DOC MENT RESUME

04068 - [B3054300] (Restricted)

nail Processinq- Productivity heasuremsnt Is Inadequate.GGD-77-83; B-114874. October 27, 1977. 15 pp. * 3.appendices (5pp.). .

Report to Rep. Charles H. Nilson, Chairman, House Committee onPost Office and Civil Service: Postal Personnel andModernization Subcomnittee; by Robert F. Reller, ActingComptroller General.

Issue Area: National Productivity: Evaluation cf Productivityinpact of Federal Personnel Policies, Procedures, andControls (2904).

Contact: General Government Div.Budqet Function: General Government: Cther General Government

(806).Organization Concerned: Postal Service.Conqressional Relevance: Hcuse Committee Cn Post Office and

Civil Service: Postal Pezsonnel and ModernizaticrSu committee.

Authority: National Productivity and quality of Working Life Act(P.L. 94-lI.6).

The Management Operating Data Slytes is currently beingused by the U.S. Postal Service to measure prcductivity in itsmail processinq operations. Findings/Conclusicns: The PcstalService is not realizing the full benefits of a .roductivitymeasurement system because its system generally dces not meetthe information needs of local managers for whom the systesm aslesiqned; is producing reports which are not being reviewed byupper level management to determaine the relative etticiency ofthe various offices and to make necessary budget changes andcost reductions more equitable; and does not ;rcvide hardstatistical data to measure the effectiveness of its ManpowerScnedulinq and Staffing Program which was designed tc increaseproductivity in individual offices. aecommendations: The PostaiService should reexamine its productivity measurement system tone sure it meets the needs or local managers. At largerfacilities the measurement system shculd prcvide precise data c!.each operation for each 8-hour to:r, day, and accounting pericd.At smaller facilities the data do not need to be as precise asthat qathered at larqe facilities, but it should be moredetailed than that provided by the Eanagement Operating DataSystem. The data should reflect the efficiency cf eacn a-hourtour. For bota large and small facilities, the data should beused to set qoals for particular operations by tncse respcnsiblefor the operations. Upper level managers should also use theaata to determine the relative efficiencies of particularoperations and of entire postal facilities. This cocparisonshould allow managers to establish equitable budgets andidentify those operations needing management imprcvement.(Autnor/SC)

ArSTRICTED - Not to be released outside Om GneralAccountig Office exespt on the haEis of specilic iapprraby the Otfice f Congressiornl Rlatlbsr.

,' ~- REPORT OF THE· I - COMPTROLLER GENERAL'-~ ' OF THE UNITED STATES

Mail Processing ProductivityMeasurement Is InadequateA productivity-measurement system ideallywill provide management with useful information for setting goals, justifying budgets,and controlling operations. The ManagementOperating Data System used by the UnitedStates Postal Service in mail processing oper-ations is inadequate because it

--generally does not meet the informa-tion needs of local managers forwhom the system was designed,

-is producing reports that are not beingreviewed by upper level management,and

--does not provide good statistical datato measure theeffectivenessof the Ser-vice's Manpower Scheduling and Staff-ing Program.

Although the Postal Service's efforts to im-prove productivity through the ManpowerScheduling and Staffing Program are basedon sound concepts, its results to date havebaen disappointing.

GGD7-83 OCTOBER 27, 1977

COMPPROLLAE GN!RAL OF THE UNITIE SrATESWASHINGTON. O.C.

B-114874

The Honorable Charles H. WilsonChairman, Subcommittee on Postal

Personnel and ModernizationCommittee on Post Office and

Civil ServiceHouse of Representatives

Dear Mr. Chairman:

Your letter of September 9, 1976, requested that weidentify all productivity measurement systems in use at theUnited States Postal Service and evaluate the adequacy ofthese systems. In addition, you asked for an overview ofthe Postal Service's Productivity Improvement Program andthe results it has achieved thus far. It was subsequentlyagreed with your off-ice to report separately on (1) pro-ductivity measurement in the mail processing area, includingan overview of the Productivity Improvement Program, and(2) productivity measurement in other major operationsin the Postal Service.

This report contains our findings relating to the mailprocessing area and to the Productivity Improvement Program.We briefed your office on our work in other areas of postaloperations on May 13, 1977, and as agreed we will examinein detail the productivity measurement system' at selectedbulk mail centers as part of our overall assessment of theNational Bulk Mail System.

As you know, section 236 of the Legislative Reorgani-zation Act of 1970 requires the head of a Federal agencyto sut'it a written statement on actions taken on ourrecommendations to the House Committee on Government Opera-tions and the Senate Committee on Governmental Affairsnot later than 60 days after the date of the report and to

B-114874

the House and Senate Committees on Appropriations with theagency's first request for appropriations made more than60 days after the date of the report. We will be in touchwith your office in the near future to arrange for releaseof the report so that the requirements of section 236 canbe set in motion.

Sincerely yours,

ACTING Comptroller GeneralOf the United States

COMPTROLLER GENERAL'S REPORT' MAIL PROCESSING PRODUCTIVITYTO THE SUBCOMMITTEE ON POSTAL MEASUREMENT IS INADEOUATEPERSONNEL AND MODERNIZATIONCOMMITTEE ON POST OFFICE ANDCIVIL SERVICEHOUSE OF REPRESENTATIVES

DIGEST

In recent years, increased attention has beengiven to the use of productivity informationas a management tool. Management can useproductivity information to

--gauge the efficiency of operations,

--aid in setting goals,

-- formulate budgets, and

-- effectively motivate subordinate managersby pinpointing responsibility.

