A 2003 article detailing the failure of outsourcing in the U.S. Postal Service may in fact be at the root of present day financial troubles for the independent agency

The mailers failed to tell the commission, however, that several outsourcing arrangements that replaced qualified postal employees with low-wage workers cost the Postal Service billions of dollars. In Chicago, on April 29, APWU President William Burrus set the record straight: Invited to testify about the strengths and weaknesses of the current collective bargaining process, he took a few moments to talk about work-sharing.

“Time after time, when postal operations have been contracted to the private sector, cost increases and inefficiency have been the result. When the work is returned, costs decrease and efficiency improves,” Burrus said. He then provided the following examples of failed work-sharing projects, including those examined below.

from the July/August 2003 issue of The American Postal Worker magazine

The above hardly paints a positive picture for those organizations – especially within the public sector, contemplating the prospective benefits of an outsourcing and/or shared services strategy.

Even with the enthusiasm for private sector capability championed through the emergence in the late nineties of the New Public Management or NPM concept which advocated the replacement of “authoritarian, top down policy-making practices with a “bottom-up” approach which facilitates stakeholder involvement,” it is now becoming increasingly apparent that this level of enterprise-wide engagement was more the result of wishful thinking than an achievable real-world practice.

For whatever reasons, and there are many, that the outsourcing initiatives such as those undertaken by the USPS have failed, one thing is certain . . . the far reaching consequences are significant, in some cases threatening the very survival of an enterprise itself.

In the case of the USPS, and as highlighted in my September 5th, 2011 post “U.S. Postal Service Shuts Down: Neither snow nor rain nor heat nor gloom of night . . . just a lack of money and responsible management!,” I had referenced a New York Times article which indicated the following;

The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.

Though congress did in fact bail out the agency through a third extension to September 2012 of the $5.5 billion debt payment, the underlying problems and questions remain.  Specifically, how does an organization with declining revenues provide its workforce with guaranteed employment and benefits.

In fact according to an article written by Steven Greenhouse, USPS labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors.

Given the recent turn of events and the growing reality of what is rapidly becoming an untenable situation, a properly managed outsourcing relationship strategy would streamline the USPS operations while simultaneously aligning labor expenses with the operational costs of the general market.

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Obviously such a plan, as it was in 2003, would be met with considerable resistance, especially on the part of the workers’ unions who would undoubtedly refer to the existing (and onerous) no layoff agreement with the agency.  However, and this is the thing to keep in mind, the questions of layoffs becomes moot if their isn’t an agency from which employees can be laid off in the first place.

Against this backdrop, outsourcing initiatives have to be more effectively managed than they have in the past, with a much greater focus or emphasis on relationships.

This leads to an interesting question . . . how do you define and establish a sound outsourcing relationship strategy?  Especially in the case of the USPS where outsourcing may present all parties who, have traditionally been at odds with one another, with the only viable option for ongoing survival?

As always, your comments are welcome!


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