oversight

U.S. Postal Service: Little Progress Made in Addressing Persistent Labor-Management Problems

Published by the Government Accountability Office on 1997-10-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

               United States General Accounting Office

GAO            Report to the Chairman, Subcommittee
               on the Postal Service, Committee on
               Government Reform and Oversight
               House of Representatives

October 1997
               U.S. POSTAL SERVICE
               Little Progress Made in
               Addressing Persistent
               Labor-Management
               Problems




GAO/GGD-98-1
                   United States
GAO                General Accounting Office
                   Washington, D.C. 20548

                   General Government Division

                   B-272446

                   October 1, 1997

                   The Honorable John M. McHugh
                   Chairman, Subcommittee on the
                     Postal Service
                   Committee on Government Reform
                     and Oversight
                   House of Representatives

                   Dear Mr. Chairman:

                   This report responds to your request that we review the Postal Service’s
                   efforts to improve employee working conditions and the overall
                   performance of the Service. These efforts, referred to in this report as
                   initiatives, reflect the Service’s attempts to try to enhance its working
                   environment. This report provides updated information related to our
                   September 1994 report1 in which we described the existence of various
                   labor-management relations2 problems in the Postal Service and made
                   recommendations for addressing such problems and improving the
                   adversarial nature of postal labor-management relations. Our objectives in
                   this report were to (1) determine the status and results of the Postal
                   Service’s efforts in improving various labor-management relations
                   problems identified in our 1994 report, including how the Service
                   implemented specific improvement initiatives; and (2) identify approaches
                   that could help the Service and its four labor unions and three
                   management associations achieve consensus on how to deal with the
                   problems we discussed in our 1994 report.


                   Since our report was issued in September 1994, little progress has been
Results in Brief   made in improving the persistent labor-management relations problems
                   that had, in many instances, resulted from autocratic management styles;
                   the sometimes adversarial attitudes of employees, unions, and
                   management; and an inappropriate and inadequate performance
                   management system. These problems have generally contributed to a
                   sometimes contentious work environment and lower productivity for the
                   Postal Service. Also, the number of employee grievances not settled at the
                   first 2 steps of the grievance process has increased from around 65,000 in
                   fiscal year 1994 to almost 90,000 in fiscal year 1996. These problems

                   1
                    U.S. Postal Service: Labor-Management Problems Persist on the Workroom Floor
                   (GAO/GGD-94-201A/B, Sept. 29, 1994).
                   2
                    “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 labor unions.



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continue to plague the Service in part because the parties involved,
including the Service, the four major labor unions, and the three
management associations, cannot agree on common approaches for
addressing the problems. This inability to reach agreement has prevented
the Service and the other seven organizations from implementing our
recommendation to develop a framework agreement that would outline
common objectives and strategies for addressing labor-management
relations problems and improving the postal workroom climate.

Since 1994, the Service and its unions and management associations have
tried to improve the climate of the postal workplace by implementing
specific improvement initiatives, such as programs for selecting and
training new postal supervisors and planning the redesign of mail delivery
routes for city letter carriers. Many postal, union, and management
association officials told us that they believed some of these initiatives
held promise for making a positive difference in the labor-management
climate. However, our review of specific improvement initiatives showed
that although some actions had been taken to implement certain
initiatives, little information was available to measure their results. In
some instances, the initiatives were only recently piloted or implemented,
and some had been discontinued. In other instances, although postal and
union officials agreed that improvements were needed, they disagreed on
approaches for implementing specific initiatives. Generally, these
disagreements have made it difficult for the Service and its unions and
management associations to move forward and work together to ensure
that the initiatives’ intended improvements could be achieved.

Improving labor-management relations at the Postal Service has been, and
continues to be, an enormous challenge and a major concern for the Postal
Service and its unions and management associations. With the significant
future challenges it faces to compete in a fast-moving communications
marketplace, the Service can ill afford to be burdened with long-standing
labor-management relations problems. We believe that in order for any
improvement efforts to achieve their maximum intended benefits, it is
important for the affected parties to agree on common approaches for
addressing labor-management relations problems. During our review, we
identified some approaches that could help the Postal Service and its
unions and management associations reach consensus on strategies for
resolving such problems. Although we recognize that achieving consensus
does not come quickly or easily, we believe that continued disagreements
on approaches for improving the postal working environment without




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             some effort to achieve common ground may lead to escalating workplace
             difficulties and hamper efforts to achieve desired improvements.


             The Postal Service is the nation’s largest civilian employer with
Background   approximately 861,000 employees as of the end of fiscal year 1996, most of
             whom process and deliver mail and provide postal products and services
             to customers, such as selling stamps and shipping parcels. According to
             the Service’s database, the total number of postal employees has increased
             from about 818,000 employees at the end of fiscal year 1993 to about
             861,000 employees at the end of fiscal year 1996, an increase of about
             5 percent. As shown in table 1, of the approximately 861,000 postal
             employees, 86 percent were career employees and 14 percent were
             noncareer employees.3




             3
              Generally, the Service has defined career employees as persons who have permanent work
             appointments and include such employees as clerks, postmasters, mail handlers, and city and rural
             letter carriers. Noncareer employees are those persons who have limited-term work appointments and
             include such employees as some data conversion operators who work at postal remote encoding
             centers and substitutes for rural carriers.



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Table 1: Composition of Postal Service
Workforce at the End of Fiscal Year                                                                 Total number of         Percent of total
1996                                     Employee functions                                         paid employees               workforce
                                         Headquarters and area offices employeesa                              11,887                         1.4
                                         Postmasters, general managers, and
                                         installation heads                                                    26,403                         3.1
                                         Supervisors and managers                                              35,035                         4.1
                                         Professional, administrative, and technical
                                         personnel                                                             10,966                         1.3
                                         Clerks and nurses                                                    269,916                     31.3
                                         Mail handlers                                                         56,182                         6.5
                                         City carriers                                                        233,964                     27.2
                                         Special delivery messengers                                             1,419                         .2
                                         Motor vehicle operators                                                 8,175                         .9
                                         Rural carriers/full-time                                              47,738                         5.5
                                         Maintenance workers                                                   43,277                         5.0
                                         Total career employees                                               744,962                     86.5
                                         Casualsb                                                              22,705                         2.6
                                         Transitional employeesc                                               31,964                         3.7
                                         Nonbargaining temporary employees                                         594                         .1
                                         Substitutes for rural carriers                                        49,730                         5.8
                                         Postmaster relief/leave replacements                                  11,446                         1.3
                                         Total noncareer employees                                            116,439                     13.5
                                         Total                                                                861,401                    100.0
                                         a
                                          This category includes employees who work in postal headquarters, at area offices in the field,
                                         and at the Service’s training facilities. The work of these employees includes such administrative
                                         functions as training, investigations, personnel matters, accounting, and marketing.
                                         b
                                          Casuals are noncareer employees with limited-term appointments who supplement the work of
                                         the career workforce. For example, casuals may be temporarily hired as clerks to perform postal
                                         work during the Christmas season.
                                         c
                                          Transitional employees are noncareer, bargaining unit employees used to fill vacated
                                         assignments, such as assignments due to be eliminated as a result of automation. The terms of
                                         appointment for these employees cannot exceed 359 calendar days for each appointment.

                                         Source: Postal Service On-Rolls and Paid Employee Statistics National Summary, Accounting
                                         Period 13, Postal Fiscal Year 1996.



                                         Most postal employees were represented by four labor unions and were
                                         called “bargaining unit” or “craft” employees. As shown in table 2, the four
                                         unions that represented the interests of most bargaining unit employees
                                         included (1) the American Postal Workers Union (APWU), (2) the National
                                         Association of Letter Carriers (NALC), (3) the National Postal Mail Handlers




                                         Page 4                              GAO/GGD-98-1 Postal Service Labor-Management Relations
                                      B-272446




                                      Union (Mail Handlers), and (4) the National Rural Letter Carriers’
                                      Association (Rural Carriers). The two largest unions are APWU and NALC.
                                      Although union membership is voluntary, approximately 80 percent of
                                      those represented by the four major unions have joined and pay dues.4

Table 2: Organizations Representing
Career Bargaining Employees as of                                                                               Number of
September 1996                        Organizations and employee functionsa                                    employeesb          Percent
                                      American Postal Workers Union, AFL-CIO, (APWU)
                                      represents clerks, maintenance workers, special delivery
                                      messengers, and motor vehicle operators.                                      322,599                  49
                                      National Association of Letter Carriers, AFL-CIO, (NALC)
                                      represents city letter carriers.                                              233,964                  35
                                      National Postal Mail Handlers Union (Mail Handlers), a
                                      division of the Laborers’ International Union of North
                                      America, AFL-CIO, represents mail handlers.                                    56,182                   9
                                      National Rural Letter Carriers’ Association (Rural Carriers)
                                      represents rural carriers.                                                     47,738                   7
                                      Total                                                                         660,483               100
                                      a
                                       In addition to the four major labor unions, two other unions represent specific craft employees.
                                      According to a postal official, the 2 unions include the D.C. Nurses Association (188 nurses) and
                                      the Federation of Postal Police Officers (1,432 officers), which together represent less than
                                      1 percent of the Postal Service’s workforce.
                                      b
                                       The number of employees shown is the number of career craft employees represented and not
                                      the number of union members. Also, these 4 unions represented a total of 81,694 noncareer
                                      employees, including transitional employees and substitutes for rural carriers. These employees
                                      are not included in the table.

                                      Source: Postal Service On-Rolls and Paid Employee Statistics National Summary, Accounting
                                      Period 13, Postal Fiscal Year 1996.



                                      Also, within the Postal Service, supervisors, postmasters, and other
                                      managerial nonbargaining personnel are represented by three
                                      management associations, including (1) the National Association of Postal
                                      Supervisors (NAPS), (2) the National Association of Postmasters of the
                                      United States (NAPUS), and (3) the National League of Postmasters (the
                                      League). Unlike craft unions, management associations cannot bargain
                                      with postal management. However, the Postal Service is required under
                                      the Postal Reorganization Act (PRA) of 1970 to consult with and recognize
                                      these associations. NAPS represents all supervisors and lower level
                                      managers, except those at headquarters and area offices, for a total of


                                      4
                                       In response to a comment by the Mail Handlers union, we obtained estimated figures from union
                                      officials on employees who had joined and paid dues to each of the four labor unions. The officials
                                      estimated the following percentages of union members who had paid dues as of September 1996:
                                      81 percent for APWU, 83 percent for Rural Carriers, 85 percent for Mail Handlers, and 92 percent for
                                      NALC.



                                      Page 5                              GAO/GGD-98-1 Postal Service Labor-Management Relations
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about 35,000 employees as of the end of fiscal year 1996. Also, as of the
end of fiscal year 1996, approximately 26,000 postmasters and installation
heads were represented by NAPUS and the League. Since 1970, many
postmasters have belonged to both organizations, which address issues of
interest to all postmasters.

In September 1994, we reported that various labor-management relations
problems persisted on the workroom floor of postal facilities. We found
that such problems were long-standing and had multiple causes that were
related to adversarial employee, management, and union attitudes;
autocratic management styles; and inappropriate and inadequate
performance management systems. In part, these problems were identified
through our analysis of the results of an employee opinion survey
administered by the Service in 1992 and 1993, in which employees
expressed their opinions about its strengths and shortcomings as an
employer.5 Generally, craft employees believed that managers and
supervisors did not treat employees with respect or dignity and that the
organization was insensitive to individual needs and concerns. The
concerns of supervisors and craft employees who worked in mail
processing plants focused mainly on (1) the insensitive treatment of
employees who were late or absent from work; (2) the lack of employee
participation in decisions affecting their work; and (3) the perception that
some employees were not held accountable for their performance, leading
to perceptions of disparate treatment. Also, managers, supervisors, and
craft employees expressed dissatisfaction with the Service’s performance
management and recognition and reward systems because they generally
believed that (1) performing their jobs well just got them more work,
(2) high levels of performance were not adequately recognized or
rewarded, and (3) poor performance was too often tolerated.

In 1994, we reported that these problems had not been adequately dealt
with, mainly because labor and postal management leadership at the
national and local levels were unable to work together to find solutions.
We also reported that the effects of such problems were multiple and
included poor quality of work life for postal employees and higher mail
processing and delivery costs for the Postal Service.

Furthermore, in our 1994 report, we stated that despite the efforts of the
Service and its major labor unions and management associations, attempts
to improve labor-management relations on the workroom floor had met

5
 The survey involved mailing a questionnaire to all postal employees to determine their satisfaction on
12 performance dimensions, such as employee treatment and participation.



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                         with limited success. We recommended in the report that the Service take
                         various actions to try to improve employees’ working conditions and its
                         overall performance. Generally, the recommendations involved some of
                         the following provisions.

                     •   Improve labor-management cooperation by having the Service, the four
                         unions, and three management associations develop and sign a long-term
                         (at least 10 years) framework agreement that would establish the overall
                         objectives and approaches for demonstrating improvements in the
                         workplace climate. Also, to help ensure that such an agreement can be
                         reached in a timely manner, consider arranging for outside assistance to
                         learn alternative negotiation techniques that could help resolve disputes
                         outside of binding arbitration.
                     •   Improve the workplace environment by training supervisors to promote
                         teamwork, recognize and reward good performance, and deal effectively
                         with poor performers; and by training employees in team participation
                         efforts that are focused on serving the customer through the continuous
                         improvement of unit operations.
                     •   Establish employee incentives by recognizing and rewarding employees
                         and work units on the basis of performance.
                     •   Improve mail processing and delivery operations by testing various
                         approaches for improving working relations, operations, and service
                         quality and evaluating the results of such tests.


                         The objectives of our review were to (1) determine the status and results
Objectives, Scope,       of the Postal Service’s progress in improving various labor-management
and Methodology          relations problems identified in our 1994 report, including how the Service
                         implemented 10 specific improvement initiatives; and (2) identify any
                         approaches that could help the Service and its unions and management
                         associations achieve consensus on how to deal with the problems we
                         discussed in our 1994 report.

                         To identify the improvement initiatives mentioned in the first objective, we
                         reviewed various GAO and postal documents, including our 1994 report, the
                         unions’ collective bargaining agreements, and documents prepared by the
                         Service that described the goals and results of specific improvement
                         initiatives. Using this information, we developed a list of 32 initiatives that
                         the Service, the 4 labor unions, and 3 management associations had
                         piloted or implemented to try to improve the postal workplace
                         environment.




                         Page 7                      GAO/GGD-98-1 Postal Service Labor-Management Relations
B-272446




Given time and resource limitations, we determined that detailed
follow-up on all 32 initiatives would be impractical. Thus, starting with the
list of 32 initiatives, we established criteria that we believed could help us
select specific initiatives from the list that warranted additional followup
to determine their status and results. Generally, such criteria were based
on (1) the results of discussions on the 32 initiatives with the Postal
Service and its unions and management associations, and (2) the extent to
which we determined that various initiatives had the potential to address
the recommendations in our 1994 report.

We discussed the list of 32 initiatives with officials who represented the
Service and its unions and management associations to ensure that we had
(1) appropriately identified all the initiatives that should be included on
our list, and (2) described the initiatives as thoroughly and accurately as
possible. The Service and the unions and management associations
generally agreed that our list of 32 initiatives included all known postal
improvement efforts that had been piloted or implemented. Also, these
organizations provided us with additional comments and perspective on
the descriptions of specific initiatives.

We reviewed the recommendations in our 1994 report to determine the
extent to which the 32 initiatives had the potential to address the
recommendations. Using the information about the initiatives that we
obtained from our discussions with the Postal Service, the unions, and the
management associations, we focused our work efforts on 10 of the 32
initiatives that in our judgment appeared to have significant potential to
address some of the Service’s labor-management relations problems that
we identified, such as the difficulties experienced by supervisors and
employees on the workroom floors of various postal facilities.

To determine the status and results of the 10 initiatives, we visited the
national Postal Service headquarters in Washington, D.C., where we
interviewed key postal officials who were responsible for establishing,
implementing, and monitoring various labor-management improvement
initiatives. These officials included the Vice-Presidents responsible for
Labor Relations, Human Resources, and Quality. We also interviewed
program officials in these offices to obtain more detailed information on
the goals and results of specific initiatives.

