Into the postal maelstrom

Royal Mail: Profits, Modernisation, Bullying, Harassment and Planned Privatisation

Royal Mail: “the most familiar manifestation of the state in ordinary daily life” ( 'Masters of the Post' by Duncan Campbell-Smith)

'Royal Mail Group – Our Code: Code of Business Standards': “Our code: Code of Business Standards sets out the standards of behaviour that we expect from our people at Royal Mail Group. It is about doing the right thing: following the law, acting honourably and treating others with respect.
Royal Mail Group will protect individuals from inappropriate or bullying behaviour.
Part 2: Manager's duty of care: Manage employees appropriately and support employees in their day-to-day work, treating all employees as you would expect to be treated yourself”.

'Royal Mail closer to sell-off after delivering profits leap' writes Lucy Tobin in the Evening Standard, 13 November 2012  “Hitting Britons with stamp price rises of almost 40% helped Royal Mail to post a 12% jump in half-year pre-tax profits to £115 million today, marching the postal giant closer to privatisation. The profit surge came despite a continuing decline in the number of letters in the postman’s daily sack, down 9% to 6.8 billion in the six months to 23 September. The group instead cashed in on its May increase in stamp prices, which saw the cost of a first-class stamp go up from 46p to 60p. The company, which delivers online behemoth Amazon’s goods, also continued to benefit from Britons’ surging levels of online shopping: revenues at its parcel businesses grew 4.6% to £2 billion. The better figures will help the Government as it aims to start selling or floating at least part of the business. Royal Mail said: “This is the second consecutive year of profit growth in the first half at group level. All our main businesses are profitable.” Its “universal service” letter division, where postmen deliver to 29 million homes a week, remained in the black after returning to profit in the last full year. A loss of £41 million in the six months to September 2011 was converted into a £99 million profit. The Government has hired UBS to start working on a sale of the business, the most high-profile privatisation since John Major sold off Britain’s railways. The postal group has hired Barclays to work on its side.  But potential investors may be wary that Royal Mail’s “people” costs — hiring and firing — rose slightly to £2.5 billion in the six months. Chief executive Moya Greene, whose £1.1 million pay packet last year made her one of Britain’s best-paid public-sector officials, appeared to warn of more job cuts to follow the 42,000 posts axed since 2002. She said: “Our modernisation programme involves painful, difficult change.”  Previous cuts have been made through voluntary redundancies, but that promise has been extended for just one year. Greene said: “We have started discussions with the CWU [Communication Workers Union] to reach an agreement... I believe our people generally understand the need for the company to continue to adapt to a rapidly changing postal market.” A major reason for the transformation in Royal Mail’s finances was the Government’s takeover of its giant pension fund, which saw £28 billion of assets and £38 billion in liabilities transferred to the State.
From the Comments: Recovery’s not in the bag yet. After it took delivery of a first-class parcel of cash from regulator Ofcom in the form of a giant hike in stamp prices, it is no surprise that the Royal Mail’s headline profit has shot up.
Privatising the company has become such a political cause célèbre that everything is being done to buff it up for sale, including hiving off its giant pension headache to the taxpayer.
But delving into the postbag, I wonder whether this is just the same bloated public-sector outfit that has been given free rein to charge more. For example, people costs actually rose instead of falling in the period — the opposite of what you might expect in the midst of a loudly trumpeted transformation.
Moya Greene may dearly love to be the boss to lead the Royal Mail onto the stock market, but unless she takes a tougher line with the trade unions, which still exert a strong grip over the company, the recovery message for would-be shareholders will be lost in the post”.
James Ashton

