and 1993 surveys do not indicate
trends. 


      EOS INDEX SHOWS SOME
      IMPROVEMENT OVER 1992
      RESULTS
-------------------------------------------------------- Chapter 3:4.1

The Postal Service has identified 20 questions in the survey
questionnaire that involve matters it believes are under the control
of unit management and for which it will hold supervisors, managers,
and executives accountable.  The Postal Service computed an index
number (called the EOS Index) for the 20 questions.  The EOS Index is
a single number (that is, a statistical average of favorable
responses) that combines the results from each of the 20
questions.\10 The EOS Index is to be part of unit management's
assessment that will form the basis for performance awards, which we
discussed in chapter 2. 

The 20 questions that were selected for the EOS Index and bargaining
employees' responses to these questions on the 1992 and 1993 surveys
are shown in table 3.2.  There was slight improvement over the 1992
results on 11 questions dealing with such things as employees'
treatment; response to their problems, complaints, and ideas; and
authority to carry out their jobs.  Even so, the marks remained low
in 1993.  On a national basis, the 1993 results for bargaining
employees showed that management received low marks (less than a
50-percent favorable response, as table 3.2 shows) for 15 of the 17
questions that were asked in both 1992 and 1993. 



                                    Table 3.2
                     
                       Bargaining Employees' Opinions About
                             Management EOS Questions


Question (favorable response                    Better or worse in    Percentage
category)\a                         1993  1992  1993 than 1992\b    point change
----------------------------------  ----  ----  ------------------  ------------
Treating employees with respect       28    21  Better                         7
 and dignity as individuals.
 (very good/good)
Taking employee interests into        20    13  Better                         7
 account when making important
 decisions.
 (very good/good)
Listening to your problems,           25    16  Better                         9
 complaints, and ideas.
 (very good/good)
Doing something about your            17    11  Better                         6
 problems, complaints, and ideas.
 (very good/good)
The safety of your job.               41    40  No substantial                 1
 (very good/good)                                difference
Cooperation between employees in      28    28  No substantial                 0
 different functional areas.                     difference
 (very good/good)
The work flow is well organized.      27    25  No substantial                 2
 (strongly agree/agree)                          difference
In the past 12 months, I have         73    \c  \c                            \c
 personally experienced sexual
 discrimination where I work.
 (strongly disagree/disagree)
In the past 12 months, I have         68    \c  \c                            \c
 personally experienced racial
 discrimination where I work.
 (strongly disagree/disagree)
In the past 12 months, I have         80    \c  \c                            \c
 personally experienced sexual
 harassment from postal
 employees.
 (strongly disagree/disagree)
Supervisor knowing his or her         54    54  No substantial                 0
 job.                                            difference
 (Very good/good)
Rates supervisor with dealing         37    35  No substantial                 2
 fairly with everyone--playing no                difference
 favorites.
 (Very good/good)
Rates supervisor in encouraging       38    36  No substantial                 2
 teamwork in getting the job                     difference
 done.
 (Very good/good)
Rates supervisor about letting you    30    30  No substantial                 0
 know what kind of job you are                   difference
 doing.
 (Very good/good)
Rates supervisor in giving you        34    34  No substantial                 0
 information you need to do a good               difference
 job.
 (Very good/good)
Rates supervisor in being             42    41  No substantial                 1
 trustworthy.                                    difference
 (Very good/good)
I have enough authority to carry      63    59  Better                         4
 out my job effectively.
 (Strongly agree/agree)
I am encouraged to come up with       29    30  No substantial                 1
 new and better ways of doing                    difference
 things.
 (Strongly agree/agree)
Poor employee performance is          22    27  Worse                          5
 usually not tolerated.
 (Strongly agree/agree)
When things go well on the job,       14    13  No substantial                 1
 how often is your contribution                  difference
 recognized?
 (Always/frequently)
--------------------------------------------------------------------------------
\a Some of the survey questions were phrased in a positive manner
(e.g., "treating employees with respect and dignity as individuals"),
and others were phrased in a negative manner ("I have personally
experienced sexual discrimination...").  A favorable response may be
agreement with positive statements or disagreement with negative
statements.  The favorable response category is shown under the
question. 

\b Changes from 1992 to 1993 greater than 2 percentage points were
classified as "better" or "worse." If the change was 2 percentage
points or less, it was classified as "no substantial difference."

\c Question was not asked. 

Source:  1993 U.S.  Postal Service Employee Opinion Survey National
Results. 

The EOS Index scores as shown in figure 3.4, as well as other
questions that focused on working conditions, employee-management
relations, performance management, and recognition and reward,
indicated that employee concerns were generally more severe in mail
processing and distribution plants than customer service districts. 

   Figure 3.4:  Comparison of EOS
   Index Scores Between Mail
   Processing and Distribution
   Facilities and Customer Service
   Districts

   (See figure in printed
   edition.)

Note:  Index scores at mail processing plants ranged from a low of 23
to a high of 51, and customer service district scores ranged from a
low of 35 to a high of 58. 

Source:  U.S.  Postal Service 1993 Employee Opinion Survey. 

The survey results also showed that, nationally, the rural carriers
were generally more positive about both their work and the Postal
Service than city carriers, clerks, and mail handlers were.  Also,
supervisors, managers, and other noncraft employees were more
positive than craft employees nationally. 


--------------------
\10 The results of the survey were presented in standard condensed
scale format.  That is, the survey responses "strongly agree" and
"tend to agree" (or "very good" and "good") were combined into a
single rating labeled "favorable." Similarly, the "disagree" and
"strongly disagree" (as well as "poor" and "very poor") survey
responses were labeled "unfavorable."


   CONCLUSIONS
---------------------------------------------------------- Chapter 3:5

Contract negotiations, grievance rates, and employee responses to the
two nationwide surveys all show that postal managers, unions, and
management associations have to change their relationships if they
are going to improve the corporate culture and make the Postal
Service more competitive and a better place to work.  In particular,
performance management and reward/recognition for work are two areas
posing serious challenges for change at the processing plant and post
office levels.  The conditions employees face on the workroom floor
of mail processing plants and delivery stations that contributed to
the point of view they expressed in the 1992 and 1993 surveys are
discussed in chapters 4 and 5, respectively. 


LABOR-MANAGEMENT RELATIONS IN MAIL
PROCESSING OPERATIONS ARE TENSE
AND CONFRONTATIONAL
============================================================ Chapter 4

The Postal Service's 352 mail processing and distribution plants
located around the country are highly mechanized, automated, and
time-driven operations that handled 171.2 billion mailpieces in
fiscal year 1993.  Within these large factory-like operations, the
tense and confrontational relations that exist on the workroom floor
have been a long-standing concern to postal management, union
leadership, and employees. 

In past surveys, mail processing and distribution employees said they
were generally satisfied with their pay and benefits, liked the work
they did, and were committed to the success of the Postal Service. 
But they were not satisfied with their working conditions, their
treatment by management and supervisors, and the recognition and
reward system for good performance.  Much of the supervisor and
employee dissatisfaction on the workroom floor was related to (1) the
treatment of employees who were late for or absent from work, (2) the
lack of employee participation in the decisions affecting their work,
(3) the perception by both craft employees and supervisors that some
employees were not being held accountable for their performance, and
(4) the unions' constant defense of nonperformers (regardless of
merit) in the grievance process. 


   MAIL PROCESSING WORK
   ENVIRONMENT IS HIGHLY
   STRUCTURED AND SCHEDULE-DRIVEN
---------------------------------------------------------- Chapter 4:1

The Postal Service mail processing plants (for general, air, and bulk
mail) are the hubs of the universal mail service that link the 39,392
post offices that collect and deliver mail.  These plants operate on
a 3-tour, 24-hour-a-day, 7-day-week basis to separate, sort, and
transport mail between individual post offices.  Operations are
closely monitored and analyzed to ensure that mail received daily is
processed in time to meet postal delivery standards (e.g., overnight,
2 days, etc.) and established ground and air transportation schedules
(referred to as clearance times) for local and out-of-town delivery. 

To some extent, the work environment is similar to traditional
assembly line work found in many manufacturing industries, where (1)
work is highly repetitive, (2) the division of labor is narrow and
restrictive, and (3) managers and supervisors closely monitor and
analyze operations to meet deadlines and budgets.  The labor
relations climate is also similar to that found in many unionized
plants, where (1) labor contracts dictate the rules of work, and (2)
conflicts are resolved primarily through a grievance-arbitration
procedure. 


      MAIL PROCESSING WORK IS
      HIGHLY ROUTINIZED
-------------------------------------------------------- Chapter 4:1.1

At a general mail processing plant, mail goes through a series of
manual, automated, and/or mechanized sorting processes (see fig. 
4.1).  First, mail handlers unload mail from incoming trucks and
deliver it to other mail handlers who separate the mailpieces into
three main streams:  letter mail, flats,\1 and parcels.  Letter mail,
which accounts for about 70 percent of the mailpieces handled, is
canceled and sorted by machines into three letter mail streams: 
prebarcoded letters, machine-readable letters, and handwritten or
script letters.  After mail handlers perform these operations, clerks
are responsible for further processing of the letters, flats, and
parcels. 

Machine-readable, nonbarcoded metered mail is processed by clerks
using optical character readers that read the addresses and spray a
bar code to each letter.  These letters are then combined with
prebarcoded mail that is sorted by barcode sorting machines according
to their ZIP Code destination.  Handwritten or script letters, as
well as any letters rejected in previous processing operations, are
passed through a letter sorting machine, which requires a clerk to
read an address item and key in a two- or three-digit code so the
machine can sort letters to the designated post office area.  Flats
and parcels go through similar automated and mechanized processing
and sorting operations.  After clerks have completed their phases of
the operation, mail handlers load the sorted mailpieces onto trucks
for delivery to the designated local post offices and out-of-town
delivery areas.  Although less automated than general mail processing
plants, the processes at air and bulk mail plants are similar to the
processes described above. 

   Figure 4.1:  Photo Layout of a
   Mail Processing Plant

   (See figure in printed
   edition.)

 

Besides the approximately 124,600 APWU clerks and 47,700 mail
handlers who work in mail processing plants, there are other crafts
represented by APWU that are critical to the operations.  They
include about 26,200 equipment and building maintenance employees and
about 7,050 vehicle operators who move the mail between mail
processing plants and post offices. 


--------------------
\1 A flat is a piece of mail that exceeds the dimensions for
letter-size mail (11-1/2" long, 6-1/8" high, or 1/4" thick).  A flat
may be unwrapped, paper wrapped, sleeve wrapped, or enveloped.  See
Glossary of Postal Terms, U.S.  Postal Service, Publication 32
(Washington, D.C.:  1988), p.  27. 


      EMPLOYEE TASKS ARE CLEARLY
      DEFINED
-------------------------------------------------------- Chapter 4:1.2

Every person in a processing plant has specific tasks to do in order
to move the mail in an efficient manner.  Supervisors are responsible
for coordinating the mail flow operations and supervising craft
employees.  Employees are responsible for processing the mail. 
Generally, supervisors are prohibited by the collective bargaining
agreements from doing craft work.  Except under certain
circumstances, employees are prohibited by contract workrules from
doing any work outside their crafts. 

According to the required process, at the beginning and continuing
through each mail processing tour, supervisors determine the volume
and priority of mail to be processed and the employees available to
perform the required work.  Supervisors check attendance, assign
employees to specific work stations, make sure processing equipment
is ready to run, set up and program the sorting machines, schedule
employee breaks, and advise managers if overtime will be needed. 
They monitor operational performance data throughout the tour and
prepare routine and special reports related to processing activities. 
Supervisors are also responsible for ensuring that employees comply
with contract terms, operational procedures, and safety regulations. 
When infractions are noted, supervisors are to correct the
deficiencies, which may include discipline, and meet with union
representatives to resolve disputes. 

Under the contract, employees are assigned work on the basis of their
crafts, their skills, and the volume of mail to be processed at
various places in the plant.  Most employees regularly work in the
same work units, while some do not know what work they will be doing
until they report for duty every day and receive an assignment.\2
Some employees, such as letter sorting machine operators, must meet
machine qualification requirements, such as the ability to key at the
appropriate speed and accuracy. 


--------------------
\2 To the extent that work is not available when an employee reports
to work, management can assign him or her to any available work at
his/her wage level.  This work can be within or outside his/her
craft. 


      MANAGERS MONITOR PLANT
      OPERATIONS
-------------------------------------------------------- Chapter 4:1.3

Mail processing operations are monitored through electronic systems,
written reports, and/or direct supervision at various levels from the
Vice President of Processing and Distribution at postal headquarters
to plant manager in the field.  An automated Mail Condition Reporting
System provides daily information to these managers on the plant
operations, such as the amount of mail available for processing at
each plant (on-hand volume) and the amount of mail not processed by
the planned clearance time ("plan failure").  Postal management's
goal is to eliminate "plan failures." Ultimately, the monitoring of
plant operations, including supervisors and employees on the workroom
floor, is intended to improve the Postal Service's delivery
performance and, in turn, customer satisfaction. 


      MANAGEMENT AND EMPLOYEE
      RELATIONS GOVERNED BY
      COLLECTIVE BARGAINING
      AGREEMENTS
-------------------------------------------------------- Chapter 4:1.4

The negotiated union contracts outline aspects of how craft employees
are to do the work, including hours of work and rates of pay for each
job, assignment of overtime, and discipline procedures.  They also
designate the grievance arbitration process as the method of
resolving workplace disputes.  Under the contracts, a full-time
employee's normal workweek consists of five 8-hour days.  Employees
working between 6:00 p.m.  and 6:00 a.m.  receive 10 percent more pay
as night shift differential; employees receive 25 percent more pay as
a premium for Sunday work.  Employees working more than 8 hours a day
or more than 40 hours a week are paid overtime at a rate of 1-1/2
times the base hourly wage.  Penalty overtime\3 at the rate of 2
times the base hourly wage is paid to APWU employees in certain
circumstances. 

The procedure to assign overtime is governed by the contracts.  Two
weeks before the start of each calendar quarter, employees desiring
overtime work are to put their names on an "overtime desired" list. 
Lists are maintained by craft, section, or tour in accordance with
local agreements.  Employees with the necessary skills are selected
in order of their seniority on a rotating basis, with those absent or
on leave passed over.  If the voluntary overtime desired list does
not provide enough employees, employees not on the list may be
required to work overtime on a rotating basis, with the first
overtime assigned to the most junior employees.  Employees refusing
mandatory overtime can be disciplined. 

As described in chapter 3, employees or unions may file grievances in
disputes with management over wages, hours, or other conditions of
employment.  Unions designate craft employees to become stewards, who
are to investigate, present, and adjust grievances.  Stewards are
allowed time "on the clock" for these activities.  The number of
stewards to be designated at a plant is set in the national
agreements.  Table 4.1 shows the formula provisions of the current
agreements. 



                          Table 4.1
           
           Number of Stewards Allowed per National
                          Agreement

Employees in the same craft per tour or            Number of
station                                             stewards
----------------------------------------------  ------------
up to 49                                                   1
50 to 99                                                   2
100 to 199                                                 3
200 to 499                                                 5
500 or more                                              5\a
------------------------------------------------------------
\a Five plus 1 additional steward for each 100 employees. 

Source:  1990-1994 Agreement between the Postal Service, APWU, and
NALC. 

For example, as of February 1994, there were 4,538 bargaining
employees at the Morgan General Mail Facility in New York, with 56
employees designated as union stewards. 


--------------------
\3 Penalty overtime is paid, except in December, if a full-time or
part-time APWU employee is required to work overtime on more than 4
of the employee's 5 scheduled days or over 10 paid hours on a
regularly scheduled day, over 8 paid hours on a nonscheduled day, or
over 6 days in a service week. 


   LABOR-MANAGEMENT PROBLEMS IN
   PROCESSING OPERATIONS
---------------------------------------------------------- Chapter 4:2

Employee survey data, grievance rates, and the results of our
interviews show that labor-management problems are pervasive in
processing operations.  Most employees are dissatisfied with many
working conditions.  The relations between management and the union
are often adversarial, which can divert attention to resolving
grievances rather than processing mail and improving work conditions. 


