Postal Service advances pay-for-performance program

After four months of negotiations, the Postal Service and the organizations that represent its managers agreed in late July on a new pay-for-performance structure for postmasters and supervisors. Now the hard part begins-putting it in place.

Under the plan, raises for supervisors and managers will be based on three levels of criteria-corporate performance goals, facility goals and individual goals. The national and facility goals count for 35 percent of a person's raise; individual goals account for 30 percent.

The program will be launched in October, but the first round of bonuses won't come until January 2005, as first reported in the Federal Times. Raises under the program will likely range from 2.5 percent to 12 percent. Vincent Palladino, president of the National Association of Postal Supervisors, expects that most supervisors will see increases of between 4 percent and 6 percent. Nearly 80,000 managers and supervisors are covered by the plan. It does not cover craft employees.

The organizations representing managers, while optimistic about the new plan, are also closely watching how the measurement system is put in place.

"It's not going to be an easy task," said Palladino. "But I think we can get some agreement and get it put in place by October."

The intent is to ensure that each layer of goals is linked to the other, according to Paul Weatherhead, manager of pay programs at the Postal Service. Some of the measures at the corporate level include on-time delivery, productivity, consumer survey scores, reducing worker injury and illness rates and improving scores on employee satisfaction surveys. At the facility level, some of the measures include revenue for retail operations, reducing workers' compensation costs, and reducing grievances. Individual goals are still being negotiated with the management organizations.

But one of the difficulties the Postal Service faces is that some of the areas, particularly operational tasks at the facility level, have never been measured before, said Weatherhead. That has caused some concern that measures will not be totally accurate. Weatherhead said the agency will try to address those kinks as they surface. What's most important, he added, is to look at the overall intent of the program, get valid measures and improve performance.

The new system replaces the highly controversial Economic Value Added program, which the Postal Service ended last July. Created in 1996, the EVA program was designed to reward managers for increasing "economic value" and achieving certain strategic goals. Few understood how the program really worked, though, and it was often criticized for paying out bonuses at a time when the agency was losing money and raising rates.

The new plan-dubbed the National Performance Assessment-is a major improvement, said Palladino.

"This gives us a chance to make more money if we do things right, but it also ensures that we are all on the same page," he said. "We hope it will result in less micromanagement too."

Eventually, the agency hopes to create an online system where managers can track their performance on a regular basis, Weatherhead said.

The plan is consistent with recommendations made last month by the President's Commission on U.S. Postal Service. The nine-member panel suggested that the agency adopt a pay-for-performance plan for all employees. Union organizations, however, oppose such an idea. In fact, William Burrus, president of the American Postal Workers Union, the largest employee organization, recently told GovExec.com that he would fight to make sure such a proposal never sees "the light of day."

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