2010 Comprehensive Statement on Postal Operations - USPS.com

The <strong>2010</strong> Annual Performance Report and 2011 Annual Performance Plan
Strategic Goal: Improve Financial
Performance
<strong>2010</strong> Results and 2011 Goals
Both corporate financial performance goals for <strong>2010</strong> will be changed
for 2011. The <strong>2010</strong> performance measures will continue to be
measured for comparison and trend purposes with previous years.
The replacement goals are more relevant and actionable below the
national level as described in more detail below.
TOTAL NATIONAL REVENUE
This includes all postage, fees, and other funds obtained from the
sale of products and services. It is being replaced as a corporate
goal in 2011 by Operating Income.
<strong>2010</strong> Plan <strong>2010</strong> Result 2011 Plan
$65.9 Billion $67.1 Billion N/A
Roughly 80 percent of revenue comes from commercial customers,
and in <strong>2010</strong> these customers, especially those in the financial
services and retail industries, were still dealing with impacts from
the recession and persistent high rates of unemployment. As a
consequence, mail volume and revenue continued to decline this
year, though at a slower rate than in 2009.
The Postal Service accounted for these factors in its <strong>2010</strong> plan, and
although revenue did decline this year, it exceeded the <strong>2010</strong> target.
In addition to new price incentives and more targeted advertising,
the result is based on consistently solid service performance in all
categories, combined with stable prices, which helped reinforce the
continued value of mail.
TOTAL FACTOR PRODUCTIVITY
Total Factor Productivity (TFP) compares outputs, such as deliveries
made, with resources used, including capital, labor, and materials
at the corporate level. It is being replaced in 2011 by Deliveries per
Work Hour.
<strong>2010</strong> Plan <strong>2010</strong> Result 2011 Plan
1.2% 2.2% N/A
Despite a 3.5 percent decline in mail volume, significant
efficiency gains were achieved in <strong>2010</strong>, improving TFP 2.2
percent compared to 2009. This marks the ninth year of
productivity growth since 2000. Productivity gains are a result of
effective workforce management, efficient use of supplies and
services, including transportation, and maximizing the return on
automation investments.
6 | <strong>2010</strong> Performance Report and 2011 Performance Plan
Work hours were reduced by 75 million, or 6.0 percent, despite an
increase of approximately 740,000 delivery points. Non-personnel
expenses were reduced by 2 percent, even as service and customer
satisfaction scores reached record levels. The greatest source
of the work hour savings were the buy-outs offered to the clerk
and mail handler craft employees in 2009. This incented more
than 20,000 career employees to retire or take an early out at
the beginning of the fiscal year, October and November. Overtime
reductions, attrition, and reduced non-career employees also
contributed to the reduction.
New Financial Performance Indicators for 2011
OPERATING INCOME
This measure is the net of total operating revenue minus total
operating expenses. It replaces Total Revenue as a corporate
objective. Operating revenue includes all postage, fees, and other
funds obtained from the sale of products and services. Operating
expenses include all expenses other than prefunding retiree health
benefits and adjustments to Workers Compensation liabilities that
result from changes in discount rates or actuarial assumptions. It is a
measure of profitability within management’s control.
<strong>2010</strong> Plan <strong>2010</strong> Result 2011 Plan
N/A ($0.5 billion) ($0.9 billion)
The 2011 objective is based on numerous projections of
the economy, mail volume, revenue growth, and planned
cost reductions.
To achieve the plan, the Postal Service will continue to maintain
excellent service in all products as the foundation for generating
revenue. Advertising mail is beginning to rebound with the economy,
and a number of initiatives are in place to take advantage of this,
including improved outreach to small business customers and
Internet marketers. Efforts will also continue to improve customer
awareness of products, building on the successful Priority Mail
advertising campaign in <strong>2010</strong>. It will also expand and streamline
customer access, and continue to pursue customer contracts to
generate additional profitable volume.
To reduce costs, the organization will continue to focus on
reducing work hours, as well as the cost of each work hour used
by making full use of non-career resources and by minimizing
overtime usage. Network optimization will accelerate to capture
savings by consolidating redundant facilities, and reducing lease
and operating costs. Detailed efforts and opportunities to grow
profitable revenue and improve efficiency in 2011 are included in the
<strong>Comprehensive</strong> <strong>Statement</strong>.