      PROCESSING EMPLOYEES ARE
      DISSATISFIED WITH THEIR WORK
      ENVIRONMENT
-------------------------------------------------------- Chapter 4:2.1

At the seven mail processing plants we visited,\4 the EOS Index
(discussed in ch.  3) ranged from a low of 29 to a high of 37,
placing five of the facilities in the bottom half of all processing
facilities in employee dissatisfaction with management.  At these
plants, the issues grieved centered on attendance, overtime, and
"craft-crossing."


--------------------
\4 Five of the seven plants were processing and distribution centers
and two were bulk mail centers. 


      GRIEVANCE ACTIVITY AND
      ISSUES AT PLANTS VISITED
-------------------------------------------------------- Chapter 4:2.2

According to postal management and union officials, grievance
activity is one indicator of the labor/management climate at mail
processing plants.  Available data for the seven plants we visited
showed significant and varying grievance activity at these plants. 
For fiscal year 1992, step 2 grievances filed per 100 employees
ranged from 17 at the Denver General Mail Facility to 342 at the
Denver Bulk Mail Center.  (See table 4.2.)



                          Table 4.2
           
            Step 2 Grievances Filed in Fiscal Year
            1992 at Mail Processing Plants Visited

                                           Total   Grievance
                                       number of    rate per
                                      grievances         100
Mail processing plant                      filed   employees
------------------------------------  ----------  ----------
Denver General Mail Facility                 314          17
Morgan (NY) General Mail Facility\a        2,182          19
Southern Maryland General Mail               579          26
 Facility and Bulk Mail Center\a
San Francisco General Mail Facility        1,249          46
Cincinnati General Mail Facility\a         4,026          91
Denver Bulk Mail Center                    1,957         342
------------------------------------------------------------
\a Grievance rate based on district data; facility data not
available. 

Source:  Postal Service district and facility grievance reports. 

As indicated in table 4.2, the grievance rate at the Denver Bulk Mail
Center was almost 4 times greater than the next highest rate.  This
high grievance rate was largely the result of an adversarial
relationship between the local APWU president and the Bulk Mail
Center management.  Because of this conflict, the APWU chose to file
multiple grievances over the same issue in an attempt to draw
attention to the facility.  In some instances, several hundred
grievances were filed over a single issue.  At the same facility, the
relationship between the mail handlers union and management was not
as adversarial--only 14 percent of the grievances filed at the Denver
Bulk Mail Center came from mail handlers.  According to Area Postal
management officials, APWU and Center management relations have
improved and the grievance rate dropped subsequent to our work at the
Center. 

In the districts we visited, attendance-related issues, which
included disciplinary actions for irregular attendance, restrictions
placed on employee leave use, and charges of absence without leave,
were among the issues most grieved.  Overtime assignments and
craft-crossing were also major grievance issues at the locations
visited.  The issues grieved for overtime included disputes over
whether it had been assigned to the right person and paid at the
right rate.  The issue grieved in craft-crossing was whether an
employee had performed work normally associated with a different
craft.  Although the collective bargaining agreements generally
prohibit employees of one craft group from performing the functions
of another craft group, they do allow management some flexibility in
making work assignments under certain circumstances. 


   CURRENT WORK CONDITIONS
   ENCOURAGE AND SUSTAIN WORKPLACE
   DIFFICULTIES AND
   SUPERVISOR-EMPLOYEE CONFLICT
---------------------------------------------------------- Chapter 4:3

Current work conditions in processing operations often place
supervisors and employees in adversarial roles, contributing to
labor-management tensions on the workroom floor.  These conditions,
described in the following sections, relate to (1) the supervisor
incentive system, (2) employee perception of management style, (3)
employee participation in work decisions, (4) performance management,
and (5) recognition and rewards. 


      SUPERVISORS' INCENTIVE
      SYSTEM TIED TO NUMERICAL
      GOALS
-------------------------------------------------------- Chapter 4:3.1

The Postal Service's merit pay and promotion systems reward
supervisors for achieving a variety of productivity and budget goals. 
According to our interviews, some supervisors emphasize "making their
numbers" over maintaining good employee relations.  Employees in each
postal district we visited identified poor interpersonal relations as
a labor-management problem. 

Until January 1994,\5 supervisors were evaluated on seven general
factors that included coordinating a work unit's operations,
supervising employees, ensuring a safe work environment, and managing
human resources.  Supervisors were also rated on how well they
achieved numerical goals (budget, safety, and administrative) set at
the beginning of a year, including control of unscheduled employee
absences and overtime usage.  Supervisors received mid-year reviews
to discuss their progress at meeting their numerical goals and also
received annual performance evaluations.  The annual evaluation
resulted in a decision on merit pay increases. 


--------------------
\5 As discussed in chapter 2, beginning in calendar year 1994, annual
pay increases for all supervisors are to be based on the Striving for
Excellence (SET) program. 


         ATTENDANCE DRIVES
         OPERATIONS AND
         DISCIPLINARY ACTIONS
------------------------------------------------------ Chapter 4:3.1.1

While mail processing is a highly mechanized and automated operation,
processing the mail still requires a sizable workforce.  Having the
necessary employees available for work when scheduled is critically
important to meeting processing deadlines.  Employee absences,
particularly unscheduled absences, disrupt processing operations and
affect down-line delivery operations.  For this reason, supervisors
are held accountable for minimizing unscheduled employee absences. 

The 1992 employee opinion survey showed that 45 percent of the
processing employees reported that they had been disciplined for
using sick leave when they were legitimately ill.\6 According to our
interviews and our review of arbitration files, supervisors' focus on
making productivity and budget goals resulted in unwarranted
discipline of employees using unscheduled leave. 


--------------------
\6 This question was not on the 1993 survey. 


         ABSENCE CONTROL PROGRAM
------------------------------------------------------ Chapter 4:3.1.2

To keep sick leave rates low, the Postal Service has an "absence
control program" to identify employees with potential attendance
problems that require management attention.  The program is guided by
the principle that management has a right to expect that employees
meet assigned work schedules.  Most large plants have established
absence control offices to track employee absences and identify
employees with attendance problems that require management attention. 

Under this program, employees requesting leave must call the
attendance control office before their scheduled work time.  Requests
for annual leave may be denied due to the needs of the Service, and
medical documentation may be required to support sick leave requests. 

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.  Other factors, such as meeting processing and delivery
deadlines, have priority over employees' needs, as the following five
examples illustrate. 

Example 1:  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
would have to report for work.  According to the clerk, his father
became ill at the party and was taken to the emergency room of a
hospital.  The clerk called his supervisor and stated 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 upon his return to duty.  The supervisor rejected the
certification and issued a 14-day suspension beginning on February 8,
1992, through February 21, 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 duty as directed.  The suspension was rescinded at
arbitration on February 16, 1993. 

Example 2:  San Francisco General Mail Facility grievance arbitration
files showed that a clerk employed with the Postal Service for 17-1/2
years was issued a letter of warning on March 21, 1992, for irregular
attendance.  Her supervisor's policy was that three unscheduled
absences in a 3-month period warranted disciplinary action.  The
clerk's leave usage for the period covered by the letter of warning
is shown in table 4.3. 



                          Table 4.3
           
                    Employee's Leave Usage

          Leave
Date      use       Purpose              Documentation
--------  --------  -------------------  -------------------
10/28/    3 hours   doctor appointment   preapproved by
91        of sick   migraine headache    supervisor
          leave
                                         medical
                                         certification

12/30/    16 hours  doctor appointment   medical
91 to     of sick   migraine headache    certification
12/31/    leave
91

1/6/92    13        late for work        none
          minutes
          of
          annual
          leave

1/8/92    4 hours   pick up son from     preapproved by
          of        airport who was      supervisor
          annual    returning from
          leave     "Desert Storm"

3/2/92    40 hours  influenza            none
to 3/6/   of sick
92        leave
------------------------------------------------------------
Source:  A San Francisco Arbitration Award Decision. 

The letter of warning was grieved and went to arbitration.  The
arbitrator concluded that the October 28 and January 8 absences were
not unscheduled because they were approved in advance, and the
remaining unscheduled absences were not unreasonable.  The arbitrator
ordered the letter of warning rescinded and removed from the clerk's
personnel file in September 1992. 

Example 3:  In a case in Southern Maryland, a clerk was issued a
letter of warning by the attendance control supervisor for having
irregular attendance.  She had discussed the reason for her absences
with her supervisor before receiving the letter.  The attendance
control supervisor told her the reason for her absence did not
matter.  The letter was rescinded at step 2 of the grievance process
3 months later. 

Example 4:  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 their 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."

Example 5:  In a New York case, an employee who was a single parent
with two handicapped children developed lupus, a disease that weakens
the immune system.  Her doctor provided notes restricting prolonged
standing and advising a change from the night shift to the day shift
to ensure proper rest.  Postal management directed the employee to
apply for a leave of absence, which she refused to do as she could
not afford to not be paid and was ready, willing, and able to work
within the two restrictions recommended by her doctor.  Postal
management contended that the employee had a babysitting problem, not
a medical necessity, and refused to change her shift.  The employee
was removed in May 1992.  She grieved her removal and was still
awaiting arbitration as of April 1994. 


      DISCIPLINARY PROCEDURES DO
      NOT DIFFERENTIATE AMONG
      REASONS FOR NONATTENDANCE
-------------------------------------------------------- Chapter 4:3.2

The Postal Service's disciplinary procedures for attendance do not
differentiate between leave abusers and employees with legitimate
needs.  According to our interviews, these procedures lowered the
morale of good performers, causing them to become disillusioned, but
were ineffective in correcting the bad attendance of poor performers. 

In all the districts we visited, managers identified overtime as a
major cause of labor-management problems.  Two managers in Cincinnati
and a steward in Southern Maryland told us that excessive overtime
created attendance problems.  A steward in New York said too much
overtime caused employee "burn-out" and increased sick leave use.  A
manager in Denver, however, said that absenteeism caused excessive
overtime.  He said this led to low morale because the existing
workforce had to adjust to a heavier workload. 

Inadequate staffing due to the restructuring and downsizing resulted
in high levels of overtime in all of the districts except San
Francisco.  Nationally, mail processing overtime hours represented
12.1 percent of total mail processing workhours in fiscal year 1993
compared to 8.8 percent in fiscal year 1992 and cost the Postal
Service $1.1 billion in fiscal year 1993. 

The independent contractor who administers the employee opinion
survey provides the Postal Service with randomly selected samples of
written comments that employees have submitted in response to the
survey questionnaire.  Employees are asked for any additional
comments they may wish to make about any topic, regardless of whether
it was covered in the questionnaire.  For the districts we visited,
with the exception of the San Francisco District, where we were
unable to obtain the written survey comments, we reviewed the
comments provided with the 1992 survey.  (Comments from the 1993
survey were not available at the time we did our fieldwork.)

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."

One plant manager said that with the shortage of employees and the
resulting high overtime rate, some employees will try to work 40
hours in 4 days (receiving 8 hours of overtime pay) and then be on
sick leave the rest of the workweek.  This gives the employee both
more days off and more pay. 

Disciplining employees for taking time off for child care purposes
was a major concern in two of the plants we visited.  Supervisors and
stewards in New York and Southern Maryland, which did not have child
care centers, told us that some employees with child care needs were
denied leave and had left their children at home unattended while
they worked rather than risk disciplinary action, which could have
resulted in suspension without pay or removal from the Postal
Service.\7 The Postal Service has child care centers available to
employees on all three tours at three plants we visited (the Denver
Bulk Mail Center, the Denver General Mail Facility, and the San
Francisco General Mail Facility).  We did not evaluate Postal Service
efforts to address employees' child care needs as part of the
labor-management review. 

In reviewing grievance-arbitration files, we found instances where
employees were disciplined for being absent to care for their
children.  For example, in Southern Maryland, a clerk was in an
accident and was totally disabled for 2 months.  He had custody of
his two children and was still dealing with the need for child care
when he returned to work.  He was issued a 7-day suspension for
failure to be regular in attendance.  His irregular attendance
resulted from tending to his two children, and he had no record of
leave abuse before the accident.  He grieved the suspension, which
was rescinded at step 2, and he received back pay for the suspension
period. 

Comments from the 1992 employee opinion survey also indicated
employees' concerns over child care issues.  In Southern Maryland, an
employee wrote that management was not sensitive to child care
problems or the need to take leave due to a child's illness.  In New
York, an employee wrote that a large number of absences were due to
workers who could not find sitters for their children at night. 
Another employee wrote that parents of small children found it
difficult to be model employees in terms of never being late or
having perfect attendance. 

Employee stress due to child care concerns was also mentioned in
focus group meetings in the Southern Maryland and New York Districts. 
In our interviews, a steward from New York pointed out that night
workers may need child care both at night, so that they can work, and
again during the day, so that they can sleep. 

Supervisors and stewards at three plants we visited (Southern
Maryland General Mail Facility, Southern Maryland Bulk Mail Center,
and New York Morgan General Mail Facility) told us that many of the
attendance problems there related to drug and alcohol abuse.  Some
did not believe the Postal Service's Employee Assistance Program was
effective in helping drug and alcohol abusers.  According to the
employee opinion survey, 25 percent of processing employees
nationwide believed there was a drug problem, and 34 percent believed
there was an alcohol problem where they worked.  The Postal Service
revised and expanded its Employee Assistance Program after we began
our review.  An evaluation of this program, and the changes made,
were not a part of our review. 


--------------------
\7 The National Child Care Task Force, comprising representatives
from the Postal Service, NALC, and APWU, was developing long-term
plans to address family and child care concerns.  It was evaluating
the day care centers already existing at postal facilities at the
time of our review. 


      EMPLOYEES BELIEVE THEY ARE
      NOT TREATED WITH DIGNITY AND
      RESPECT
-------------------------------------------------------- Chapter 4:3.3

The 1993 employee opinion survey showed that 49 percent of mail
processing employees did not believe they were treated with dignity
and respect, and 56 percent reported problems with job stress.  In
written comments submitted with the 1992 employee opinion survey,
supervisors and employees said: 

     "As a supervisor...I felt that middle management...wanted line
     supervisors to harass employees and initiate discipline even
     when they knew it was not in compliance with the National
     Agreement." (Cincinnati)

     "Management seems to be more concerned with harassing and
     disciplining employees than with actually accomplishing the real
     objectives of the Postal Service." (Southern Maryland)

     "...Management has a `black-list' of employees they don't like
     and go out of their way to make life hard for these people. 
     These `examples' of what can be done to `bad' employees may keep
     the rest of us in line but they destroy morale..." (Denver)

     "Management fails to treat employees with dignity, not giving
     employees respect and consideration.  Employees feel that there
     is no concern for their working conditions or morale.  They are
     not given credit, only criticism..." (New York)

In our interviews, some managers and supervisors acknowledged that
there were some supervisors with poor interpersonal skills who
corrected, belittled, or embarrassed employees in front of their
peers.  For instance, grievance files in the San Francisco District
included a step 3 grievance for harassment filed by 27 clerks against
a supervisor who allegedly yelled, showed favoritism, and had no tact
or professionalism. 

Employee treatment and generally poor interpersonal relations were
primary concerns in the May 1993 postal violence focus group
meetings.  Postal management held these sessions, facilitated by
outside consultants, to give employees the opportunity to express
their feelings and concerns about workplace safety after shootings in
May 1993 at postal facilities in Dearborn, MI, and Dana Point, CA. 
The following concerns were among those expressed in these meetings: 

  Supervisors feel they have a better chance of being promoted if
     they treat their subordinates harshly.  (New York)

  Several employees stated that they had witnessed confrontations
     between supervisors and employees, as well as fights between
     employees.  Given some of the problems on the workroom floor,
     some were surprised there was not more violence.  (Cincinnati)

  Several mail handlers complained about supervisors' treatment of
     them on the loading dock.  They said they were treated in a
     "condescending" way--they were "talked down to, treated like
     children, cursed at, watched over and told what to do." (San
     Francisco)

  The most frequent themes were poor communication, poor supervisors,
     favoritism, employees not valued, and employees talked to as if
     they were children.  (Southern Maryland)

Managers, supervisors, and union stewards we interviewed told us that
everyone in the Postal Service needed to improve their interpersonal
skills.  Supervisors said they would especially like training on
techniques for dealing with poor performers. 