Furthermore, to obtain information on status and results from officials
involved in implementing the 10 initiatives, we spoke with various postal
field officials in 4 area offices—the Mid-Atlantic, Northeast, Southwest,



Page 8                      GAO/GGD-98-1 Postal Service Labor-Management Relations
B-272446




and Western areas. These locations were selected because various
initiatives had recently been piloted or implemented in these areas. Also,
our staff from the Dallas and Denver regional offices were available to visit
these areas and discuss such initiatives in person with responsible postal
officials. At these locations, we interviewed the officials who were most
knowledgeable about labor-management relations activities in the area
offices, including the area vice-presidents, the managers for human
resources, and labor relations specialists. Also, within the four areas, we
interviewed postal officials responsible for (1) processing and delivering
mail, which included the managers of processing and distribution plants
and managers of remote encoding centers (RECs);6 and (2) providing
services to postal customers, which included district office managers.
These officials were close to the activities performed on the workroom
floor of postal facilities, which is where the labor-management relations
problems that we identified in our 1994 report had become evident.

In addition, to address the first objective, we interviewed various union
and management association representatives, including national leaders
located in the Washington, D.C., area and local representatives in the four
area offices we visited. We interviewed these officials to gain their views
and insights on (1) the reasons for the persistence of various
labor-management relations problems; and (2) the Service’s efforts to
implement the 10 improvement initiatives, some of which were intended to
address such problems. At the national level, we spoke with the presidents
of APWU and NALC as well as the presidents of the Mail Handlers and Rural
Carriers unions. In addition, we interviewed the presidents of NAPS, NAPUS,
and the League. At the local level, we interviewed various union
representatives, including national business agents responsible for union
activities in the states covered by the four area offices, local union
presidents, and shop stewards. We also spoke with local representatives of
the three management associations.

As mentioned in the first objective, to determine the overall extent to
which the Postal Service and its unions and management associations had
progressed in addressing persistent labor-management relations problems,
we obtained information on various events that had occurred since the
issuance of our 1994 report. Specifically, this information included (1) the
results of the most recent contract negotiations between the Service and
each of the four major labor unions; (2) data related to postal employee
grievances; and (3) efforts by the Service and the unions and management


6
 Postal remote encoding centers (RECs) are installations responsible for barcoding mail that cannot be
read by the Service’s automated mail processing equipment.



Page 9                              GAO/GGD-98-1 Postal Service Labor-Management Relations
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                      associations to address the recommendations in our 1994 report, such as
                      the Postmaster General’s (PMG) invitation to the other seven organizations
                      to attend a labor-management relations summit meeting and the
                      implementation of various improvement initiatives, including their status
                      and results.

                      To address the second objective, we monitored congressional activities
                      that occurred since the issuance of our 1994 report, including the annual
                      oversight hearings on the Postal Service’s operations required by PRA. In
                      addition, we reviewed pending legislation intended to reform postal laws
                      that was developed by the Chairman of the Subcommittee on the Postal
                      Service, House Committee on Government Reform and Oversight, and
                      introduced in June 1996, and again in January 1997 as H.R. 22. We also
                      reviewed the sections of the Government Performance and Results Act of
                      1993 (referred to as the Results Act) related to the Postal Service, as well
                      as GAO and congressional documents that provided guidance on
                      implementing the requirements of the Results Act. Finally, to obtain more
                      information on how the Service was using a third party to serve as a
                      facilitator in labor-management discussions as was recommended in our
                      1994 report, we interviewed the Director of the Federal Mediation and
                      Conciliation Service (FMCS).

                      We requested comments on a draft of this report from the PMG; the
                      presidents of the four labor unions (APWU, NALC, Mail Handlers, and Rural
                      Carriers) and the three management associations (NAPS, NAPUS, and the
                      League); and the Director of FMCS. Of the nine organizations from which
                      we requested comments, six provided written comments, including the
                      Service, the four unions, and one of the three management associations
                      (the League). These written comments are reprinted in appendixes II
                      through VII. The remaining three organizations—FMCS, NAPS, and
                      NAPUS—provided oral comments. The comments are discussed in
                      appropriate sections throughout the report and at the end of the report.
                      We conducted our review from June 1996 through May 1997 in accordance
                      with generally accepted government auditing standards.


                      Since our 1994 report was issued, the Postal Service and its unions and
Little Progress Has   management associations have made little progress in improving
Been Made in          long-standing labor-management relations problems. These problems have
Improving             generally contributed to a sometimes contentious work environment and
                      lower productivity. Such problems may make it more difficult for these
Labor-Management
Relations Problems

                      Page 10                    GAO/GGD-98-1 Postal Service Labor-Management Relations
B-272446




organizations to work together to improve the Service’s performance so
that it can remain competitive in a dynamic communications market.

According to Postal Service information, in fiscal years 1995 and 1996, the
Service improved its overall financial performance as well as its mail
delivery services, particularly in the delivery time of overnight First-Class
Mail. For example, in fiscal year 1996, the Service reported a net income of
about $1.6 billion, which was second highest only to its fiscal year 1995 net
income of about $1.8 billion. The Service believed that in large part,
improved control over its expenses, including savings from automation
efficiencies and a restructuring and refinancing of its long-term debt,
contributed to the increased income. In addition, the Service reported that
its national average of on-time delivery of overnight First-Class Mail
reached an all-time high of 89 percent for fiscal year 1996 compared to
86 percent for fiscal year 1995.7

Although the Service had made financial and First-Class Mail delivery
improvements, other data indicated that in some areas, its performance
had not improved. For example, the rate of change in the Service’s overall
productivity, known as total factor productivity (TFP), has decreased in
each of the last 3 fiscal years. TFP includes various performance indicators,
such as usage rates of automated mail processing equipment, the growth
in the overall postal delivery network, the development of postal facilities,
and changes in presorted and prebarcoded mail volumes. Additionally, for
fiscal year 1996, the on-time delivery of 2-day and 3-day mail—at 79 and
80 percent, respectively—did not score as high as overnight delivery. Such
performance has raised a concern among some postal customers that the
Service’s emphasis on overnight delivery is at the expense of 2-day and
3-day mail. Also, although its mail volume continues to grow, the Service is
concerned that customers increasingly are turning to its competitors or
alternative communications methods. In 1996, mail volume increased by
about one-half of the anticipated increase in volume. As discussed in our
1994 report, the Service recognized that it must focus on improving
customer satisfaction to enhance revenue and retain market share. Also,
the Service recognized that in all likelihood, customers will not remain
satisfied in an environment where persistent labor-management relations
problems continue to cause employee dissatisfaction.



7
 The Postal Service currently uses a measurement known as the External First-Class Measurement
System (EXFC) as a means of indicating how well it is serving customers. The quarterly EXFC,
administered by Price Waterhouse, measures the delivery time of First-Class Mail from deposit to
delivery (collection box to mail slot).



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                             Our recent work has shown little progress within the last few years on
                             addressing long-standing labor-management relations problems, and the
                             sometimes adversarial relationships between postal management and
                             union leadership at the national and local levels have persisted. These
                             relationships have generally been characterized by (1) a continued
                             reliance by three of the four unions on arbitration to settle their contract
                             negotiation impasses with the Service, (2) a significant rise not only in the
                             number of grievances that have been appealed to higher levels but also in
                             the number of grievances awaiting arbitration, and (3) the inability of the
                             Service and the other seven organizations to convene a labor-management
                             relations summit to discuss problems and explore solutions. Various
                             postal, union, and management association officials whom we interviewed
                             said that the problems persist primarily because the leaders of these
                             organizations have been unable to agree on common approaches to
                             solving the problems. As a result, our 1994 recommendation for
                             establishing a framework agreement of common goals and approaches
                             that could help cascade positive working principles and values from top
                             postal, union, and management association officials down throughout the
                             Service’s approximately 38,000 postal facilities nationwide has yet to be
                             implemented.


Arbitration Used to Settle   In our 1994 report, we discussed the occurrence of past contract
Most Contract                negotiations, which generally took place at the national level between the
Negotiations                 Service and the four labor unions every 3 or 4 years. Since as far back as
                             1978, interest arbitration8 has been used to resolve bargaining deadlocks
                             that occurred during contract negotiations for three of the four unions,
                             including APWU, NALC, and Mail Handlers. Specifically, interest arbitration
                             occurred in 1978, 1984, and 1990 with APWU and NALC, and in 1981 with Mail
                             Handlers.

                             The most recent negotiations occurred for contracts that expired in
                             November 1994 for APWU, NALC, and Mail Handlers, during which interest
                             arbitration was used to settle bargaining deadlocks. In the case of the
                             Rural Carriers, whose contract expired in November 1995, negotiations




                             8
                              The Postal Reorganization Act (PRA) of 1970 provided that labor unions could collectively bargain
                             with the Postal Service to establish compensation, benefits, and other terms and conditions of
                             employment for the employees they represent. Unlike employees in the private sector, postal
                             employees are prohibited from striking. Thus, PRA established procedures for interest arbitration that
                             are designed to resolve bargaining impasses that may occur during discussions over the terms of a new
                             contract.



                             Page 12                             GAO/GGD-98-1 Postal Service Labor-Management Relations
                         B-272446




                         resulted in the establishment of a new contract without the use of interest
                         arbitration.9

                         With APWU, NALC, and the Mail Handlers, the issues that arose in interest
                         arbitration over their most recent contracts were similar to issues that
                         have surfaced at previous contract negotiations. The issues focused
                         primarily on the unions’ push for wage and benefit increases and job
                         security, in contrast to postal management’s push for cost-cutting and
                         flexibility in hiring practices. According to a postal official, such
                         negotiations over old issues that continually resurface have at times been
                         bitter and damaging to the ongoing relationship between the Service and
                         union leadership at the national level. Union officials also told us that a
                         new issue—the contracting out of specific postal functions, also known as
                         outsourcing—has caused the unions a great deal of concern, because they
                         believe that it could affect job security for employees.

                         In his comments on a draft of this report, the president of the Rural
                         Carriers union stated that for the most recent collective bargaining
                         agreement, the negotiating team, including postal and union
                         representatives, held joint training sessions across the country and invited
                         various state and local postal management and craft representatives to
                         participate in the training. The Rural Carriers president believed that this
                         training helped the parties to better negotiate and reach agreement on the
                         language that was included in the most recent contract, which in this
                         instance eliminated the need for the use of an outside arbitrator. Also, the
                         president believed that the training helped provide both union and postal
                         management officials a more thorough understanding of the contract’s
                         requirements.


Grievances Continue to   In our September 1994 report, we discussed the problems associated with
Increase                 the grievance/arbitration process, which is the primary mechanism for
                         craft employees to voice work-related concerns. As defined in postal labor
                         agreements, a “grievance” is “a dispute, difference, disagreement, or
                         complaint between the parties related to wages, hours, and conditions of
                         employment.” In our 1994 report, the problems we described included
                         (1) the high number of grievances being filed and the inability of postal
                         supervisors or union stewards to resolve them at the lowest organizational
                         level possible and (2) the large backlog of grievances awaiting arbitration.



                         9
                          The rural carriers have had a more cooperative relationship with the Postal Service and generally
                         have been able to negotiate contracts without arbitration.



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The process for resolving postal employees’ grievances is similar to that
used in many private sector and other public organizations. Generally,
according to labor relations experts, a process that is working effectively
would result in most disputes being resolved quickly at the lowest
organizational level, that is, by the supervisor, employee, and union
steward who represents the employee’s interests. Employees as well as
the four postal unions that represent them can initiate grievances.

Depending on the type of grievance, the process may involve up to 4 or 5
steps, and each step generally requires the involvement of specific postal
and union officials. For instance, at each of the first 3 steps in the process,
the parties that become involved include lower to higher union and postal
management level officials in their respective organizations, such as post
offices, mail processing and distribution centers, and area offices. Step 4 in
the grievance process occurs only if either the Service or the union
believes that an interpretation of the union’s collective bargaining
agreement is needed, in which case, national level postal and union
officials would become involved. The fifth and final step in the grievance
process involves outside binding arbitration by a neutral third party.

Generally, at each step in the process, the involved parties are to explore
and discuss the grievance to obtain a thorough understanding of the facts.
During any of the first 4 steps that occur before arbitration, the grievance
may be settled by the parties. If the grievance is not settled, the Service
makes a decision in favor of either postal management or the employee. If
the Service denies the grievance (i.e., makes a decision in favor of
management), the employee or union steward can elevate the grievance to
the next higher step in the process until the last step, which concludes the
process with a final and binding decision by a neutral arbitrator. Table 3
briefly describes the specific steps of the 5-step process and the key
parties involved. A more detailed description of the grievance/arbitration
process is included in appendix I.




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                                       B-272446




Table 3: Brief Descriptions of Steps
and Key Parties Involved in the        Step number      Brief description of step               Key parties involved
Grievance/Arbitration Process          1                Oral discussion of grievance            Employee or union steward, and
                                                        occurs.                                 supervisor
                                       2                If grievance was denied at step 1,      Union steward or representative
                                                        a written grievance is filed.           and installation head or designee
                                                                                                (e.g., postmaster, plant manager)
                                       3                If grievance was denied at step 2, Union area representative and area
                                                        a written appeal of the grievance is office human resources manager or
                                                        filed.                               other designated area-level postal
                                                                                             official
                                       4                Written decision interpreting the       Representatives of national union
                                                        union’s national collective             and postal headquarters
                                                        bargaining agreement is made by
                                                        the Service (if either the Service or
                                                        union believes that such
                                                        interpretation is needed).a
                                       5                Arbitration of grievance is decided     Neutral arbitrator
                                                        (final and binding decision).
                                       a
                                       This step may not occur with every grievance.

                                       Source: U.S. Postal Service: Labor-Management Problems Persist on the Workroom Floor
                                       (GAO/GGD-94-201A/B, Sept. 29, 1994).



                                       In our 1994 report, we highlighted issues associated with the
                                       grievance/arbitration process, including the high number of grievances
                                       that had been 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
                                       1994, a total of 65,062 grievances were not settled at the steps 1 and 2
                                       levels and were appealed at the step 3 level, which involved postal
                                       management and union officials at the area office level. According to the
                                       Service, this number increased to 73,012 in fiscal year 1995 and 89,931 in
                                       fiscal year 1996.

                                       As indicated in figure 1, in fiscal year 1996, the average rate of step 3
                                       grievances for every 100 craft employees had risen to 13, compared to
                                       fiscal year 1994, when the average rate was 10 step 3 grievances for every
                                       100 craft employees.




                                       Page 15                           GAO/GGD-98-1 Postal Service Labor-Management Relations
                                        B-272446




Figure 1: Average Rate of Postal
Service Grievances Appealed to Step 3
Per 100 Craft Employees During Fiscal   Cases per 100 employees appealed to step 3
Years 1994 Through 1996
                                        14
                                                                                                                            13

                                        12
                                                                                           11

                                                           10
                                        10


                                             8


                                             6


                                             4


                                             2


                                             0
                                                          1994                            1995                            1996

                                                        Fiscal years

                                        Note: Step 3 grievances are grievances that have been appealed by the unions to the area level
                                        because they could not be resolved at the plant or district levels.

                                        Source: U.S. Postal Service.




                                        Also, figure 2 indicates that according to Service data, increases had
                                        occurred in the number of grievances that were awaiting arbitration by a
                                        third-party arbitrator, also referred to as backlogged grievances.10 Figure 2
                                        shows that the number of backlogged grievances had increased from
                                        36,669 in fiscal year 1994 to 69,555 in fiscal year 1996, an increase of about
                                        90 percent.




                                        10
                                          For this report, the term backlog is used to describe only those grievances awaiting arbitration.



                                        Page 16                               GAO/GGD-98-1 Postal Service Labor-Management Relations
                                        B-272446




Figure 2: Postal Service Grievances
Awaiting Arbitration for Fiscal Years
1994 Through 1996                       Number of cases awaiting arbitration

                                        80,000

                                                                                                                     69,555


                                        60,000


                                                                                        48,469


                                        40,000             36,669




                                        20,000




                                             0
                                                            1994                        1995                          1996
                                                          Fiscal years

                                        Note: These figures include backlogged grievances for which no arbitration decision had been
                                        made by the end of the fiscal year.