The Management Operating Data System is cur-rently being used by the United States PostalService to measure productivity in its mailprocessing operations. The system is theoffspring of a more complex measurementsystem that was abandoned because errors,incorrect procedures, arbitrary. adjustments,falsification, and inadequate equipmentresulted in inflated productivity data.

The Management Operating Data System wasintended to provide managers with basicproductivity information. It was not tobe used by managers for comparing the rela-tive efficiencies of operations or postoffices because of a fear that such com-parisons would foster the same kind ofcompetition and resulting fabricationthat ruined the earlier system.

GAO's review showed that the Postal Serviceis not realizing the full benefits of a pro-ductivity measurement system because itssystem

ar Sheet Upon remova. the rport GG D-77-83cover date should be noted hereon

--generally does not meet the informationneeds of local managers for whom thesystem was designed;

--is producing reports which are not beingreviewed by upper level management todetermine the relative efficiency ofthe various offices and to make neces-sary budget changes and cost reductionsmore equitable; and

-does not provide hard statistical data tomeasure the effectiveness of its ManpowerScheduling and Staffing Program, which wasdesigned to increase productivity inindividual offices.

GAO also noted that the results of the Man-power Scheduling and Staffing Program,formerly known as the Productivity Improve-ment Program, have been disappointing todate. The concepts employed by the programare sound, and the Postal Service's currentefforts to improve line managers' confidenceand commitment to this program should makeit work effectively.

RECOMMENDATIONS TOTHE POSTMASTER GENERAL

The Postal Service should reexamine its pro-ductivity measurement system to be sure itmeets the needs of local managers. At largerfacilities where accountability and opera-tional efficiency are most important and yetmost difficult to achieve, the measurementsystem should provide precise data on eachoperation for each 8-hour tour, day, andaccounting period.

Ar smaller facilities where operations aremore easily controlled, the data does not-need to be as precise as that gathered atlarge facilities, but it should be moredetailed than that provided by the Manage-ment Operating Data System. The datashould reflect the efficiency of each8-hour tour.

For both large and small facilities, thedata should be used to set goals for partic-ular operations by those responsible for theoperations. Upper level managers shouldalso use the data to determine the relativeefficiencies of particular operations andof entire postal facilities. This compari-son should allow managers to establishequitable budgets and identify thoseoperations needing management improvement.

AGENCY ACTIONS

The Postmaster General agreed with GAO'srecommendations. Be stated that the PostalService has initiated corrective actions tohelp overcome the inadequacies cited inthis report.

The Postal Service has begun reexaminingits productivity measurement system.Plans have been made to reinstitute tourreports in the large facilities beginningin March 1978. A computer time-sharingsystem now being field tested will providemail volume and productivity data for thesmaller offices presently using the Manage-ment Operating Data System. Beginning inAugust 1977, management summary reportsare being made available to upper levelmanagers, and increasing emphasis isbeing placed on using productivity datain establishing budgets and assessingperformance.

These actions should help the PostalService improve its productivity measure-ment system.

Tear Sheet

C o' n t e n t s

Pace

DIGEST

CHAPTER

1 INTRODUCTION 1Why productivity measurement? 1Evolution of the ManagementOperating Data System 2

Manpower Scheduling and StaffingProgram 5

Scope of review 5

2 MCD DOES NOT HELP IN MANAGINGMAIL PPOCESSING OPERATIONS 6

MOD does not provide forcontrol in operations 6

MOD is not used to set goals 7MOD is not used to justify_

budget recuests 8Management does not use MOD

to enhance motivation norestablish accountability 9

3 WEAKNESSES IN PRODUCTIVITY MEASURE-MENT HINDER MANPOWER SCHEDULING ANDSTAFFING PROGRAM 10The progress of the Manpower

Scheduling and Staffing Programis disappointing 10

The lack of good productivitydata is hampering progress 13

4 CONCLUSIONS AND RECOMMENDATIONS 14Conclusions 14Recommendations to

the Postmaster General 14Agency actions 15

APPENDIX

I Letter dated Sectember 9, 1976,from Congressman Charles H. Wilson 15

.II Letter dated Auaust 26, 1977, fromthe Postmaster General 18

III Example of a MCD reoort 20

ABBREVtATIONS

GAO General Accounting Office

MOD Management Opecrating Data System

CEAPTER 1

I3TRODOCTION

In 1976 about 226,000 postal clerks and mailhandlersprocessed about 90 billion pieces of mail. Increasingthe productivity of these excloyees, as well as the oro-ductivity of all Federal and non-Federal employees, becamepart of a national goal created by the Congress through TheNational Productivity and Quality of Working Life Act,Public Law 94-136, dated Novetmer 1975.

WHY PRODUCTIVITY MEASUREMENT?

Measuring productivity is necessary as a first step inany program directed at increasing productivity. Actionstaken to improve productivity after a formal program isestablished should be auantified so their effects can bedemonstrated. The usefulness of productivity data as amanagement tool can t'en be demons-rated.