      EMPLOYEES HAVE LIMITED
      INVOLVEMENT IN DAILY
      DECISIONS AFFECTING THEIR
      WORK
-------------------------------------------------------- Chapter 4:3.4

Employee opinion survey results showed that processing employees do
not believe management values their input on how to organize and
accomplish their work.  In each of the postal districts we visited,
poor communication between supervisors and employees and lack of
employee empowerment to effect changes in their work were cited as
significant labor-management problems.  In responding to the 1993
survey, 60 percent of the processing employees reported that the
workflow was not well-organized.  Employees also responded that they

  were not encouraged to come up with new or better ways of doing
     things (52 percent);

  were reluctant to reveal problems or errors to management (58
     percent);

  did not believe management listened to employee problems,
     complaints, or ideas (53 percent); and

  did not believe management would do something about employee
     problems, complaints, and ideas (65 percent). 

The following are comments from the 1992 employee opinion survey that
illustrate some employees' attitudes about their involvement in
decisionmaking: 

     "Employees are micro-managed to the point that they lose
     interest in doing a better job or making any decisions."
     (Cincinnati)

     "I feel that upper management has a big ego and that they feel
     that any suggestions by craft are less than desirable." (Denver)

     "Employees have ideas, since we do the same work everyday.  We
     know the problems of our work area.  We should have more input
     on the running of operations." (New York)

     "Supervisors do not accept that tasks can be done differently
     and still be correct." (Southern Maryland)

The inability of employees to influence how their work was organized
and accomplished was also mentioned by employees we interviewed. 
Some supervisors at the San Francisco plant said that employees did
not take their jobs seriously.  A supervisor in Southern Maryland
said that employees did not feel responsible for their work.  At the
New York, Denver, San Francisco, and Cincinnati plants, union
stewards said employees were most familiar with the problems in their
work areas and should have some input in running the operations.  A
tour manager and supervisor from Southern Maryland and supervisors
from Cincinnati and Denver said that encouraging more employee
involvement and listening to employee suggestions would improve
operations and the labor-management climate. 


      POOR PERFORMANCE IS USUALLY
      TOLERATED
-------------------------------------------------------- Chapter 4:3.5

Perceived inequities in the distribution of work was the top concern
cited by employee opinion survey respondents.  Basically, employees
and supervisors alike said the Postal Service was ineffective in
dealing with poor performers.  The difficulty the Postal Service had
with removing poor performers was cited as a labor-management problem
in each of the postal districts we visited. 

According to the 1993 employee opinion survey, 83 percent of the
processing workers responded that some people did most of the work
while others did just enough to get by.  Seventy percent of the
workers reported that poor employee performance was tolerated by
management.  According to a regional director of the Mail Handlers
Union, there is a general perception that managers and supervisors
lean on good performers to make up for those employees who are less
efficient.  Many times supervisors feel that poor performers take too
much time to deal with so they simply "write them off."

There is no formal evaluation process for craft employees unless a
step increase is deferred.  According to a postal official, the
Postal Service uses measures such as attendance records or accuracy
and speed standards to pinpoint poor performers. 

Supervisors are to take progressive disciplinary actions to correct
undesirable employee behavior.  Actions are to be taken progressively
as follows: 

  an informal discussion between the supervisor and the employee;

  a formal letter of warning;

  a suspension without pay for 14 days or less;

  a suspension without pay for more than 14 days, or removal from the
     Postal Service. 

Employees can be issued several disciplinary actions at one level
before progressing to the next level.  Records of disciplinary
actions taken can be removed from the employee's personnel record
after 2 years if no other offenses have occurred.  Disciplinary
actions are subject to grievance/arbitration procedures, which can
result in reinstatement and restitution, including back pay. 
According to union and management officials, there is almost always a
grievance filed for every disciplinary action taken.  On the employee
opinion survey, 66 percent of first-line supervisors responded that
many supervisors have given up trying to discipline employees. 
Supervisors at the San Francisco, Southern Maryland, and New York
plants told us that their attempts to discipline employees were
undermined by district labor relations staff who willingly settled
grievances to avoid arbitration costs.  These supervisors believe the
districts' willingness to settle cases encouraged the unions to
grieve all disciplinary actions in hopes of eliminating or reducing
the severity of the action.  Union officials in New York told us they
generally grieve disciplinary actions because they consider these
actions punitive, rather than corrective, as required in the
collective bargaining agreement. 

The employee opinion survey also showed that 88 percent of first-line
supervisors reported it was nearly 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. 

  In Southern Maryland an employee was grieving her removal from the
     Postal Service after having been suspended and/or removed seven
     times within 4 years (July 1986 through June 1990) because of
     attendance problems related to substance abuse.  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. 

  In Cincinnati an employee grieved her removal for two charges of
     absence without leave after progressive discipline to correct
     her continuing attendance problems.  The arbitrator ruled that
     the grievant's attendance record proved beyond any reasonable
     doubt that she was an unacceptable employee and was not entitled
     to retain her position.  However, the arbitrator also said that
     one of the two charges for absence without leave was not
     sufficiently proven, so he ordered the employee conditionally
     reinstated. 

  In New York an employee grieved her removal from the Postal Service
     in December 1990 for being absent without leave and for
     submitting a fictitious medical certificate.  In her 2-1/2 years
     of service, she received seven prior disciplinary actions
     (including five suspensions) for various infractions related to
     her admitted drug and alcohol addiction.  This employee's
     removal was sustained by the arbitrator in December 1992, 2
     years later. 

According to union and management officials in New York, about 80
percent of disciplinary actions are attendance-related.  The District
Human Resource Manager told us that if employees continue to not show
up for work, management will eventually be able to remove them, but
as long as poor performers report for duty and stay at their work
stations, there is little that can be done. 

In the Cincinnati District, employee resentment at management's
nonconfrontation of poor performers was a primary concern in focus
group discussions over workplace safety.  Employees cited rigid
personnel policies and poor union/management relations as
contributing to the retention of incompetent and/or dangerous
employees, which they said created stress for everyone. 

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

     "...The unions have tied management's hands making it difficult
     for employees to be fired...."

Someone else wrote: 

     "...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 is
also tolerated by management.  They do not believe supervisors are
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 supervisors
consistently followed the provisions of the national agreements.  In
contrast, most mid-level managers and first-line supervisors (61
percent and 73 percent, respectively) thought that they did
consistently follow the contracts.  Union officials said contract
violations occur regularly because supervisors do not receive
contract training and because supervisors are 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 to then provide training, a transfer
opportunity, or a mentor to improve performance. 


      MORE INCENTIVES FOR GOOD
      PERFORMANCE NEEDED
-------------------------------------------------------- Chapter 4:3.6

According to the 1993 employee opinion survey, processing employees
are not recognized or rewarded for demonstrating high levels of
performance.  On the survey, 77 percent of processing employees
responded that they were not rewarded for high levels of performance,
76 percent reported that performing well just gets you extra work,
and 60 percent said their contributions were not recognized when
things went well.  Forty-two percent of processing employees said
their supervisors did not provide them with feedback on the adequacy
of their performance.  In fact, some stewards told us there were
disincentives for working hard and that rigid disciplinary policies
affected the morale of good performers as well as bad performers. 
Supervisors and stewards told us that the Postal Service needed to
implement incentive programs to encourage good performance by
employees rather than relying on discipline to discourage poor
performance. 

Comments submitted by employees with the 1992 survey demonstrate how
the lack of performance incentives can affect employees' attitudes: 

     "Craft employees need to know they are doing a good job. 
     Incentive rewards are rare.  When you get the same reward for
     poor performance as for good performance, why try harder."
     (Denver)

     "Many craft employees are lackadaisical - don't seem to care how
     much or how well they do - and they get paid the same as those
     who care and take the extra steps to do things right."
     (Cincinnati)

     "There is no incentive; managers tell employees `you get a check
     every two weeks, that's incentive enough.' " (Southern Maryland)

     "Management still does not treat many of its employees as
     assets.  I've heard many hard working dedicated employees
     complain that they come to work every day, do a very good job,
     and rarely any thanks or recognition of a job well done is
     given." (New York)

Promotional opportunities do not act as performance incentives for
employees because promotions within the craft are generally based on
seniority, not performance.  However, employees can apply for
available management positions.  According to the survey, 57 percent
of processing employees said that the Postal Service did not provide
employees with training to help them qualify for a better job, and 47
percent reported that there was little or no opportunity for
advancement. 

Processing employees also reported a lack of incentives for
demonstrating teamwork on the workroom floor.  Seventy-two percent of
the survey respondents indicated that work groups were not rewarded
for cooperating with each other.  In New York, a union steward said
craft employees and the unions could improve the work climate by (1)
promoting a greater sense of teamwork among employees and (2)
allowing employees to participate in decisions affecting their work. 
In this regard, the Postal Service and the unions are experimenting
with self-managed work units that allow employees to assume more
responsibility for processing the mail. 


   POSTAL SERVICE AND UNIONS
   EXPERIMENTING WITH SELF-MANAGED
   WORK UNITS
---------------------------------------------------------- Chapter 4:4

At the time of our review, seven processing plants and five post
offices were testing a program that allowed craft employees to take
greater responsibility for moving the mail.  A "crew chief" program
was developed as a formal pilot project with the clerk craft, guided
by a June 1991 joint Memorandum of Understanding between the Postal
Service and APWU.  This program was to allow employees to do their
work with less supervision.  However, the program did not address all
of the underlying issues that create conflict between labor and
management, such as the lack of incentives for teamwork and
procedures for dealing with poor performers. 

Crew chiefs were craft employees who were to assume a leadership role
in a work unit, performing selected functions previously done by the
unit supervisor, such as training new employees and leaving the work
area to obtain mail and bring it to the unit for processing.  As a
craft employee, the crew chief could work with the unit employees,
whereas supervisors are prohibited by the collective bargaining
agreement from doing craft work.  However, crew chiefs could not
approve leave and they could not take disciplinary actions. 

The crew chief concept emerged during the negotiations for the 1990
collective bargaining agreement between the Postal Service and APWU. 
APWU proposed the concept because it believed the organization of
postal work was outdated and inefficient and created an unnecessarily
adversarial and bureaucratic work environment.  The Postal Service
was not opposed to the concept but felt there were too many
questions, such as how crew chiefs would be selected, that needed to
be addressed before any agreement could be considered.  In interest
arbitration, the Postal Service and APWU entered into a Memorandum of
Agreement to pilot test the project with the clerk craft. 

The tests were conducted in both automated mail processing and retail
operations.  The seven mail processing plants and five retail sites
that were testing the concept were jointly selected by the Postal
Service and APWU from a list of sites that were willing to
participate in the program.  The first test site, established in July
1992, covered the automated operations at the Sacramento Processing
and Distribution Center in California.  Crew chiefs at the pilot
sites were chosen on the basis of seniority or selection by a joint
committee of union and management members and were given 40 hours of
on-site training.  Each of the sites had the option of adopting an
"unelection" process whereby employees could vote every 90 days to
replace their crew chief. 

The Postal Service has two other programs similar to the crew chief
concept.  One program, group leaders, involved the mail handlers
union and was started over 20 years ago.  Group leaders were to be
selected on the basis of seniority and were to receive on-the-job
training.  The other program, service captain, included both mail
handlers and clerks.  There were no rules for the selection of
service captains and no formal training required or provided.  In the
Southern Maryland General Mail Facility program, which started in
November 1992, service captains were initially selected by the
respective supervisor of each operation.  Later, they were selected
by their peers, as long as management considered the employee to be a
good worker with a satisfactory attendance record.  Plant managers
can implement either program without postal headquarters approval. 
The Postal Service could not tell us how many or which facilities
were participating. 

In a limited review of these three programs, we interviewed managers,
supervisors, and crew chiefs at three of the pilot sites: 
Sacramento, CA; Royal Oak, MI; and Birmingham, AL.  We also discussed
the service captain program with facility managers at the Southern
Maryland General Mail Facility, and we discussed the group leader
program with managers from the Sacramento Processing and Distribution
Center. 

For these programs, participants told us they believed that craft
employees were generally more comfortable taking instructions from
and expressing their concerns to crew chiefs, service captains, and
group leaders rather than supervisors.  Participants also told us
that these positions alleviated some of the increased pressure on
supervisors that resulted from the 1992 reduction in supervisory
staffing.  In the service captain program at Southern Maryland,
certain pay locations in the automation unit were self-managed; they
operated without supervision on some days during the week, and all
mail was to be processed according to an operating plan. 

These programs, however, do not address some important issues that
cause workfloor tensions between supervisors and employees.  The
programs do not give all employees more control over their work
processes; they empower only the crew chief, service captain, or
group leader.  The programs also do not provide any new incentives
for team performance or procedures for holding employees and
supervisors accountable for poor performance. 

According to our interviews, supervisors and crew chiefs did not
fully understand their respective roles and responsibilities.  They
said that the duties that supervisors allowed crew chiefs to perform
varied significantly among the sites and also among the tours at a
given location.  They also said that selecting the crew chief on the
basis of seniority did not ensure that the best qualified person was
selected for the position.  Some supervisors perceived crew chiefs as
a threat to their job security, so they bypassed them and dealt
directly with the employees.  The management association that
represents supervisors, the National Association of Postal
Supervisors (NAPS), did not support the crew chief program.  The NAPS
President said he considered crew chiefs to be another layer of
management.  The existing supervisors at the test sites were left in
place, and the Postal Service did not redefine their roles in a
self-managed work environment.  The crew chief pilot program ended
March 31, 1994. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 4:5

The Postal Service needs, but does not have, the full commitment of
its employees to achieve service quality improvements.  It recognizes
that employees are rejecting excessive regimentation and looking for
more control over their work experiences.  The lack of accountability
for poor performance severely hinders the work of the Postal Service. 

Self-managed work groups, which give employees greater
responsibility, offer advantages for both the Postal Service and its
employees.  However, before employees can assume more responsibility
for their work, they need incentives to perform as team members. 
Furthermore, the Postal Service needs specific work standards and
procedures to hold employees accountable for their performance.  To
effectively implement self-managed work groups, the Postal Service
needs the commitment and cooperation of all of the parties that are
affected--management, the unions, the management associations, the
supervisors, and the employees. 


MAIL DELIVERY OPERATIONS AFFECT
CARRIERS' JOB ATTITUDES AND
EMPLOYEE-MANAGEMENT RELATIONS
============================================================ Chapter 5

Similar to the relationships between employees and management in
processing and distribution plants, the relationships between city
carriers and management are generally tense and often
confrontational.  This is in contrast to the relationships between
rural carriers and management, which are generally cooperative. 

City and rural carriers have common goals and in many cases work out
of the same post office under the same supervisors.  However, they
have very different work environments, and their attitudes about the
Postal Service, their work, and supervision differ significantly.  In
the 1992 and 1993 employee opinion surveys, rural carriers
consistently rated the Postal Service higher in all 12 survey
dimensions than city carriers did.  Their different views, according
to both union and management officials we interviewed and our
analysis of city and rural carrier data, are associated primarily
with (1) the relative independence that rural carriers have to do
their work and (2) the incentives that the rural carriers have for
doing good work. 


   RURAL CARRIERS ARE MORE
   SATISFIED THAN CITY CARRIERS
---------------------------------------------------------- Chapter 5:1

Employee opinion data show that, overall, rural carriers are far more
satisfied in their jobs with the Postal Service than city carriers
are.  Responding to the 1993 employee surveys, rural carriers had
more favorable responses for 80 of the total 84 questions asked.  Of
the four exceptions, the difference was 3 percentage points or less
for three questions and 13 percentage points for the remaining
question.  This latter question had to do with whether carriers were
given sufficient opportunity on the job to look at Postal Service
videotapes; overall, city carriers had greater opportunity than rural
carriers. 

Of the 84 questions, the question that drew responses indicating the
greatest difference (43 percentage points) in satisfaction was
whether carriers agreed or disagreed with the following statement: 
"Performing well just gets you extra work." Of rural carriers, 53
percent disagreed or strongly disagreed with the statement.  In
contrast, only 10 percent of the city carriers disagreed or strongly
disagreed with the statement. 