'Anger as Royal Mail profits soar'  reported The Evening Standard, 13th November 2012:
“Royal Mail has reported a huge increase in half-yearly profits, sparking fresh controversy over plans to privatise the postal group. Operating profits in the six months to September were £144 million, compared with £12 million in the same period last year, as growth in parcel deliveries made up for a continued fall in the number of letters being sent. Unions said the news showed that modernisation of the Royal Mail can be successful within the public sector. Royal Mail chief executive Moya Greene said the timing of the privatisation was a matter for the Government, but she believed the organisation could not generate the investment it needed by itself.  The group said in its interim report that preparations are under way for the sale of Royal Mail. "Obtaining external capital is a key part of the transformation process as we become a more parcels-focused business and make the investment in technology to do so," said the report. The Government is planning to sell or float the Royal Mail - but not the Post Office arm of the business - probably at the end of next year, despite opposition from unions representing postal workers and managers. Ms Greene said Royal Mail was climbing out of a "very deep hole", with all parts of the business now profitable. She highlighted the turnaround in the UK parcels, international and letters business (UKPIL), where a loss of £41 million in the half year to last September has been converted into a profit of £99 million. "Royal Mail has experienced the negative impact of e-substitution, which is driving the structural decline in the traditional letters market. Conversely, we are seeing the positive impact that online retailing is having on our parcel volumes," she said.  Dave Ward, deputy general secretary of the Communication Workers Union, said: "There is no need for privatisation as a solution to business transformation. Change is being successfully delivered by postal workers daily throughout the company. "Royal Mail is doing its bit to change, but the regulator must now step in to protect the universal service. Competition from private companies is undermining Royal Mail's ability to provide an affordable service to every part of the UK."

'The Royal Mail Newspaper Courier' November 2012 :  
“ Transforming Royal Mail: The transformation of Royal Mail is well under way. Our financial performance continues to strengthen. There is still a lot to do. Our interim results 2012-13: Our Finances: We make 3.3p in every £1 compared to 0.3p last year. Better. But some way to go compared with big players. The money we are paid for our products and services as a Group is up 3.3% to £404 billion. Profits are up to £144 million from £12 million (profit after transformation costs).  This is the second consecutive year of growth. Our Customers: Something for you complaints are up 77%. This has to change urgently. Parcels are big business for us. Customer satisfaction – 74%. We exceeded our customer satisfaction target of 70%.
Parcels and Letters: Almost £4 in every £10 we earn in the UK is from parcels. We need to grow this business. It is the future. The money (revenue) we make from letters is up 2%. As expected, the number of traditional letters we handle is down 9%.
Modernisation: We have completed delivery revisions in 49% of offices. Some offices are doing well. Others are not doing so well. We need to deliver the savings consistently across the country. 8 out of 10 letters are now automatically sorted in delivery order. 26% reduction in accidents leading to absence (accidents leading to absence as a proportion of worked hours)
Need to Know: By 2016, online retailing is expected to account for almost 12% of total UK retail sales. Parcels account for almost half the money we make as a group. It's critical that we focus on converting the increase in parcel volumes into profitable growth.”