                                        Source: U.S. Postal Service.




                                        Figure 3 shows that in fiscal year 1996, the average rate of grievances
                                        awaiting arbitration had risen to 10 grievances per 100 craft employees, an
                                        increase from the average rate of 6 grievances per 100 craft employees in
                                        fiscal year 1994.




                                        Page 17                            GAO/GGD-98-1 Postal Service Labor-Management Relations
                                      B-272446




Figure 3: Average Rate of Postal
Service Grievances Awaiting
Arbitration Per 100 Craft Employees   Cases per 100 employees awaiting arbitration
for Fiscal Years 1994 Through 1996    14


                                      12


                                                                                                                   10
                                      10



                                       8
                                                                                      7
                                                        6
                                       6


                                       4


                                       2


                                       0
                                                      1994                           1995                         1996
                                                    Fiscal years

                                      Note: These figures include backlogged grievances for which no arbitration decision had been
                                      made by the end of the fiscal year.

                                      Source: U.S. Postal Service.




                                      Generally, the postal management and union officials we interviewed said
                                      that the total volume of grievances was too high. However, the views of
                                      postal and union officials differed on the causes of this high grievance
                                      volume. These officials told us that their views had not changed
                                      significantly since we issued our 1994 report. Generally, the officials
                                      tended to blame each other for the high volume of grievances being filed
                                      and the large number of backlogged grievances awaiting arbitration.

                                      In 1994, we reported that from postal management’s perspective,
                                      grievances have always been high because union stewards flooded the
                                      system with frivolous grievances to demonstrate that they were executing
                                      their responsibility to represent employees’ interests. Also, a postal official
                                      told us that he attributed the high grievance rate to what he termed an
                                      overall “entitlement mentality” on the part of craft employees who
                                      believed that they were entitled to file grievances.




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                        B-272446




                        In contrast, union officials told us that postal management was largely
                        responsible for the huge volume of backlogged grievances. One union
                        official told us that the key problem was not in the filing of grievances by
                        employees but in the inability of lower level postal officials to settle
                        disputes, especially at steps 1 and 2. This situation has often resulted in
                        many grievances being escalated to a higher decisionmaking level and has
                        added to the delays in obtaining such decisions. Also, an APWU official
                        explained that postal management is generally reluctant to settle
                        grievances awaiting arbitration because the backlog benefits postal
                        management. The official told us that postal management can continue to
                        violate the APWU labor agreement with impunity as long as grievances sit in
                        the backlog awaiting an arbitration decision. In his comments, the
                        president of the Rural Carriers union stated that he strongly encourages
                        union members to file only meritorious grievances.


Summit Meeting on       The Postal Service and its unions and management associations have been
Labor-Management        unsuccessful in their attempts to convene a labor-management relations
Relations Has Not Yet   summit that was proposed by the PMG over 2 years ago. In November 1994,
                        the Subcommittee on Federal Services, Post Office, and Civil Service of
Occurred                the Senate Committee on Governmental Affairs held a hearing on
                        labor-management relations in the Postal Service that in large part focused
                        on the information in our September 1994 report. Various witnesses
                        testified at the hearing, including the PMG and the national leaders of APWU,
                        Mail Handlers, Rural Carriers, and NAPS. The PMG extended an invitation to
                        the leaders of the four unions and three management associations to join
                        Service officials in a labor-management relations summit at which postal,
                        union, and management association leaders could explore our
                        recommendations for improving the workroom climate and determine
                        appropriate actions to be taken.

                        The responses from the other seven organizations to the PMG’s invitation
                        were mixed. For instance, around January 1995, the leaders of the three
                        management associations and the Rural Carriers union accepted the
                        invitation. However, the union leaders for APWU, NALC, and Mail Handlers
                        did not. They said they were waiting until the contract negotiations were
                        completed before making a decision on the summit. At the time the
                        invitation was extended, the contracts for these three unions had recently
                        expired, and contract negotiations had begun. After all negotiations were
                        completed for the three unions in April 1996, they agreed to participate in
                        the summit.




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Given the difficulties initially encountered by the Service in trying to
convene a summit, in February 1996, the Postal Service requested the
Director of the Federal Mediation and Conciliation Service (FMCS) to assist
the Service by providing mediation services in helping to set up the
summit meeting. Also, in March 1996, the Chairman of the Subcommittee
on Postal Service, House Committee on Government Reform and
Oversight, encouraged the FMCS Director to assist the Postal Service by
providing such services.

According to a postal official, in September and December 1996, the FMCS
Director facilitated two presummit meetings that involved representatives
from the Service, APWU, and NALC. In January 1997, another meeting was
held that involved only the Service, APWU, and NALC officials. Although
postal and union officials declined to reveal the specific issues that were
discussed at the presummits, they told us that such issues as
performance-based compensation, outsourcing of specific postal
functions, and grievance resolution will continue to be major concerns.

Also, in March 1997, the Director of FMCS told us that another presummit is
currently being scheduled to provide the other five affected parties an
opportunity to discuss similar issues with the Service. However, as of
May 1997 when we completed our review, no summit involving all eight of
the parties had taken place, nor was one scheduled.

In his comments on a draft of this report, the Director of FMCS provided us
updated information on the presummit and summit meetings. APWU, NALC,
Rural Carriers, and the League also provided us their comments on the
presummit and summit meetings. The Director of FMCS told us that in
addition to the presummit meetings held in September and December 1996
with the Service, APWU, and NALC, another presummit meeting was held in
June 1997, which was attended by officials from FMCS, the Service, the Mail
Handlers and the Rural Carriers unions, NAPS, NAPUS, and the League. The
purpose of the presummit was similar to the purpose of the presummit
meetings previously held with APWU and NALC, which was to (1) discuss
information on labor-management relations problems that was obtained
by an outside contractor through interviews with various postal, union,
and management association officials; and (2) determine the next steps in
attempting to organize a summit meeting that would involve the Service,
the four major labor unions, and the three management associations.
Generally, the Director believed that the presummit meeting went well and
that the stage is now set for what he envisions will be a summit meeting
that should provide the eight organizations with a forum for openly



Page 20                    GAO/GGD-98-1 Postal Service Labor-Management Relations
                         B-272446




                         discussing the status of labor-management relations and the steps that can
                         be taken to help resolve problems. He also told us that discussions are
                         currently being held with the eight organizations on proposed dates for the
                         summit meeting.

                         The president of APWU told us that the prospects of a summit meeting
                         being convened were not improved when the Service unexpectedly
                         announced its decision to contract out some Priority Mail transportation
                         and processing services to Emery Worldwide Airlines.11 According to the
                         president of APWU, after one of the presummit meetings, the PMG pledged
                         full communication concerning the Service’s business plans. However,
                         APWU stated that it was not consulted about this decision before it was
                         finalized, and its representatives were disappointed because they believed
                         that the Service did not solicit their views on the merits of such a decision.
                         The president of NALC said that although a summit meeting has not yet
                         been convened, GAO should not use this fact as an indicator of the extent to
                         which labor-management relations problems exist. NALC commented that
                         one of the reasons the summit meeting has not yet occurred was because
                         the timing of the PMG’s suggestion for a summit in November 1994 was not
                         appropriate, given that sensitive and difficult collective bargaining
                         negotiations were about to begin. NALC also stated that some presummit
                         meetings have already been held, which could achieve some positive
                         results.

                         In its comments, the Rural Carriers union pointed out that it was the first
                         organization to accept the PMG’s invitation soon after it was first proposed.
                         Like NALC, the League also commented that the PMG’s attempts to convene
                         a summit with all the employee organizations were thwarted by contract
                         negotiations, and since 1994, a summit with the participation of all four
                         unions and three management associations simultaneously has failed to
                         happen.


                         Since our 1994 report was issued, the Postal Service and the other seven
Status and Results of    organizations have continued in their efforts to address long-standing
Initiatives to Improve   labor-management problems by taking actions to implement specific
Labor-Management         improvement initiatives, such as the program for selecting and training
                         new postal supervisors, known as the Associate Supervisor Program (ASP).
Relations                Although many postal, union, and management association officials we
                         spoke with believed that some of these initiatives held promise for making

                         11
                           The Service recently entered into a $1.7 billion contract with Emery Worldwide Airlines to provide
                         transportation services, including trucking and airline services, to help move the Service’s Priority
                         Mail, which the Service attempts to deliver within 2 to 3 days.



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                                          B-272446




                                          a positive difference in the labor-management relations climate, little
                                          information was available to measure the results of various initiatives.

                                          For the 10 initiatives that we selected for follow-up, table 4 includes brief
                                          descriptions of the initiatives, identifies the organizations who participated
                                          in the implementation of the initiatives, and indicates the
                                          recommendations in our 1994 report to which each initiative is related.


Table 4: List of 10 Selected Initiatives, Their Major Participants, and Related 1994 GAO Recommendations
Initiative                          Brief description                Actual/potential participants GAO recommendation(s)
Associate Supervisor Program    A 16-week training program that    —Postal Service                 Provide for the selection and
(ASP)                           was established in 1994 and        —APWU, NALC,a Mail              training of postal supervisors.
                                was designed to prepare            Handlers, and Rural Carriers
                                candidates to assume postal        —NAPS, NAPUS, and the
                                supervisory positions.             League
New performance-based           A revised compensation and    —Postal Service                      Provide a system of incentives
compensation system for         bonus system established in   —NAPS, NAPUS, and the                for recognizing and rewarding
executives, managers, and       1995 that was intended to     League                               employees based on corporate
supervisors                     provide postal executives,                                         and unit performance.
                                managers, some supervisors,
                                and some postmasters with pay
                                increases and bonuses that
                                more closely aligned each
                                individual’s performance with
                                the performance of his or her
                                work unit and the overall
                                performance of the Service.
CustomerPerfect!sm              A process begun by the Service     —Postal Service                 Develop common goals and
                                in 1995 to establish a             —APWU, NALC, Mail Handlers,     strategies, and
                                Service-wide system of             and Rural Carriers              test approaches at pilot sites for
                                continuous improvement for         —NAPS, NAPUS, and the           improving postal operations
                                conducting its business of         League                          and service quality.
                                processing and delivering mail     —Employees represented by
                                and providing postal products      the D.C. Nurses Association
                                and services to its customers.     and the Federation of Postal
                                                                   Police Officers
                                                                   —All other postal employees
                                                                   not represented by unions or
                                                                   management associations.
Summit meeting                  The PMG’s invitation, extended     —Postal Service             Establish a framework
                                in November 1994, to the           —APWU, NALC, Mail Handlers, agreement to develop common
                                leaders of the four labor unions   and Rural Carriers          goals and strategies.
                                and three management               —NAPS, NAPUS, and the
                                associations to establish a task   League
                                force whose purpose would be
                                to try to address the
                                labor-management relations
                                problems discussed in our 1994
                                report.
                                                                                                                         (continued)



                                          Page 22                           GAO/GGD-98-1 Postal Service Labor-Management Relations
                                         B-272446




Initiative                     Brief description                Actual/potential participants   GAO recommendation(s)
Delivery Redesign              A program begun in 1995 that     —Postal Service                 Develop and test approaches
                               was designed to establish        —NALC                           for improving mail delivery by
                               appropriate changes to the                                       providing for greater employee
                               system by which city letter                                      independence in sorting and
                               carriers, represented by NALC,                                   delivering mail, greater
                               sort and deliver mail, which                                     incentives for early completion
                               would eventually serve as the                                    of work, and a system of
                               basis for compensating these                                     accountability for meeting
                               carriers.                                                        delivery schedules.
Labor-management cooperation   A 1993 memorandum of              —Postal Service                Establish a framework
memorandum                     understanding established         —APWU                          agreement to develop common
                               between the Service and APWU                                     goals and strategies.
                               to establish principles of mutual
                               commitment that would serve
                               as the basis for their increased
                               cooperation throughout the
                               Service.
Crew chief                     A pilot program established     —Postal Service                  Develop and test approaches
                               between the Service and APWU —APWU                               for improving mail processing
                               through the 1990 collective                                      operations through the use of
                               bargaining process under                                         self-managed work units.
                               which bargaining employees
                               would be allowed to assume
                               leadership roles in work units.
Mediation of grievances        A process established between —Postal Service                    Develop and test approaches
                               the Service and APWU through —APWU                               for improving working relations
                               the 1994 collective bargaining                                   at postal pilot sites.
                               process under which trained
                               mediators from both
                               organizations would work
                               together to try to resolve
                               employees’ grievances at the
                               lowest possible level.
Employee Involvement (EI)      A program established through —Postal Service                    Train employees and hold them
                               contract negotiations with NALC —NALC                            accountable for working as
                               in 1981 that was intended to                                     members of work teams,
                               end or alleviate the adversarial                                 focusing on serving the
                               relationship on the workfloor.                                   customer, and participating in
                                                                                                efforts to continuously improve
                                                                                                unit operations.
                                                                                                                     (continued)




                                         Page 23                         GAO/GGD-98-1 Postal Service Labor-Management Relations
                                           B-272446




Initiative                      Brief description                     Actual/potential participants            GAO recommendation(s)
Employee opinion survey (EOS)   A survey that was first sent out      —Postal Service              Obtain employee views on and
                                in 1992 to all bargaining and         —APWU, NALC, Mail Handlers, participation in improving
                                non-bargaining employees and          and Rural Carriers           workfloor environment.
                                was designed to obtain                —NAPS, NAPUS, and the
                                employees’ assessments of the         League
                                Service’s strengths and               —Employees represented by
                                shortcomings as an employer.          the D.C. Nurses Association
                                                                      and the Federation of Postal
                                                                      Police Officers
                                                                      —All other postal employees
                                                                      not represented by unions or
                                                                      management associations

                                           a
                                            In its comments, NALC stated that we had erroneously listed it as a participant in ASP. As shown
                                           in table 4, for each of the 10 initiatives, we identified the organizations that were participants in or
                                           potential participants in specific initiatives. According to postal officials responsible for
                                           implementing ASP, generally, all craft employees with at least 1 year of work experience in the
                                           Service are eligible to apply for ASP. Thus, our inclusion of NALC as a participant in ASP was
                                           intended to show that NALC employees with a minimum of 1 year of postal work experience can
                                           apply for and, if accepted, participate in ASP.

                                           Source: U.S. Postal Service: Labor-Management Problems Persist on the Workroom Floor
                                           (GAO/GGD-94-201A/B, Sept. 29, 1994) and various postal and union documents that described
                                           specific initiatives.



                                           As shown in table 4, all 10 initiatives required the participation of the
                                           Postal Service. However, the participation of the other seven
                                           organizations—that is, the four major labor unions and the three
                                           management associations—varied depending on the extent to which
                                           employees represented by the unions and the associations were covered
                                           by each initiative. For example, the initiative involving the mediation of
                                           grievances applied only to employees represented by APWU, because this
                                           initiative was established through the 1994 collective bargaining process
                                           that occurred between the Service and APWU. Similarly, the Delivery
                                           Redesign initiative applied only to employees represented by NALC,
                                           because this initiative focused on the work performed by city letter
                                           carriers.

                                           In his comments on a draft of this report, the president of the League of
                                           Postmasters believed that the list of 10 initiatives in our report could be
                                           construed to mean that the League had a stronger presence in the
                                           implementation of the initiatives than was actually the case. The League
                                           mentioned that in most instances, the Service provided the League general
                                           information about the initiatives and a timetable of what was to occur in
                                           their implementation.




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                             During our discussions with Service, union, and management association
                             officials on the 10 improvement initiatives, the officials generally agreed
                             with the overall goals of some of the initiatives. However, the results of
                             our work indicated that in large part, fundamental disagreements among
                             the eight organizations on strategies for implementing specific initiatives
                             continued to hamper their efforts to achieve these goals and improve the
                             overall working climate for postal employees.