   CITY AND RURAL CARRIERS HAVE
   COMMON GOALS AND
   RESPONSIBILITIES BUT OPERATE
   UNDER VERY DIFFERENT WORK
   ENVIRONMENTS
---------------------------------------------------------- Chapter 5:2

City and rural carriers are responsible for delivering mail quickly
and efficiently to millions of families and businesses across the
nation.  During fiscal year 1993, the 211,893 career city carriers
and 43,694 regular rural carriers and their replacements delivered
171.2 billion pieces of mail to over 123 million delivery points in
cities and rural areas of America.  They worked out of 39,392 post
offices, stations, and branches and provided delivery service 6 days
a week. 

Like other postal operations, carrier operations are driven by tight
time schedules and budgets.  For example, city carriers at the
Waldorf, MD, Post Office are expected to report for work by 7:00 a.m. 
and to be on the streets delivering mail by 10:45 a.m.  Rural
carriers at the same post office are to report between 6:00 and 7:00
a.m.  and are expected to be on their routes by 10:30 a.m.  The
period of time in the office is to be used for "casing" or manually
putting the mail into delivery order.  When delivering the mail, both
city and rural carriers are expected to follow established routes to
provide reliable and consistent delivery to customers. 


      CITY AND RURAL CARRIERS HAVE
      DIFFERENT COMPENSATION
      SYSTEMS
-------------------------------------------------------- Chapter 5:2.1

While city and rural carriers have common responsibilities and in
some cases similar routes, their compensation systems differ.  City
carriers are hourly workers paid for a standard 8-hour workday or
40-hour workweek.  City carriers who work in excess of a 40-hour
workweek are paid for those hours at an overtime rate of 1-1/2 times
their basic hourly rate.  In addition, a penalty overtime rate
equivalent to doubletime is paid to carriers when they are required
to work overtime in violation of contract provisions for overtime
assignments.\1 Therefore, a city carrier's pay can vary substantially
each week because overtime hours can vary weekly. 

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 on
their respective routes.  Most rural carrier routes have been
evaluated at more than 40 hours per week.  When a rural carrier's
weekly salary is computed, the first 40 hours are calculated at the
basic hourly rate, and all additional hours estimated over 40 are
computed at an "overtime" rate of 1-1/2 times the hourly rate. 
However, under the Fair Labor Standards Act (FLSA) [section 7
(b)(2)], this additional amount is not considered overtime pay. 

In order to qualify for this treatment under the act, rural carriers
are employed by the Postal Service on an annual basis at a guaranteed
annual wage, and under the condition that they cannot work more than
2,240 hours a year.  The guarantee is that they will work a minimum
of 1,840 hours and not more than 2,080 hours during the guaranteed
period of 52 consecutive weeks.  Any hours actually worked in excess
of (1) 12 hours in any one work day, (2) 56 hours in any workweek, or
(3) 2,080 hours in the 52-consecutive workweek guarantee are to be
compensated at an overtime rate.  Any such overtime is to be paid at
1-1/2 times the carrier's regular rate of pay.\2 Carriers who work
over 2,240 hours during the guarantee period are to be compensated in
accordance with section 7(a) of the FLSA--which requires overtime for
all hours actually worked in excess of 40 hours in any given week. 
When this situation occurs, the Postal Service has to recompute the
pay for the entire guarantee year. 

Because the rural carriers' compensation system has "overtime" built
into the base annual salary, rural carriers do not negotiate daily
with supervisors for authorization for additional workhours.  Also,
they work more hours a year on average than city carriers.  For
example, national workhour data showed that in fiscal year 1993,
rural carriers worked an average of 1,859 hours versus 1,797 hours
for city carriers.  During that period, rural carriers were paid a
total of $45.5 million for 2.4 million overtime hours\3

compared to $1.3 billion paid to city carriers for 55.1 million
overtime hours. 


--------------------
\1 Article 8, Section 5.F., of the city carriers' contract states
that no full-time regular employee shall be required to work overtime
on more than 4 of the employee's 5 scheduled days in a service week;
or work over 10 hours on a regularly scheduled day, over 8 hours on a
nonscheduled day, or over 6 days in a service week. 

\2 As an example, the regular rate of pay for a 10-day route
(referred to as a "K route") is determined by three calculations. 
First, the carrier's daily compensation rate is determined by
dividing his/her annual salary by 260 days (52 weeks x 5 days a
week).  This daily compensation rate is then multiplied by the actual
number of days the carrier has worked or was on paid leave in the
guarantee period to determine pay to date.  This adjusted salary is
then divided by the total year-to-date workhours.  This adjusted
(regular) rate of pay is multiplied by 1-1/2 to determine the FLSA
overtime rate. 

\3 This does not include "overtime" that is already built into their
annual salaries. 


      BLURRED DISTINCTION BETWEEN
      CITY AND RURAL CARRIER
      DELIVERY ROUTES CREATES
      JURISDICTIONAL DISPUTES
-------------------------------------------------------- Chapter 5:2.2

Besides having similar mail casing duties and delivery
responsibilities, city and rural carriers are now operating, in some
cases, in common delivery service areas using similar means of
transportation.  In fiscal year 1993, there were approximately
162,941 city carrier delivery routes.  These routes were established
in more highly populated urban and suburban areas where deliveries
are made to the door, centrally located mail boxes, or to curbside
mail boxes. 

Traditionally, rural carriers provided delivery service to boxes
placed along the roadside in small and rural communities.  In these
deliveries, rural carriers used their own vehicles and were paid an
equipment and maintenance mileage allowance.  Because of growth in
some previously rural areas, many rural carrier deliveries are now
made to highly populated communities.  In fiscal year 1993, about
18,000 of the 49,236 rural delivery routes (37 percent) were located
in populated suburban communities, which consisted of both
residential and commercial establishments.  On many of these suburban
routes, rural carriers work out of the same post offices as city
carriers, they make dismount deliveries, and some drive Postal
Service vehicles. 

Establishing and extending routes in growth communities, especially
in suburban areas, has been a point of contention between the Postal
Service and NALC.  If the new growth area is near a city delivery
service area, then the Postal Service will typically assign the
routes to city carriers.  On the other hand, if new growth is near a
rural delivery area, then the growth area will be assigned to rural
carriers.  In March 1989, the President of NALC notified the Postal
Service that it was initiating a grievance over the assignment of
routes to rural carriers in Vienna and Oakton, VA.  According to
NALC, approximately one-half of the mail delivered in Vienna and all
the mail delivered in Oakton has been assigned to rural carriers. 
NALC contended in its notification letter to the Postal Service that
both communities meet the Postal Service criteria for city delivery
because the routes

     "...consist either substantially or entirely of deliveries to
     commercial establishments in office buildings and/or shopping
     centers.  Other mail delivery routes assigned to rural letter
     carriers encompass residential deliveries to closely compacted
     townhouses and/or apartment buildings, many of which receive
     their mail in cluster boxes.  In servicing the routes, the rural
     letter carriers in Vienna and Oakton drive Postal Service
     vehicles and, in many instances, dismount from their vehicles
     and deliver most or all of their mail on foot."

This case was still in arbitration as of May 1994, but it may have
far-reaching implications for determining whether new routes become
city or rural.  According to Postal Service officials, managers may
prefer to assign new routes to rural carriers because they believe
that rural delivery is more cost-effective and easier to manage on a
daily basis. 


   RURAL CARRIERS OPERATE WITH
   GREATER INDEPENDENCE THAN CITY
   CARRIERS
---------------------------------------------------------- Chapter 5:3

Managers and supervisors are responsible for ensuring that carriers,
whether city or rural, carry out their assigned duties efficiently
and in accordance with Postal Service regulations.  Both city and
rural carriers function under the supervision of postmasters or
station managers and first-line supervisors.  Postmasters or station
managers oversee post office operations, while the day-to-day
oversight of workfloor operations and direct supervision of carriers
are the job of first-line supervisors. 


      MORE EXTENSIVE SUPERVISION
      APPLIED TO CITY CARRIERS
      THAN RURAL CARRIERS
-------------------------------------------------------- Chapter 5:3.1

Primarily because of different provisions for "overtime" pay under
the two pay systems, city carrier daily schedules are more closely
supervised than rural carriers' schedules.  Six of the post offices
we visited had both city and rural carriers.  The postmasters at all
six offices said that first-line supervisors generally spend much
more time overseeing the daily work of city carriers.  For example,
the Healdsburg, CA, 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, despite the fact that there are
about the same number of rural and city carriers at the station. 

At these six post offices, we observed that city carriers were
subject to more extensive control throughout their workday than rural
carriers.  To demonstrate this, we will describe the routine followed
6 days a week by the more than 200,000 city carriers in negotiating
their work schedules and then contrast this with the rural carriers'
relative independence. 


         CITY CARRIERS' DAILY
         ROUTINES
------------------------------------------------------ Chapter 5:3.1.1

At the start of their shifts, city carriers estimate the amount of
time needed to case\4 and deliver their mail by assessing the volume
and type of mail (letters, flats, etc.) designated to be delivered
for that route.  Managers and supervisors are responsible for the
official daily mail volume count for each route.  However, in some
post offices and stations, clerks and carriers perform this duty. 

On the basis of workhour estimates, carriers must inform the
supervisor if they will not be able to case all the mail, meet
scheduled departure time, or complete delivery of mail within 8
hours.  Each carrier requesting overtime or auxiliary assistance must
estimate how much extra work time is needed and explain the reason
for the request.  In a relatively short period of time (i.e., before
carriers must leave the station), supervisors must decide every day
for numerous carriers how to handle any extra workload.  For example,
in 1 San Francisco city station, 2 supervisors make these decisions
for 66 carriers. 

After considering the request, supervisors must decide for each
carrier requesting assistance whether to provide auxiliary
assistance, authorize overtime, or instruct carriers to hold mail for
later delivery.  Carriers and supervisors can and do disagree on the
time required to service their routes.  As discussed in chapter 4,
until January 1994,\5 supervisors were evaluated on, among other
things, how well they achieved a variety of budget and workhour
goals.  As a result, supervisors have an incentive to keep workhours,
especially overtime usage, to a minimum.  Furthermore, each city
carrier route is supposed to be evaluated annually to determine how
many linear feet of mail the carrier should case and deliver daily. 
It is this quantity of mail, called the reference volume, that
supervisors generally expect carriers to case and deliver each day. 
Disagreements on time requirements are basically due to differences
in mail volume estimates and mail mix.  Each linear foot of mail is
an estimate and presumed to always equal a number of mail pieces,
whereas a linear foot of some mail (e.g., post cards) will require
more casing time than other mail (e.g., TV Guide). 

Once these decisions have been made, carriers are required to leave
the office to begin mail deliveries at or before their scheduled
departure times.  If they return to the office before their scheduled
8-hour day ends, they are assigned additional duties by management. 
Using timecards or automated badge readers, they are required to
"punch the clock" when they arrive at the office, leave to deliver
the mail, return to the office, and leave for the day. 


--------------------
\4 The time allowed by Service policies for casing the mail is based
on either (1) a minimum of 18 letters and 8 flats per minute or (2)
the carrier's casing speed demonstrated during the last route
inspection. 

\5 As discussed in chapter 2, beginning in calendar year 1994, annual
pay increases for all supervisors will be based on the Striving for
Excellence (SET) program. 


         RURAL CARRIERS' RELATIVE
         INDEPENDENCE
------------------------------------------------------ Chapter 5:3.1.2

In contrast to city carriers, rural carriers' workdays are not
subject to strict controls and rules.  They are expected to deliver
all the mail each day rather than work a set number of hours.  They
do not have to negotiate daily with supervisors regarding the time it
will take to complete mail casing or delivery.  We were told that
supervisors' primary interaction with rural carriers is a
walk-through in the morning to see if the carriers have any concerns
or questions. 


      PERFORMANCE STANDARDS ARE
      MONITORED MORE CLOSELY FOR
      CITY CARRIERS THAN RURAL
      CARRIERS
-------------------------------------------------------- Chapter 5:3.2

Managers of both city and rural carriers hold the carriers they
supervise accountable for required tasks each day, but performance
factors are more closely monitored for city carriers than rural
carriers. 

City carriers are monitored routinely against detailed performance
standards.  These standards, which include such factors as the amount
of mail cased and delivered per hour, are based on information
collected during the last route inspection.  The amount of time they
spend in the office and on the street is monitored and recorded on a
daily basis.  In contrast, rural carriers are not required to meet
similar daily standards and are allowed to plan and keep track of
their own work times.\6 A rural carrier's daily work schedule is
flexible and fluctuates on the basis of such factors as mail volume
and road or weather conditions.  Annual evaluations of such workload
elements as route mileage and the quantity of mail set the general
parameters for daily work requirements.  However, on a daily basis,
managers expect rural carriers to deliver all their mail on time and
keep the customers satisfied. 

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\7 and attendance--all to
determine if the carriers are meeting their expected goals.  For
example, the Postal Service has set detailed standards for the
accurate and speedy casing of the mail, which is viewed as a key
duty.  While they are casing mail, the carriers' speed is measured
daily against these standards.  Managers and first-line supervisors
also continually review the efficiency of carriers' office routines,
and they direct carriers to adopt work methods that will achieve
maximum effort within their 8-hour workday. 

In keeping with their generally greater autonomy, rural carriers
control their own workday but are held accountable for the on-time
delivery of all their mail.  They are not required to meet time-based
minimum performance standards for office duties.  Managers are
primarily concerned that rural carriers do not exceed the workhour
ceilings previously discussed (see p.  74), because if they do, the
Postal Service is required to pay overtime.  Thus, the autonomy
afforded rural carriers by the structuring of the rural route largely
eliminates the need for rural route supervisors to monitor how much
time rural carriers spend sorting and delivering the mail. 


--------------------
\6 The purpose of the rural carriers tracking their hours is to
monitor their commitment to the Postal Service of not exceeding 2,080
work hours during the guaranteed annual contract period, which would
require overtime pay. 

\7 Curtailed mail is mail held for delivery on a later day that can
still meet its committed date.  Delayed mail has missed the
established delivery commitment. 


      EXTENSIVE SUPERVISION OF
      CITY CARRIERS LEADS TO
      CONFLICT ON THE WORKROOM
      FLOOR
-------------------------------------------------------- Chapter 5:3.3

Employee opinion survey data for 1993 showed that city carriers were
more dissatisfied with working conditions than their rural
counterparts.  A key cause of this dissatisfaction identified during
our fieldwork was the level of supervision imposed on city carriers,
which engendered conflict mainly over the amount of time it takes to
do the work.  In other words, the daily pay and schedule negotiations
present numerous opportunities for confrontation and conflict. 

In contrast, the rural carriers' system presented fewer opportunities
for conflict, and as a result of emphasis on carrier independence,
relationships between supervisors and employees were reported to be
better. 

As shown in figure 5.1, city carriers were more negative than rural
carriers in their views on working relationships between the union
and management, managers' treatment of employees, management's
willingness to listen to employee problems and ideas, and respect for
supervisors. 

   Figure 5.1:  Percent of City
   and Rural Carriers Who
   Responded Favorably on
   Employee-Management Relations

   (See figure in printed
   edition.)

Source:  U.S.  Postal Service 1993 Employee Opinion Survey. 

Extensive supervision and rigid controls reduce city carriers'
independence and their control over how they do their work. 
Workfloor conflicts tended to occur when supervisors applied policies
promoting efficiency that carriers perceived to be an intrusion in
areas they felt they knew best.  In Grand Central Station, NY, for
example, stewards cited rigid rules and oversupervision as two of
their primary concerns.  A steward added that management relied on
books and procedures to get the job done instead of listening to the
ideas of carriers.  In Denver, the local NALC President told us that
the major problems for letter carriers included the daily
restrictions on how they must case their mail, use their vehicles,
and deliver the mail.  He said that many problems would be resolved
if procedures followed by city carriers could be made less
restrictive. 

Also, because of the conflicts on the workroom floor, city carriers
filed significantly more grievances than rural carries.  National
step 3 grievance data for the first 3 quarters of fiscal year 1992
showed that city carriers filed 11 times more grievances per 100
employees than the rural carriers.  In addition, five of the seven
districts we visited had complete data on both city and rural
carriers, and they showed that rural carriers filed fewer step 2
grievances per carrier than their city counterparts.\8

As shown in figure 5.2, city carriers in these five districts filed
more step 2 grievances in the first 2 quarters of fiscal year 1993
than rural carriers during the same period. 

