Transforming The Postal Service Essay

Read the case study, “Transforming the Postal Service” (Shafritz, Russell, & Borick, 2012, pp. 374-377), and answer the following two questions posed at the end of the case study.

  1. What steps has the U.S. Postal Service taken to transform itself?
  2. How this the fear of increased competition from FedEx and UPS motivated the Postal Service to reform?

Write a 2- to 3-page (in addition to the title and reference pages that you must include) minimum response in essay form. Include in text citation. APA Format

Transforming the Postal Service

Ever since the nineteenth century when stamps were first used as postage on letters, people have collected them for their artistic merit and their investment value. The United States first issued adhesive postage stamps in 1847. These stamps had portraits of Benjamin Franklin and George Washington. Governments have produced a multitude of commemorative stamps for the collectors’ market. After all, a stamp purchased and saved is almost pure profit to the post office.

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When the U.S. Postal Service decided to issue a stamp commemorating the rock ‘n’ roll star Elvis Presley, it created publicity by asking Americans to “vote” on stamp designs featuring either the young or old Elvis. When the “polling” was complete, the young Elvis design won by four to one. More importantly, this created a ready audience—a ready market—for the stamp when it was released in 1992. Nevertheless, the Postal Service was surprised at the depth of the public’s enthusiasm. People who had never saved stamps before suddenly become collectors—at least of this stamp. The Postal Service could barely keep up with the initial demand for the Elvis stamp. Because hardly anyone bought the first Elvis stamps to use on letters, the Postal Service, from its point of view, was almost literally printing money.

Taken by surprise by the public’s tremendous response to the Elvis stamp, the Postal Service was determined that the next time it would be ready—ready with more stamps to sell. But stamps of what? Most commemorative stamps are issued, bought by collectors or people who prefer stamps with some distinction, and then forgotten. The Postal Service searched for another dead national icon with a following comparable to Elvis’s. “Dead” was an important consideration here. Contrary to the philatelic policies in monarchies and dictatorships, only the likenesses of the deceased are allowed on American stamps. Marilyn Monroe, dead since 1962, had never faded from the public’s mind. As with Elvis, her face and persona were instantly recognizable. Both had died prematurely of drug overdoses when they were still enormously popular.

Realizing the market potential, the Postal Service gave the Marilyn stamp a lavish publicity send-off. Postmaster General Marvin Runyon made the rounds of the TV and radio talk shows as if he were hawking a book. He scheduled visits to shopping malls where he would judge Marilyn Monroe look-alike contests. They even advertised her on TV. Over old news clips of Marilyn, an announcer asks, “When is a stamp not just a stamp? The Marilyn stamp [picture of stamp replaces news film] now at your post office.” Many people give great patriotic service to their government when they are alive; to do so after death as Marilyn has done—and is still doing—is patriotism indeed.

Today’s Postal Service was created by the Postal Reorganization Act of 1970. This federal statute converted the Post Office Department into an independent establishment—within the executive branch of the government— to own and operate the nation’s postal system, thereafter known as the U.S. Postal Service. The old Post Office Department was “reinvented” (before this term was in common usage in government) as a public enterprise because the Nixon administration was unhappy with its poor management and constant need for public subsidies.

Amid a dramatic postal strike in the spring of 1970, the government for the first time in history agreed to allow wages, which hitherto had always been set through the legislative process, to be negotiated between union and government representatives. That ended the strike. Subsequently, the Postal Reorganization Act was passed, establishing the corporate framework sought by Nixon and providing for collective bargaining with postal employees in the future. The Postal Service remains the only federal agency whose employees are governed by a collective-bargaining process that permits negotiations over wages.

The chief executive officer of the Postal Service, the postmaster general, is appointed by the nine governors of the Postal Service, who are appointed by the president, with the advice and consent of the Senate, for overlapping nine-year terms. The ambiguous legal status of the Postal Service has been the source of political controversy since it was established in 1970. It does not report to the president and is only indirectly responsible to Congress. Even though it is an “independent” government corporation, it cannot even set its own prices for services. A Postal Rate Commission, created by the 1970 Reorganization Act, must approve all postage rates, fees, and mail classifications. The commission also has appellate jurisdiction to review Postal Service determinations to close or consolidate small post offices. There have been a number of bills introduced in recent congresses to return the Postal Service to the status of a regular executive department—and to greater political control. Such proposals tend to increase dramatically whenever local post offices are forced to merge or close.

