The stories reminded me that, for the last 21 years of my Pitney Bowes career, I dealt continuously with the encroachment of state capitalism in the postal sector.  In the late 1980’s and throughout the 1990’s, we successfully fought a series of battles with the U.S. Postal Service to keep it from becoming another entity with all the powers and privileges of the federal government, but with none of the regulatory constraints associated with federal government agencies.  Several senior postal officials aspired to create a power base similar to many government-owned entities, such as the Tennessee Valley Authority (which Marvin Runyon, the Postmaster General from 1992 to 1998, had led) or the New York-New Jersey Port Authority.

Fortunately, we defeated efforts by the Postal Service to regulate the mailing industry and compete unfairly with it at the same time.  The Postal Service leadership teams succeeding Runyon and members of his senior team generally tried to operate within the boundaries set by Congress. We had a very collaborative, and mutually respectful, relationship with the Postal Service during most of my tenure as CEO.

The story was very different outside the United States.  While we had similarly respectful and collaborative relationships with the postal officials in the UK, Canada, Spain, Denmark, and Norway, we had a variety of challenges with postal authorities in many other countries.

We saw three distinct challenges:

• Some postal operators, which had appeared to become privatized, acted in very anti-competitive ways in their own nations, and also secured rights and privileges from their national governments that stacked the deck against partners and competitors.  The most extreme example was Germany, during the leadership of Deutsche Post by Klaus Zumwinkel, who resigned in early 2008 for reasons unrelated to his work-related performance.  Throughout Zumwinkel’s 18-year tenure as CEO, Deutsche Post acquired companies all over the world, including a disastrous acquisition of Airborne, a major package shipper, and the worldwide operations of DHL.

In Germany, where Deutsche Post realized most of its profits, postal rates were exceptionally high (well above $.60 per piece), service was not exceptional, but competition was ruthlessly suppressed.  At the end of 2007, a few weeks before Germany had committed to open its market to full competition from within the EU, Zumwinkel successfully prevailed on German legislators to pass a law that created a minimum wage for postal sector employees only, a wage pegged at Deutsche Post’s minimum pay grade.  The immediate result was to destroy its two largest mailing competitors, since neither could secure labor cost advantages over Deutsche Post.

In Italy, Poste Italiane took advantage of complex and onerous labor laws to fend off competition, since these laws made part-time and temporary workers prohibitively expensive.

• In many countries, postal operators expanded into businesses in which the marketplace was amply served by the private sector, but in which the postal operators would immediately have a competitive advantage, because of the implicit protection from national governments.  Australia, Belgium, Ireland, China and New Zealand all started retail banks.  Japan had always had a sizable postal banking system which paid almost no interest to depositors, but which became a huge source of loans to projects favored by politicians.  Prime Minister Koizumi staked his political career on an initiative to privatize the Japan Post, not because there was ferocious opposition to privatizing the mail or package business, but because the heavy governmental control of the flow of bank loans would be jeopardized. He barely avoided receiving a vote of no confidence because his initiative upset the way government favors had been delivered for generations.

Postal operators have played heavily in the money transfer business (competing with Western Union), in retail government services, in the sale of greeting cards and stationery, and in the sale of gift items often transmitted through the mail.  Postal operators like Australia, China, Finland, and Sweden moved seamlessly into mail services businesses. In countries with a strong tradition of state capitalism, these postal operators were able to operate freely in more businesses in which they competed unfairly with the private sector.

• The postal operators often carried mandates and missions inconsistent with a business focused on cost-effective customer service.  France and Canada were prime examples of this problem, as were Japan, Spain, and Portugal. In these countries, postal operators were saddled with explicit and implicit requirements that they keep a minimum number of people employed, even if the demands of the business would not justify such employment.  For Pitney Bowes, the government employment mandates made many of our productivity enhancement tools unusable by these postal operators.  They could not improve their productivity, even if they wanted to, because they were fulfilling social mandates.  Postal ratepayers paid more, in the form of a disguised tax, to create a welfare system for workers who probably could not have secured employment at comparable wage and salary rates.

I was able to experience the ugly underside of state capitalism for over two decades.  It made me realize that the United States should think long and hard about migrating down the path these other countries have followed.  It also is a cautionary tale for large multinational corporations that aspire to compete fairly in major markets in which one or more of the competitors are state-owned or state-controlled enterprises, or in which the state considers a particular industry strategically important.