   Figure 5.2:  Step 2 Grievances
   for City and Rural Carriers for
   Sites Reviewed, First Two
   Quarters Fiscal Year 1993

   (See figure in printed
   edition.)

Source:  Site grievance files, U.S.  Postal Service. 

Supervision by managers was sometimes construed as harassment by
carriers, and especially by city carriers.  Charges of harassment
surfaced in our review of grievance and arbitration complaints by
city carriers at some sites we visited. 

For example, in the San Francisco Post Office, where 13 percent\9 of
all grievances filed by city carriers were categorized as "harassment
or unprofessional conduct by supervisors," carriers from one city
station filed a class grievance on this issue against their station
managers.  These carriers believed they had been harassed over
alleged "excessive talking." Managers stated that ongoing
conversations by carriers outside their work areas slowed down work. 
The carriers' grievance stated that management used harassment
tactics to push the carriers to meet productivity goals.  Management
responded that it was trying to promote operational efficiency. 

Although our interviews and review of grievance data revealed a
variety of problems at each post office we visited, conflicts
frequently arose at all of them over the amount of time city carriers
requested to perform their duties.  Officials in five of the seven
districts we visited cited the daily negotiations that occurred over
requests for assistance such as overtime as the most contentious
issue between first-line supervisors and city carriers.  Union
stewards representing city carriers told us that overtime problems
included concerns about the daily negotiations with supervisors for
overtime necessary to complete their routes, how overtime was
distributed among all the carriers in their unit, and the burdens
placed on them by mandatory overtime.\10

Available grievance data at the locations we visited showed numerous
incidents where conflicts centered on the issue of overtime.  In all
but one of the districts we visited, overtime was one of the most
frequently grieved contract issues.\11 In the Westchester District of
New York, for example, over one-half of all contract grievances filed
by city carriers involved overtime.  In the Southern Maryland area of
the Capitol District, over one-fifth of all contract grievances were
overtime-related.  Although grievance rates for overtime were not as
high in other districts with available data, numerous grievances were
filed on overtime issues in five districts.  Many grievances
concerning overtime involved its distribution among city carriers. 
For example, in the Westchester District, a city carrier filed a
grievance asking for 8 hours of overtime pay because managers did not
call him in when work became available on his route. 

In the Bear Valley Post Office of the Denver District, problems
arising from negotiations between supervisors and city carriers for
overtime led the station manager to change the overtime approval
process in 1993.  The new process allows city carriers to approve
their own overtime.  The first-line supervisors and carrier stewards
agreed that this change would help improve workfloor relations and
city carrier morale by eliminating what was considered to be the most
contentious issue in the office.  At the time of our review, the
office's managers were monitoring the effects of the changed process
to ensure that city carriers do not abuse it. 


--------------------
\8 We were not able to collect comparable data for the Denver
District because it was not readily available, and the New York
District does not have any rural carriers. 

\9 For all categories of step 2 grievances filed in the first 2
quarters of fiscal year 1993, this 13 percent represents the largest
percentage of the total filed on any one issue. 

\10 The overtime clause in the NALC contract requires that (1)
"overtime desired" lists be established by craft section or tour; (2)
that the postal service make "every effort...to distribute equitably
the opportunities for overtime among those on the list"; and (3) if
the "overtime desired" list does not provide sufficient qualified
people, other employees "may be required to work overtime on a
rotating basis with the first opportunity assigned to the junior
employee."

\11 In all districts visited where data were readily available,
contract grievances filed by carriers, such as overtime disputes,
accounted for the majority of all grievances filed.  The remaining
grievances were related to disciplinary issues. 


   CITY CARRIER PERFORMANCE
   STANDARDS PENALIZE EFFECTIVE
   PERFORMANCE
---------------------------------------------------------- Chapter 5:4

City carriers' performance standards tend to discourage carriers from
performing at their best in casing and delivering mail.  City
carriers have several disincentives for completing work quickly.  If
they return to the office early--before their 8-hour day ends--they
may be required to perform additional duties as directed by
management.  These duties often involve sorting the next day's mail
or being sent back out on the street to help complete mail delivery
on another route--commonly referred to as "pivoting." However,
carriers who stay out on the street and do not return to the office
until the end of their 8-hour day are not required to do additional
work. 

Procedures for setting and adjusting city carriers' expected daily
workloads (reference volumes) also tend to systematically discourage
carriers from working at their highest performance levels.  Managers
set reference volumes for each carrier's regular 8-hour day during
annual route examinations.  During these examinations, carriers are
required to meet performance standards for sorting mail and other
office duties.  Carriers who exceed the minimum performance standards
are expected to consistently perform at the higher level, which then
becomes their standard until the next route examination.  In
addition, those who exceed the standards may get larger workloads
than those carriers who have their workloads set at the standards. 
These procedures can discourage city carriers from working beyond a
minimally acceptable level. 

Rural carriers do not face the daily disincentives for good work
encountered by city carriers.  If rural carriers finish their work in
less than their evaluated time, they are given the option upon
returning to the office to leave for the day, or they can get an
early start on the next day's work. 

Procedures for adjusting rural carriers' workloads link pay to level
of effort, encouraging carriers to increase their workload.  In
general, route examinations are used to adjust workloads and set
rural carriers' compensation annually.  These examinations consist of
a mail count and route inspection to determine how much time is
required to deliver the mail daily over the year.  When rural
carriers' workloads are adjusted on the basis of this review, their
compensation is also adjusted upward or downward to reflect the
change.  Thus, the rural system rewards carriers who assume larger
workloads from year to year. 

Employee opinion survey responses for 1993 indicated that city
carriers tended to hold negative views regarding the systematic
disincentives to higher performance levels that are built into their
delivery system.  Approximately 80 percent of all city carriers
agreed or strongly agreed with the statements that "Some people do
most of the work, while others do just enough to get by," and that
"Performing well just gets you extra work." In contrast, about 40
percent of rural carriers agreed or strongly agreed with those
statements (see fig.  5.3). 

   Figure 5.3:  Percent of City
   and Rural Carriers Who
   Responded Unfavorably on
   Performance Management and
   Rewards

   (See figure in printed
   edition.)

Source:  U.S.  Postal Service, 1993 Employee Opinion Survey. 

Union and management officials in six of the seven districts we
visited said that the current system for city carriers discouraged
good performance.  An NALC local branch president from Sacramento
stated that the system encouraged city carriers to be average
performers because doing any more than that usually means more work
with no added pay.  A Southern Maryland postmaster commented that if
the size of rural carriers' routes increased, they were paid more,
but if the size of city carriers' routes increased, they just got
more work.  A steward told us that the most grieved issue for
carriers at the Grand Central Station in New York was the pivoting
requirement, i.e., having to do the work of other carriers. 

In the post offices and stations we visited, greater independence for
rural carriers did not have a negative effect on their work
performance.  Postmasters we interviewed in these six post offices
said that rural carriers were as efficient as their city
counterparts.  They performed all their required tasks and did not
receive any more customer complaints than city carriers. 


   POSTAL SERVICE AND NALC
   ACKNOWLEDGE NEED FOR CHANGE
---------------------------------------------------------- Chapter 5:5

The current labor-management environment provides a significant
opportunity for the Postal Service and NALC to make the appropriate
changes to the city carrier system that will offer a more
self-managed work environment that would be beneficial to both
employees and managers.  Although both Service and NALC leaders have
acknowledged the need to change the way city routes are structured
and carriers are managed, significant changes have not been
forthcoming. 

In 1987, the Service and NALC established a joint task force to study
possible changes and improvements in how carrier assignments were
designed, evaluated, and compensated.  The study was to identify and
examine those elements of the rural carrier system that helped avert
many of the conflicts common between supervisors and city carriers. 
However, the two parties were not able to reach any agreement on how
to change the city carrier assignments. 

In March 1994, the Postal Service and NALC had similar but
independent efforts under way to study possible changes to the
current city carrier system.  A national NALC task force was
reviewing how city routes can be restructured to better serve
carriers, customers, and the Postal Service.  Under consideration was
a January 1992 suggestion by the NALC Vice President that NALC
consider a route design similar to that used by rural carriers to
better deal with changes in office functions and procedures that
could threaten city carrier job opportunities.  The Postal Service
had also set up teams to study and propose alternatives to the
current city carrier system.  Thus, both the Postal Service and NALC
are independently reviewing alternate approaches to the city carrier
system, including examining the possibility of adopting the rural
carrier approach.  We found no efforts to coordinate and consolidate
these two studies for addressing the common concerns. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 5:6

The city carrier system, which has evolved over many decades, is in
need of change.  The Postal Service is now facing a changing and
increasingly competitive environment and needs a more flexible city
delivery system that can meet the competitive challenges.  This new
environment requires a system that will offer a more self-managed
work environment, is easier to manage, and encourages carriers to
work at their highest performance levels.  We recognize and support
efforts of the Postal Service and NALC to review possible
alternatives to the existing city carrier system.  Unless significant
changes are made, it will be difficult for the Postal Service to
provide reliable and consistent mail delivery service in its major
markets. 


POSTAL SERVICE HAS TRIED FOR MANY
YEARS TO CHANGE WORKPLACE
ENVIRONMENT
============================================================ Chapter 6

Since 1982, the Postal Service, unions, and management associations
have tried a variety of ways to improve workfloor relations. 
However, commitment to improvement initiatives has been piecemeal,
sporadic, and often short-lived across the organization, 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.  National officials are not satisfied with the design
and results of past efforts.  Moreover, employees in all crafts and
supervisors still have major concerns about their work environment. 

As discussed in chapter 2, top Postal Service, union, and management
association officials were building a National Leadership Team at the
time of our review.  However, the team had not reached agreement on
an approach or plan for improving the situation at processing plants
and post offices. 

In light of (1) the Postal Service's goal of improving service to
become more competitive, (2) the continuing workfloor problems in
both mail processing and delivery operations, and (3) the limited
success of past initiatives, we reviewed approaches followed by some
other organizations that improved workfloor relations and customer
service.  The organizations had all adopted similar philosophies and
approaches for addressing employee and labor relation problems
similar to those we found at postal processing plants and post
offices. 


   LIMITED PARTICIPATION IN
   IMPROVEMENT INITIATIVES
---------------------------------------------------------- Chapter 6:1

The Postal Service's most comprehensive employee involvement
initiative began in 1982 and is still under way 12 years later.  This
initiative emerged from contract negotiations in 1981 and was
supposed to end or alleviate the adversarial relationship on the
workfloor.  In announcing the initiative in October 1981, then
Postmaster General William Bolger said: 

     "I have taken a first step in a redirection of postal
     philosophy, away from the traditional, authoritarian style of
     management and toward an increasing worker involvement in
     finding solutions to problems of the work place."

Since that time, the employee involvement effort and a number of
additional initiatives have been pursued.  Basically, these
initiatives were designed to (1) encourage participation of employees
and management in problem solving, (2) provide monetary incentives
for managers and employees to work together, and (3) establish
alternatives to existing contract rules for resolving workfloor
conflicts.  Although many of these initiatives were similar in
purpose, participation in them generally followed the jurisdictions
of the unions and management associations.  (See table 6.1.)



                                    Table 6.1
                     
                       Initiatives for Improving Workfloor
                                    Relations


Initiatives                 APWU      NALC  NPMHU   NRLCA   NAPS  NAPUS   League
--------------------------  --------  ----  ------  ------  ----  ------  ------
Employee-management participation plans
--------------------------------------------------------------------------------
Employee Involvement (EI)             X

Quality of Working Life                     X
(QWL)

Quality of Working Life                             X
and Employee Involvement
(QWL/EI)

Management by                                               X     X       X
Participation (MBP)


Monetary incentives for working together
--------------------------------------------------------------------------------
Striving for                                X       X       X     X       X
Excellence Together (SET)


Alternatives for handling employee discipline
and resolving management-employee disputes
--------------------------------------------------------------------------------
Modified Article 15         X         X     X
(Grievances)

Modified Article 16         X         X     X
(Discipline)

Labor and Management        X
Partners (LAMPS)

Union Management Pairs                X
(UMPS)

No Time Off in Lieu of                      X
Suspension (NO-TOL)

Letters in Lieu of                    X
Suspension to Emphasize
Needed Improvement
(LISTEN)


Programs to identify and overcome
obstacles to good relations
--------------------------------------------------------------------------------
Labor Management Plan       X         X     X

Participative Management                                    X     X       X
Plan
--------------------------------------------------------------------------------
Source:  U.S.  Postal Service. 

Appendix II provides more detailed information on the above
initiatives. 

Participation in the initiatives shown in table 6.1 remained
essentially the same through 1993.  APWU, representing about 50
percent of all craft employees, has never participated in Employee
Involvement (EI) or Quality of Working Life (QWL) because the union
leadership sees these initiatives as an effort by management to
bypass the union and work directly with employees that APWU
represents. 

In 1990, former Postmaster General Anthony Frank began the Striving
for Excellence (SET) program to give craft employees an additional
monetary incentive for working effectively together to achieve
excellence in the Postal Service.  NALC and APWU, which represent 85
percent of all craft employees, chose not to participate because
union leaders believed that such pay would replace negotiated wage
increases and also encourage competition among employees. 

The alternatives for administering discipline and resolving disputes
were developed as early as 1985, and some alternatives resulted from
contract negotiations in 1987.  The modification of articles 15 and
16 of national contracts and related local initiatives provided local
management and unions more responsibility for dealing with workplace
conflicts.  For example, article 16 allowed supervisors to discipline
employees in some situations after one prior discussion with them. 
The article was modified to specify circumstances in which
supervisors must hold two prediscipline talks with employees. 

The labor management plan was developed jointly by NALC, APWU, Mail
Handlers, and headquarters labor relations staff to change the
labor-management and supervisor-employee relationships.  The plan
began in sites where the relationship between union and management
had become dysfunctional--creating serious or crisis situations at
plants and post offices, e.g., postal facilities in Oklahoma City,
OK, and the Indianapolis Post Office, IN.\1 The plan includes (1)
involvement of postal labor relations specialists, national and
regional management and union counterparts, and local union
officials, managers, and employees; (2) data-gathering through
individual interviews with labor and management representatives to
assess positive and negative factors in the labor-management climate;
(3) focus group meetings to share with local labor and management
officials the results of the interviews; (4) joint exercises to
improve communication and trust; and (5) goal-setting and monitoring
of progress against goals after 1 year.  The plan was designed to
improve the long-term labor-management relationship. 

The participative management plan was developed jointly by the three
management associations and headquarters labor relations staff.  The
goal of the plan is to overcome commonly encountered obstacles to a
better management relationship.  It has the same processes as the
labor-management plan. 

As table 6.1 shows, the rural carriers' union did not participate in
the discipline and dispute resolution initiatives but did participate
in EI/QWL and SET.  In chapter 5 we discussed the different
relationship that rural carriers have with supervisors and their
performance incentives--as well as their more favorable opinions
overall--which are different from the incentives employees in the
other three crafts have. 

In May 1993, the MBP National Joint Steering Committee announced that
the restructuring of the Postal Service and the new emphasis on
participative relationships had "eclipsed the need for a formally
structured Management by Participation process as it [had] previously
existed under the former organizational structure." To replace MBP,
the Committee urged the Postal Service to establish leadership teams,
composed of representatives from management, unions, and management
associations, in every customer service district and processing plant
in the country.  Committee members believed that leadership teams
would promote increased quality involvement in key business issues
and provide more comprehensive resolutions to business problems.  At
the time of our review, the Postal Service was pursuing the objective
of forming leadership teams in 85 performance clusters. 


--------------------
\1 We issued two reports commenting on the severity of the
labor-management relations problems in both Oklahoma City and
Indianapolis.  See Postal Service:  Improved Labor/Management
Relations at the Oklahoma City Post Office (GAO/GGD-90-02, Oct.  27,
1989); and Postal Service:  Employee-Management Relations at the
Indianapolis Post Office Are Strained (GAO/GGD-90-63, April 16,
1990). 