                             The purpose of some of these initiatives was generally to improve
                             labor-management relations, thereby enhancing the Service’s performance
                             in providing postal products and services to its customers. During our
                             review, we found that various actions had been taken to implement all 10
                             initiatives that we reviewed. However, we found it difficult to determine
                             what results, if any, were achieved from 3 of the 10 initiatives primarily
                             because the initiatives were only recently piloted or implemented. Also,
                             for 5 of the 10 initiatives, disagreements among the involved participants
                             on approaches for implementation generally prevented full
                             implementation of these initiatives and full evaluation of their results. In
                             addition, although results were available for 2 of the 10 initiatives, these
                             initiatives were eventually discontinued, primarily because the Service and
                             the other involved participants disagreed over how best to use the
                             initiatives to help improve the postal workplace environment.


Actions Have Been Taken      For three initiatives, results were difficult to determine, primarily because
to Implement Three           they had only been recently piloted or implemented, which made it too
Initiatives, but It Is Too   early to fully assess their results. The three initiatives included (1) the
                             Associate Supervisor Program (ASP); (2) the new performance-based
Early to Determine Results   compensation system for executives, managers, and supervisors; and
                             (3) CustomerPerfect!


Associate Supervisor         In our 1994 report, we recommended that the Service select and train
Program                      supervisors who could serve as facilitator/counselors and who would have
                             the skills, experience, and interest to treat employees with respect and
                             dignity, positively motivate employees, recognize and reward them for
                             good work, promote teamwork, and deal effectively with poor performers.
                             In an attempt to address this recommendation, the Service established ASP,
                             a 16-week supervisory training program designed to ensure that
                             candidates for postal supervisory positions were sufficiently screened and
                             trained so that after they were placed in supervisory positions, these
                             supervisors would have a solid foundation that could help them work well



                             Page 25                     GAO/GGD-98-1 Postal Service Labor-Management Relations
B-272446




with employees. A test of ASP was completed in the St. Louis district office
in the fall of 1994, after which the test was expanded to include a total of
10 pilot sites.12 According to a postal official, as of March 1997, about 254
candidates had completed ASP training. Most of these candidates have
already been assigned to supervisory positions in various postal locations.
The Service expects that by the end of fiscal year 1997, 70 of the Service’s
85 postal district offices will have graduated ASP classes or will have
classes ongoing.

During our review, the Service was gathering data from the 10 pilot
locations to evaluate ASP. For example, in March 1997, according to an
official from the Service’s Office of Corporate Development and Training,
that office conducted a 3-day ASP workshop to obtain feedback from the
program participants, including the trainers, coaches, coordinators, and
supervisory candidates who attended ASP training. According to the postal
official, all the participants in the workshop commented that ASP was an
“incredible success.” In addition, the official told us that a San Francisco
post office went from having the worst scores in productivity and the
Service’s External First-Class (EXFC) Measurement System to being one of
the top post offices in the San Francisco district. The official attributed
much of this improvement to the high-quality calibre of the ASP supervisors
who had been assigned to the post office.

As of March 1997, the Service was still completing the last ASP pilot. Upon
completion of the pilot, the Service plans to administer a written survey to
all ASP participants to obtain their comments on the content of the ASP
training course, including such matters as the extent to which they believe
the course met its objectives and whether the ASP instructors were
knowledgeable. Also, the participants are to be asked to assess how they
have been able to transfer their recently learned knowledge and skills to
their current supervisory positions.

In addition, the Service plans to distribute a separate written survey to the
managers of the new ASP supervisors. In this survey, managers are to be
asked to compare the quality of the on-the-job performance of ASP
supervisors to supervisors who had not received ASP training. Also,
managers are to be asked to evaluate ASP supervisors’ communications and
leadership skills as well as their ability to promote and maintain a safe
working environment for employees. Finally, the Service plans to collect
overall performance data, such as EXFC and productivity scores, to

12
  The 10 sites that participated in the ASP pilot included (1) Dallas, TX; (2) Detroit, MI; (3) Hartford,
CT; (4) Los Angeles, CA; (5) Miami, FL; (6) Philadelphia, PA; (7) Providence, RI; (8) San Francisco, CA;
(9) St. Louis, MO; and (10) Washington, D.C.



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                            B-272446




                            compare a specific postal facility’s performance before receiving ASP
                            supervisors and after receiving such supervisors to try to determine to
                            what extent ASP may have affected the performance of the facility.

                            Various postal, union, and management association officials we
                            interviewed at some of the ASP pilot locations told us that although they
                            believed it was too soon to evaluate the results of the program, they
                            believed it had the potential for providing the Service with more qualified
                            and better trained supervisors. Also, local union officials we spoke with
                            said that they liked the additional training that is to be provided to current
                            postal supervisors under ASP.13


New Performance-Based       In our 1994 report, we discussed past problems with the Service’s
Compensation System for     performance-based incentive systems for managers and supervisors. The
Executives, Managers, and   problems concerned a system that emphasized providing these employees
                            with merit pay and promotions for achieving a variety of productivity and
Supervisors                 budget goals. Examples of such goals included requiring supervisors to
                            manage their assigned budgets and control unscheduled employee
                            absences and overtime usage. However, we found that some supervisors
                            emphasized “making their numbers” over maintaining good employee
                            relations.

                            To help address these problems, we recommended in 1994 that the Service
                            should provide incentives that would encourage all employees in work
                            units to share in the tasks necessary for success and that would allow
                            work units and employees to be recognized and rewarded primarily on the
                            basis of corporate and unit performance. To address this recommendation,
                            the Service established a revised compensation system in 1995 for
                            employees under the Postal and Career Executive Service (PCES). Later, in
                            1996, the system was expanded to cover the Executive and Administrative
                            Schedule (EAS), which includes executives, managers, and supervisors.14
                            The purpose of this system was to establish a performance-based incentive
                            system of pay increases and bonuses that would appropriately recognize

                            13
                             According to a postal official responsible for managing ASP, the Service plans to make specific parts
                            of ASP training available to current postal supervisors, such as conflict resolution and methods for
                            dealing with problem employees. The purpose of this effort is to provide current postal supervisors
                            with training that is similar to the training that ASP candidates receive.
                            14
                              Employees covered by this system basically include (1) postal vice-presidents; (2) managers who
                            work at Postal Service headquarters in Washington, D.C., and at postal field locations; (3) some
                            supervisors at postal field locations, including district offices and plants; (4) some postmasters; and
                            (5) other higher level postal professional, administrative, and technical personnel. This system does
                            not cover compensation for bargaining unit employees whose pay and benefits are specified in their
                            unions’ contracts.



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and reward employees for good performance. The amounts of such
increases and bonuses would be based not only on the individual’s
performance rating but also on the performance of the individual’s work
unit, as well as the performance of the Service as an organization.

A key aspect of the revised compensation system is called the Economic
Value Added (EVA) variable pay program, which is a program intended to
provide employees covered by the new compensation system with
bonuses based on specific performance measurements, such as the
financial performance of the Service and levels of customer satisfaction.
Under EVA, in fiscal year 1996, the Service distributed a total of
$169 million in bonuses to a total of about 63,000 postal executives,
managers, supervisors, postmasters, and other higher level nonbargaining
unit employees. Nationally, the average bonus paid to an executive under
PCES amounted to $12,500. Postmasters covered by the new compensation
system and higher level professionals, administrative, and technical
employees each received a bonus that averaged $3,900.15

Another important aspect of the new compensation system was the
inclusion of work unit and corporate measurements in EAS employees’
merit performance evaluations. For fiscal year 1997, these evaluations are
required to include objectives that are aligned with an individual
employee’s work unit goals. The objectives must also align with and
support the Service’s corporate goals. According to postal officials, this
change is intended to (1) enhance EAS employees’ active involvement in
setting objectives to support their work units, (2) establish accountability
for results, and (3) provide monetary acknowledgment of an individual
employee’s contribution to the success of the work unit.

Although the leaders of the three management associations supported the
concept of a performance-based incentive system, two of the three
associations disagreed with the Service on how this system was to be
implemented. Specifically, NAPS agreed to endorse the new pay system.
However, in contrast, officials from NAPUS refused to endorse the new pay
system because they believed “it offered virtually nothing to some of our
members.” Also, in its comments on a draft of this report, the League
stated that it refused to endorse the new pay system because the means by
which the Service implemented EVA precluded most of the Service’s
postmasters, including most of the League’s members, from being eligible
for bonuses.

15
 Under the new compensation system, the payout percentage figure for postmasters, managers,
supervisors, and higher level professional, administrative, and technical employees included under the
EAS was one-half the amount of the payout percentage figure for postal PCES executives.



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According to NAPUS and League officials, the Service determined that
certain employees who were covered by the requirements of the Fair
Labor Standards Act (FLSA), also known as nonexempt employees,16 should
not be eligible to receive EVA bonuses. NAPUS and League officials
mentioned that the Service’s decision eliminated about 60 percent of the
employees represented by their associations because they were
nonexempt employees. A postal official said that in large part, this
determination was based on the results of a wage comparability study
done recently for the Postal Service in which the wages of postal
employees were compared to wages for employees doing similar work in
the private sector. The official said that the results of the study showed
that nonexempt postal employees were paid from 30 to 60 percent higher
wages compared to employees doing similar work in the private sector.
Also, the official said that nonexempt employees in private sector
organizations with incentive pay programs are generally not eligible to
participate in such programs. Furthermore, the official said that since
nonexempt employees are entitled to receive overtime pay for work they
perform in excess of 40 hours per week, these employees are already
sufficiently compensated for their “extra” work.

NAPUS and League officials also stated that many of the Service’s
nonexempt employees are postmasters who are women and members of
minority groups. Furthermore, the presidents of NAPUS and the League told
us that within recent months, their associations have filed class-action
lawsuits charging that the new compensation system discriminates against
women and minorities. The lawsuits, which were filed in November 1996,
are still pending as of January 1997, according to management association
officials.

In their comments on a draft of this report, three organizations—the Rural
Carriers union, the League, and NAPS—provided us their insights into this
initiative. In his comments, the president of the Rural Carriers union stated
that he supported the concept of EVA but had differences with the Postal
Service in the application of EVA. He mentioned that at the national level,
his union has met to try to determine how the rural carriers’ current
compensation system could be revised so that rural carriers could
participate in EVA. The president further stated that his union was awaiting
an opportunity to participate in EVA, especially since rural carriers’
individual performance goals have always been aligned with their postal
units’ goals, which were established under the Service’s CustomerPerfect!

16
 Under FLSA, nonexempt employees are required to receive overtime payments for work they
accomplish in excess of 40 hours per week.



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                   system of management. However, the president said that due to the
                   enormous resources that the Service has devoted to the implementation of
                   the Delivery Redesign initiative, it has been unable to provide much
                   assistance to the Rural Carriers union in developing any type of
                   performance pay system in addition to the one that the rural carriers
                   already have. The Rural Carriers president also stated that it is the
                   individual employee who drives customer satisfaction, creates revenue,
                   and increases productivity. As such, he believes that the performance of
                   rural carriers in these areas is already aligned with the concepts of EVA.

                   As previously mentioned, in his comments, the president of the League
                   expressed his concern that less than a majority of postmasters were
                   included under EVA, which caused the League not to support the new pay
                   system. Also, he commented that (1) nonexempt postmasters who receive
                   additional pay for working over 40 hours per week should not be excluded
                   from eligibility for EVA bonuses, because such pay is due these postmasters
                   for additional work and should not be considered a bonus; and (2) when
                   trying to support new programs, such as EVA, the Postal Service has often
                   used the private sector as a basis for comparing the work of postal
                   employees to employees doing similar work in the private sector.
                   However, the League president stated that because the Postal Service is
                   not a private business, the Service should recognize that many postal
                   positions are unique and cannot be compared to positions in the private
                   sector. The president of NAPS told us that he believed some postmasters
                   were overpaid for the work that they did, which included work that
                   oftentimes was done by craft employees, particularly clerks, such as
                   sorting mail and providing over-the-counter products and services to
                   postal customers.


CustomerPerfect!   In February 1995, the Service implemented CustomerPerfect!, which has
                   been described by the Vice President for Quality as a “management system
                   being constructed and operated by the Postal Service as a vehicle for
                   constructive change.” He told us that CustomerPerfect! is designed to
                   assess and, where necessary, improve all aspects of Service operations so
                   that it can better provide postal products and services to its customers in a
                   competitive environment.

                   Postal officials told us that in fiscal year 1995, two CustomerPerfect! pilots
                   were established in Washington, D.C., and Nashville, TN. Later, in




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B-272446




February 1996, eight additional pilot sites were added.17 A postal official
mentioned that these pilots consisted primarily of implementing what the
Service called process management, which was described as a systematic
approach to continuously assessing, evaluating, and improving the design
and management of core work processes, including those that facilitate
the processing and delivery of mail products and services to postal
customers. A key aspect of this approach involves the collection and use
of various service and financial performance data, such as EXFC; EVA; and
data on safety in the workplace, including postal vehicle accidents. A
postal official mentioned that the Service plans to expand the process
management aspect of CustomerPerfect! to all 85 postal performance
clusters in fiscal year 1997.18

According to postal officials, CustomerPerfect! was not specifically
designed to address labor-management relations problems. However, they
believe it provides an opportunity for management and craft employees to
work together on problem-solving teams to improve how the Service
accomplishes its overall mission. Postal officials told us that they believed
they had good representation from craft employees on several
problem-solving teams that have been established. They further stated that
all improvement initiatives should be aligned with CustomerPerfect!

According to a postal official, in 1995, the Service offered to provide a
briefing on the goals of CustomerPerfect! to the four unions and the three
management associations. According to a postal official, representatives
from two of the four unions—APWU and Rural Carriers—attended the
briefing. The postal official told us that Mail Handlers and NALC
representatives declined to attend the briefing. Mail Handlers’ officials told
us that they had no interest in the briefing, mainly because the Service had
already made the decision to implement CustomerPerfect! and did not
solicit the union’s input into the development of CustomerPerfect! NALC
officials did not identify a specific reason for not attending the
CustomerPerfect! briefing. However, they told us that the Service
unilaterally terminated the joint Service-NALC improvement initiative called

17
 The locations of the 10 CustomerPerfect! pilots included the following district offices: (1) the Capital
District, Washington, D.C.; (2) the Central Plains District, Omaha, NE; (3) the Connecticut District,
Hartford, CT; (4) the Greater Indiana District, Indianapolis, IN; (5) the Harrisburg District, Harrisburg,
PA; (6) the Louisiana District, New Orleans, LA; (7) the New York District, New York, NY; (8) the
Sacramento District, Sacramento, CA; (9) the Seattle District, Seattle, WA; and (10) the Tennessee
District, Nashville, TN.
18
  A performance cluster is an organizational mechanism used by the Service to help track performance
data. For each of the Service’s 85 districts, a cluster usually consists of (1) a district office, which is
responsible for customer service functions mainly through its post offices, stations, and branches; and
(2) a large mail processing and distribution center/facility, which is responsible for processing and
distributing mail mainly through other such centers/facilities, bulk mail centers, and airport mail
centers/facilities.


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                           Employee Involvement (EI) and is now emphasizing CustomerPerfect!
                           Representatives from both Mail Handlers and NALC also told us that
                           CustomerPerfect! was forced on the unions with no attempt by the Service
                           to solicit their input into the development of CustomerPerfect!

                           In their comments on a draft of this report, the Rural Carriers union and
                           the League of Postmasters provided us their insights on CustomerPerfect!
                           The president of the Rural Carriers union mentioned that he supported
                           this initiative in concept and that many of his union members have been
                           involved in CustomerPerfect! process management activities.
                           Furthermore, he stated that individual performance goals for rural carriers
                           had always been aligned with a postal unit’s corporate goals under
                           CustomerPerfect! However, his main concern dealt with how rural carriers
                           could participate in EVA. The League commented that because Service
                           goals have been established for each performance cluster, a postal
                           installation that achieves or exceeds its goals will more than likely not
                           receive any recognition for such performance if it is included in a cluster
                           with other installations that have not achieved their goals. According to
                           the League, this situation is not a good one for providing employees
                           incentives nor is it good for morale, customer service, or the Postal
                           Service.


