Postal Service tinkers with workers’ salaries

Postmasters' incentive pay - the amount they earn above their base salary for exceptional performance - will soon be subject to slightly different standards.

The new rules, which will be released by the end of the year, will likely put less emphasis on factors that are outside of postmasters' control. Under the current pay-for-performance system, which was implemented in fiscal 2004, salary increases are based primarily on revenue, with little regard for location, or other mitigating factors. The U.S. Postal Service is working with groups that represent postal management, including the National Association of Postal Supervisors, the National League of Postmasters and the National Association of Postmasters, to finalize these changes.

The groups representing postmasters generally have been supportive of the pay-for-performance initiative, while expressing concern that the program be implemented fairly. Unions representing federal employees have long expressed similar worries over incentive pay initiatives among nonmanagement employees, while federal executives have largely welcomed pay-for-performance measures.

In a newsletter to members, Steve LeNoir, president of the National League of Postmasters, included suggestions from NLPM members to USPS. They included the recommendation that there be less emphasis on revenue, which is partly outside of the postmasters' control. For example, the post office in Freeport, Maine, earns extra revenue because of its location near busy catalog retailer L.L. Bean, while another small town post office in the midwest might be without any sizable business that could drive revenue. Members also recommended that postal officials consider costs and unexpected events, such as the weather, which are outside of postmasters' control and exclude them from performance measures. The size of the incentive pay can range from 2 percent of base salary to low double-digit percentages.

The amount employees are able to earn above their base salaries must be significant enough to motivate their behavior, said Sean Gailmard, assistant professor of political science at Northwestern University. Usually, he said, federal incentive pay programs involve so little money that they have minimal impact on productivity.

"One reason incentive pay hasn't been bigger…is that it's an uncomfortable position for people to be in," said Gailmard. People like to know how much money they will make so they can plan their mortgage, for example. "You're trading off the cost imposed on employees from the extra risk and the benefit from giving greater incentives," he added.

Another problem with paying people for good performance, Gailmard said, is that it can reduce employees' internal motivation. "If there's any kind of intrinsic motivation to do a good job, then providing extrinsic incentives can damage that," he said, adding that people in the public sector are probably more motivated by personal reasons as opposed to money than those in the private sector. For example, a postmaster who wants to do a good job because he believes in having an efficient postal system might stop being motivated by that belief if he gets paid extra to do a good job

Deb Alums, vice president of the National League of Postmasters, urged members to think creatively about how they can boost revenue. In the group's Postmaster's Advocatenewsletter, she suggested starting a pen pal club at a community school, offering a seminar on online services, or working with a local business to undertake a stamp camp.

She added that effort matters as much as results. While revenue would likely rise as a result of these activities, she wrote, "If you were in some circumstance that revenue did not increase even after all your efforts, your manager could still award you positive scores." She also suggested reducing costs by stopping leaky faucets or keeping lights off when they're not needed.