      LOCAL UNION AND MANAGEMENT
      OFFICIALS OFTEN NOT
      COMMITTED TO INITIATIVES
-------------------------------------------------------- Chapter 6:1.1

At the plant and post office level, participation was optional for
all of the initiatives we reviewed except for the SET program, which
required no specific implementation action by local management,
employees, or unions.  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 to
implement the initiatives, 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." A postal headquarters
official responsible for administering union contracts said that
national union leadership instructed city carriers to temporarily
withdraw from EI to show disagreement with management on a carrier
route issue. 

Local union leaders sometimes cited specific instances when, in their
view, management did not support EI team projects.  For example, two
of the three EI teams at Grand Central Station in New York City, NY,
disbanded because the team members did not feel they had the
authority or management commitment needed to do their projects.  Mail
Handlers officials said that managers at the Cincinnati, OH, general
mail processing plant "shot down" all of the local QWL teams'
suggestions.  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.  At the
time of our visit, there were no QWL or EI projects under way at any
of these Southern Maryland locations. 

The headquarters labor relations official responsible for
administering union contracts for many years said that the discipline
and dispute resolution alternatives also suffered from a lack of
sustained management and staff resource commitment at the national
and local levels.  Further, he said that the labor management plan
was attempted at only 49 facilities, in part because national union
presidents either disliked the joint training required to
successfully develop and implement the plan or did not otherwise
support the effort.  He said that the lack of sufficient headquarters
resources also precluded labor relations specialists from continuing
to work with local managers, union leaders, and employees as needed,
resulting in some benefits being "undone" where the plan had been
implemented. 

We visited three field postal facilities at Oklahoma City, OK,
Indianapolis, IN, and Denver, CO, that had implemented the
labor-management plan.  According to the union leaders at these
facilities, management interest in pursuing the labor-management plan
was short-lived at all three facilities.  A local APWU official in
Oklahoma City told us that the plan worked because of headquarters
involvement and emphasis, but it had no real lasting beneficial
effects because headquarters did not follow through.  An NALC
official in Indianapolis said that the plan there had failed because
of a lack of the management commitment needed to make it work. 

We heard similar comments at the Denver Bulk Mail Center.  The
grievance rate at the Center dropped from 1,235 grievances per 100
employees from fiscal year 1991 before the plan was implemented, to
342 grievances per 100 employees in fiscal year 1992, after the plan
was implemented.  However, the grievance rate increased in fiscal
year 1993 after management changed at the facility, and a conflict
developed between the APWU local and the plant manager.  This
resulted in the APWU local not attending the plan meetings. 
According to Area Postal management officials, APWU and Center
management relations have improved and the grievance rate has dropped
subsequent to our work at the Center. 

A headquarters labor relations officials said that the labor
management plan had been implemented at only a few sites since 1990
because of resource constraints and lack of national union leadership
support.  One official added that there was no permanent staffing
dedicated to plan implementation and follow- up.  Staff who were
involved worked on an ad hoc basis and had other, often unrelated,
assignments. 

Although the SET program is designed to encourage teamwork, its
effects on participating employees were not clear.  A Postal Service
survey of 62 of its human resource managers in 1993 indicated that
employees did not see the link between the SET payments, individual
behavior, and organizational performance.  While finding SET to be
conceptually sound, those surveyed believed that it had not changed
behavior because it had not been well-communicated to employees. 


      INITIATIVES HAVE HAD SOME
      POSITIVE RESULTS
-------------------------------------------------------- Chapter 6:1.2

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/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." The national presidents of NALC and NRLCA said that
EI/QWL teams have gone from dealing with "housekeeping" issues to
tackling more substantive issues.  They cited several "successful"
EI/QWL projects, including

  some self-directed work sites for city carriers, and

  procurement of right-hand drive vehicles for rural carriers. 

Management and union officials at processing plants and post offices
that we visited also believed that EI/QWL efforts were beneficial. 
For example, managers and union officials at the Carmel Post Office,
NY, said that EI meetings improved communications and the attitudes
of employees and union stewards.  The Denver Postmaster and the local
NALC president said that they were committed to the EI process, and
they credited EI with improving communications and labor-management
relations.  They cited as a good outcome an EI project--called the
Customer Service Management Program--done by a team at the Bear
Valley Post Office, CO.  They said this project reduced friction
between carriers and supervisors and improved morale and trust at
that location.  Similarly, Mail Handlers representatives for the San
Francisco, CA, general mail processing plant said that QWL had opened
lines of communication and had improved operations.  Our review of
the QWL files corroborated their statements.  For example, we found a
method developed by a QWL team to separate films from other mail,
which minimized damage to films processed on sorting equipment at the
plant. 

Most management, union, and management association officials we
interviewed at headquarters and field locations believed the
alternatives for discipline and dispute resolution were useful.  A
headquarters labor relations official told us that the modified
procedures "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.  According to the
national presidents of NAPUS and the League, the modified procedures
did what needed to be done more expeditiously and at a lower cost. 

Two analyses done by the Postal Service showed that alternative
procedures improved the resolution of workfloor disputes. 

  A 1990 analysis by postal headquarters showed that 17 out of the
     total 22 offices using one alternative procedure sent fewer
     cases to arbitration.  The decrease among the 17 offices ranged
     from about 33 percent to 100 percent and averaged 71 percent. 

  A 1991 analysis of the Labor and Management Partners (LAMPS)
     program by Central Michigan APWU officials and Lansing, MI,
     postal officials showed that the number of arbitration cases
     generated from the local postal facility dropped after LAMPS
     began.  During fiscal year 1988, before LAMPS was used, the
     Lansing facility sent 31 cases to arbitration.  LAMPS was
     implemented, and over the next 28 months the facility sent two
     cases to arbitration.  The Lansing Postmaster and the local APWU
     president reported at a national conference in 1992 that LAMPS
     had eliminated the backlog of grievances, achieved dollar
     savings, improved productivity, and enhanced relations and
     communications on the workroom floor. 

Headquarters labor relations officials said that the labor management
plan improved relations in the facilities where it was implemented. 
Our work at postal facilities in three locations--Oklahoma City, OK,
Indianapolis, IN, and Denver, CO--corroborated that view.  A plan was
developed for the Oklahoma City post office between 1988 to 1990 by
management, NALC, APWU, and the Mail Handlers and for the
Indianapolis postal facilities between 1989 to 1990 with management
and NALC.  Union and management officials at both locations said that
the plan built trust and improved relations between management and
union officials.  In 1992, the Denver Bulk Mail Center developed a
plan to improve relations between APWU and management.  Both union
and management officials in Denver said that short-term goals were
met and labor-management relations improved. 

A headquarters official responsible for management association
relations said that MBP had improved overall relations between the
Postal Service and the three management associations.  All three
management association national presidents agreed with this
assessment.  The three associations established the MBP National
Joint Steering Committee, which created an awards program in 1991 to
recognize outstanding initiatives developed locally.  The 1992
National MBP Award winners included a cross-functional MBP work team
in Albany, NY, that developed new procedures for reporting and
correcting missent mail; three task groups in Columbia, SC, that
created innovative procedures to identify delivery problems and
increase productivity scores; and a Charlotte, NC, MBP task force
that worked with local EI and QWL work teams to pilot a revised
carrier route plan. 


      OTHER INITIATIVES UNDERTAKEN
      TO IMPROVE COOPERATION AND
      JOINT PROBLEM SOLVING
-------------------------------------------------------- Chapter 6:1.3

The initiatives identified in table 6.1 and discussed above were
designed to change conditions and working relations on the workroom
floor.  In addition to those efforts, the Postal Service and unions
had other agreements to promote cooperation and joint
problem-solving, including the following: 

  Joint Labor-Management Committees:  These committees were formed at
     the national, local, and intermediary levels of the Postal
     Service as early as 1971.  As a result of the 1990 contract
     negotiations, NALC and APWU jointly agreed with the Postal
     Service to establish 13 national committees to consider matters
     of mutual concern.\2 The Postal Service and the Mail Handlers
     also chartered seven national joint committees, such as the
     Joint National Education and Training Fund Committee and the
     National Clean Air Committee. 

  Violence in the Workplace Committee:  This national committee first
     met in 1991 following the shootings at Royal Oak, MI, and
     included members from the Postal Service, the management
     associations, and three of the four national postal unions.  The
     committee's purpose is to deal with violence and stress in
     postal workplaces.  APWU did not participate because it thought
     that the Postal Service used the meetings to "disseminate
     platitudes about cooperation." The committee issued two
     statements deploring violence in the Postal Service.  The
     committee also developed a plan to form similar committees at
     the local level. 

  Joint Management-Union Training:  The Postal Service and the unions
     have developed and delivered several joint training programs. 
     For example, the Postal Service jointly sponsored training
     programs with APWU for transitional employees and with NALC and
     NRLCA on implementation of automation. 

At the national level, management and unions had taken and were
considering other steps to deal with workplace conflicts through
grievance, arbitration, and mediation procedures.  In 1989, the
Postal Service and NALC formally agreed to limit the number of
grievances appealed to step 3.  Similarly, in 1993, APWU and the
Postal Service agreed to place a short-term moratorium on arbitration
proceedings in order to resolve a sizable backlog of grievances. 

At the time of our review, the Postal Service was working with APWU,
NALC, and the three management associations to develop other means,
such as the use of mediation, to minimize the arbitration and
administrative hearings backlog.  In addition, a joint task force was
reviewing the discipline procedures to find new methods, such as
counseling and education, to correct unacceptable behaviors. 


--------------------
\2 Some of the committees, such as the National Joint
Labor-Management Safety Committee, were formed before the 1990
negotiations.  Others, such as the National Employee Assistance
Program Committee, were added as a result of the 1990 negotiations. 


   INITIATIVES HAVE NOT CHANGED
   UNDERLYING VALUES AND SYSTEMS
---------------------------------------------------------- Chapter 6:2

As indicated above, past and ongoing efforts to deal with
union-management and employee-supervisor relations have focused to a
large extent on resolving conflicts rather than preventing them.  The
labor-management plan did attempt to prevent conflicts by asking
management, unions, and employees to (1) identify obstacles to good
labor-management relations and (2) make a commitment to overcome
them.  However, the plan was limited primarily to problem locations. 
The various attempts to improve the
discipline-grievance-arbitration-resolution process may have helped
to heal wounds but have not prevented the infliction of wounds in the
first place. 

Relations between management and unions and between supervisors and
employees continue to be adversarial at many processing plants and
post offices, and grievances continue to mount.  The 1992 and 1993
employee opinion surveys showed that widespread dissatisfaction
existed in two dimensions relating to supervisor-employee
relations--performance management and reward/recognition.  Employees
rated these dimensions lower than the other 10 dimensions.  There
were no significant differences between employees participating and
not participating in the EI/QWL initiatives.  Moreover, their
responses to most questions in these two dimensions were more
negative in 1993 than in 1992, as table 6.2 shows. 



                                    Table 6.2
                     
                      Employees Rated Performance Management
                     and Reward/Recognition the Same or Worse
                                in 1993 than 1992


Dimension and question (response                Better or worse in    Percentage
category)\a                         1993  1992  1993 than 1992\b    point change
----------------------------------  ----  ----  ------------------  ------------
Performance management
--------------------------------------------------------------------------------
Poor performance is usually not       22    27  Worse                          5
 tolerated.
 (strongly agree/agree)
Many supervisors have given up        30    37  Worse                          7
 trying to discipline employees.
 (strongly disagree/disagree)
It is nearly impossible to fire an    20    24  Worse                          4
 employee who should be
 terminated.
 (strongly disagree/disagree)
In my area, some people do most of    15    16  No substantial                 1
 the work while others do just                   difference
 enough to get by.
 (strongly disagree/disagree)

Recognition and reward
--------------------------------------------------------------------------------
When things go well on the job,       14    13  No substantial                 1
 how OFTEN is your contribution                  difference
 recognized?
 (always/frequently)
Pay should be based more on           56    52  Worse                          4
 performance than it is at
 present.
 (strongly agree/agree)
Performing well just gets you         16    18  No substantial                 2
 extra work.                                     difference
 (strongly disagree/disagree)
I get rewarded for high levels of     12    13  No substantial                 1
 performance.                                    difference
 (strongly agree/agree)
Work groups are rewarded for          10    10  No substantial                 0
 cooperating with each other.                    difference
 (strongly agree/agree)
--------------------------------------------------------------------------------
\a Some of the survey questions were phrased in a positive manner
(e.g., "..treating employees with respect and dignity as
individuals"), and others were phrased in a negative manner ("I have
personally experienced sexual discrimination...").  A favorable
response may be agreement with positive statements or disagreement
with negative statements.  The favorable response category is shown
under the question. 

\b Changes from 1992 to 1993 greater than 2 percentage points were
classified as "better" or "worse." If the change was 2 percentage
points or less, it was classified as "no substantial difference."

Source:  1993 U.S.  Postal Service Employee Opinion Survey National
Results. 

National officials said that past initiatives have not addressed some
basic problems in the workforce.  For example, the former Postal
Service Vice President for Quality cited two major shortcomings of
EI/QWL initiatives:  (1) the initiatives did not have top-level
management involvement but rather were for the employees in the
field, and (2) they were not done to meet business needs but rather
primarily to improve relations and worklife quality.  The national
NAPS President called two alternative procedures to resolve workfloor
disputes "monuments to our failure."


   NO PLAN EXISTS FOR IMPLEMENTING
   NATIONAL INITIATIVES AT FIELD
   LEVEL
---------------------------------------------------------- Chapter 6:3

The National Leadership Team, consisting of top Postal Service,
union, and management association officials, has not developed and
agreed to a plan for implementing recent national initiatives, such
as holding joint meetings and revising employee pay and recognition
systems, at performance cluster and workfloor levels.  Although the
National Leadership Team was meeting regularly, similar meetings that
included union and management association representatives generally
were not being held at performance cluster levels.  Furthermore, the
NALC President told his national business agents not to participate
in meetings at the performance cluster level.  He said that "cluster
groups are doing things better handled by the EI process."

APWU has participated in few past initiatives.  Postmaster General
Runyon recently took additional steps in an effort to obtain the
participation and commitment of the APWU President.  In November
1993, the Postmaster General and APWU President Moe Biller signed a
joint memorandum of understanding on labor-management cooperation. 
The agreement says that "the APWU and the Postal Service hereby
reaffirm their commitment to and support for labor-management
cooperation at all levels of the organization" and "approve the
concept of joint meetings among all organizations." The statement
also acknowledges that the competitive environment requires
management and the union to jointly pursue strategies that emphasize
improving employee working conditions and satisfying the customer in
terms of both service and costs. 

The agreement to cooperate was a "quid pro quo" for another joint
agreement signed at the same time.  Under this agreement, the Postal
Service agreed that it will no longer pursue contracting out for
certain clerical services (keying address data) associated with the
automation program.  Instead, the Postal Service will keep the work
in-house.  The agreement reflects the view that the benefits of union
cooperation, which APWU expects will result in the Postal Service
creating about 20,000 jobs,\3

will offset part of the $4.3 billion in labor costs the Postal
Service originally expected to save from contracting out such
services.\4

Some national initiatives that were implemented by postal management
and certain craft employees would need to be pursued as part of the
collective bargaining process.  For example, changes in systems for
paying craft employees would be decided by postal management and the
unions in negotiations to be held before current contracts expire. 
The contracts with APWU and NALC expire in November 1994.  In May
1993, the Postal Service and NRLCA agreed to extend their contract
for another 2 years.  In November 1993, the Postal Service and the
Mail Handlers also agreed to extend their contract for another year. 

Historically, a problem in contract negotiations has been the gradual
fragmentation and growing discord among the four major craft unions. 
In earlier years, the unions negotiated as a unified bargaining
committee, the Council of American Postal Employees.  This
arrangement broke down in 1978 when the rural letter carriers union
decided to go its own way because of disagreement with NALC.  The
mail handlers union followed suit in 1981.  APWU and NALC have
continued to bargain together as the Joint Bargaining Committee, but
they have been at odds since the last contract, and each union has
publicly criticized agreements signed with management by the other
side.  In August 1994, the President of NALC announced that it would
not bargain jointly with APWU during the upcoming contract
negotiations. 