Actions Have Been Taken    For five initiatives, the Service and some of the organizations, especially
to Implement Five          APWU and NALC, fundamentally disagreed on how specific improvement

Initiatives, Although      initiatives should be implemented. As a result, progress in implementing
                           these initiatives was difficult to determine. Furthermore, during our
Disagreements Exist Over   discussions with Service, union, and management association officials on
Approaches                 the five improvement initiatives, the officials generally agreed with the
                           overall goals of some of the initiatives. However, in large part,
                           fundamental disagreements among the Service and some of the
                           organizations on strategies for implementing specific initiatives continued
                           to hamper their efforts to achieve these goals and improve the overall
                           working climate for postal employees. The five initiatives included (1) the
                           labor-management relations summit meeting, (2) Delivery Redesign,
                           (3) the labor-management cooperation memorandum of understanding,
                           (4) the mediation of employee grievances, and (5) the crew chief program.

Summit Meeting             As discussed earlier in this report, the first initiative—the PMG’s proposed
                           summit meeting—has not yet taken place, mainly because negotiations on
                           three of the four unions’ most recent contracts caused these unions to
                           decline to attend such a summit until the negotiations were completed.



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                    Negotiations for all four unions were not completed until April 1996. Yet,
                    as of May 1997 when we completed our review, the PMG’s proposed summit
                    with all eight organizations had not occurred, nor had it been scheduled.
                    However, preliminary efforts to convene such a summit have occurred.
                    They included presummit meetings in November and December 1996 with
                    APWU and NALC, an additional meeting with APWU and NALC in January 1997,
                    and plans for presummit meetings with the other remaining five
                    organizations.

                    As mentioned previously, we received comments on the summit meeting
                    from five organizations, including FMCS, APWU, NALC, Rural Carriers, and the
                    League. A discussion of their comments, which begins on page 20, has
                    been included at the end of the section of the report entitled “Little
                    Progress Has Been Made in Improving Labor-Management Relations
                    Problems.”

Delivery Redesign   One of our 1994 recommendations was for the Service and the unions to
                    jointly identify pilot sites where postal and union officials would be willing
                    to test revised approaches for improving working relations, operations,
                    and service quality. Specifically, we recommended that for city letter
                    carriers, a system should be established that incorporated known positive
                    attributes of the rural letter carrier system, including greater independence
                    for employees in sorting and delivering mail, incentives for early
                    completion of work, and a system of accountability for meeting delivery
                    schedules. In our 1994 report, we said that problems experienced by city
                    carriers were often related to (1) the close supervision imposed on city
                    carriers, which often engendered conflicts between supervisors and
                    carriers, mainly on the amount of time it took for carriers to do their work;
                    and (2) the existence of performance standards for city carriers that
                    tended to discourage carriers from doing their best and completing work
                    quickly. Postal, union, and management association officials we
                    interviewed generally agreed that such problems called for a revision of
                    the city letter carrier system.

                    As discussed in our 1994 report, both the Service and NALC have studied
                    the city letter carrier system to determine how best to revise it. For
                    instance, 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 postal supervisors and city carriers.




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However, the Service and NALC were unable to reach any agreement on
how to change the city carrier assignments.

Consequently, in March 1994, the Service and NALC established similar but
independent efforts to study possible changes to the city letter carrier
system. A national NALC task force reviewed how city routes could be
restructured to better serve carriers, customers, and the Service. Under
consideration was a suggestion made 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. At the same time, the Service had also set up
teams to study and propose alternate approaches to the city carrier
system, including examining the possibility of adopting the rural carrier
approach. However, we found no effort between the Service and NALC to
coordinate and consolidate these two studies for addressing the common
concerns.

According to postal officials, in 1997, after numerous discussions with
NALC and with no ultimate agreement on an approach, the Service decided
to test some revised processes for the delivery of mail by city letter
carriers. These processes are collectively known as Delivery Redesign.
The Service’s plan was to use these revised processes as a basis for
helping to develop a city carrier delivery system that could enhance mail
delivery by (1) reducing friction between supervisors and carriers,
(2) providing increased compensation for superior performance, and
(3) removing existing disincentives for doing the job well.

In addition to the current delivery process, the Service is testing 3 revised
delivery processes at 14 selected sites.19 For example, some sites are to
test the separate case and delivery processes under which some carriers
would do only casing20 while others would do only delivery. Also, one of
the revised processes is to involve the Service’s implementation of
performance standards, also known as standard time allowances, to
structure and monitor city carrier performance at these 14 sites. However,
the Service is not testing any compensation alternatives for these
employees, because it needs agreement from NALC. According to an NALC
official, NALC has not agreed to such alternatives, because it considers



19
 The locations of the 14 test sites included Baton Rouge, LA; Carson City, NV; Columbus, OH; Enid,
OK; Ft. Myers, FL; Grand Rapids, MI; Houston, TX; Lewistown, ID; Los Angeles, CA; Louisville, KY;
New York, NY; Rochester, MN; St. Augustine, FL; and Syracuse, NY.
20
  The process of casing involves manually putting the mail into delivery order.



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                         B-272446




                         compensation for city carriers an issue that is most appropriately
                         discussed in the collective bargaining process.

                         A postal official told us that the testing of the revised city carrier delivery
                         processes began in Louisville, KY, in March 1997 and will have started in
                         the other 13 test sites by May 1997. He also told us that although NALC
                         officials were briefed several times (May, July, and September 1996) on
                         Delivery Redesign, they have not endorsed the testing of the revised
                         processes. At the national level, NALC officials declined to comment on the
                         testing; they told us that they believe the issue of delivery redesign is a
                         subject to be decided through the collective bargaining process. However,
                         the officials added that they do not believe that the city letter carrier
                         delivery system should be structured similarly to the evaluated route
                         system used by rural carriers. As we reported in 1994, rural carriers work
                         in environments substantially different from city carriers. As a result, rural
                         carriers generally have more independence in doing their work. Also, the
                         compensation systems for rural and city carriers are different. Rural
                         carriers are salaried workers who do not have to negotiate daily for
                         overtime. City carriers are hourly workers whose daily pay can vary
                         depending on the amount of overtime hours they would be required to
                         work to process and deliver mail on their assigned routes.

                         Two organizations—NALC and NAPS—provided us their comments on the
                         Delivery Redesign initiative. NALC objected to the Service’s implementation
                         of Delivery Redesign, stating that by implementing this initiative, the
                         Service has violated the requirements of NALC’s contract agreement
                         regarding time and work standards for city letter carriers. Also, NALC
                         mentioned that the Service has repeatedly rejected NALC’s invitations to
                         study the city letter carrier system in a cooperative manner. In addition,
                         the president of NAPS told us that he believed that the Delivery Redesign
                         initiative could help improve the city carrier system partly because one
                         purpose of this initiative was to collect enough information to allow the
                         city carrier routes to be evaluated daily instead of annually, which is how
                         rural carrier routes are currently evaluated.

Joint Labor-Management   In November 1993, the Service and APWU signed a joint memorandum of
Cooperation Memorandum   understanding on labor-management cooperation. The memorandum
                         included various principles that were intended to help the Service and
                         APWU (1) establish a relationship built on mutual trust and (2) jointly
                         explore and resolve issues of mutual interest. An example of one of the
                         principles involved the parties’ commitment to and support of
                         labor-management cooperation at all levels throughout the Service to



                         Page 35                     GAO/GGD-98-1 Postal Service Labor-Management Relations
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ensure a productive labor relations climate, a better employee working
environment, and the continued success of the Service. Another principle
was a statement about the willingness of both parties to jointly pursue
strategies that emphasized improving employee working conditions and
satisfying the customer in terms of both service and cost. The
memorandum did not include any information as to how the Service and
APWU planned to measure the results of its implementation.


The cooperation memorandum was a “quid pro quo”21 for another joint
agreement signed at the same time, known as the Remote Barcoding
System (RBCS) Memorandum of Understanding. Under this agreement, the
Service agreed that it would no longer pursue contracting out for certain
clerical services (i.e., keying address data) associated with the automated
mail processing, or RBCS, functions. Instead, the Service agreed to keep this
work in-house, which would primarily be performed at remote encoding
centers (RECs).

During our visits to various RECs located in the field, most postal officials
and union representatives told us that the cooperation memorandum did
not generally make any significant difference in their ability to work well
together. Rather, they told us that they believed their ability to work
cooperatively was attributable primarily to the differences in the nature of
the work at RECs, which had clean, office-like atmospheres, instead of in
facilities such as plants, which were similar to manufacturing facilities.
Also, employees at RECs perform similar types of work (i.e., data entry
functions); at other types of postal locations, the work involves a wide
range of tasks performed by different employees, including sorting mail,
loading and unloading mail trucks, and serving customers. Also, REC
managers we interviewed told us that because REC employees had not
previously worked in the postal environment, they had no preconceived
notions about labor-management relations.

Both Service officials and APWU leaders agreed that the labor-management
relations memorandum had not accomplished its intent of improving
cooperation between the Service and APWU. They told us that the
memorandum had generally not lived up to their expectations. Postal
officials told us that although they and APWU officials continue to work
together, they do not believe that the “far-reaching anticipated effect” of
the memorandum has been achieved.


21
 The term “quid pro quo” refers to the exchange between two parties of something for something.
Specifically, one of the parties provides or agrees to provide the other party with a good or a service in
exchange for the other party’s agreement to provide a good or service in return.



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                          Also, although the president of APWU stated that he considered the
                          cooperation memorandum to be a “framework agreement” between the
                          union and the Service, he told us that he believed the Service was not
                          sincere when it signed the memorandum, because the Service
                          continuously violates the spirit of the memorandum. He mentioned that a
                          recent example of this type of violation was that the Service tried to annul
                          both the cooperation memorandum and the RBCS memorandum in 1995.
                          However, an interest arbitrator refused the Service’s request for
                          annulment.

                          In its comments on a draft of this report, APWU agreed that the
                          memorandum had not lived up to its expectations. However, the union
                          stated that cooperation between APWU and the Service exists, as
                          exemplified by the recent establishment of three additional agreements
                          with the Service. These agreements, which were signed by the Postal
                          Service and APWU during the period May through July 1997, were intended
                          to (1) try to significantly reduce or eliminate grievance backlogs;
                          (2) establish a National Labor Relations Board alternative dispute
                          resolution procedure concerning information requests; and (3) provide for
                          the implementation of an administrative dispute resolution procedure to
                          help resolve employee complaints about specific issues, such as pay. APWU
                          included copies of the three agreements as enclosures to its written
                          comments, all of which are included in appendix III. APWU believed that
                          any assessment of the status of postal labor-management relations should
                          include an evaluation of the impact of these agreements, despite the fact
                          that the agreements had only recently been signed by Service and APWU
                          officials. Because these agreements were not available during the period
                          of our review, we could not evaluate their implementation.

Mediation of Grievances   As a result of the 1994 contract negotiations, APWU and the Service agreed
                          to include in the union’s contract a program of mediation in which parties
                          at local installations could request assistance to help facilitate the
                          grievance/arbitration process and improve the labor-management
                          relationship. The purpose of this mediation program was to address the
                          problem of too many grievances not being settled on the workroom floor.

                          According to a postal official, the Service initially planned to use the
                          mediation program on a test basis as a means of reducing the large
                          backlog of grievances awaiting arbitration. To begin this test, the official
                          told us that as of October 1996, the Service had trained a total of 113
                          individuals to serve as mediators who could assist in settling grievances
                          awaiting arbitration at pilot sites that were to be selected. However, APWU



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             officials told us that they disagreed with the Service’s plans to test the use
             of mediators in this manner. They believed that a massive arbitration effort
             was the best means of reducing the large backlog of grievances awaiting
             arbitration. According to APWU officials, whenever a large backlog of
             grievances awaiting arbitration occurs, such an effort should involve
             sending an arbitrator to that installation to hear all the backlogged
             grievances.

             Both postal and APWU officials told us that the details of how the mediation
             program will be implemented are still under discussion. However, none of
             the postal or APWU officials we interviewed provided any information on
             when these discussions were scheduled for completion.

             In its comments on a draft of this report, APWU stated that after the first
             joint agreement on mediation was included in the 1994 contract, the
             Service tried to move ahead and implement its own type of mediation
             program instead of trying to reach a joint understanding with APWU on how
             the program should be implemented. Nevertheless, as previously
             mentioned in our discussion on the Joint Labor-Management Cooperation
             Memorandum, in May 1997, APWU and the Service established another
             agreement that includes provisions for using various types of mediation
             processes to help (1) eliminate the current grievance backlog, (2) prevent
             future reoccurrences of such backlogs through the improvement of
             labor-management relations, and (3) address the root causes that generate
             grievances. A copy of this agreement is included in appendix III.

Crew Chief   In our 1994 report, we discussed the Service’s testing of the crew chief
             program, a program that was designed to allow craft employees to take
             greater responsibility for moving the mail. The purpose of this program
             was to address craft employees’ concerns that they had only limited
             involvement in the daily decisions affecting their work because
             management generally did not value their input on how to organize and
             accomplish the work.

             During 1990 interest arbitration proceedings, APWU proposed the crew
             chief concept because it believed the organization of postal work was
             outdated and inefficient and created an unnecessarily adversarial and
             bureaucratic work environment. The 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. As a result of these proceedings, the Service and




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APWU entered into a June 1991 Memorandum of Understanding to pilot test
the crew chief program with clerk craft employees.

Beginning in July 1992, a pilot of the program was conducted in a total of
12 postal locations, including 7 mail processing and distribution plants and
various post offices in 5 postal districts.22 These sites were jointly selected
by the Service and APWU from a list of sites that were willing to participate
in the program. At the pilot sites, crew chiefs were chosen on the basis of
seniority or selected by a joint committee of union and postal employees
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. Postal supervisors were
prohibited by the APWU collective bargaining agreement from doing craft
work, but as a craft employee, the crew chief could work with unit
employees. However, unlike supervisors, crew chiefs could not approve
leave for employees or take disciplinary actions against them.

In 1994, we reported that the pilot of the crew chief program was
completed in March 1994. However, according to program participants,
including managers and supervisors as well as crew chiefs whom we
interviewed at specific postal sites, the results of the pilot were mixed. On
the one hand, some program participants told us that they believed craft
employees were generally more comfortable taking instructions from, and
expressing their concerns to, crew chiefs rather than to supervisors.
Participants also told us that crew chief positions alleviated some of the
increased pressure on supervisors that resulted from the Service’s 1992
reduction in supervisory staffing. However, on the other hand, we found
that the crew chief program did not address some important issues that
caused workfloor tensions between supervisors and employees.
Specifically, the crew chief program did not give all employees more
control over their work processes; it empowered only the crew chief. Also,
this program did not provide any new incentives for team performance or
procedures for holding employees and supervisors accountable for poor
performance.

As discussed in our 1994 report, supervisors and crew chiefs often 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 postal pilot sites and also among the work tours at

22
  The locations of the seven pilot plants included (1) Birmingham, AL; (2) Lehigh Valley, PA;
(3) Louisville, KY; (4) Rochester, NY; (5) Royal Oak, MI; (6) Sacramento, CA; and (7) St. Paul, MN. The
5 pilot district offices included (1) Las Vegas, NV; (2) Louisiana, LA; (3) South Jersey, NJ; (4) Sun
Coast, FL; and (5) Western New York, NY.



Page 39                              GAO/GGD-98-1 Postal Service Labor-Management Relations
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specific sites. Supervisors and crew chiefs 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
employees. Also, NAPS did not support the crew chief program, mainly
because its president considered crew chiefs to be another layer of
management. The existing supervisors at the crew chief test sites were left
in place, and the Service did not redefine their roles in a self-managed
work environment.

In recent interviews, a postal official said that although the Service
believed that crew chiefs in post offices generally had a positive effect on
postal operations, it did not believe that similar positive outcomes were
evident in the plant locations that used crew chiefs. Furthermore, this
official told us that after the completion of the pilot, the topic of crew
chiefs was set aside because of the 1994 contract negotiations with APWU.
He also told us that after the negotiations were completed, discussions
began again on the results of the crew chief pilot. However, according to
postal and APWU officials, they were still evaluating these results as of
February 1997.