An effective productivity measurement system shouldprovide a regular periodic repocrt on the efficiency of theorganization. It ',ill bring to the attention of managersdepartures from past trends, from planned goals, or fromsimilar ocerations in comparable organizations.

The timeliness of the data provided by the systemdepends, of course, on how freauently the measures arecompiled. To be most useful, however, the system shouldProvide the data managers use to gauge operations whenthey need it. The system should serve the managers,not vice versa.

A productivity measurement system can aid in thesetting of management goals. Most agencies are accustomedto establishing goals for their current and future ocerations.Too often these goals are overly general, however, makingit difficult for managers to assess efficiency. A aroperlydesigned productivity measurement system can assist in makincgoals more s.ecific and meaningful by showing the progressmade toward at:ainina these goals.

Excerience has shown -.ar a direct way of gettingmanagers' attention focused on. the use of produc:ivivy datais to relate i: to -he budcet formulation and review process.

Since the budget represents the most visible incentive formanagers, they will pay attention to those qoals chat willhelp them the most in the budget allocation exercise. Pro-ductivity data provides a powerful cool for projectingstaffing requireaments and justifying capital expendituresfor equipment. It also provides a means for projecting theeffect of planned improvements on resource requirements.

Productivity measurement, resulting in productivityimprovements, is a direct way of achieving the goals of acdst reduction program. The use of productivity data andspecific goals can contribute to better projections ofresource needs. Productivity data provides a history ofwhat actually happened to productivity under a variety ofconditions. This information can provide a basis fordetermining how well the goals for productiv ty improve-ments are being achieved.

A sound productivity measurement system must have thecommitment of the managers involved to use this data tomotivate subordinate managers. The managers must realize,however, that the system will pinpoint responsibility.Therefore, some managers may be reluctant to use the data.

A productivity measurement system will show changes inthe efficiency of a program's operations and these changeswill become visible to higher level managers in the formof specific numbers and productivity rates. Such informa-tion forces managers to explain poor performance and pro-vides a vehicle for documenting good performance. With thiskind of evaluative tool, upper level managers have a methodfor evaluating performance in meeting desired productivitylevels.

EVOLUTION OF THE MANAGEMENTOPERATING DATA SYSTEM

The Management Operating Data System (MOD) is thenewest in a long line of systems the Postal Service has usedfor collecting mail volume and staff-hour data. Many earliersystems have been abandoned in searching for the ultimatemethod of providing operating data. The system which Lmmedi-ately preceded MOD was the Work Load Recording Svscem.

2

Basically, the Work Load Recording System provideddetailed mail volume, hours, and cost relationship data for70 major mail processing operations and work-hour and costdata for 130 other operations in 117 large offices. Inaddition, it provided abbreviated data for 370 smaller offices.

The Work Load Recording System employed an automatedmail weight measurement system tied to the Postal SourceData System, a computerized data system used primarily torecord employees' time and attendance. The resulting opera-ting reports were provided by 8-hour tours for each day,week, and accounting period. These "tour reports" containedsta-dardized descriptions of each particular mail processing,support, and administrative operation showing the actualmail volume processed and the work-hours used for eachoperation. The data was intended for line supervisorsand managers to

-- :-:.-uat= and control productivity,

--improve mail processing methods,

--improve staff scheduling, and

--evaluate changes in mail processing.

Competition among post offices grew because the systemcompared productivity by office.

In September ,1974, the Postal Inspection Servicereported that the benefits of the Work Load Recording Systemwere not worth the cost. It advised the Postmaster Generalthat errors, incorrect procedures, arbitrary adjustments,falsification, and inadequate equipment had resulted in.inflated volumes at almost every office thfat used the WorkLoad Recording System. The report recommended that thesystem be changed to minimize motivation and opportunityfor false entries and other errors resulting in incorrectvolumes.

A task force, created to study the system's problems,reported that the system was complicated, costly, misunder-stood, -and misused. Through discussions with field andheadaquarters personnel, the task force developed severalalternative replacements to the syc-.em, including MCD, whichthe ?ostal Service ultimately adopted.

MOD is intended to provide managers with basic informa-tion on the relationship between mail volume and staff-hours.

3

A typical MOD report identifies both actual and projectedmail volumes and hours used each day for several identifiableprocessing operations.

Appendix III is an example of a MOD report. The first

line shows that operation 030 (the primary letter sort)handled 455,000 pieces of mail compared to a projected volumeof 460,000 pieces. Each clerk handled an average of 1,391pieces of mail per hour as compared to a projected 1,406pieces pad hour. Clerks spent 327 hours performing primarysort compared to a planned 284 projected hours to performthe function. Finally, the line shows the actual versusplanned hours to date during the accounting period.

The MOD report also shows planned and used hours forseveral miscellaneous support functions. Appendix III shows

this at the bottcm of the page.

Under MOD mail volume is recorded only when it entersthe operation where it will receive its first distributionhandling in that facility. It does not record mail volumefor subseauenr or downstream distribution as was the caseunder the Work Load Recording System. The downstream effectsof mail volume are based on statistical projections. Theseprojections are updated at least twice yearly to assure thatthey accurately reflect local mail-flow densities. Signifi-cant savings were expected at all post offices due to the

streamlined collection procedures.