Experience thus far indicates that the Postal Service and the
leadership of the unions and management associations may be unable to
develop the relationships necessary to deal with workroom problems
without some outside intervention.  This intervention could come in
the form of assistance by parties outside the Post Service, such as
the Federal Mediation and Conciliation Service (FMCS), which was
created as an independent agency in the executive branch for the
purpose of assisting labor and management in the resolution of their
differences.  As discussed below, the Tennessee Valley Authority, an
independent government corporation, used such outside assistance,
including some new techniques for conducting negotiations and
reaching bilateral agreement, to overcome a serious labor management
problem in 1992. 

To date, the Postal Service National Leadership Team has not involved
FMCS or other such organizations in developing new relationships and
learning new negotiation techniques at the national or performance
cluster levels. 


--------------------
\3 The Postal Service did not provide us with an official estimate of
the number of in-house employees necessary to staff remote barcoding
systems.  The 20,000 number was provided by APWU. 

\4 An arbitrator ruled in May 1993 that the keying work had to be
offered to current employees first before it was contracted out.  The
parties then negotiated an agreement under which the work will be
done in-house with 30 percent postal career workhours and 70 percent
transitional employee workhours. 


   APPROACHES OF SOME OTHER
   ORGANIZATIONS FOR BUILDING A
   COMMITTED WORKFORCE
---------------------------------------------------------- Chapter 6:4

We reviewed approaches followed by some other organizations that
addressed labor-management situations similar to those we found in
the Postal Service.  That is, the organizations were facing
increasing competition and loss of market share, relations between
management and unions were acrimonious, and employees lacked
commitment to and satisfaction with their jobs. 


      ORGANIZATIONS MADE A
      SUSTAINED TOP-LEVEL
      COMMITMENT TO DESIRED VALUES
      AND BELIEFS
-------------------------------------------------------- Chapter 6:4.1

We earlier reported\5 on how some private sector companies, such as
Ford, AT&T, and Motorola, were attempting to change their cultures. 
According to several experts we interviewed, an organization's
decision to change its culture is generally triggered by a specific
event, such as international competition, a severe budget reduction,
or a change in the world situation.  The experts generally agreed
that a culture change is a long-term effort that takes at least 5 to
10 years to complete.  Officials of the nine companies we reviewed
believed that there are two key techniques of prime importance to
successful culture change: 

  Top management must be totally committed to the change in both
     words and actions. 

  Organizations must provide training that promotes and develops
     skills related to their desired values and beliefs. 

Other techniques considered important by the companies in changing
cultures were designed to make the desired values and beliefs a way
of life for everyone in the organization.  These techniques included
distributing a written statement of the values and beliefs; offering
rewards, incentives, and promotions to encourage behavior that
reinforces the beliefs; holding company gatherings to discuss the
beliefs; and using systems and processes to support the values. 

In unionized organizations that we reviewed, the commitment to
change, including the adoption of new values and beliefs, was made by
both management and unions.  This commitment was expressed in the
form of a partnership approach to achieving organizational goals and
documented in a long-term agreement in writing between management and
the unions.  For example, we earlier reported\6 that to resolve a
difficult labor-management situation, the Tennessee Valley Authority
(TVA) and unions representing TVA employees signed agreements of
mutual cooperation and trust that are to run up to 20 years. 
Subsequently, Representative Jim Cooper announced that he no longer
planned to introduce legislation to deal with the situation. 

TVA and unions representing TVA employees developed the long-term
agreements with the assistance of the Department of Labor and FMCS. 
In addition, the parties to the development of the agreements and the
periodic collective bargaining at TVA receive training on "win-win"
or interest-based bargaining.  TVA reported that this had proven to
be a highly successful approach in dealing with issues important to
both labor and management.  It is based on the key principles of
separating personalities and personal issues from the problem;
focusing on interests, not positions; generating a variety of
possible options before deciding what to do; and evaluating the
result on the basis of objective criteria. 

More recently, a partnership approach to labor-management relations
has been recommended by panels created at the highest levels of the
federal government.  The National Performance Review, headed by Vice
President Al Gore, recommended in September 1993 establishing a
National Partnership Council to transform adversarial
union-management interaction into a partnership for reinvention and
change.  President Clinton created the Council by executive order in
October 1993.  In January 1994, the Council, which included
representatives of the three largest federal employee unions and
various federal agencies, delivered its report and recommendations to
make labor-management partnership a reality in the federal
government. 

In March 1993, at the direction of the President, the Secretaries of
Labor and Commerce created a blue-ribbon panel headed by Dr.  John
Dunlop, former Secretary of Labor, to examine the current state of
labor-management relations in the private sector and determine
whether there are methods of improving productivity through
labor-management cooperation and employee participation.  The panel
issued an interim report in May 1994. 


--------------------
\5 Organizational Culture:  Techniques Companies Use to Perpetuate or
Change Beliefs and Values (GAO/NSIAD-92-105, Feb.  1992). 

\6 Labor-Management Relations:  Tennessee Valley Authority Situation
Needs To Improve (GAO/GGD-91-129, Sept.  26 1991). 


      FORD AND SATURN APPROACH TO
      TRANSFORMING VALUES AND
      BELIEFS INTO REALITY
-------------------------------------------------------- Chapter 6:4.2

We obtained information on efforts to transform a labor-management
partnership and new values and beliefs into reality by visiting the
Ford Motor Car Company and the Saturn Corporation, a division of
General Motors (GM).  We selected these two unionized companies
because our research indicated that they had turned around
acrimonious labor-management relationships and established new
approaches on the factory floor for building quality products. 

We found that these companies succeeded in improving labor-management
relationships, and their corporate performance, by, among other
actions, making a long-term commitment to changing their 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
changed the way they interacted with each other.  Management at both
plants, together with the United Auto Workers (UAW), 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 base a certain
percentage of pay on corporate performance. 

Summarized below are some of the key components of the approaches
followed at Ford and Saturn, based on our discussions with company
officials in Dearborn, MI, and Springhill, TN; a review of various
written materials they provided; and our observations during our
plant tours. 


         UNION AND MANAGEMENT WORK
         TOGETHER AS FULL PARTNERS
------------------------------------------------------ Chapter 6:4.2.1

Unions at both Ford and Saturn participated fully with management in
business decisions.  This participation ranged from daily information
sharing to joint strategic planning.  At Ford, union leaders were
briefed on a regular basis, through the "Mutual Growth Forums," on
the company's financial and competitive status and its plans for new
product lines or discontinuance of old products. 

At Saturn, all strategic, tactical, and operational decisions were
made jointly by Saturn management and UAW Local 1853.  This
partnership relationship began with the formation of a GM-UAW Study
Center in 1984 to review a new type of relationship and approach to
the operation of the Saturn project.  The "Group of 99," comprising
99 UAW members, GM managers, and staff personnel from 55 plants in 17
GM Divisions, jointly developed and designed the plant and selected
the new workforce. 

Similarly, at both plants, the union leaders were convinced of the
long-term value of employee empowerment and provided active support
and leadership to make it work through communication, trust, and
working together.  At Saturn, the union took an active role in
conflict resolution and implemented a "consultation" process, which
used counseling, guidance, and review to make the process
constructive rather than disciplinary.  This involvement did not
replace the union's legal responsibility to represent the interests
of employees.  Nor did it diminish management's role of providing
necessary resources, providing fiduciary oversight, and having the
ultimate say in hiring, promotion, and "de-selection" of employees. 


         RECOGNITION OF NEED FOR
         WORKPLACE FLEXIBILITY
------------------------------------------------------ Chapter 6:4.2.2

Although their approaches were different, both Ford and Saturn and
the respective UAW locals recognized the need for workplace
flexibility.  At Ford, the local parties were encouraged by both Ford
management and UAW to modify the national contract to allow for
increased flexibility in production.  For example, the parties can,
and often have, negotiated "Modern Operating Concepts" (MOC)
agreements, which allow workers to cross crafts to do the work more
efficiently.  For instance, electricians can do their own welding at
some locations.  At Ford's Nashville, TN, glass plant, the parties
have given management more authority to assign overtime.  Ford
officials told us that many plants operate under MOC agreements, and
most have reported greater efficiency as a result. 

The labor agreement at Saturn is 27 pages long compared to 400 pages
in the GM-UAW agreement and has no fixed expiration date.  It does
not contain rigid workrules but rather guiding principles by which
the parties are to operate.  The contract provides for one job
classification of operating technician and six additional
classifications of skilled trades members.  Promotions are to be
based on knowledge and skills, not seniority.  Peer evaluations,
along with contributions to the group, are also to be considered. 


         WORK TEAMS ORGANIZED AND
         EMPOWERED TO CONTROL THE
         PRODUCTS
------------------------------------------------------ Chapter 6:4.2.3

In response to increased international competition, both Ford and
Saturn introduced new concepts for organizing work.  The concepts
emphasize employee empowerment and teamwork.  At Ford, employees form
problem-solving teams to meet business needs.  One such team, made up
of engineers and assembly employees, built the prototype for the
Taurus.  Together, they were able to identify and correct potential
problems and make improvements at an early stage of the manufacturing
process. 

At Saturn, instead of assembly line work directed by first-line
supervisors, the entire Saturn operation is done through self-managed
work units.  Workers who build the cars at Saturn are all operating
technicians ("op techs"), and all are salaried employees.  They work
in units consisting of 8 to 18 workers who are responsible for
accomplishing a specific number of tasks.  The units have broad
latitude and responsibility for all aspects of the work, including
ordering supplies, performing repairs and maintenance, developing and
delivering training, resolving conflicts, keeping records, and
setting member work schedules.  Each unit is run largely by its
members as a small business, complete with a budget.  When a new
employee is needed, team members interview prospective employees and
then choose the person with whom they will be working.  There are no
foremen or first-line supervisors; team decisions are made by
consensus.  A "work unit counselor" is responsible for managing daily
production schedules, managing conflict between team members, and
communicating the team's needs to the work unit's "module advisor"
who is responsible for several work units.  The counselor is elected
by the team and serves a 3-year term. 


         COMPENSATION PARTIALLY
         BASED ON CORPORATE
         PERFORMANCE
------------------------------------------------------ Chapter 6:4.2.4

Both Ford and Saturn have compensation systems under which a part of
employees' pay is based on corporate performance.  Ford has
profit-sharing plans, whereby the company sets aside a portion of the
annual net profits to be distributed to the employees.  At Saturn,
the compensation system includes a risk-reward component mandating
that up to 20 percent of an employee's salary will depend on the
fulfillment of several goals, among them the achievement of specific
productivity targets. 

At Saturn, employees operate under a system of self-accountability
for results, which is supported by union and management.  Members of
the work unit are provided an incentive to meet unit goals,
standards, and budgets because they share together in the unit's
success or failure.  Peers and work unit counselors identify and
counsel members not doing their assigned share of the work according
to standards.  Counselors and union leaders together follow
clear-cut, simple steps for dealing with substandard performance of
any member and, if necessary, removing members from work units. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 6:5

There have been numerous attempts to improve the work environment and
enhance labor-management relations at the Postal Service.  Although
the initiatives have produced positive outcomes, they have not
changed underlying values and systems that have perpetuated the
hostile work environment and adversarial labor-management relations. 
Lasting improvements can only be realized if management, union, and
management association leaders at all levels of the Postal Service
are committed to changing their traditional practices.  They can
learn from the experiences of some other organizations in (1)
developing a union-management partnership; (2) modifying national
agreements to allow for workplace flexibility; (3) empowering
employees through work teams; and (4) linking pay, in part, to
organizational and unit performance. 




(See figure in printed edition.)Appendix I
U.S.  POSTAL SERVICE'S CORPORATE
VISION STATEMENT
============================================================ Chapter 6


INITIATIVES FOR IMPROVING
WORKFLOOR RELATIONS
========================================================== Appendix II


   EMPLOYEE-MANAGEMENT
   PARTICIPATION
-------------------------------------------------------- Appendix II:1


      EMPLOYEE INVOLVEMENT/QUALITY
      OF WORKING LIFE
------------------------------------------------------ Appendix II:1.1

The Employee Involvement/Quality of Working Life (EI/QWL) initiatives
were undertaken to make the organizational culture less autocratic
and more participative.  Although similar in philosophy and
structure, a separate EI/QWL process was established for each of the
three participating unions. 

Through EI/QWL, the Postal Service and the unions hoped to (1)
redirect postal management away from the traditional authoritarian
practices toward a style that would encourage employee involvement
and (2) enhance the dignity of postal employees by providing them
with a chance for self-fulfillment in their work.  Postal Service
leadership expected the EI/QWL effort to have far-reaching effects,
as indicated by the following statement by then Senior Assistant
Postmaster General Carl Ulsaker in 1982: 

     "Improved job satisfaction and the sense of self-fulfillment
     that come with being a member of the team will increase
     employees' enthusiasm and interest in their work.  The
     adversarial relationship between labor and management will
     diminish.  The we-they or win-lose syndrome changes to teamwork
     and win-win.  Grievances and EEO complaints go down because
     resentment against authority diminishes.  Error frequency and
     unscheduled absenteeism reduce because employees become
     interested in their work."

He said that profitability and service would improve through a
combination of increased labor productivity and reduced absenteeism,
discipline, and grievance-handling time. 


      MANAGEMENT BY PARTICIPATION
------------------------------------------------------ Appendix II:1.2

Similar in purpose to EI/QWL, the Management by Participation (MBP)
initiative is a process for disseminating participative management
concepts to supervisors, managers, and postmasters.  Through MBP, the
Postal Service and the three management associations hope to foster a
more participative environment and develop realistic solutions to
business problems. 


   STRIVING FOR EXCELLENCE
   TOGETHER
-------------------------------------------------------- Appendix II:2

The Postal Service's basic pay structure for craft employees goes
back to policies established in the 1800s, under which wage rates
periodically are negotiated by the unions, and a variety of wage
schedules exist for the different jobs in each craft.  All employees
with the same seniority in a particular job are to receive the same
basic pay throughout the Postal Service.  The Striving for Excellence
Together (SET) added a new dimension to the pay system. 

The purpose of the SET program is to convince craft employees and
their managers that everyone pulling together is essentially a better
idea than everyone pulling in different directions.  The concept
relies heavily on group interaction and peer pressure to prevent
shirking of job duties.  Under SET, each participating employee's
payment is based on a combination of three measures:  the Postal
Service's national financial performance, the relative ranking of the
85 performance clusters in the Customer Service Index (CSI), and the
performance cluster's improvement in CSI scores over time. 


   ALTERNATIVE DISCIPLINE AND
   DISPUTE RESOLUTION PROCEDURES
-------------------------------------------------------- Appendix II:3


      MODIFIED 15 AND 16
------------------------------------------------------ Appendix II:3.1

The basic procedures for administering discipline and resolving
workplace disputes are set forth in negotiated union-management
contracts.  Two changes to those procedures are referred to as
Modified 15 and Modified 16, which were developed by two national
task forces--one composed of APWU, NALC, and Postal Service
representatives; and one composed of Mail Handlers and Postal Service
representatives.  The modified procedures are intended to (1) improve
the resolution of workplace disputes and (2) encourage communications
to correct work-related problems. 

The modified procedure increases the opportunity for grievance
resolution at a lower level.  Under the modified procedure, the union
seeks resolution of an employee's grievance with the immediate
supervisor (step 1), a designated mid-level manager, (step 1A), and a
six-person union-management grievance committee (step 2) before
appealing to outside arbitration. 

Similarly, the discipline procedure was modified to improve
communication and reduce conflict between supervisors and employees. 
The procedure requires two predisciplinary discussions for minor
offenses before formal disciplinary action is taken.  Previously,
contract procedure required one discussion between supervisors and
employees before disciplinary action was taken. 


      LOCALLY DEVELOPED
      ALTERNATIVES
------------------------------------------------------ Appendix II:3.2

Along with modifying articles 15 and 16, the contracts negotiated in
1987 by the Postal Service and APWU and NALC permitted local
management and union leaders to develop dispute resolution
procedures.  We reviewed four such procedures, which are described
briefly below. 