Two employee organizations—APWU and NAPS—provided us their
comments on the crew chief program. According to APWU, a study of the
program by an individual at Wayne State University revealed that morale
and job satisfaction had improved at virtually all the sites that used crew
chiefs and that such improvements were more evident at postal
installations that provided retail services than at mail processing
installations. Also, APWU mentioned that the Service still resists the crew
chief program because APWU believes that the Service is intent on retaining
what APWU termed “. . . the same bureaucracy and administrative hierarchy
that has existed since [the 1992] reorganization with all its consequent
ramifications for continued ’contentiousness’.” APWU stated that it
considered the crew chief program to be successful and expressed
considerable concern that the Service still resisted it. Moreover, APWU
commented that we ignored the fact that crew chiefs—also referred to by
APWU as negotiated group leaders—were being successfully used at RECs,
and the overall performance of the RECs has exceeded expectations.
However, our purpose for including RECs in our review was to determine
the extent to which the joint labor-management cooperation memorandum
had been implemented, not to review the overall operations of RECs. Thus,
we did not review the use of crew chiefs or negotiated group leaders at
RECs or the overall performance of RECs.




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                           B-272446




                           The president of NAPS also commented on the crew chief program, stating
                           that his organization generally did not favor the program, mainly because
                           it empowered only one person on the mail processing team—the crew
                           chief, who often functioned as a second supervisor in addition to the
                           team’s primary supervisor. The president believed that all employees on a
                           mail processing team should be empowered to work together to do
                           whatever it takes to process and distribute the mail efficiently and that
                           only one team supervisor was needed to coordinate mail processing and
                           distribution activities. By empowering all the team’s employees in this
                           manner, the NAPS president believed that a crew chief was not needed.


Discontinued Initiatives   For two initiatives, efforts to continue implementing them were hampered
                           primarily by disagreements among the Service and the other involved
                           participants over how best to use the initiatives to help improve the postal
                           workplace environment. Also, according to postal officials, a lack of union
                           participation in one of the two initiatives generally caused the Service to
                           discontinue its use. The two initiatives included (1) the employee opinion
                           survey (EOS) and (2) the Employee Involvement (EI) program.

Employee Opinion Survey    The nationwide annual employee opinion survey (EOS), which began in
(EOS)                      1992 and continued through 1995, was a voluntary survey that was
                           designed to gather the opinions of all postal employees on the Postal
                           Service’s strengths and shortcomings as an employer. Postal officials told
                           us that such opinions have been useful in helping the Service determine
                           the extent of labor-management problems throughout the organization and
                           make efforts to address such problems.

                           According to postal officials, problems with the EOS arose during
                           negotiations on some of the 1994 union contracts. Both postal and union
                           officials stated that during those negotiations, the Service used our 1994
                           report, which included the results of the 1992 and 1993 EOS, in its
                           discussion of various contract issues with three unions (APWU, Mail
                           Handlers, and NALC). In our 1994 report we found that past EOS results have
                           indicated that many mail processing and distribution employees who had
                           responded to the survey said that they (1) were generally satisfied with
                           their pay and benefits, (2) liked the work they did, and (3) were proud to
                           work for the Postal Service. However, a postal official stated that the
                           Service’s use of our findings, which were partially based on the EOS results,
                           caused problems with some union officials. He told us that NALC boycotted
                           the 1995 EOS because it believed EOS was inappropriately used during the
                           1994 contract negotiations.



                           Page 41                    GAO/GGD-98-1 Postal Service Labor-Management Relations
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According to postal officials, NALC and APWU encouraged their members not
to complete future surveys. Also, the officials told us that although the
Mail Handlers and Rural Carriers unions did not urge their members to
boycott future surveys, the resistance by APWU and NALC members was
enough to skew the results of the EOS and render it almost useless. This
action by the unions led to the discontinuance of the EOS in 1996. Also,
officials from a management association told us that they did not believe
the results of employee surveys should be used in determining
management pay levels, because they believed craft employees have
manipulated, and would continue to manipulate, surveys to discredit their
supervisors.

In their comments on a draft of this report, four organizations—APWU,
NALC, Mail Handlers, and the League—provided us their insights on EOS.
Three of the four organizations—APWU, NALC, and Mail Handlers—did not
support the implementation of EOS nor the use of its results. Specifically,
these three organizations objected to what they believed was the Service’s
inappropriate use of EOS results as a basis for justifying its position in
collective bargaining.

APWU stated that it generally does not object to employee surveys and did
not object to EOS until postal officials began using the survey’s results in
the 1994 contract negotiations to justify their bargaining positions, which
in part led to the APWU boycott of the 1995 EOS. NALC stated that although
surveys such as EOS can be useful tools, they can produce (1) data that can
be manipulated, (2) results that can be misinterpreted, and (3) conclusions
that may be inappropriately used. Although NALC stated that it was willing
to work with the Service in developing and implementing an employee
survey, it believed that the Service’s unilateral implementation of EOS and
its inappropriate use of results during contract negotiations undermined
the credibility of EOS.

Also, Mail Handlers stated that during 1994 contract negotiations, the
Service used EOS results to support its position that union members did not
need increased wages and benefits. As a result, in July 1995, the Mail
Handlers union stated that it adopted a resolution, which included its
reasons for objecting to EOS. According to the Mail Handlers union, the
resolution stated that Mail Handlers did not support EOS and requested that
those of its members who chose to complete the 1995 EOS should do so in
a manner that would render it useless. In addition, the League commented
that although the Service implied that EOS was discontinued because of a
lack of union participation, the League understood that it was because



Page 42                    GAO/GGD-98-1 Postal Service Labor-Management Relations
                       B-272446




                       both the Service and the unions had used EOS data to support their
                       positions on various issues such as pay and benefits.

Employee Involvement   As discussed in our 1994 report, the Employee Involvement (EI) initiative
                       began in 1982 and was designed to end or alleviate the adversarial
                       relationship in the workplace climate. Through the implementation of EI,
                       the Service and NALC intended 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.

                       According to a postal official, EI was discontinued, primarily because it no
                       longer contributed significantly to the goals of the Service and was unable
                       to address the root causes of conflict in the workplace or foster the
                       empowerment of city letter carriers. The postal official told us that when
                       EI was first established in 1981, it accomplished some positive results in
                       the workplace. However, in recent years, EI has not helped to improve the
                       postal workplace as much as it once did. The official told us that a key
                       reason was that for the past 3 years, all joint EI meetings between Service
                       and NALC officials were cancelled due to negotiations over NALC’s most
                       recent contract. The official also told us that during 1994 contract
                       negotiations, the Service and NALC disagreed over various aspects of EI,
                       including what type of work the 400 trained EI facilitators should perform.
                       According to the official, these facilitators were working in various postal
                       field locations as full-time EI facilitators, which prevented them from
                       performing functions directly related to mail processing and delivery.

                       NALC  disagreed with the Service’s reasons for discontinuing EI. An NALC
                       official characterized EI as a remarkable achievement in
                       labor-management cooperation. He mentioned that EI represented one of
                       the Service’s and NALC’s earliest efforts to replace the traditional
                       authoritarian and hierarchical work processes in the postal workplace
                       climate with a system of increased cooperation and enhanced worker
                       empowerment. Although the Service decided to discontinue its support of
                       EI, the NALC official told us that the union intends to continue working to
                       reinstate the EI program.

                       In its comments on a draft of this report, NALC reiterated its concern about
                       the Service’s April 1996 termination of EI, which NALC termed “. . . an
                       extraordinarily regressive act.” Shortly after EI was terminated, the
                       president of NALC mentioned that he had written to the Vice President of



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                    B-272446




                    Labor Relations for the Postal Service to protest the action. Also, the NALC
                    president stated that he believed the timing of EI’s termination, which
                    coincided with the time that the Delivery Redesign initiative was begun,
                    indicated that in its approach to dealing with NALC, the Service had moved
                    from a position of jointness and cooperation to one of domination and
                    confrontation. The president stated further that he believed the Service’s
                    revised approach should be an issue of greater concern to us than any of
                    the initiatives we had selected to review. As noted in the Objectives,
                    Scope, and Methodology section, we selected the initiatives included in
                    this review based primarily on (1) discussions with the Postal Service and
                    its unions and management associations and (2) the extent to which the
                    initiatives had the potential to address our previous recommendations. EI
                    was not included in our review.


                    Improving labor-management relations at the Postal Service has been and
Continued Need to   continues to be an enormous challenge and a major concern for the Postal
Improve             Service and its unions and management associations. With the significant
Labor-Management    future challenges it faces to compete in a fast-moving communications
                    marketplace, the Service can ill afford to be burdened with long-standing
Relations           labor-management relations problems. We continue to believe that in
                    order for any improvement efforts to be sustained, it is important for the
                    Service, the four unions, and the three management associations to agree
                    on common approaches for addressing labor-management relations
                    problems so that positive working principles and values can be recognized
                    and encouraged in postal locations throughout the nation, especially in
                    locations where labor-management relations are particularly adversarial.
                    Our work has shown that there is no clear or easy solution to improving
                    these problems. However, continued adversarial relations could lead to
                    escalating workplace difficulties and hamper the Service’s efforts to
                    achieve its intended improvements.

                    The limited experience the Postal Service and its unions and management
                    associations have had with FMCS in an attempt to convene a postal summit
                    meeting, although not fully successful to date, nonetheless has suggested
                    that the option of using a third-party facilitator to help the parties reach
                    agreement on common goals and approaches has merit. The use of FMCS,
                    as recommended in our 1994 report, was requested by the PMG in early
                    1996 and encouraged by the Chairman of the House Subcommittee on the
                    Postal Service in March 1996. Although efforts to arrange a summit
                    continue, the window of opportunity for developing such an agreement
                    may be short-lived because of contract negotiations involving three of the



                    Page 44                    GAO/GGD-98-1 Postal Service Labor-Management Relations
B-272446




four unions whose bargaining agreements are due to expire in
November 1998.23 As previously mentioned, in 1994, after formal contract
negotiations had begun for APWU, Mail Handlers, and NALC, these unions
were generally reluctant to engage in discussions outside the contract
negotiations until they were completed.

A second approach to improving labor-management relations was
included in the postal reform legislation introduced by the Chairman of the
House Subcommittee on the Postal Service in June 1996 and reintroduced
in January 1997. Under this proposed legislation, a temporary,
presidentially appointed seven-member Postal Employee-Management
Commission would be established. The proposed Commission would be
responsible for evaluating and recommending solutions to the workplace
difficulties confronting the Service and would prepare its first set of
reports within 18 months and terminate after preparing its second and
third sets of reports.24 The Commission would include two members
representing the views of large nonpostal labor organizations; two
members from the management ranks of similarly sized private
corporations; and three members well-known in the field of
employee-management relations, labor mediation, and collective
bargaining, one of whom would not represent the interests of either
employees or management and would serve as the chair. Some concerns
have been raised that the proposed Commission would not include
representatives of the Postal Service or its unions or management
associations, and thus the results of its work may not be acceptable to
some or all of those parties. In July 1996, representatives of each of the
four major unions testified before the House Subcommittee on the Postal
Service that the Commission was not needed to solve labor-management
relations problems at the Postal Service. They said that the affected parties
should be responsible for resolving the problems.

Finally, the Government Performance and Results Act provides an
opportunity for Congress; the Postal Service, its unions, and its
management associations; and other stakeholders with an interest in
postal activities, such as firms that use or support the use of third-class
mail for advertising purposes and firms that sell products by mail order, to
collectively focus on and jointly engage in discussions about the mission
and proposed goals for the Postal Service and the strategies to be used to

23
 The collective bargaining agreements for APWU, NALC, and Mail Handlers are due to expire in
November 1998. The agreement for Rural Carriers is due to expire in November 1999.
24
  Under this proposed legislation, the Commission would submit its recommendations in the form of a
written report to the President and Congress to the extent that such recommendations involved any
legislation and to the Postal Service to the extent that the recommendations did not involve legislation.



Page 45                              GAO/GGD-98-1 Postal Service Labor-Management Relations
                            B-272446




                            achieve desired results. Such discussions can provide Congress and the
                            other stakeholders with opportunities not only to better understand the
                            Service’s mission and goals but also to work together to develop and reach
                            consensus on strategies to be used in attaining such goals, especially those
                            that relate to the long-standing labor-management relations problems that
                            challenge the Service.

                            The Postal Service is currently developing its strategic plan as required by
                            the Results Act for submission to Congress by September 30, 1997. The
                            plan is intended to provide a foundation for defining what the Service
                            seeks to accomplish, identify the strategies the Service will use to achieve
                            desired results, and provide performance measures to determine how well
                            it succeeds in reaching result-oriented goals and achieving objectives.
                            Also, as part of this process, the Results Act requires that the Service
                            solicit the views of its stakeholders on the development of its strategic
                            plan and keep Congress advised of the plan’s contents. The Service
                            published notices in the Federal Register asking the public for input on its
                            proposed plan no later than June 15, 1997. This comment period provided
                            an opportunity for those who might be affected by decisions relating to the
                            future of the Postal Service to voice their views on the strategies to be
                            used by the Postal Service. Furthermore, the strategic plan is intended to
                            be part of a dynamic and inclusive process that fosters communication
                            between the Service and its stakeholders—including the unions and
                            management associations—and that can help clarify organizational
                            priorities and unify postal employees in the pursuit of shared goals.


                            We provided a draft of our report to nine organizations for their review
Comments From the           and comment. The nine organizations included
Postal Service, Labor
Unions, Management      •   the Postal Service;
                        •   the four labor unions, including APWU, NALC, Mail Handlers, and Rural
Associations, and           Carriers;
FMCS and Our            •   the three management associations, including NAPS, NAPUS, and the League
                            of Postmasters; and
Evaluation              •   FMCS.


                            We received written comments from the Postal Service, the four major
                            labor unions, and one of the three management associations—the League
                            of Postmasters. We also obtained oral comments from the Director of FMCS
                            and the presidents of NAPS and NAPUS.




                            Page 46                    GAO/GGD-98-1 Postal Service Labor-Management Relations
B-272446




The comments we received from the 9 organizations included diverse
opinions on the 3 sections of the report that dealt with (1) the report’s
basic message that little progress had been made in improving
labor-management relations problems; (2) the implementation of and the
results associated with the 10 improvement initiatives; and (3) the
opportunities that are available to help the Service, the 4 unions, and the 3
management associations reach agreement on how to address
labor-management relations problems. Regarding the report’s basic
message, although the nine organizations generally agreed that little
progress had been made and labor-management relations problems have
persisted, some of them expressed different opinions on the reasons why
such problems continued to exist. With respect to the 10 improvement
initiatives, many of the organizations expressed different opinions about
such matters as how some of the initiatives were implemented, including
what role the organizations played in their implementation, and what
results were associated with specific initiatives. Concerning the
opportunities that could be used to help the Service, the four unions, and
the three management associations agree on how to address persistent
labor-management relations problems, the organizations expressed
various opinions about the potential of these opportunities for helping the
organizations resolve such problems. Also, some of the organizations
believed that entities outside the Postal Service, including Congress,
should not be involved in discussions about postal labor-management
relations problems. Some of these organizations believed that the parties
directly affected by such problems, namely the Service, the four unions,
and the three management associations, should be the ones to decide how
best to address the problems.

We understand that the nine organizations had different perspectives on
these matters. However, we believe that the diversity of their opinions
reinforces the overall message of this report and provides additional
insight as to why little progress in improving persistent labor-management
relations problems has been made since the issuance of our
September 1994 report. We continue to believe that the establishment of a
framework agreement, as recommended in our 1994 report, is needed to
help the Service, the unions, and the management associations agree on
the appropriate goals and approaches for dealing with persistent
labor-management relations problems. Also, we believe that opportunities
such as the ones discussed in this report, including the use of a third-party
facilitator, the proposed labor-management relations commission, and the
requirements of the Government Performance and Results Act, can
provide the Service, the unions, and the management associations



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                          B-272446




                          alternatives to explore in trying to determine how best to reach agreement
                          on dealing with such problems, so that the Service’s work environment
                          can be improved and its competitive position in a dynamic
                          communications marketplace can be maintained.