In his review' Masters of the Post: The Authorized History of the Royal Mail by Duncan Campbell-Smith, Ian Jack  writes :
“For the best part of two centuries, the British postal service was the wonder of the world. No other country delivered letters so cheaply, reliably and quickly. Most of the credit belongs to Rowland Hill, but even before he remade the institution in the 1840s, Britain's dedication to the speedy delivery of letters drew admiration at home and abroad. Purpose-built mail coaches pulled by relays of horses (four to every coach) had tightened British geography by the end of the 18th century, shrinking the five-day journey from London to Edinburgh to 60 hours and London-Bristol to an overnight gallop. Inside cities and towns, speedy "penny posts" flourished. John Keats finished "On first looking into Chapman's Homer" at dawn one October morning in 1816, put a copy in the post at Southwark, and the recipient was able to enjoy the sonnet an hour or two later over his 10 o'clock breakfast in Clerkenwell.
The public revered the post for its military dash. Mail coach guards swore loyal oaths, wore scarlet tunics and had the right to shoot anyone they suspected of being an escaped French prisoner-of-war, with a £5 reward. In 1829, the Post Office opened its magnificent new headquarters in St Martin's le Grand, close to St Paul's and a must-see for foreign dignitaries after the cathedral's Whispering Gallery had been tested. The architect, Robert Smirke, was already working on designs for the British Museum when he got the commission and the General Post Office was equipped with similar Ionic columns and a Portland stone façade – illuminated at night with 1,000 gas flares, as a procession of mail coaches clip-clopped from the courtyard to begin their night-rides across Britain. Anthony Trollope, a junior clerk, once guided the queen of a German state around the building, walking every step backwards in front of her, which included the tricky negotiation of many stairs, and received half a crown for his courtesy. ("A bad moment," as Trollope remembered.)
Still, the Post Office of that age was far from perfect. It was smug and conservative and operated a bewildering system of charges that varied according to how far a letter had to travel and how many sheets it contained, with the receiver and not the sender paying the costs; an important incentive, it was thought, to the post boys who had to deliver them. Hill, who came to the Post Office as a Treasury adviser, revolutionised every aspect of the business when he introduced the uniform penny post and commissioned the first adhesive stamps. None of his reforms was easily achieved. The political establishment thought he was crazy: the Treasury worked out that the current average price of sending a letter was sixpence, which meant that the Post Office would need to multiply its mail volumes six times simply to maintain its revenue. Government ministers saw this as impossibly ambitious (rightly so; decades passed before mail volumes rose so much), but the simplicity and cheapness of Hill's plans caught the public imagination and the penny post became a mass movement that, in Duncan Campbell-Smith's words, "equalled anything seen on behalf of the abolition of slavery or even the reform of the parliamentary franchise". And so the government gave in.
Campbell-Smith sums up Hill as "a workaholic autocrat". But his sweeping postal reforms were vital to Britain's success as the world's leading industrial nation. It was so easy to be in touch. By the 1840s, the railways' travelling post offices were sorting letters en route. A north country manufacturer could have a reply from a London bank "by return of post" as the Royal Mail became a pulsing channel of business negotiation. Prices no longer excluded the working class, who might find themselves hundreds of miles from their relatives in a new industrial town. In the words of the social historian GM Trevelyan, Hill had "enabled the poor, for the first time in the history of man, to communicate with the loved ones from whom they were separated".
Consequently, and unusually, the nation fell in love with a government department: "It was universally seen as unique, not just as a flourishing business enterprise run by the state but as an organisation of unparalleled efficiency and trustworthiness." For most people in Britain, the Post Office became "the most familiar manifestation of the state in ordinary daily life". And it grew and grew, changing the nation's habits and landscape. Hill and one of his associates invented the Christmas card. Trollope, by now working in the Channel Islands, heard reports about new-fangled post boxes in France and imported the idea. (After a standard colour was adopted in 1874, their splash of red gave the humblest village the glamour of distant communication.) The Post Office invented the postal order, set up a savings bank, hired thousands of boys to deliver telegrams, and built offices in provincial towns that in their elegance and importance rivalled France's hotels de ville. By 1914, it employed more people than the army, the navy and the royal dockyards combined.