  Labor and Management Partners (LAMPS):  Under this procedure, APWU
     shop stewards seek resolution of disputes over contractual
     issues with (1) the immediate supervisor and (2) a general
     supervisor or postmaster.  If the parties cannot resolve the
     dispute, a two-person LAMPS team consisting of a management
     representative and a union representative attempts to resolve
     the case.  If the LAMPS team cannot agree on a resolution, the
     case is to be referred to a labor relations field director and
     the craft director in APWU.  If the disagreement is not settled
     at that point, the regular grievance system is to be applied. 
     With discipline, the procedure calls for a predisciplinary
     meeting between the steward and the supervisor.  If no agreement
     is reached, the LAMPS team is to be called.  If the disagreement
     is still not settled, the case is to be processed in accordance
     with the regular grievance procedure. 

  Union-Management Pairs (UMPS):  Under this procedure, the shop
     steward seeks resolution of disputes over contractual issues
     with the immediate supervisor.  If the parties cannot resolve
     the dispute, a two-person UMPS team consisting of a management
     representative and a union representative attempts to resolve
     it.  If the UMPS team cannot agree on a resolution, the case is
     to be referred to the human resources field director and the
     area/regional Administrative Assistant for NALC.  If the dispute
     remains unresolved, it is to be referred to the NALC business
     agent and the district manager or postmaster.  If the
     disagreement is still not settled at that point, the regular
     grievance arbitration system is to be applied. 

  No Time Off in Lieu of Suspension Letters (No-Tol):  This is a
     "paper-discipline" procedure used for mail handlers.  It is used
     to promote resolution of problems through discussions to
     forestall the need for any form of discipline.  If formal
     discipline is warranted, No-Tol letters are to be used instead
     of time-off suspensions. 

  Letters In Lieu of Suspension To Emphasize Needed Improvement
     (LISTEN):  This procedure, used by postal management and NALC,
     is similar to the mail handlers' No-Tol procedure.  It
     encourages discussion to correct work- related problems before
     formal discipline is resorted to.  If discussing deficiencies is
     not successful, then LISTEN letters are to be used in lieu of
     time off suspensions. 


   PROGRAMS TO OVERCOME OBSTACLES
   TO GOOD RELATIONS
-------------------------------------------------------- Appendix II:4


      LABOR-MANAGEMENT PLAN
------------------------------------------------------ Appendix II:4.1

Postal headquarters labor relations staff, NALC, APWU, and the Mail
Handlers jointly developed and promoted the labor-management plan
concept to identify and overcome commonly encountered obstacles to
good labor-management relations.  According to postal officials, the
plan concept has generally been used after relations and employee
discontent became very difficult or reached crisis situations. 

The development of a plan for a particular location is to include
employee interviews and focus group sessions, joint exercises to
improve communication and trust, joint labor-management meetings to
set improvement goal, and evaluation of progress against the goals. 
The plan requires a strong commitment from both management and the
unions. 


      PARTICIPATIVE MANAGEMENT
      PLAN
------------------------------------------------------ Appendix II:4.2

The participative management plan was jointly developed by the Postal
Service, NAPS, NAPUS, and the League to assist supervisors and
managers to overcome commonly encountered obstacles to a better
management relationship.  The development of a plan for a particular
location is to include confidential interviews and focus groups,
exercises to establish a working dialogue and build trust, meetings
to set improvement goals, and evaluation of progress against the
goals.  The plan requires sustained commitment from both officials of
the management associations and senior managers to improving postal
management relations. 




(See figure in printed edition.)Appendix III
COMMENTS FROM THE U.S.  POSTAL
SERVICE
========================================================== Appendix II



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The following responses are keyed by number to specific parts of the
Postal Service's letter dated August 2, 1994. 

1.  We recognize that improving labor-management relations in the
Postal Service is a difficult long-term task and agree that the
Postal Service has many initiatives underway that address its labor
management problems.  Our work was directed at examining the root
causes of these problems.  We did this, in part, by interviewing over
475 Postal Service supervisors, managers, national and local postal
labor leaders, and national management association leaders.  We
reviewed grievance and arbitration data to help us better understand
and document the nature and causes of workplace problems identified
through those interviews.  We buttressed this work by analyzing the
1992 and 1993 results of the Postal Service employee opinion surveys
to further identify factors causing workforce dissatisfaction.  This
work supports the conclusion that the organizational culture of the
Postal Service is a major cause of its poor labor-management
relations. 

Our work also points to a number of Postal Service policies and
practices that have contributed to the problems.  We believe that
these policies and practices reflect current values that should be
changed in an effort to encourage, facilitate, and reward more
productive relations.  For example, on the delivery side, we discuss
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 reexaming such as tying supervisors'
incentive systems to numerical goals.  We note that later in his
letter, the Postmaster General accepts our recommendations,
characterizes them as ambitious, and says that they need to be
ambitious to resolve problems of such long standing. 

We discuss in volume I and in chapter 2 of volume II numerous steps
that the Postmaster General has taken to change the culture of the
organization.  We have expanded this discussion in response to the
Postal Service's concerns that our report pays too little attention
to these efforts.  However, given the entrenched nature of
labor-management dissention that we found remaining on the workroom
floor, we think it is unrealistic to expect that harmony can be
achieved overnight.  Changing the corporate culture will continue to
be a time-consuming and difficult task that will require unions and
management to work more collegially to avoid falling into their
traditional adversarial roles.  These traditional roles and the
resulting corporate culture have significantly impeded the Postal
Service's efforts to improve delivery service and cut costs. 

The adversarial nature of labor management relations in the Postal
Service is reflected in the terms used by a range of employees, both
union and management, during interviews with us to describe
management style and the labor-management climate in postal
facilities.  Those terms included "paramilitary," "autocratic," and
"adversarial." We therefore used these terms to characterize the
corporate culture as viewed by the employees.  The former Postmaster
General on his departure from the Postal Service said that one of his
regrets was his inability to overhaul the corporate culture, which he
said "seems to have a paramilitary character." The current Postmaster
General has used "autocratic" and "authoritarian" in characterizing
the management style in the Postal Service and has said that
employees need more authority to do their jobs.  Because of the
Postal Service's concern with the use of the term "paramilitary" to
describe its culture, we have substituted "autocratic" for
"paramilitary" throughout our text. 

2.  Violent episodes at Postal Service facilities prompted the
request for this review.  While some employees said that the
autocratic management style practiced in postal facilities has led to
a tense and confrontational environment between supervisors and
employees, it was not our intention to link violence to the corporate
culture, and we have clarified this point in the introduction to our
report.  We point out in chapter 6 that the Postal Service, unions,
and management associations have signed two statements to deal with
violence in the Postal Service.  In their statements they pledged to
"make the workroom floor a safer, more harmonious, as well as a more
productive workplace."

3.  We judgmentally selected the plants to visit with the primary aim
of providing both geographic coverage and a mix in the sizes of the
plants.  The fact that most of these plants had labor-management
problems is not the basis of our conclusion that the problems were
nationwide.  That conclusion is based on interviews with headquarters
and national officials, employee opinion survey results, and
grievance-arbitration data.  The primary purpose of the site visits
was to help us identify the causes of the problems, and we therefore
selected sites where problems existed. 

4.  Similarly, our findings were based not on the individual comments
in employee opinion surveys but on an array of data sources,
including (1) the 1992 and 1993 servicewide employee opinion surveys;
(2) the grievance-arbitration data files; and (3) extensive
interviews with over 475 union, management, and management
association officials, both at the national and local level. 

We cited individual employees' comments only to illustrate the nature
of the problems identified from interviews, grievance and arbitration
data, and employee opinion survey results.  We agree with the Postal
Service that comments from an individual should not be taken as
representing a consensus of all employees' views. 

5.  We recognize in chapter 3, volume II, that there was some
improvement overall in employee responses between 1992 and 1993 in 9
of the 12 survey performance dimensions.  This improvement was
encouraging given the major reorganization and downsizing that took
place when the 1993 survey was administered, and we noted this in
volume I after receiving the Postal Service's comments.  It is to the
Service's credit that it solicits employee opinions about various
aspects of the organization, including the labor-management climate,
and plans to continue administering this survey annually. 

6.  Mail delivery is a national issue.  A collective bargaining
structure has been established by law for resolving Postal Service
labor-management issues.  If that structure does not work, the
American people will eventually look to Congress for a resolution. 
Accordingly, we suggested in our draft report that Congress monitor
the progress being made and after 1 year consider whether a
reexamination of the structure may be warranted.  Our intent was
twofold:  (1) to provide a greater incentive to Postal Service labor
and management for reaching closure on the issues; and (2) to provide
Congress with the information it will need to consider whether and,
if so, when, it may wish to intervene.  As discussed above, we
recognize the long-term nature and difficulty of changing a corporate
culture.  Given this and the Postal Service's concern with the 1-year
time frame, we modified our suggestion in the final report to provide
for a 2-year threshold. 




(See figure in printed edition.)Appendix IV
COMMENTS FROM THE AMERICAN POSTAL
WORKERS UNION, AFL-CIO
========================================================== Appendix II



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2 and 3. 



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The following are GAO's comments on the letter dated July 22, 1994,
from the American Postal Workers Union. 


   GAO COMMENTS
-------------------------------------------------------- Appendix II:5

1.  We are not recommending specific changes to the collective
bargaining agreements.  We do recognize that changes may be necessary
in these agreements in order to implement the framework agreement
suggested (see p.  17, vol.  I).  We also recognize that the parties
have to work out their differences for themselves (see pp.  16 and
17, vol.  I).  We believe that there are different ways "to work out
the differences" between labor and management, and we are advocating
a top-down, partnership approach, such as that used by the United
Auto Workers with Ford and Saturn.  We have revised the matter for
congressional consideration to allow more time for labor and
management to develop the framework agreement. 

2.  Although the agreement entered into by the Postal Service and
APWU to foster cooperation between management and labor is a positive
action and was part of another joint agreement to keep remote
barcoding work in-house, not all of the key players (unions,
management associations, and Postal Service) are parties to the
agreement.  Rather, only the Postal Service and APWU signed the
agreement.  Moreover, it does not identify any actions that will be
taken to improve conditions on the workroom floor.  We do agree with
APWU that the agreement should not be limited to improving working
conditions but rather should include joint strategies to improving
customer satisfaction and organizational performance. 

3.  We recognize in the report that APWU and the Postmaster General
signed an agreement to stop contracting out remote barcoding work and
restore these jobs to postal employees.  (see ch.  6, vol.  II). 

4.  We revised the text to clarify the number and reasons for
interest arbitration.  The right to strike and union security were
policy issues decided in the Postal Reorganization Act of 1970 and
were not considered in this report.  As agreed with the requesters,
our review was to focus primarily on labor-management relations
problems on the workroom floor.  However, we agree that Congress may
want to reexamine the provisions in the 1970 Postal Reorganization
Act relating to these and other issues, given that the Postal Service
is now operating in a market environment very different from the one
23 years ago. 

5.  In order to gauge employees' sentiment concerning their working
conditions, we used a broad array of sources.  Employee opinion
survey data, testimonial evidence from hundreds of interviews with
union and management representatives, and the grievance/arbitration
data all corroborated the state of labor relations in the Postal
Service as described in our report.  The results of our review are
consistent with prior studies on postal labor-management relations. 
In order to respond to the congressional request, we determined that
it was necessary to obtain the views of employees directly, much like
the unions and postal management do.  To have limited our work to
interviewing only union officials about employees' views on working
conditions would have severely impaired our independence and violated
governmental auditing standards.  Further, we do not believe that our
use in this report of information obtained from the employee opinion
survey is in any way inappropriate or inconsistent with the National
Labor Relations Act because the act governs only the relationships
between employers, employees, and labor organizations. 

6.  We recognize the fact that unions owe employees a duty of fair
representation.  However, this duty does not compel the union to take
every case to arbitration.  On the basis of National Labor Relations
Board precedents and court cases, the union is accorded considerable
discretion in the handling of grievances, as long as it acts in good
faith, is nondiscriminatory, and has a rational basis for making a
decision. 

7.  We listed several possible causes for the grievance backlog in
volume II--including authoritarian management style and local
management refusal to settle cases (see ch.  3, vol.  II). 

8.  We did not evaluate the Postal Service's organizational design
and therefore cannot comment on the status afforded to the labor
relations function or the problems associated with the dual
management structure. 

9.  We deleted the term "restrictive."

10.  We revised the text to reflect that APWU anticipates that the
remote barcoding agreement will provide just over 20,000 jobs.  The
Postal Service did not provide us with an official estimate of the
number of employees necessary to staff the remote barcoding systems. 
However, on the basis of available data, we estimate that the remote
barcoding systems will require about 46,000 workyears when completed
(35,300 transitional and 11,300 career workyears). 

11.  We recognize that safety and health issues have been the subject
of contract negotiations and have revised the text in volume I to
reflect this fact. 

12.  In volume II, chapter 4, we devoted a section to self-managed
work units and stated that APWU proposed the concept.  We did not
comment on the remote encoding centers because these centers were not
activated at the time we completed our review. 

13.  The propriety and legal basis of management association
representation were outside the scope of our work. 

14.  We have revised our report to say "generally based on seniority,
not performance."

15.  We are not suggesting that the Postal Service import or
transplant programs like those at Saturn and Ford Motor Company. 
However, we endorse the principles and values that those programs are
based on, and we are recommending that the Postal Service, the
unions, and management associations design their framework agreement
on similar principles and values (see pp.  17 and 18, vol.  I). 




(See figure in printed edition.)Appendix V
COMMENTS FROM THE NATIONAL RURAL
LETTER CARRIERS' ASSOCIATION
========================================================== Appendix II


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix VI


   GENERAL GOVERNMENT DIVISION,
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix VI:1

Michael E.  Motley, Associate Director, Government Business
 Operations Issues
James T.  Campbell, Assistant Director
Barry P.  Griffiths, Project Manager
Lillie J.  Collins, Evaluator
Melvin J.  Horne, Evaluator
Chau H.  Vu, Evaluator
Janet W.  Duke, Consultant
Barry L.  Reed, Senior Social Science
 Analyst
Donna M.  Leiss, Reports Analyst


   CINCINNATI REGIONAL OFFICE
-------------------------------------------------------- Appendix VI:2

Kenneth B.  Bibb, Senior Evaluator
William E.  Haines, Evaluator


   DENVER REGIONAL OFFICE
-------------------------------------------------------- Appendix VI:3

James S.  Crigler, Senior Evaluator
Michael L.  Gorin, Evaluator


   NEW YORK REGIONAL OFFICE
-------------------------------------------------------- Appendix VI:4

Anne Kornblum, Senior Evaluator


   SAN FRANCISCO REGIONAL OFFICE
-------------------------------------------------------- Appendix VI:5

David Moreno, Deputy Project Manager
Kathy Stone, Evaluator
Caitlin A.  Schneider, Evaluator
Gerhard C.  Brostrom, Reports Analyst





RELATED GAO PRODUCTS
============================================================ Chapter 1

Postal Service:  Role in a Competitive Communications Environment
(GAO/T-GGD-94-162, May 24, 1994). 

Employee-Management Relations at the Indianapolis Post Office Are
Strained (GAO/GGD-90-63, April 16, 1990). 

Improved Labor/Management Relations at the Oklahoma City Post Office
(GAO/GGD-90-02, Oct.  19, 1989). 

U.S.  Postal Service:  How the Postal Service Dealt with the Edmond,
Oklahoma, Tragedy (GAO/GGD-88-78, June 1988). 

Labor-Management Relations and Customer Services at Simi Valley, CA,
Post Office (GAO/GGD-88-44, March 3, 1988). 

Employee-Management Relations at the Evansville, Indiana, Post Office
(GAO/GGD-87-23, Dec.  24, 1986). 

Labor Relations--Employee Management Relations at the Alhambra, CA,
Post Office (GAO/GGD-86-40, April 7, 1986). 

Labor-Management Unrest at the Salt Lake City Post Office
(GAO/GGD-83-41, Feb.  11, 1983). 

Management/Employee Relations Problems at the Bennetsville, South
Carolina, Post Office (GAO/GGD-82-35, Jan.  18, 1982). 

Employee Concerns about Working Conditions at the San Antonio, Texas,
Post Office (GAO/GGD-81-62, March 30, 1981). 

Management/Employee Relations Problems at Evansville, Indiana Post
Office (GAO/GGD-81-37, February 19, 1981). 

Improved Grievance/Arbitration (GAO/GGD-80-12, Nov.  28, 1979).