                          We incorporated comments where appropriate from all nine organizations,
                          including the Service, the four unions, the three management associations,
                          and FMCS, as their comments pertained to the three major sections of the
                          report in which we discussed our findings. We have included copies of the
                          written comments we received from the Postal Service, APWU, NALC, Mail
                          Handlers, Rural Carriers, and the League of Postmasters, along with our
                          additional comments, as appendixes II through VII, respectively.


Comments Related to the   In the section of the report entitled “Little Progress Has Been Made in
Report’s Message          Improving Labor-Management Relations Problems,” which begins on page
                          10, we discussed the report’s basic message that these problems, which
                          were identified in our 1994 report, still persisted. Representatives from the
                          nine organizations generally agreed that labor-management relations
                          problems continued to exist in the Postal Service and that little progress
                          had been made in addressing them. In their written comments, some
                          organizations discussed in more detail the reasons why they believed such
                          problems still existed. Among other things, these reasons included
                          concerns about the Postal Service’s contracting out of some postal
                          functions, the lack of trust between employees and managers, and the
                          importance of permitting the Postal Service and its unions and
                          management associations to operate without interference from outside
                          parties.

                          In addition to these written comments, the president of NAPS told us that
                          he believed the reason for the continued problems was that most
                          employee organizations were more concerned with trying to preserve their
                          own existence rather than trying to help ensure the future security of the
                          Postal Service as an organization. He believed that it was time for the
                          unions and the management associations to begin educating their
                          members about the need for these organizations to focus on maintaining
                          the existence of the Service because, without the Service, the employee
                          organizations would have no reason to exist.


Comments Related to       In the section of the report entitled “Status and Results of Initiatives to
Specific Improvement      Improve Labor-Management Relations,” which begins on page 21, we
Initiatives               presented information on the efforts that the Service, the 4 labor unions,


                          Page 48                    GAO/GGD-98-1 Postal Service Labor-Management Relations
                      B-272446




                      and the 3 management associations have made to implement 10
                      improvement initiatives. In this section, we included the comments that
                      we received from some of these organizations, such as APWU, NALC, and
                      NAPS, which provided us their insights about specific improvement
                      initiatives, including the crew chief program, the postal employee opinion
                      survey, and EI. The organizations that commented on specific initiatives
                      provided information that generally (1) discussed the extent to which they
                      participated in helping to develop and implement specific initiatives,
                      (2) described the outcomes that they believed resulted from specific
                      initiatives, and (3) identified the reasons why they believed specific
                      initiatives had not achieved their intended outcomes.


Comments Related to   In the section of the report entitled “Continued Need to Improve
Opportunities for     Labor-Management Relations,” which begins on page 44, we discussed
Improving             opportunities that are currently available for the Service, the 4 unions, and
                      the 3 management associations to use in attempting to reach agreement on
Labor-Management      strategies for improving labor-management relations problems. The
Relations             opportunities we discussed in our report included (1) the continued use of
                      a third-party facilitator, such as FMCS, to help these eight organizations
                      agree on common goals and approaches; (2) the establishment of a
                      presidentially appointed commission of outside experts to evaluate and
                      recommend solutions to labor-management relations problems; and
                      (3) the inclusion of the eight organizations, Congress, and other parties
                      interested in postal activities in a dialogue as part of the Government
                      Performance and Results Act that can help all postal stakeholders focus
                      on defining the Service’s mission and goals and the means to achieve such
                      goals.

                      Some of the organizations provided us their comments on one or more of
                      these three issues. Concerning the first issue about the use of a third-party
                      facilitator to help the eight postal parties reach agreement, we received
                      comments from five organizations. However, instead of the third-party
                      facilitator, their comments generally focused more on the PMG’s proposed
                      summit meeting for which the Director of FMCS has been performing the
                      facilitator role in attempting to convene the meeting. We received
                      comments on the meeting from FMCS, APWU, NALC, Rural Carriers, and the
                      League, all of which provided different perspectives on the anticipated
                      merits of the proposed summit meeting. The information we obtained
                      about the meeting is included in the section of the report entitled “Little
                      Progress Has Been Made in Improving Labor-Management Relations
                      Problems.” This section includes information on the summit meeting,



                      Page 49                    GAO/GGD-98-1 Postal Service Labor-Management Relations
B-272446




which begins on page 19, and the comments on the meeting that we
received from the five organizations.

The second issue involved the establishment of the seven-member
labor-management relations commission that was included in proposed
legislation by the House Subcommittee on the Postal Service. We received
comments on this issue from the Postal Service and one of the three
management associations—the League of Postmasters.

In its comments, the Service endorsed the proposal by the House
Subcommittee on the Postal Service that a commission be established to
evaluate and recommend solutions to labor-management relations
problems. The Service believed that it would prefer to support the work of
such a commission rather than engage in continued recriminations and
finger-pointing with the unions on why so little progress in addressing
such problems had been made, which has often occurred in the past. The
Service had two suggestions for the Subcommittee’s consideration in the
establishment of the commission. First, the Service suggested that a
shorter time period (i.e., 1 year instead of 3-1/2 years) be established for
the commission to complete its work. The Service stated that 3-1/2 years
was too long a period of time for the commission to evaluate and
recommend solutions to persistent labor-management relations problems,
mainly because a significant amount of work by us and others has already
been done to identify that such problems continue to exist and that this
work should not have to be repeated. Second, the Service suggested that
the commission be established under the auspices of an independent
academic organization to help ensure that (1) the commission’s work
could be started as quickly as possible without having discussions about
its establishment tied to discussions about the postal reform legislation
and (2) the chances that the commission’s recommendations would be
accepted could be increased.

In its comments on a draft of this report, the League mentioned that as
described in the proposed legislation, the proposed commission would not
include representatives of postal employees or customers. The League also
expressed concern about the fact that the members of the commission
would be making decisions about how to resolve labor-management
relations problems without being responsible for ensuring that such
problems were resolved.

Recent discussions we held with the presidents of the four unions and the
remaining two of the three management associations (i.e., NAPS and NAPUS)



Page 50                    GAO/GGD-98-1 Postal Service Labor-Management Relations
B-272446




confirmed that they are also concerned about the composition of the
commission as well as the need for it. Given these opinions, the Service
expressed a concern that without the involvement of an independent body,
implementation of the commission’s recommendations may be difficult to
accomplish.

Concerning the third issue—the opportunity for parties interested in
postal activities to engage in a dialogue as part of Results Act
requirements—only APWU provided comments. According to the president
of APWU, he received a copy of the Postal Service’s draft strategic plan
around June 16, 1997, which he considered rather late. The Results Act
required that the final plan be submitted to Congress no later than
September 30, 1997. Accordingly, the APWU president believed that such
lateness reduced the value of his input on the draft plan and led him to
question whether the Service’s attempt to seek input was sincere.


As arranged with you, unless you publicly announce its contents earlier,
we plan no further distribution of this report until 30 days from its issue
date. At that time, we will send copies of this report to the Ranking
Minority Member of your Subcommittee, the Chairmen and Ranking
Minority Members of the House and Senate oversight committees, the
Postmaster General, and to other interested parties. Copies will also be
made available to others upon request.

If you or your staff have any questions about this report, please contact me
on (202) 512-4232; or Teresa Anderson, Assistant Director, on
(202) 512-7658. Major contributors to this report are included in appendix
VIII.

Sincerely yours,




Bernard L. Ungar
Director, Government Business
  Operations Issues




Page 51                     GAO/GGD-98-1 Postal Service Labor-Management Relations
Contents



Letter                                                                                1


Appendix I                                                                           56

Description of
Grievance/Arbitration
Process
Appendix II                                                                          58

Comments From the
Postal Service
Appendix III                                                                         60

Comments From the
American Postal
Workers Union
Appendix IV                                                                          80

Comments From the
National Association
of Letter Carriers
Appendix V                                                                           92

Comments From the
National Postal Mail
Handlers Union
Appendix VI                                                                          95

Comments From the
National Rural Letter
Carriers’ Association




                        Page 52   GAO/GGD-98-1 Postal Service Labor-Management Relations
                        Contents




Appendix VII                                                                                           98

Comments From the
National League of
Postmasters of the
United States
Appendix VIII                                                                                         107

Major Contributors to
This Report
Tables                  Table 1: Composition of Postal Service Workforce at the End of                  4
                          Fiscal Year 1996
                        Table 2: Organizations Representing Career Bargaining                           5
                          Employees as of September 1996
                        Table 3: Brief Descriptions of Steps and Key Parties Involved in               15
                          the Grievance/Arbitration Process
                        Table 4: List of 10 Selected Initiatives, Their Major Participants,            22
                          and Related 1994 GAO Recommendations

Figures                 Figure 1: Average Rate of Postal Service Grievances Appealed to                16
                          Step 3 per 100 Craft Employees During Fiscal Years 1994 Through
                          1996
                        Figure 2: Postal Service Grievances Awaiting Arbitration for                   17
                          Fiscal Years 1994 Through 1996
                        Figure 3: Average Rate of Postal Service Grievances Awaiting                   18
                          Arbitration per 100 Craft Employees for Fiscal Years 1994
                          through 1996




                        Page 53                     GAO/GGD-98-1 Postal Service Labor-Management Relations
Contents




Abbreviations

AFL-CIO    American Federation of Labor-Congress of Industrial
                Organizations
APWU       American Postal Workers Union
ASP        Associate Supervisor Program
EAS        Executive and Administrative Schedule
EI         Employee Involvement
EOS        Employee Opinion Survey
EVA        Economic Value Added
EXFC       External First-Class Measurement System
FLSA       Fair Labor Standards Act
FMCS       Federal Mediation and Conciliation Service
MBP        Management by Participation
NALC       National Association of Letter Carriers
NAPS       National Association of Postal Supervisors
NAPUS      National Association of Postmasters of the United States
NLRA       National Labor Relations Act
NPMHU      National Postal Mail Handlers Union
NRLCA      National Rural Letter Carriers’ Association
PCES       Postal Career Executive Service
PRA        Postal Reorganization Act of 1970
PMG        Postmaster General
QWL        Quality of Work Life
RBCS       Remote Bar Coding System
REC        Remote encoding center
TFP        Total factor productivity
UMPS       Union-Management Pairs


Page 54                   GAO/GGD-98-1 Postal Service Labor-Management Relations
Page 55   GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix I

Description of Grievance/Arbitration
Process

                                As defined in postal labor agreements, a “grievance” is “a dispute,
                                difference, disagreement, or complaint between the parties related to
                                wages, hours, and conditions of employment.” The Postal Service’s
                                process for resolving grievances is similar to that used in the private sector
                                and other public organizations.

                                Depending on the type of grievance, the process may involve up to 4 or 5
                                steps, and each step generally requires the involvement of specific postal
                                and union officials. For instance, at each of the first 3 steps in the process,
                                the parties that become involved include lower to higher union and postal
                                management level officials in their respective organizations, such as post
                                offices, mail processing and distribution centers, and area offices. Step 4 in
                                the grievance process occurs only if either the Service or the union
                                believes that an interpretation of the union’s collective bargaining
                                agreement is needed, in which case national level postal and union
                                officials would become involved. The fifth and final step in the grievance
                                process involves outside binding arbitration by a neutral third party. Both
                                employees and the four unions that represent them can initiate grievances.
                                The 5 steps of the process are described below.

Step 1: Oral Grievance      •   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: Written Grievance   •   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: Written Appeal of   •   The union files a written appeal with the Area Office’s director of human
Grievance                       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).




                                Page 56                     GAO/GGD-98-1 Postal Service Labor-Management Relations
                                    Appendix I
                                    Description of Grievance/Arbitration
                                    Process




Step 4: National Level Review   •   If either party maintains that the grievance involves a matter concerning
of Grievances Involving an          the interpretation of the National Agreement, the union has 21 days to
Interpretation of the Union’s       refer the matter to the national level of the union and the Postal Service.
National Agreement              •   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             •   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.




                                    Page 57                         GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix II

Comments From the Postal Service




See p. 48.




See pp. 49-51.




                 Page 58   GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix II
Comments From the Postal Service




Page 59                       GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III

Comments From the American Postal
Workers Union

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




See pp. 48-49.




                             Page 60   GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix III
                 Comments From the American Postal
                 Workers Union




See comment 2.

Now on p. 11.




                 Page 61                      GAO/GGD-98-1 Postal Service Labor-Management Relations
             Appendix III
             Comments From the American Postal
             Workers Union




See p. 21.




             Page 62                      GAO/GGD-98-1 Postal Service Labor-Management Relations
                      Appendix III
                      Comments From the American Postal
                      Workers Union




See pp. 35-37.




See pp. 37-38.




See pp. 38-41.
Also see comment 3.




                      Page 63                      GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix III
                 Comments From the American Postal
                 Workers Union




See pp. 41-43.




                 Page 64                      GAO/GGD-98-1 Postal Service Labor-Management Relations
             Appendix III
             Comments From the American Postal
             Workers Union




See p. 51.




             Page 65                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 66                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 67                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 68                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 69                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 70                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 71                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 72                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 73                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 74                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 75                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 76                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




Page 77                      GAO/GGD-98-1 Postal Service Labor-Management Relations
               Appendix III
               Comments From the American Postal
               Workers Union




               The following are GAO’s comments on specific issues included in the letter
               dated July 21, 1997, from the American Postal Workers Union (APWU).
               Other issues that were discussed in the letter have been included in the
               report text.


               1. We do not agree with APWU’s assessment that the basic premise of the
GAO Comments   report—that labor-management relations problems have generally
               contributed to a sometimes contentious work environment and lower
               productivity—was misleading. In discussing these issues, we did not
               suggest, as APWU stated, that such an environment resulted from some top
               down directive from the unions. Rather, as discussed in our 1994 report,
               such an environment appeared to have resulted from various problems,
               including autocratic management styles, adversarial employee and union
               attitudes, and inappropriate and inadequate performance management
               systems. We identified these problems mainly through the results of the
               1992 and 1993 postal employee opinion surveys and our interviews with
               postal, union, and management association officials.

               Also, we did not suggest that such problems as the high level of grievance
               activity and poor relations between postal craft employees and
               supervisors were the result of union propaganda or internal union politics.
               Instead, as discussed in our 1994 report, we determined that various data,
               including (1) increased grievance rates, (2) repeated uses of arbitration to
               settle contract negotiations, and (3) responses to the 1992 and 1993 postal
               employee opinion surveys indicated that postal, union, and management
               association officials needed to change their relationships and work
               together to help improve the Service’s corporate culture, so that the Postal
               Service can become more competitive and a better place to work.

               2. In its comments, APWU stated that it believed the report’s premise—that
               the Service has experienced lower productivity or insufficient productivity
               improvements compared to the private sector—was flawed. APWU also
               cited various problems with our discussion of TFP in the report and
               believed that we had implied that TFP was retarded by labor. In addition,
               APWU expressed concern about our characterization that the Service’s
               economic performance was causing it to lose market share to its
               competitors. Furthermore, APWU included in its comments specific data on
               such topics as (1) comparisons of Service and APWU labor productivity to
               that of the non-farm labor sector and (2) the Service’s share of the
               advertising revenue that has been generated by major communications
               participants, such as newspapers, radio, and television.



               Page 78                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix III
Comments From the American Postal
Workers Union




The discussion on TFP in our report was intended to provide additional
information and perspective on the Service’s overall productivity and
performance compared to other performance indicators such as net
income and delivery scores for specific classes of mail. We did not verify
the accuracy of the TFP information that we obtained from the Service nor
did we verify the data that APWU included with its comments related to
such topics as labor productivity and advertising revenue. Also, we did not
suggest as APWU stated that the behavior of TFP was retarded by labor. In
addition, we stated in our report that the Service was concerned about the
fact that customers were increasingly turning to competitors or alternative
communications methods. This information was not our characterization,
as asserted by APWU, but it was information that we obtained from Service
officials.

3. In discussing the crew chief program, APWU commented that we ignored
the fact that negotiated group leaders—employees whose responsibilities
are similar to those of crew chiefs—were being successfully used at RECs,
and the overall performance of the RECs has exceeded expectations. Our
primary purpose for including RECs in our review was to determine the
extent to which the joint APWU-Service labor-management cooperation
memorandum had been implemented, not to review the overall operations
of RECs. Thus, we did not review the use of negotiated group leaders at
RECs or the overall performance of RECs.