At one time, management at the Postal Service's head-quarters, regional, and district levels received summaryreports. This practice was eliminated for fear it would

foster the same kind of competition and resulting fabrica-tion that ruined the Work Load Recording System. Accordingto a headauarters -official, this was'also the reason thePostal Service decided to produce daily volume reportsrather than volumes by 8-hour tours as was done under theWork Load Recording System.

A post office is classified as either a MOD I office ora MOD II office, depending upon its size. In the 111 largestpost offices, known as MOD I offices, productivity data iscollected on automated equipment. The smaller MOD II officescollect this data manually. In MOD I offices, the collectionof this data is facilitated, as was the Work Load RecordingSystem, through the use of the Postal Source Data System.

4

MANPOWER SCHEDULING ANDSTAFFING PROGRAM

In August 1974 the Postal Service initiated-a struc-tured cost reduction program for mail processing functionscalled the Productivity Improvement Program. This programwas to be implemented in 107 major post offices employingmore than 60 percent of the Postal Service's mail processingemployees.

In 1977 the name of this program was changed to theManpower Scheduling and Staffing Program. This programcontinued to operate under its original design using indus-trial engineering techniques to increase productivity withoutdegrading mail service. Potential cost savings nationwidewere estimated at $225 million. These improvements were tobe accomplished by (1) computerized personnel scheduling,(2) methods improvement that might result from time andmotion studies, and (3) maximized mail processing operationsthrough mechanization.

These plans were to be implemented in two steps. Thefirst step was to employ a team approach to provide comput-erized employee scheduling and staffing techniques to localoffices. The second step currently in the testing cycle willincorporate localized engineered work standards.

SCOPE OF REVIEW

Our review of the Postal Service's program to measureproductivity in the mail processing area was conducted atPostal Service Headquarters, regional offices, and selectedsectional center facilities and post offices.

We reviewed pertinent directives, methods handbooks,and operating reports and interviewed postal officialsthroughout the various management levels. The interviewswere designed to obtain postal officials' reactions toMOD and to solicit opinions on the possibilities forimproving the Postal Service's techniques for collectingand communicating management information.

5

CHAPTER- 2

MOD DOES NOT HELP IN MANAGING

MAIL PROCESSING- OPERATIONS

MOD is intended to be a productivity measurement system,but it falls short. It is not designed to provide operationsmanagers with information they need to control mail pro-cessing operations. Although MOD provides some informationthat middle and upper level managers could use to justifybudgets, enhance motivation, or establish accountability atlower levels, they do now use it for these purposes.

MOD DOESNOT-PROVIDE- FORCONTROL IN OPERATIONS

Under the Work Load Recording System, productivityreports were generated on an 8-hour tour basis. Withthe implementation of MOD, however, the reporting fre-quency was changed to once each 24-hour period.

According to many facility managers, the absence oftour volume statistics is a serious drawback. Without thiskind of data, proper tracking of productivity and evaluationof supervisors at the larger offices were very imprecise andof little value to the managers. They said that withoutthis information, proper management was impossible at largefacilities with thousands of employees-because problem areascannot be isolated nor responsibility fixed. A good pro-ductivity measurement system, the managers believe, isvital for increasing efficiency, especially at these largefacilities.

Ironically, the scope section of chapter 1 of theManagement Operating Data System Manual states that thesystem is designed to provide local management with theinformation they need for planning and control. In mostlocations that we visited, we found the information thatMOD provided was not the kind of information that localmanagers had wanted or needed.

In discussions with lower level managers, especiallyat one large postal facility, this loss of informationwas repeatedly brought up during discussions of th_ useful-ness of MOD information. These managers found thai: thedata provided by MOD lacked sufficient detail. The volume

6

of mail processed in the individual operations and thestaff-hours used were not identified by each 8-hour tour.Consequently, it was difficult for the managers to evaluatethe performance of their subordinates and for employeesto judge their own performances.

Under the old Work Load Recording System, a sense ofcompetition among the tours existed, with employees of eachtour wanting to be a member ¢f the most productive tour.It is also difficult to identify and hold individual super-visors responsible for low productivity when you cannot showthem where they have failed. In several instances we foundfacility managers gathering supplemental mail volume informa-tion to keep track of thie volume of mail their operationsand tours were processing. They believed that they neededthis kind of information to do their jobs.

MOD-IS NOT USEDTO SET-GOALS

At the postal facilities we visited, we found noinstance in which MOD data was being used to set goals formail processing operations or to create work standards.Several postal officials stated that their managementtechnique had been to establish productivity goals for themail processing operations and hold supervisors responsiblefor achieving the necessary performance to meet these goals.They said this approach is not practical under MOD, becausethey are now forced to rely on a comparison of actual to.planned (budgeted) staff-hours to evaluate the performance·of various mail processing units.

Managers believe this method is unsatisfactory becausethe planned staff-hours are prepared during budget formula-tion and are not goals based on productivity data that has

-been analyzed to assure operational efficiency. Theseplanned staff-hours represent only estimates based on pasttrends, such as for the same period last year. An obviousshortcoming of this approach occurs, for example, if anoperation had an inflated budget last year and was ineffi-cient. The data for this year will provide little meaningfulcomparison.

