In an economy that is stagnant and a world that is becoming evermore electronic, mailing managers face numerous challenges to maintain a well-staffed, efficient operation in businesses that are watching every penny spent in order to push whatever possible to the bottom line. And it is in this era that we conducted our 16th Annual Mailing Systems Technology Wage & Operations Survey, the only comprehensive survey of its kind in the mailing industry.
We have come a long way in 16 years. But just to refresh the memories of those who were in the industry "back then," here are some of the articles that appeared in Mailing Systems Technology: USPS Worksharing: An idea whose time is here; Manifesting Mail: Will it replace meters? ; Mailer-applied Barcoding: Gets your mail delivered quicker and at less cost; Outfitting Your Mail Center for the Computer Age; The Intelligent Inserter; and On Our Way up from the Basement.
Well, mail centers have certainly made it "out of the basement" and into the computer age. In fact, our surveys have shown that in most years, the industry was maturing by leaps and bounds. Then there were some years, like this year, that managers faced tightened budgets, forced layoffs, minimal pay increases and a general feeling of "riding it out" until times get better. My hats off to mail center managers throughout our industry who have had to make difficult choices in the last few years. Although times are tough, you were still able to make some gains and continue driving the mailing industry into a better future.
Before we get into the survey results, I would like to thank those of you, our readers, who participated in the survey. Without sharing information about your operations, we could not provide the industry with the most comprehensive analysis of mail operations in the US. This year, we analyzed 382 operations with 5,519 mail center workers. As in years past, we present the results of the wage portion of the Wage & Operations Survey in this issue. In the November-December issue, we will unveil the operations side of the survey results.
Your Bottom Line
Let's face it; the bottom line for you and your workers at the end of the day is what you take home wages. Mail center managers' wages increased by 3% over 2004 wages. Supervisors, however, had another hefty gain of 8%, on average, following a 6% increase in 2004. The gap between a manager's pay and a supervisor's pay narrowed from a gap of $10,400 in 2004 to $9,100 this year. A plausible explanation could be that supervisors are taking a more active management role since 69% of mail center managers also manage other departments.
Disparity between female and male managers continues although it has improved ever so slightly from 2004, after no improvement in the previous three years. Even though female managers have worked, on average, 13 years in the industry, men earn 11% more with only 12 years experience. In 2004, men earned 12% more.
Interestingly, entry-level wages for mail center staff (non-management) also had a 3% gain, but the average high-end pay for staff workers actually fell 1.5% overall. In 2004, we witnessed a "freeze" of entry-level wages and only a 3. gain in high-end wages. In 2005, there appears to be a shift of emphasis from long-term employees to new hires. Wages of inserter operators also averaged a 3% increase, while mail handlers went up 1%, and addresser operators remained the same as 2004 wages.
Retaining Good Employees
For the third year in a row, mail center managers have been able to maintain a retention rate of 93%, the highest in the history of our 16-year survey. Perhaps the poor economy is helping workers "stay put," but there are other factors that may account for this ongoing success. Government institutions, mail service companies and printers are at the top of the chart, each with a 95% retention rate. Lowest on the scale at 91% are educational institutions. Others who have above average retention rates include very low- as well as low-volume operations (less than 300,000 mailpieces a · month), very small businesses (less than 10 employees) and very large companies (more than 500 employees), union shops, centers in which print and mail operations are combined, centers managed by certified managers or managers who use scheduling software.
Interestingly, managers who do not track productivity have a higher retention rate than those who do. We assume that managers who track productivity are turning over staff because of unproductiveness, which is a good reason to have a lower retention rate. Operations processing mostly Periodical Mail have the rest retention rate of 98%, while Standard Mail operations follow with a 94% rate and First-Class operations fall below the industry average at 92%.
Facing Difficult Choices
By the end of 2004, nearly as many managers (23%) had to lay off staff as those who had to increase the size of their staff (24%). Since we began tracking staffing patterns, 2004 has been the year with the highest number of centers who had to reduce staffing. Most staff reductions were in manufacturing/wholesale businesses (31% decreased staff size), followed by educational institutions (27%). Mail service providers and printers had the least number of mail operations that had to cut staff (8% and 7%, respectively).
