Watching PMG David Steiner testify before the House Subcommittee on Government Operations last week made some impressions, good and bad, and perpetuated concerns over conditions not being addressed.
The hearing was in a large room with the subcommittee leadership sitting on the top row, above many other empty rows, looking at the witnesses some distance below.
The more unusual element was not the layout, however, but the civility between the subcommittee’s leaders and with other members of the panel, and with the witnesses before them. In contrast to former PMG Louis DeJoy, David Steiner was businesslike and courteous, occasionally enjoying a moment of humor with one of the subcommittee members.
What was more concerning was that the content of the PMG’s 23 pages of written testimony, and the basis for some of his answers, reflected a disappointing level of persistent support for his predecessor’s 10-Year Plan – a document that was long on aspiration and short on honest evaluation of its feasibility.
As has been reported here before, this further suggests that the echo chamber that is USPS HQ has successfully convinced Steiner that The Plan should be preserved, if not in its tactics, at least in its basic principles, e.g., that regulation of USPS pricing is unnecessary; that the regulator is impeding creative product development; that cost control measures being taken are sufficient; and that the key to financial stability is increased revenue from higher prices.
The attitudes and operational beliefs of Louis DeJoy and his team are evident in what Steiner said, and that isn’t what ratepayers hoped for when he came aboard last year.
Observations
The chances are nil that the management bubble surrounding Steiner allows dissenting views to get much of his attention. Steiner is a smart man – he wouldn’t have reached the heights of his career if he wasn’t – but when he came to the USPS he was in new territory.
Starting with his conversations with the governors – all supporters of The Plan that they and DeJoy advanced – and later in his initial days at HQ with the executive leadership team and other senior managers – most of whom were charged with implementing The Plan – it’s unclear how much Steiner ever questioned what he was told, or sought other perspectives. Regardless, his testimony seems to suggest that his inner circle successfully filtered out anything that might cause doubts about what the erstwhile DeJoy team was saying.
Steiner still doesn’t seem to agree that the cost issue isn’t because of transportation – DeJoy’s favorite target – but with labor. There are too many people, specifically in operations, not delivery, for the declining volume of mail, and too many of them are career workers to whom the USPS has committed a fixed schedule whether needed or not. Moving as fast as possible to a lower-cost complement, and one of mostly flexible-schedule workers, should have started years ago. However, as it had done for decades, the agency’s entrenched labor team simply kept up the pattern of wage increases and job security that were adopted in much better times.
Steiner was right, however, that his agency, like any business, cannot simply cut its way to survival. It needs to increase revenue. However, as HQ thinking has been for years, simply raising prices is all that needs to be done.
There was little attention paid to the annual public service appropriation to offset the costs caused by the universal service obligation. Just $460,000,000 in 1971, if properly adjusted for inflation it could be worth about $3.75 billion annually today. Why that money is left on the table – while the USPS warns of imminent financial disaster – is puzzling. Regardless, it appeared to not be on Steiner’s radar.
What the PMG did acknowledge during his testimony was that service isn’t where it needs to be. However, unlike in his detailed descriptions of how the regulator has erred and how prices need to be raised, et cetera, he offered no comments about how he plans to make operations more productive – not just “efficient,” which has been a buzzword for cost-cutting – but tangibly, visibly better.
Degradations to true service quality – like chronically relaxed service standards, the insult to customers that is RTO, and the manufactured exceptions to service performance measurement – never were in the view of the panel members, and never mentioned by the PMG.
As we had noted in a commentary (“Regime Change”) in the previous issue, Steiner is expecting to break the old rule that doing what you always did won’t get you what you always got. The Postal Service – in all of its functions – that was run by DeJoy and company will not change so long as DeJoy’s company, their attitudes, and their beloved Plan remain.
Service
To bring the dots together, and paraphrase James Carville’s slogan in 1992, it’s service, stupid. Now, no-one is calling the PMG stupid, only pointing out that financial improvement, driven by new business and increased revenue, must be built around a simple objective: providing genuine service.
David Steiner has said – rightly – that the USPS can do whatever anyone wants, so long as they’ll pay for it. What his agency is doing now is providing poor service yet expecting businesses and other ratepayers to pay whatever prices are set. The PRC may regulate prices, but the PMG and his operational executives manage service.
As a business executive, Steiner understands value for money, and – unless his court has kept him from seeing reality – he knows that current USPS service isn’t worth the price. To fix service, he might start by replacing aspirations with action, buzzwords and performance obfuscation with honest numbers, and evidence that poor performance or self-serving excuses aren’t acceptable at any level.
When ratepayers start experiencing really better service – without the puffery of “precision, “excellence,” and the purpose of Day 0 – they’ll be willing to pay the price for it, and provide the USPS with the income Steiner wants to develop. Our simple advice – that we know will never reach him – would be to cut costs where they should be cut, get the help that Congress can and should afford, but always, always, start by providing indisputable, authentic service. That’s why the USPS exists.