An alternative to establishing goals using a producti-vity measurement system would be to develop work standardsfor the mail processing operations. Such standards arecurrently being developed and are more than a year frombeing finalized.

7

According to several postal officials these standardswill not be the ideal output for particular operations, butrather will be the average productivity level attained.Officials believe the standards will be influenced by lessefficient, larger offices and, therefore, be somewhat lowerthan expected performance.

A second problem with establishing work standards atthe national level could be the difficulty in updating them.to reflect technological advancements in particular mailprocessing operations. If the standards are not current,their value diminishes as a management tool, and accurateperformance assessment will be impossible.

The need for using the productivity measurement dataavailable through a MOD-type system to establish goals forthe mail processing operations should not be ignored. Whenthis data is generally accepted by the participants, thenat least a frame of reference is established for the pro-ductive efficiency of the organization. And, many of theanswers to questions asked managers become clearer.

MOD IS NOT USED TO JUSTIFYBUDGET REQUESTS

The Postal Service's budgeting process calls for head-quarters to apportion funds to the region and for the region,in turn, to apportion funds to the districts. It is eachdistrict's responsibility to apportion its share of the fundsto the management sectional centers under its jurisdiction.The apportionment to the districts is based on prior budgetperformance and plans submitted by the districts, butgenerally operational data is not considered.

A regional official told us that his goal is to elimi-nate the waste within the post offices and that budgetedhours have to be well justified. Precise evaluation of anoffice's efficiency, however, is not possible. The in-ability to identify which locations are operating efficientlybecomes more critical as managers try to carry on theiroperations in the face of cost reduction programs. ThePostal Service's system for apportioning funds does notreward self-imposed productivity improvements.

Some regions have taken more extensive cost reductionactions than others. One region, for example, fully imple-mented a reduction plan, reducing deliveries in businessareas to one per day. Another region has done little to

8

reduce these delivery costs. Consequently, officials ofthe first region believe that additional budget cuts shouldbe directly tied to a region's commitment and success inmeeting the targets of ongoing cost reduction programs.

In some facilities, productivity data has been usedto formulate plans to meet the Postal Service's budget cuts.According to one district manager, his system of productivitymeasurement, which involves measuring staff-hours and mailvolume processed by tour, has improved efficiency by 15 per-cent over what it was under MOD only. If his districtcontinues to be hit with arbitrary budget cuts from head-quarters, however, he feels it will soon reach the pointof no return--where budget cuts will be met by correspondingcuts in service.

MANAGEMENT-DOES NOT USEMOD TO ENHANCE MOTIVATIONNOR ESTABLISH ACCOUNTABILITY

Within the Postal Service, we found few instances inwhich MOD reports were received or used above the locallevel. At one time managers at the headquarters, regional,and district offices received summary reports. Due toa headquarters staff decision, however, the report distri-bution was stopped. The staff feared a headquarters reviewwould foster the same kind of competition and resultingfabrication that ruined the Work Load Recording System.

with the decision by upper level managers not to monitorthe data provided' by MOD, postal officials have given up avaluable means of measuring productivity and assessing theefficiency of the various offices. Knowing that theirperformance is not being scrutinized and compared.aga-instsimilar offices or locations, managers will not be asstrongly motivated to get their tours and operations toperform as efficiently as possible. Management accounta-bility at all levels would require districts to monitor thedata supplied from their offices, regions to monitor thedistricts, and headquarters to monitor the regions.

Several postal officials maintained that the reluctanceof upper level managers to receive and use productivitydata resulted from MOD being an overreaction to the corrup-tion that developed under the Work Load Recording System.These officals suggest that perhaps the pendulum has swungtoo far away from the concept of accountability, causingdecreased motivation and less emphasis on productivity.

9

CHAPTER-3

WEAKNESSES IN PRODUCTIVITY MEASUREMENT HINDER

MANPOWER-SCHEDULING-AND-STAFFING- PROGRAM

The Postal Service's Manpower Scheduling and StaffingProgram, formerly called the Productivity ImprovementProgram, was designed to increase productivity. Theprogress to date has been disappointing and its futureimpact is questionable. The data needed to show areas whereproductivity improvements could be made and to show theeffects of recommended changes has been weakened with theadvent of MOD. The concepts employed by the program, never-theless, are sound, and the Postal Service's efforts toimprove line managers' confidence and commitment to theprogram should make it more effective.

THE PROGRESS -OF-THE-MANPOWER-SCEDULINGAND STAFFING PROGRAM IS DISAPPOINTING

The Manpower Scheduling and Staffing Program was designedtQ improve productivity through

--computer personnel scheduling,

--methods improvements that might result from timeand motion studies, and

--maximizing mail processing operations through mechani-zation

Plans- for implementing this program required twophases. The.goal of phase I was to provide computerizedemployee work scheduling at 107 post offices, which wasto be accomplished through the-use of a computer staffingmodel. This model, known as the Interactive Postal Simula-tor, simulates mail processing operations, mail availability,and service and transportation constraints and develops thestaffing requirements, by operation, for each day ofthe week. Once the basic information is developed fora specific post office, managers should be able to evaluatethe mail processing staffing requirements and make adjust-ments as conditions dictate.