Survey respondents tend to be optimistic about current year staff reductions, projecting fewer reductions than actually occur. For example, in 2004, only 15% of managers projected they would reduce staff size, but by year-end, 23% had. The number one reason for decreasing staff size was budget cuts, followed by attrition, then declining mail volume and automation, which rounded out the top four reasons.
Once again in 2005, only 15% of mail center managers, overall, project they will reduce the number of workers in their operations. Topping the list are educational institutions with 29% of educational mail center managers projecting staff reductions. Manufacturers -wholesalers continue to expect reductions with 19% expecting to cut their workforces. Government and nonprofit institutions are next on the list with 15% projecting cuts this year. We will see how accurately they projected next year.
Not Down and Out
Although a slight difference, more mail centers (24%) did increase their workforces than those who reduced staff (23%) in 2004. Half of all mail service providers and 45% of all printers hired on additional staff. Least likely · to add staff were educational institutions in which only 8% increased the number of workers.
The outlook for this year is not quite as bright, with only 23% of mail centers expecting to pick up additional workers. This again may be an optimistic number since in 2004, 28% of managers predicted to add staff when only 24% actually did. Once again, mail service providers and printers are at the top of the list with 47% and 39% of managers, respectively, expecting to hire additional workers. Manufacturers/wholesalers (12%) and government and nonprofit institutions (16%) are least likely to be hiring.
With budget cuts topping the list for why most companies are reducing staff size, it is understandable that managers are turning to mail service providers and printers to pick up more of the workload that has generally been done in-house. Perhaps that is why we will continue to see a lot of the industry growth in the outsourcing sector.
The Hunt for Good Employees
Even though staff sizes are being reduced and retention is high, managers still have to fill vacant positions. While newspaper classifieds continue to top the list as the number one choice for finding qualified applicants, of note is that if a manager is seeking someone to fill a position and pays under the industry average, they rely on word of mouth to seek applicants. That resource is third on the list for managers who pay more than the industry average (first is classifieds, followed by the Web). How managers attract potential employees has no effect on retention rates; in other words, one method does not produce longer term workers than another.
While only 17% of all mail centers who were surveyed were unionized, there are interesting contrasts in those shops as compared to non-union shops. First, which mail center is most likely to be unionized? It would be in a government or educational institution, processing primarily First-Class Mail, located in the western US, processing more than a million pieces per month. Union shops are less likely to compensate workers through incentive programs. Only 23% of union shops have an incentive program, while 33% of non-union shops have incentive programs.
Instead of incentives, higher hourly wages are negotiated. Non-management, entry-level staff (those represented by the union) earn 18% more than the industry average and 23% more than non-union workers. Long-term employees earn 14% more than the industry · average and 22% more than non-union workers. Managers and supervisors, although not represented by the union, in general, also benefit from the union wage structure; their wages are 16% above the industry average.
In"cent"ing the Staff
Management has long used incentives to boost productivity and quality. Mail center managers are no different. It is especially evident in small businesses where high wages are not the norm. Thirty-seven percent of very small companies use incentives in the mail center as compared to 30% in companies with over 500 employees. In small companies, the incentive is most often based on performance and merit, whereas large companies provide incentives based most often on profits.
Whether a business processes primarily First-Class or Standard Mail makes no difference as to whether they provide incentives. However, managers of First-Class operations most often base incentives on profits, while managers in Standard Mail centers base incentives on productivity.
While incentives have an impact on a weekly paycheck, they do not have an impact on longevity. In mail centers that have incentive programs, the average number of years of staff is 7; while in centers with no incentive programs, workers average 8 years.
Turning a Corner
Last year's survey results unveiled a trend of fewer female workers in the mail industry. This year, the good news is that there is a resurgence of women in the industry. The number of female full-time staff went up two percentiles; likewise, there were two percentiles more part-time female workers. There were more supervisors in the industry this year and both men and women advanced equally into those positions with two percentiles more for each. The not so good news for women is that more men advanced into manager positions. Two percentile more men advanced into manager positions while the percent of women managers stayed the same.
Learn More in the Next Issue
Make sure to "tune in next time" for more survey results. In the November-December issue, we delve into the operational side of mail centers. We look at outsourcing trends, staff-to-volume size, how managers will be dealing with postage increases, what your opinions are on the Postal Service, the ongoing impact of MERLIN, how much does it cost to process a piece of mail and a host of other issues. Thanks again to those who helped with this survey.