What went wrong? Digital communication has left every postal service in the world struggling to cope with a loss of trade, but long before that happened the British Post Office found its own peculiar difficulties, created in part by its Victorian success. Like much of British industry, it found modern inventions a nuisance. The government persuaded the PO before the first world war to take over a ramshackle telephone system, owned by a dozen different companies, but throughout the 1920s the PO did almost nothing to extract more money from what was a monopoly asset. Britain ranked 12th in the world in the number of telephones per 1,000 people in 1929. Among cities, London came as low as 27th. Marketing was an anathema. A small revolution occurred in the 30s – when the PO snapped awake to the potential of telephones and in Night Mail commissioned one of the most brilliant publicity films ever made – but it went on thinking of itself primarily as a deliverer of letters; not unreasonably, because letters still accounted for 90% of its income.
By the 70s, the main problems were size and torpor. A head-count of 430,000 employees made it the biggest business in Britain, and though by now it was a public corporation rather than a government department, its upper management still ran along civil service grooves. Down below, trade unions ran the shop floor, planned the overtime rotas, and, particularly in the London sorting offices, grew solid in their opposition to productivity agreements and mechanised sorting: the postal section of the London District Council (LDC3) made its initials notorious as "a kind of workers' Soviet". Losses mounted. The inflation-adjusted cost of posting a half-ounce letter had never been lower, not even in Hill's day, but mail volumes (unlike labour costs) began to fall. Even in this melancholy atmosphere, the PO managed to go on innovating – where would a satnav be without postcodes? – and then in the 1980s a surge in mail volumes suddenly overturned the prevailing wisdom of "managed decline".
The number of letters posted rose by more than a quarter between 1982 and 1987. Mail shots poured out of personal computers, ink-jet printers and high-speed copiers – new office technologies that gave the Royal Mail an unexpected Indian summer. Social correspondence – letters between individuals needing a stamp and a walk to the pillar-box – now accounted for only 15% of letters. Everything else was "business" mail. In the 1840s, William Wordsworth had complained that all cheap postage had done was increase the number of time-wasting letters from strangers. Now we were all Wordsworths, but to the Post Office's great advantage.
What was a government to do with such success? The telecoms division had already been successfully privatised in 1984, but Mrs Thatcher revealed a surprisingly sentimental streak when it came to the mail and insisted the Post Office remain in public ownership. (Why? Because of stamps with the Queen's head? The friendly postmen of her childhood? Nobody knew.) If the PO had been allowed commercial freedom as a public corporation, this might have been good news. Instead the Treasury used it as a milch-cow, creaming off profits that were badly needed for investment so that sometimes the PO kept staff on because it couldn't afford their redundancy payments. Meanwhile the Department of Trade and Industry set up a zealous regulator, Post comm, which on the one hand could curb rises in the postage rate and on the other could demand that the PO's monopoly be opened to private competition. Post comm insisted it was simply following EU directives, but its puritanical dedication to the free market ideal amazed the Royal Mail's counterparts elsewhere in Europe.
The pressures drove the Post Office into successive waves of corporate reorganisation, or what Campbell-Smith calls "death by a thousand plans". For a mercifully brief time it even gave itself a new name, Consignia. Managers spent more time trying to implement change than they did looking after the business. By 2002, "Blair and his ministers were faced with a Post Office in total financial disarray. Five years of frenetic reorganisations had reduced it to a state of virtual collapse."
This is a majestic account of a great institution's rise and fall. It doesn't close without hope: the author thinks the British postal service may have a modest, privatised future as a kind of co-op where users and staff hold the shares, trading on the British public's "abundant good will" towards the Royal Mail. It's hard to read his closing chapters, however, without being angered at the spectacular muddle and  carelessness of recent British governments, which first bled a national asset dry and then poked the carcass with sticks”.