Phase I was to be accomplished by teams of 7 to 12members. Membership was composed of headquarters, regional,district, and local post office representatives and financeofficers. The teams were to undergo 2 weeks of trainingand then spend approximately 16 weeks developing and in-stalling cost reduction projects in their offices.

10

Phase I was to be implemented by a series of roundswith round I teams fielded at 10 post offices in Seotember1974.

During the period May through August 1975, the PostalInspection Service reviewed round I activities at all 10offices. They reported that program objectives had not beenachieved, projected savings were misleading, and the pro-gram's cost tracking system was inadeguate.

Specific findings of the Inspection Service were that:

---Seven of the 10 offices had not implemented theteam scheduling and staffing recommendations.

--Implementing methods improvements had been limitedto Proposals comprising about 40 percent of the pro-jected annual cost savings.

--Maximum possible cost savings for fiscal year 1975budgets were $720,000, rather than the reported$3.1 million, with the differences consisting mostlyof local office cost reduction programs erroneouslyattributed to the program.

--Local office costs amounting to $200,000 and severalareas of headquarters costs were not included inpublished reports.

The Inspection Service report listed several reasonswhy the local offices failed to fully implement these pro-jects. The first reason was the lack of confidence managershad in scheduling changes and cost savings based on pro-ductivity increases in the. absence of illustrated examples..Second, changes in mail-flow patterns from implementing theBulk Mail System and the Service Improvement Program 1/were expected to affect the data upon which the staffingmodel was to operate.

1/The Service Improvement Program was implemented on a testbasis in October 1975. It eliminated domestic airmail as aclass of service by upgrading first-class mail service tomeet airmail delivery performance.

11

The Inspection Service report indicated that correctiveaction had been or would be taken on the round I problems,and the program continued with round II, consisting of20 offices.

We visited one office in the southern region includedin round II. Team members at that office spent 5 months,at a cost of $118,000, identifying methods improvementsand developing a scheduling and staffing plan. Savings of$588,000 were reported, but most of this resulted from localoffice cost reduction programs, leaving only $58,000 directlyattributable to the Manpower Scheduling and Staffing Program.

Introduction of the Bulk Mail System and the ServiceImprovement Program made many of the scheduled staffing.changes recommended by the team inoperative. In addition,due to this office's plans to move to a new facility in 1979,it was decided that scheduling and staffing will not be up-dated until after this move takes place. Since the BulkMail Program and the Service Improvement. Program are nation-wide efforts, all offices in rounds ' and II may have beenadversely effected.

During-round III, the Postal Service decided to testthe feasibility of fielding teams composed entirely oflocal post office personnel. This would provide localmanagers with total program ownership. Test results wereencouraging, and the decision was made to field only localteams for succeeding rounds.

During our visit to another location in the southernregion, round V reviews were in process. Officials spokefavorably of the program, especially the decision to uselocal office team members. These officials believed thatlocal teams would suggest only improvements they could livewith and that faster implementation would be Possible.These work methods improvement projects accounted for savingsof $1.2 million. In addition, use of the Interactive PostalSimulator model was underway. It will be used to analyzestaffing in individual operations and should enablemanagers to determine the effects an operational change,such as adding a letter sorting machine, will have onstaffing plans.

12

A headquarters official said that data from rounds IVand V was more reliable. He believed that more managersknew how the program operated and were willing to acceptcost reduction recommendations made by the teams to meetreductions in the budget imposed ht' headquarters.

THE LACK OF'GOOD PRODUCTIVITYDATA IS HAMPERING PROGRESS

Although it seems that progress could be made underthe Manpower Scheduling and Staffing Program, a seriousproblem developed with the basic data (provided by MOD)upon which it operates. According to officials at bothheadquarters and regional levels, this program has beenseriously weakened since the introduction of MOD. TheManpower Scheduling and Staffing Program and its Inter-active Postal Simulator model were designed to use Work LoadRecording System data which was much more detailed than thatprovided through MCD.

Modifications have been made in the' model to enableit to use MOD data, and improved manual data gatheringtechniques have been employed. Without hard data as support,however, verifying the accuracy of the data gathering isdifficult. If the data gatherings are not accurate re-flections of the mail processing work volume, the basicinput data for the staffing model will produce faulty opera-tional data.

The-true magnitude of this problem arises when'a managerbegins to achieve a high degree of efficiency in the opera-tion and reduces staff levels to the minimum needed tomeet budget constraints and still process the workload onhand.- Because of inaccuracies in the work sample, changesin mailer's habits (such- as the quantities mailed and thetimes of the month when the mail is deposited) could bemissed or go unnoticed. Since these volumes would not bedetected in the staffing model, the peak workload andstaffing periods would not always coincide. This wouldcreate mail volumes that could not be processed and thuswould be delivered late, resulting in a lower quality ofservice.

One postal official summarized the situation of t. heManpower Scheduling and Staffing Program. He said thatthe program could have Progressed much more in the sameamount of time if it had operated under a system inwhich Work Load Recording System type data was orovidedrather than the data provided by the current system.