Despite perennial criticism, what the Postal Service (USPS) does is impressive: In 2006 more than 213 billion pieces of mail were delivered to 146 million residences and businesses by almost 700,000 career employees in 37,000 post offices. With annual revenues of more than $72 billion, and the largest civilian fleets of vehicles on the planet, it delivers more than 46 percent of the world’s card and letter mail each day. But the USPS is changing rapidly. Because of the decline in mail volume due largely to the Internet and text messaging, by 2011 there were 5,000 fewer post offices. Employees were down to 532,000. Physical mail peaked in 2006 with 213 billion pieces; by 2010 it was 20 percent lower and declining.

While most Americans do not realize it, their daily mail is cheap, comparatively speaking. The United States has the lowest first-class postage of any industrialized state. For the price of a first-class stamp, even one with Marilyn or Elvis on it, the Postal Service will take your letter—if properly addressed—to the bottom of the Grand Canyon by mule, to the Arctic Circle in Alaska by bush pilot, or to ships on America’s remote rivers by mail boat. The current motto of the Postal Service is “We Deliver for You.” It knows that if it doesn’t, that if there are too many complaints, Congress may change its mandate.

The Postal Service’s worst nightmare is that Congress will jeopardize the service’s solvency by allowing others—maybe Federal Express (FedEx) or United Parcel Service (UPS)—the right to deliver first-class mail. Such totally private corporations could then easily skim off the easy and profitable urban delivery routes and leave the Postal Service with all the unprofitable and difficult ones. Thus “express mail” overnight delivery was created in 1977 specifically to compete with Federal Express, and the Postal Service has conducted quarterly performance evaluations since 1990 to monitor the timeliness of its first-class mail delivery. And with perpetual fears of losing its monopoly and viability, the Postal Service is hustling to improve its core services, to create new products, such as the 2005 Muppet stamps and the 2006 “Forever” stamp that can be used to mail a standard first-class letter anytime in the future.

The Marilyn and Elvis stamps are indicators of a major new trend in public administration in general, and the Postal Service in particular: the concern for marketing. Marketing, entrepreneurship, and promotional management are relatively new areas of interest in the public and nonprofit sectors. The first published argument (that we have been able to locate) that nonprofit organizations should engage in marketing even though they face somewhat unique circumstances is in Philip Kotler and Sidney Levy’s 1969 article “Broadening the Concept of Marketing.” The first textbook on the subject, also by Kotler, was not published until 1975. Although some nonprofit organizations have engaged in business-enterprise-type activities at least since the beginning of the twentieth century—for example, the Metropolitan Museum of Art in New York City opened its first official sales store in 1908—only scattered attention was paid to such income-generating activities prior to 1980.

Entrepreneurial-type business ventures by agencies of the public sector are not limited to the Postal Service. Creating and capitalizing on chances to make money—the core of entrepreneurship—are becoming increasingly fashionable. Thus organizations as diverse as the Chicago Public Library and the Los Angeles County coroner’s office sell a wide range of memorabilia.

The result of entrepreneurial forays by the Postal Service and other public sector entities is to raise revenue through non traditional methods rather than increasing taxes or user fees (or stamp prices). Entrepreneurship is a frame of mind, a willingness to create and to be receptive to opportunities, an orientation toward risk-taking ventures. But nonprofit organizations cannot allow the current interest in entrepreneurship to allow them to forget their traditional purposes. Business ventures can be dangerous when they compromise the organization’s original mission. Marilyn and Elvis stamps, pins, and other souvenir items are like best selling books. They generate tremendous income when first offered for sale and even have comfortable backlist sales, but they are no substitute for the organization’s core function: selling a service.

So what’s the lesson here? The public sector can benefit from some entrepreneurial techniques. If stamps with Washington, Franklin, and other dignitaries do not sell well enough as collectibles, then sell what sells. Sell Marilyn, Elvis, and even Miss Piggy. The Postal Service, by being made a public enterprise, has simply used its discretion to branch out into the entertainment industry. In so doing, it has found a way to improve its financial health so as to better fulfill its primary purpose: delivering the mail. While its long-term survival is still very much in question, the USPS appears to be making a good-faith attempt to keep itself a player in the twenty-first-century world of communication.v


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