Page 79                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix IV

Comments From the National Association of
Letter Carriers

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




                             Page 80   GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix IV
                 Comments From the National Association of
                 Letter Carriers




Now on p. 25.




Now on p. 19.


See pp. 19-21.




See p. 24.




                 Page 81                       GAO/GGD-98-1 Postal Service Labor-Management Relations
                Appendix IV
                Comments From the National Association of
                Letter Carriers




Now on p. 12.




See p. 35.




                Page 82                       GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix IV
                 Comments From the National Association of
                 Letter Carriers




See comment 2.




Now on p. 13.




                 Page 83                       GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix IV
                 Comments From the National Association of
                 Letter Carriers




See pp. 43-44.




                 Page 84                       GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix IV
                 Comments From the National Association of
                 Letter Carriers




See pp. 42-43.




                 Page 85                       GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix IV
                 Comments From the National Association of
                 Letter Carriers




See comment 3.




                 Page 86                       GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix IV
                 Comments From the National Association of
                 Letter Carriers




See comment 3.




                 Page 87                       GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix IV
                 Comments From the National Association of
                 Letter Carriers




See pp. 47-48.




                 Page 88                       GAO/GGD-98-1 Postal Service Labor-Management Relations
               Appendix IV
               Comments From the National Association of
               Letter Carriers




               The following are GAO’s comments on specific issues included in the letter
               dated July 17, 1997, from the National Association of Letter Carriers
               (NALC). Other issues discussed in the letter have been included in the
               report text.


               1. We do not agree with NALC’s opinion that our methodology in reviewing
GAO Comments   improvement initiatives was fundamentally flawed. The methodology we
               used for our 1994 report laid the groundwork for concluding that problems
               in labor-management relations persisted on the workroom floor of various
               postal facilities. The methodology that supported the work for this review
               involved a similar approach, which generally included (1) interviews with
               responsible postal, union, and management association officials both in
               headquarters and at selected postal field locations and (2) reviews of
               relevant documents. As discussed in the section of the report entitled
               “Objectives, Scope, and Methodology,” which begins on page 7, this work
               was intended to help us determine the extent to which progress in
               improving such problems had been made, including whether the results of
               specific improvement initiatives had contributed to such progress.

               As we mentioned in the methodology section, the 32 initiatives we
               originally identified for our review covered a wide range of postal
               improvement activities. We recognize that such initiatives offered
               opportunities for the Service and NALC, as well as the other three unions
               and the three management associations, to try to improve the postal work
               environment. However, we determined that because we were faced with a
               limited amount of time and resources, we were unable to review all 32
               initiatives. We determined that our efforts could best be spent by
               reviewing those initiatives that we believed had significant potential to
               address the recommendations in the 1994 report, and that, of the 32
               initiatives, 10 appeared to fit this criterion. As described in our
               methodology, our work included (1) discussions with various
               headquarters and field postal officials responsible for implementing and
               monitoring the 10 initiatives, (2) discussions with national and field union
               and management association representatives who were involved with or
               affected by the implementation of the 10 initiatives we reviewed, and
               (3) reviews of relevant documents associated with the implementation of
               the 10 initiatives. We believe that by using this approach, we were able to
               obtain sufficient information that enabled us to determine the overall
               extent to which progress had been made in improving various
               labor-management relations problems that were identified in our 1994
               report.



               Page 89                       GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix IV
Comments From the National Association of
Letter Carriers




2. In its comments, NALC stated that it believed it was inappropriate to
compare the rural letter carrier system to the city carrier system. Thus,
NALC believed that we should not cite the rural carrier system as a model
for the Service and NALC to use in their attempts to revise the city letter
carrier system. As discussed in our 1994 report, both the Service and NALC
agreed that the city letter carrier system had problems and needed to be
changed. We identified various positive attributes of the rural carrier
system, such as greater independence for employees in sorting and
delivering mail, that we believed the Service and NALC could consider in
attempting to revise the city carrier system. However, we did not advocate
that city carriers merely adopt the rural carrier system. Rather, we
recommended that working together, the Service and NALC should test
revised approaches that incorporate known positive attributes of the rural
carrier system to determine how such attributes might be used in the city
carrier system. We continue to believe that the implementation of this
recommendation may help address some of the problems that we found
were associated with the city letter carrier system.

3. In its comments, NALC expressed concern about the fact that we did not
discuss two initiatives in our report. The two initiatives included (1) the
1992 Joint Statement on Violence and Behavior in the Work Place and
(2) the Union-Management Pairs (UMPS) program.

Concerning the joint statement on violence, NALC believed that it was
curious that although this initiative was included in the original list of 32
initiatives, we did not include it in our report. Also, NALC stated that it
believed the statement might have been “. . . an instructive area of inquiry,
since it portrays the best and worst of union-management joint efforts to
address labor-management cultural issues.” According to NALC, the signing
of the statement by the Service and the unions was the best aspect of this
initiative, but the worst part was the Service’s refusal to recognize the
statement as an enforceable agreement against postal supervisors.

As explained previously in comment 1, time and resource limitations
prevented us from reviewing all 32 initiatives. We believed that the 10
initiatives we selected were those that had significant potential for
addressing the recommendations included in our 1994 report. Since we did
not review the joint statement on violence, we cannot comment on NALC’s
statements about this initiative. However, we believe that such a statement
provides the Service, its unions, and management associations an
opportunity to work together to solve problems, which may help these




Page 90                       GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix IV
Comments From the National Association of
Letter Carriers




organizations improve cooperation between employees and supervisors
and reduce workfloor tensions.

Concerning the Union-Management Pairs (UMPS) program, NALC stated that
it was a joint, cooperative program, one in which postal management and
union officials worked together to try to resolve disputes between
employees and supervisors without lengthy delays or arbitration. NALC
believed that UMPS was a successful program that helped bring about a
drastic reduction in grievances and arbitrations and that in its 10 years of
existence, it generated a positive labor-management ambiance. Although
NALC stated that it wanted to expand the use of UMPS, the Service has
refused to do so.

Like the joint statement on violence, UMPS had been included in the
original list of 32 initiatives, and, as mentioned previously, time and
resource limitations precluded us from reviewing all 32 initiatives.
However, as discussed in our 1994 report, UMPS provided the Service and
NALC an opportunity to try to jointly resolve disputes between employees
and supervisors before such disputes escalated into formal grievances. We
believe that such an effort can help these organizations improve
communications and reduce conflicts between employees and
supervisors.




Page 91                       GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix V

Comments From the National Postal Mail
Handlers Union

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See pp. 47-48.




Now on p. 5.

See comment 1.




                             Page 92   GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix V
                 Comments From the National Postal Mail
                 Handlers Union




Now on p. 42.




See pp. 42-43.




                 Page 93                       GAO/GGD-98-1 Postal Service Labor-Management Relations
              Appendix V
              Comments From the National Postal Mail
              Handlers Union




              The following is GAO’s comment on a specific issue included in the letter
              dated July 22, 1997, from the National Postal Mail Handlers Union (Mail
              Handlers). Other issues that were discussed in the letter have been
              included in the report text.


              1. In its letter, the Mail Handlers union disagreed with our statement that
GAO Comment   about 80 percent of employees represented by the four major postal
              unions have joined and paid dues. According to Mail Handlers, this figure
              should be higher than 80 percent. Also, Mail Handlers mentioned in its
              letter the union security provisions of the National Labor Relations Act
              (NLRA) and its desire to see such provisions applied to the Postal Service,
              which, if enacted by Congress, would mean that postal employees
              represented by a labor organization must join and pay dues to that
              organization.

              According to PRA, employees have the right, but are not required, to join a
              labor organization. The overall percentage figure that we included in the
              report on the number of union members was intended to provide a general
              perspective on the extent to which those employees represented by unions
              were actual members of the union.

              We obtained information on the total number of employees represented by
              the four labor unions from the Postal Service’s On-Rolls and Paid
              Employees Statistics National Summary. Also, we recently contacted
              union officials in the four major postal labor unions to obtain estimated
              figures on employees who had joined the unions and paid dues. As shown
              in the report text on page 5, union officials estimated the following
              percentages of union members who had paid dues as of September 1996:
              81 percent for APWU, 83 percent for Rural Carriers, 85 percent for Mail
              Handlers, and 92 percent for NALC.

              We did not verify the accuracy of the data in the Service’s summary nor
              did we verify the accuracy of the data provided by the four unions. In
              addition, since we did not address the union security provisions of NLRA as
              they might apply to the Postal Service, we could not comment on this
              issue.




              Page 94                       GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix VI

Comments From the National Rural Letter
Carriers’ Association

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




See pp. 13
and 19.




                             Page 95   GAO/GGD-98-1 Postal Service Labor-Management Relations
                Appendix VI
                Comments From the National Rural Letter
                Carriers’ Association




See pp. 29-30
and 32.




See p. 21.




                Page 96                       GAO/GGD-98-1 Postal Service Labor-Management Relations
              Appendix VI
              Comments From the National Rural Letter
              Carriers’ Association




              The following is GAO’s comment on a specific issue included in the letter
              dated June 11, 1997, from the National Rural Letter Carriers” Association
              (Rural Carriers). Other issues that were discussed in the letter have been
              included in the report text.


              1. In its letter, the Rural Carriers union discussed its continued
GAO Comment   involvement in the Quality of Work Life/Employee Involvement (QWL/EI)
              initiative. Rural Carriers stated that this initiative has been ongoing since
              1982 and QWL/EI participants have addressed various substantive
              work-related issues, such as the implementation and monitoring of
              automation, new rural carrier training and safety issues. Rural Carriers
              also mentioned that no permanent QWL/EI structure exists mainly because
              rural carriers who participate are not expected to devote their full time to
              QWL/EI activities and also, participants rotate through the QWL/EI program.


              The QWL/EI initiative was included in the original list of 32 initiatives that
              we had identified at the onset of our review. However, as discussed in the
              section of this report entitled “Objectives, Scope, and Methodology,”
              which begins on page 7, time and resource limitations precluded us from
              reviewing all 32 initiatives. Thus, from the list of 32 initiatives, we selected
              10 that we determined had significant potential to address the
              recommendations in our 1994 report. Although we did not review the
              QWL/EI initiative in this report, as discussed in our September 1994 report,
              we found that when local postal management, unions, and employees
              were committed to improvement initiatives such as QWL/EI, the results
              were often positive and had the potential for helping to (1) develop mutual
              trust and cooperation, (2) change management styles, and (3) increase an
              awareness that quality of worklife is just as important as the “bottom line.”




              Page 97                       GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix VII

Comments From the National League of
Postmasters of the United States

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




See pp. 47-48.




                             Page 98   GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix VII
                 Comments From the National League of
                 Postmasters of the United States




Now on p. 19.



See p. 21.




See p. 24.




See comment 2.




See pp. 42-43.




                 Page 99                       GAO/GGD-98-1 Postal Service Labor-Management Relations
                      Appendix VII
                      Comments From the National League of
                      Postmasters of the United States




See comment 3.




Now on p. 28.




Also see comment 4.




See pp. 29-30.




See p. 30.




                      Page 100                      GAO/GGD-98-1 Postal Service Labor-Management Relations
                 Appendix VII
                 Comments From the National League of
                 Postmasters of the United States




See p. 32.




See p. 50.




See comment 5.




                 Page 101                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix VII
Comments From the National League of
Postmasters of the United States




Page 102                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix VII
Comments From the National League of
Postmasters of the United States




Page 103                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix VII
Comments From the National League of
Postmasters of the United States




Page 104                      GAO/GGD-98-1 Postal Service Labor-Management Relations
               Appendix VII
               Comments From the National League of
               Postmasters of the United States




               The following are GAO’s comments on specific issues included in the letter
               dated July 22, 1997, from the National League of Postmasters of the United
               States (the League). Other issues that were discussed in the letter have
               been included in the report text.


               1. In its letter, the League commented on a statement we made in the
GAO Comments   report, which indicated that since 1970, the distinction between NAPUS and
               the League had become blurred and their memberships overlapped (i.e.,
               many postmasters belonged to both organizations). According to the
               League, this statement was unclear. Thus, we revised the text to indicate
               that many postmasters belong to both NAPUS and the League and that both
               organizations address issues of interest to all postmasters.

               2. In its letter, the League mentioned that it asked the Service to
               implement a specific project known as the Special Services
               Implementation Task Force. However, the League stated that the Service
               did not consult or work with the League during the planning stages of the
               project, and the League was consulted only near the end of the project.
               Also, the League mentioned that the Service asked the League to
               participate in the development of training courses. Although the results
               have not yet been determined, the League stated that the results of this
               work on training look promising. Since we did not review these initiatives,
               we cannot comment on the information that the League provided on them.

               3. In its comments, the League mentioned the Management by
               Participation (MBP) initiative, which provided the Service and the three
               management associations an opportunity to help eliminate authoritarian
               management styles. The League indicated that although MBP was viewed as
               a worthwhile initiative and helped make various improvements, it was
               discontinued during or shortly after the PMG’s 1992 postal reorganization.

               At the beginning of our work, MBP was included in the list of 32 initiatives.
               However, as discussed in the section entitled “Objectives, Scope, and
               Methodology,” which begins on page 7, time and resource limitations
               precluded us from reviewing all 32 initiatives. Thus, we focused our efforts
               on 10 initiatives that we determined had significant potential for
               addressing our 1994 recommendations. Since we did not review MBP in this
               report, we cannot comment on the information that the League provided
               on MBP. However, in chapter 6 and appendix II of volume II of our 1994
               report, we included information on MBP, which was a process for
               disseminating participative management concepts to postal supervisors,



               Page 105                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix VII
Comments From the National League of
Postmasters of the United States




managers, and postmasters so that a more participative work environment
could be fostered and realistic solutions to business problems could be
developed.

4. In its letter, the League commented on the new compensation system
for managers and supervisors, including the EVA program. The League
stated that our report implied that most postmasters were included in EVA;
but, according to the League, most postmasters were excluded from EVA.
In our report, we stated that League and NAPUS officials told us that based
on the Service’s decision that nonexempt employees should not be eligible
to receive EVA bonuses, about 60 percent of employees represented by
these associations were eliminated because they were nonexempt
employees. We believe that by including this statement in the report, we
had already indicated the League’s concern that a majority of the
employees it represented was excluded from EVA.

The League also commented that it refused to endorse the new pay system
because it excluded most of the Service’s postmasters, including most of
the League’s members. As suggested by the League, we included this
information in the text of the report where the new compensation system
was discussed.

5. In its letter, the League suggested that separate meetings between each
of the seven employee organizations and the Postal Service might help
develop cooperation and trust between the parties. According to the
League, after such meetings had taken place, all eight parties could come
together for what would hopefully prove to be a more productive and
successful meeting. As discussed in this report, in November 1994, the PMG
invited the four labor unions and the three management associations to
meet with the Service in trying to determine, among other things, how best
to implement the recommendations included in our September 1994
report. A key recommendation in our report was the establishment by
these eight parties of a framework agreement to outline overall objectives
and approaches for demonstrating improvements in the workroom climate
of both mail processing and delivery functions. However, we did not
specify the means by which the eight organizations should establish such
an agreement.




Page 106                      GAO/GGD-98-1 Postal Service Labor-Management Relations
Appendix VIII

Major Contributors to This Report


                         Michael E. Motley, Associate Director
General Government       Teresa L. Anderson, Assistant Director
Division, Washington,    James T. Campbell, Assistant Director (Retired)
D.C.                     Anne M. Hilleary, Evaluator-in-Charge
                         Tammy R. Conquest, Senior Evaluator
                         Melvin J. Horne, Senior Evaluator
                         Chau Vu Walters, Senior Evaluator
                         Arnel P. Cortez, Evaluator


                         Billy W. Scott, Senior Evaluator
Dallas Regional Office   Hugh F. Reynolds, Evaluator


                         Robert E. Kigerl, Evaluator
Denver Regional          Robert W. Stewart, Evaluator
Office




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