13

-J

CRAPTER 4

CONCLUSIONS AND RECOM.4ENDATIONS

CONCLUSIONS

The Postal Service's system for measuring Productivityof the work force in the mal processing area

-- generally does not meet the information needs of localmanagers for whom the system was designed;

-- is producing reports that are not being reviewed byupper level 'nanagement to determine relative efficiencyof the varijus offices and to make necessary budgetchanges and cost reductions more equitable; and

--does not provide the hard statistical data needed tomeasure the effectiveness of the Manpower Schedulingand Staffing Program ard its staffing model (theInteractive Postal Simulator).

The concept of -the Manpower Scheduling and StaffingProgram remains sound despite the problems encountered withthe composition of team members in earlier rounds and theinadequate information from MOD in later rounds. Greaterstaffing efficiency should be a oriority of the mail pro-cessing operation with.a productivity.measurement systemproviding the necessary data for the Manpower Schedulingand Staffing Program to work effectively.

RECOMMENDATIONS-TOTHE POSTMASTER GENERAL

The Postal Service should reexamine its productivircmeasurement system to be sure it meets the needs of the localmanagers at offices of varying size. At larger facilitieswhere accountability and operational efficiency are mostimportant and yet most difficult to achieve, the measurementsystem should provide precise data on each ooera:ion foreach 8-hour tour, day, and accounting oeriod.

At smaller facilities where operations are nore easilvcontrolled, the data does not need to be as orecise as thatgathered at large facilities, but it should be more detailedthan that provided by MuCD. The data should reflect :heefficiency of each 8-hour tour.

14

For both large and small facilities, the data s:houldbe used to set goals for particular operations by thosemanagers responsible for the operations. Upper levelmanagers should also use the data to determine the relativeefficiencies of particular operations and of entire postalfacilities. This comparison should allow the Postal Serviceto establish equitable budgets and identify those operationsneeding management improvements.

AGENCY ACTIONS

The Postmaster General agreed with our recommendations.He stated that the Postal Service has initiated correctiveactions to help overcome the -inadequacies cited in thisreport. (See Appendix II.)

The Postal Service has begun reexamining its productiv-ity measurement system. Plans have been made to reinstitutetour reports in the large facilities beginning in March 1978.A computer time-sharing system now being field tested willprovide mail volume and productivity data for the smalleroffices presently using MCD. Beginning in August 1977,MOD management summary reports are being made availabl? toupper level managers, and increasing emphasis is beingplaced on using productivity data in establiching budgets-and assessing performance.

We believe these actions should help the Postal Serviceimprove its productivity measurement system.

15

APPENDIX I APPENDIX I

~- as~n-s

-Wi 6j AV. M.

-MuL -Sin. A*. ocuse of of r Rt tatatibeg,M .-LW.c,. SUBCOMUTrM OX POSTAL FACILITIES. MAIL AND

'-I- ''tTm LABOR MANAGEMENT

imm, CM ER LON1 . oMA mA. 900001=6 MA- COMMiTTK ONIPOST]OFFIC ANDCVIILSERVICE

l CAuuN Hai uOct O llamarbusm.C 20515

September 9, 1976

The Honorable Elmer B. StaatsComptroller GeneralU. S. General Accounting Office441 G Street N.W.Washington, D.C. 20543

Dear Mr. Staats:

The U. S. Postal Service is a labor intensiveorganization with personnel costs accounting for about85 percent of postal expenses. In the long-run thesolution to the Service's financial Droblems and theproblem of ever increasing postage rates lies in increasedproductivity.

During recent hearings before the SubcommitteecnPostal Facilities, Mail, and Labor Management seriousquestions were raised concerning the ability of theService to measure productivity in postal facilities.GAO representatives testified on the problems with theold Work Load Recording System and the falsification ofrecords that occurred while WLRS was in effect. Allega-tions have been made that the successor system-ManagementOperating Data does not provide management with theinformation it needs to insure postal operations areefficient.

I am aware that the General Accounting Officecurrently has a survey of the MOD system.' I would liketo request that this study be expanded to include:

-- the identification of all productivity measure-ment systems in use in the Postal Service and

-- an evaluation of the adequacy of these systems.

16

APPENDIX I - - APPENDIX I

I would hope that as part of this study GAO couldalso provide the Subcommittee with an overview of theService's Productivity improvement Program and the resultsit has achieved thus far, especially the progress thathas been made in developing fair and reasonable workstandards for mail processing operations.

If you should have any questions please contactMr. George Gould of the subcommittee staff.

truly you

WARLES H. WILSONChairman

CHW: ggp

17

APPENDIX II APPENDIX II

a 2

.THE POSTMASTER GENERALWhington,. DC 2026

August 26, 1977

Mr. Victor L. LoweDirector, General Government

DivisionU. S. General Acounting OfficeWashington, D. C. 20548

Dear Mr. Lowe:

Thank you for inviting our comments on your draft report entitled,"Mail Processing Productivity Measurement Is Inadequate."

The report's principal findings are that the Service's ManagementOperating Data System (MOD), which is used to measure pro-ductivity in mail processing operations, (1) does not adequately meetthe needs of local management, (2) is not being used by upper manage-ment to determine the efficiency of offices or to adjust budgets, and(3) does not provide adequate data to measure the effectiveness of theService's program to increase productivity in individual offices.