 The Communications Workers' Union (CWU) – Letter to Members' – November 2012:
“Workplace Issues – CWU members have played their part in delivering a lot of successful change, but in far too many locations people are struggling to cope and things are not going as intended. This is mostly down to poorly planned revisions and unrealistic local savings targets. It's also about Royal Mail shifting their focus more and more to preparing the company for privatisation. We have told Royal Mail that their current approach is failing and that they are placing far too much pressure on front line employees, particularly in Delivery. The decent managers out there know this to be true – but are often fearful of speaking out and are themselves under huge pressure to constantly hit unachievable numbers. Other managers remain obsessed with command and control and have no local plan other than chaotic lapsing and absorption on a daily basis.
The Threat Posed by Unfair Competition and Privatisation – With the threat of unfair competition and privatisation still hanging over our heads, CWU members rightly ask the question – when we deliver transformation, isn't it just being done for the benefit of others? The Government confirmed that the timing of a sale would still depend on the right economic conditions being in place. They stated a sale is unlikely to proceed until late 2013 or early 2014.”
The CWU – Bullying and Harassment in Deliveries' – Survey – November 2012:
“Revisions have been taking place in delivery offices across the UK over the last year. During the same period, reports of bullying and harassment cases appear to have increased significantly. CWU is now asking all delivery members to give us information about your experience. The CWU’s Delivery Reference Group, which consists of representatives from across the UK, is dealing with reports received from members and reps about how managers are bullying people into delivering beyond their time and/or absorbing unrealistic amounts of mail on a fairly regular basis. We are determined to stop this type of behaviour.
Do these stories sound familiar?
Whilst we recognise there are some units where the managers are reasonable and adhere to national agreements and procedures, the amount of complaints we are receiving suggests that this may be a major problem. The CWU are determined to address your concerns and eradicate any form of bullying and harassment in your workplace.
“I knew I wouldn’t be able to finish my delivery before my finishing time – I asked my manager for assistance. He said: ‘take it all out and don’t bring any back or you’ll be facing a wilful delay charge’.”  48 year old postman
“I worked one and a half hours overtime but was only paid for 30 mins. My manager said the traffic only warranted 30 mins and my performance was the problem.” Post woman with 18 years’ service
“My delivery regularly takes me well over my time. I’ve given up trying to  get overtime because of the veiled threats of disciplinary action due to poor performance.” Postman with ten years’ service
I used to love this job now I feel sick at the thought of coming in each morning. I hate the constant battling with a manager that thinks I am lazy.”  Post woman with 12 years’ service
“I’ve given up asking for overtime because of the threat of dismissal; I just work over and keep my mouth shut.”  38 year old post woman
“My manager says if I book any overtime I’ll never get a permanent contract. So I just keep my head down and never claim any overtime I work.” 42 year old postman
'The CWU –  Letter to Members' – December 2012:
“Royal Mail Summit Talks with the CWU on 17th December 2012:  the CWU tabling key concerns on:
Aggressive management cost cutting that bears no resemblance to our national agreements or the reality of your working environment. This is leading to management placing unacceptable pressure on front line delivery staff”.
'Royal Mail appoints banks to advise on privatisation' writes Brian Groom in The Financial Times, 15th November 2012: “Royal Mail has appointed three investment banks (Barclays, Bank of America Merrill Lynch and Goldman Sachs) to advise it as preparations to privatise the world's oldest postal service step up a gear. A decision on privatisation is expected in 2013 or 2014. Royal Mail which employs about 150,000, is thought likely to be worth up to £2 billion - £3 billion if floated on the stock exchange which would put it straight into the FTSE 100 and make it the largest privatisation since the government sold the railways in the 1990s.”
'Is it the last Christmas post for a state-owned Royal Mail?' writes Esther Addley in The Guardian, 18th December 2012:  http://www.guardian.co.uk/uk/2012/dec/18/last-christmas-post-royal-mail
“It's shortly after 9.30am in the small town of Earby in Lancashire, tucked just south of the Yorkshire Dales national park, and Laura Craig is well into her daily round. The local post woman strides up garden paths past inflatable Santas and tinsel wreaths to empty the first load of the day from her oversized bag. They've had all sorts of weather here: Monday was sodden, while last Friday the pavements were so icy "people were coming off the buses and crawling to their doors", according to one local resident. But today is a glorious, chill morning, complete with dazzling sunrise and small birds chirruping in competition with the yapping dogs that greet Craig's approach in every fourth or fifth house. It has, needless to say, been a busy day. All leave is cancelled in December in Barnoldswick delivery office, where Craig, 27, prepared her walk earlier, sorting letters, parcels and the extra crop of Christmas cards into street order and bundling them together for the six or so loops of streets that make up her daily round. Tuesday mornings are usually easy, compared with Wednesdays. But with the online shopping ordered at the weekend working its way through the system, and the extra seasonal orders, Craig and her colleagues are braced for a scramble in the final few delivery days before Christmas. It's as much a festive tradition as bread sauce and hangovers, and one being repeated in every community in the country as Royal Mail seeks to clear sorting offices of the millions of items of post that flood the network each December. But however cheery each greeting – "Y'all right, Laura?" shouts one elderly woman as she waits for her dog to defecate in a patch of soggy grass next to Tyseley Grove – these are uncertain times for Britain's postal service, with no one willing to predict what the future holds for the nation's much-loved red delivery vans. Though the postal service has shrugged off repeated warnings, it is unarguable that the social media generation sends fewer letters and cards than the one before. The predicted 800m cards the service will handle this year is a 20% decrease on 2005. The effect on the Christmas post of a punishing price rise earlier this year, when the cost of first-class stamps rose from 50p to 60p and second class from 36p to 50p, has yet to be measured, but a survey for Saga found that more than half of the over-50s planned to send fewer cards. And yet, says Darren Banks, the collection and delivery sector manager for the BB postcode area, into which Barnoldswick falls: "I have been 27 years with Royal Mail, and every time we get a new machine or a new system we have thought it was the decline of the business, and it wasn't. More people are now sending emails and text messages, so you would think post was dead, but it's just so easy to order online, and we're here to fulfil that."Half the service's revenue now comes from delivering parcels, a boom sector, which along with the price rises has been thanked for profits rising from £12m to £144m in the six months to September. No one is in doubt about what that is likely to mean. In April, Royal Mail formally separated from Post Office Ltd, which oversees the 12,000 post office branches across the country. While Royal Mail will almost certainly remain in state hands, privatisation is widely held to be imminent, perhaps as early as autumn 2013, meaning this could be the last time Craig and her 159,000 colleagues deliver the Christmas post on behalf of a state-owned service."We don't talk about it," says Craig, who became a postie five years ago. "Everybody knows it's going to happen. But I think people are just trying to concentrate on getting on with the delivery side of things." Will it make a difference? "Depends who buys us."There may be bumpy times ahead, with Royal Mail and the Communication Workers Union (CWU), which represents postal workers, complaining to Ofcom that competition in the sector threatens the principle of a universal service. At least the customers seem happy. The Christmas tips have started. Craig will occasionally be thrust a few pounds and told to buy herself a drink, but more often it's chocolate or biscuits. "I feel a bit uncomfortable taking it, but it's nice to be appreciated," she says, with a grin. She'll have walked 11 miles, up driveways and down cul de sacs, before she's done”.

Steve Clayton