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The Cost of Doing Business?

The Cost of Doing Business?
By Chuck Mulidore
NAPS Secretary/Treasurer

Recently, the Office of Inspector General (OIG) published an audit report entitled, “Effectiveness of the Postal Service’s Efforts to Reduce Non-Career Employee Turnover.” I encourage all EAS employees to read this report.

Here is some background information from the report: “This report presents the results of our self-initiated audit of the effectiveness of the U.S. Postal Service’s efforts to reduce non-career employee turnover. The Postal Service hires non-career employees to supplement its regular workforce and reduce staffing costs. ... Our objective was to assess the Postal Service’s effectiveness in reducing non-career employee turnover and evaluate underlying reasons for non-career employee turnover.”

As EAS employees overseeing the operations of the Postal Service, we know a focus of the agency has been to reduce employee costs by using these supplemental, non-career employees in strategic mail delivery, processing and retail functions. Obviously, controlling the level of non-career employee turnover would result in significant savings to the Postal Service.

Unfortunately, the USPS so far has not been able to develop a comprehensive strategy to address this issue. According to the report: “Although annual turnover decreased from 42.8% in FY 2016 to 38.5% in FY 2019, it still exceeded the NPA goal of 34.8% in FY 2016 and 34.08% in FY 2019. Also, the FY 2019 turnover rate exceeded the FYs 2017 and 2018 rates.”

Let me put this another way. The Postal Service sets an NPA target of 34.8% for annual non-career employee turnover, yet cannot meet that goal. The turnover rate increased in FY 2019 from the previous two fiscal years!

The OIG report further states: “To meet the FYs 2018 and 2019 34.08% NPA non-career employee turnover goals, the Postal Service would have had to retain al-most 3,000 more non-career employees in FY 2018 and almost 5,900 more non-career employees in FY 2019. We calculated this would have reduced the cost of onboarding and training by about $4.1 million in FY 2018 and about $9.6 million in FY 2019 based on management’s estimate of total onboarding and training costs.”

So, in other words, had the Postal Service met its own established goal of just over 34% of its non-career employees leaving after an average of only 81 days on the job, per the OIG’s findings, there would have been nearly a $14 million savings just in onboarding and training costs for fiscal years 2018 and 2019. You probably are wondering what the Postal Service’s response was to not meeting these goals and attempting to reduce this cost. But I’m sure you know the answer.

The report continues: “Also, non-career employee turnover could be improved if HR-HQ management developed a single, comprehensive strategic plan for recruiting, hiring and retaining non-career employees. Because HR-HQ management did not develop a single, comprehensive national strategic plan for recruiting, hiring and retaining non-career employees of all four crafts, districts developed local strategies to help reduce non-career employee turnover.”

Thus, in the absence of a national strategy to develop a recruiting, hiring and retaining plan for non-career employees, many local districts developed something on their own, which, of course, led to unevenness across the country in how these strategies are implemented. And it did little to alleviate the national issue of the costs from non-career employee turnover.

You might have thought that, perhaps with this issue so important it appears on your NPA scorecard, the USPS would have measured the costs associated with the high levels of non-career employee turnover. But, while the agency estimates it saved about $8 billion in labor costs from FYs 2016 to 2019 by employing non-career employees, “they did not measure the cost savings associated with the NPA non-career employee turnover performance. Measuring the potential cost savings associated with reducing non-career employee turnover would help ensure management focuses on improvement.”

Unbelievably, the USPS claims to know the cost savings of using non-career employees, yet never has bothered to measure all the associated cost savings by improving non-career employee turnover performance. This only can lead me to the conclusion that reducing these costs is not a serious issue for senior postal leadership. It is, however, a cost associated to you as an EAS employee on your NPA scorecard.

Perhaps the Postal Service believes that a non-career employee turnover rate of over 38% is an acceptable cost of doing business. If so, then no wonder business is suffering.