The report recommends: (1) that the Service reexamine its produc-tivity measurement system, (2) that larger facilities receive productivitydata by operation and by tour, (3) that srnaller facilities receive infor-mation by tour, and (4) that the data be L ,ed by upper management todetermine the relative efficiency of entire postal facilities, to adjustbudgets and to identify operations where management improvementsare needed.

The Service agrees that its productivity measurement system needsreexamination and it has such a review underway. Instructions havebeen issued to reinstate tour reports at our larger facilities. A com-puter timesharing system to provide better data for the smaller offices

18

APPENDIX II APPENDIX II

that use MOD is now undergoing feasibility testing. MOD Summaryand Operating Reports are now being made available to upper manage-ment and increasing emphasis is being placed on productivity data inestablishing budgets and assessing performance.

We believe these steps will overcome the inadequacies cited in yourreport and will improve the Service's productivity measurementsystems.

Sincerely,

BenjaminF. Bailar

19

APPENDIX III - APPENDIX III

wall. puClLs. l OPtIaTIMtg MWPOMT,ir Ui *7 ASP 13 FY 7T

OISTwI.uTIOm "ps PT Ip A/ TO OATLL TTCS IrHP PyTO c_"" ICO CLA/ti.m Pl.J4U AcTUAL P.IR&0O@30 4gJ.' .I0'e 1391 L441 327 21 156l2 e1i*

---- ;:-- 3 4u4- - 124 f3*4 Z.73 _. - . 2- . -.. 142--043 1t.O 1 ?37. l? 1621 ) 9& 517 .9001. 3T70. 31,2. 1713 I722 216 2 1614 L00as S139.4 9o39.0 ISS S16 3" 24 I*as IdS$4*c 909,4 911.0 1JS 13 2769 Z 304S090 4).0 e..I 1*1l9 1*I1 44 0O 220 'lj

, . _8 m- .----. !&l.. _*- .... AL ....- .. - -. 22 --_ -LTOTAL LYTTiLS

1937.4 1916. t4*) 1 .lag 11u *e 40 71I3FLATS0*64 *3. *S.* 11rs qj 72 *4 3*4 3&070 364' 3®o* e b, E- l ? 1 At ZOo 20

--- :_ -- .e- .] A" 4m 6 1 .. _ -a. 4- -- ..- -L..bt-I

7 O/17's 1*: 17. e 6J9 706 2%* 23. 12?4 1340

tUtAL rLTS2*7.0 L20.03 Sv 771 aIS 371 2004- dO!

mimC.LS10o I.o 1I.4 J*b 396 38 354 10 112

- *---14346C-------- --- - -. 5 -fStAI.s PAC··C3-, 37. 3 - 3 , o .e 432 .o

a5.o *60. 347 342 I" 191 930 VIS*lX0 OPEIAT IONS

029 glo.4 1,. 9Sl 1941 1? Le d3

161 19 e.e s.* 14 e6L l2 16 35.TOTAL ,IXC0 oPtL

3&0e. to4.0 bas 1121 a1. 422 932LP 2330TOTAL OISTRIIBUTOM

,--- -. -i-.4 s" .121, ... 3a ...- 1. -..- ,3. -

ail. P8PAaAT1 NOol 563*.e 1S72 1L 9qP 355 .03020 110.0 e 102 2t 2i 127 IS0020 dY-ASS 342.0

lo,3.0 137 . 2. .0. ' b3

A/P TO OATMISC MAIL PROCcISSt1 C#afT SUPv PLADNS(O ACTUAL PLAt.lO

111 OUTGOING 0P(cIMG uilT if4 21 'ie ZI1-. O4 4a-U tMGG&A 6-j~AtL T- - .1 -- - s- -- --- -430-

104 IuICOtMG, OP1INCG wIlT leo 1.0 770 6oo21.d q.ATrOMa ACTItITIrS 200 176* 94& 10*SS4 'tWFlC. wORK-"COO0 2*0 211 1140 10.

;.GE mo 2

5o0 MISC &CTIttVttd'I MVOCt *W* ' 0 319 346SIS ARELISTY. SC;lTh0 L0a 8 9 49 J3&701 SuW - NaiL. USTUIUTtI,, 200 20 lids 10007T6 SJPW - oIsC rAIL P0OC S, s0 306 390

TOTAL -ISC MAWL P0QCSI&O-- _ a - ____l*- _---.&.6- --- _ -

NA INTrfa.CCt

749 A&IM.lISTOAfIfU 56 s0 26* 302741 SuJPV * AEG * ACTING *4 40 307 24747 dutLnhG $S1C;lC: Ce Oo 73 *40

_O td, .a Ni.te--- -r

---- --- - ......TOTAL MalMTcEMACE

2C1 64 3115 Ile 1117

'.G4 Um9J# 4Qa4k .OUMS"ALL 00CUSOS1N4l To04. &/P TO UAIL

_ __- Z)J4U L .- ALA..L.. _. __. _.. .. P .- --. L LLL L-%*a-suo YO J341 . . I. 1874'7 19923 - .;iSMaPv 1SI 320 334 - 3.0 17S1 1736 3.1

TOTAL. 11 6 6. 20136 211* So.2

OVtLTINt COAFT *3 ISO

-S2-U _ .-_..-.. --.--.- L--- -

(22301)20