Patrick Donahoe: Delivering Morale Amid USPS Cuts

How does management buoy employee morale in the face of deficits, hiring freezes, overtime cutbacks, and service reductions? It's a question many managers have been trying to answer since the U.S. financial crisis compelled businesses to scale back operations 18 months ago. Deputy Postmaster General Patrick Donahoe—who yesterday held a New York press conference on the U.S. Postal Service's proposed plan to cut back mail delivery from six days a week to five (no more Saturdays)—discussed the challenge with Bloomberg BusinessWeek's Rebecca Reisner. Edited excerpts of their conversation follow:

Rebecca Reisner: Is there any chance you won't need to make the cuts if the recession eases significantly?

Patrick Donahoe: This is not a matter of the mail coming back when the economy does. McKinsey and Boston Consulting did a survey with us and found that mail volume will have a slow, steady decline regardless. In 2006 we delivered 213 billion pieces of mail and that dropped to 177 billion in 2009. It's expected to decrease to 168 billion by the end of 2010. Last year, we took a $3.8 billion loss.

Before we get to the matter of employee morale, what about the feelings of customers who'll be deprived of their Saturday mail deliveries?

We have heard loud and clear from mail recipients that they'd rather have a service cutback than price hikes or government bailouts.

How are you presenting the five-day-a-week plan to postal employees?

What we've talked about is the fact that our finances are such that we have to take some steps to get financially healthy again. We're proposing a balanced plan whereby no one group of people—USPS workers, customers, or mailers—has to bear all of the impact. And within the USPS, no one category of employees will be singled out for more cutbacks than other categories.

So how will you be reducing the workforce to adjust to the service cutback?

This change would result in the equivalent of 40,000 jobs lost [the USPS currently has 596,000 employees], and we think we can accomplish that via retirement, overtime cuts, and hiring freezes. In the past, we've used attrition successfully. Since 2000 we've declined our head count by 200,0000—due to the steady drop in mail volume—by not replacing employees who quit or retire. In October 2009 we offered $15,000 to those who wanted to retire before the age of 55, and 21,000 people took it.

Will you be offering an incentive for early retirement this year?

We may not have to. It's a timing issue. The average age of postal employees is 53, and their retirement packages are already funded.

What's the mood of USPS employees now?

Any time business is suffering, you worry. But our people are doing a great job. They delivered the mail during all the big snowstorms in the East this winter. People look forward to seeing their letter carriers, and postal workers know there are customers waiting for medicine or checks. They feel good about providing that service. One thing that came through clearly via the surveys is that customers want to make sure the Postal Service never goes away.