In this case, the employer is the Port Authority of New York and New Jersey, an entity created by a contract between New York and New Jersey and jointly owned by the two states.  This entity is not accountable to elected officers or voters, except for the indirect influence that elected officials from the two states sitting on its board of directors have on the entity’s operations.  Oddly enough, entities like the Port Authority were created over several decades in the 20^th century because elected officials believed that they would operate in a more business-like fashion and not be subject to the corrupting influences of elected officials trying to “buy” votes by bestowing favors on constituents. However, the lack of public accountability means that the customers of the Port Authority, namely those who travel in the New York Metropolitan area, will bear the brunt of the abuses of the pension system.

In one sense, it should be easy to solve this problem: abolish this “pension spiking” scheme in the next collective bargaining session.  However, we get a hint of why these kinds of schemes are so hard to uproot. A toll collector named Princesella Smith is quoted as saying: “I’m blessed. I have a great job, and, in this economy, it’s great that I can cover everything with my eight hours a day and overs.”

Executives and union leaders who both know that paying a toll collector like Ms. Smith $89,599 per year is absurdly excessive also have to confront the fact that, but for her oversized compensation package, she probably would be living in a much more difficult economic situation.  She is a human face to the problem of reducing the government budget deficit.  I found that, at Pitney Bowes and at other large organizations, no matter how well these organizations were managed and how tightly costs were controlled, it was difficult to bring pay into line with what made sense for customers.

The overpaid employee is a real person, often well liked and appreciated for his or her organizational commitment.  While I do not know how good an employee Ms. Smith might be, she is clearly doing a job, collecting tolls on the George Washington Bridge, that few people would choose to do if they had other choices.

Not only are overpaid employees often liked and appreciated, but senior executives often know the families of these employees and the tragedies and challenges the employees face.  At Pitney Bowes’ Connecticut operations, there really are no executives living in enclaves that totally separate them from coming into contact with ordinary employees.  I was highly likely to interact with company employees outside the office. When my second son was younger, the president of the Little League baseball program was a product manager at the company. Our housekeeper’s husband worked at the company. When we went to school events, we would meet parents who were company employees and whose children were friends of our children.

It is easy to blame militant labor unions for fighting to preserve the jobs of overpaid and under-skilled employees.  However, my experience is that these problems would exist in any organization in which executives, voluntarily or otherwise, build close personal relationships with people up and down the organization.

Over time, I developed the skill of confronting people I knew and liked, but who had to leave the company.  I had to convince them that it was not only in our best interest, but in theirs, that we were taking them out of a job, reducing their pay, or in some other way taking an adverse employment action.  I operated on the simple principle that if I could not look them in the eye across a table and justify what we were doing, the action was indefensible.  Thankfully, I never had to make the judgment that an adverse employment action was indefensible when I used that test.

When we teach senior executives to care about employees as individuals, then we create a different problem.  It becomes challenging to look those overpaid and under-skilled employees in the eye, meet them in the coffee shop and deli, see their families in the school events, or run into them on the street, and tell them that you either have to eliminate their job or reduce their pay to bring it into line with what the market pay should be for their job.

Think about the job of a postal worker who manages mail sorting machines.  At Pitney Bowes, we were able to employ and retain people who would do this work at about 1/3 the rate that the Postal Service was paying for the same work.  We were consistent in our pay practices with the real market for this job.  The Postal Service’s pay rates were artificially high, both because of a collective bargaining agreement, and because of the political pressure that postal union workers could bring to bear on elected officials.

The concept of a “living wage” is that people must earn enough in any job to be able to afford a standard of living above the federal poverty line.  However, what “living wage” advocates forget is that the “living wage” movement would result in fewer jobs and more expensive products.  As I look across our economy, I see many candidates for job eliminations if wages for that job get too high, not the least of which is the toll collector job.

When I go to large retail grocery stores and pharmacies, I am increasing seeing self-service stations, including some at the checkout counter.  When I go into bathrooms, I see electrical hand driers, which clearly replace the job of transporting and stocking paper hand towels. Postal sorting machines have replaced most postal clerks who sort mail.  Automated banking kiosks replace tellers, as other vending machines provide 24×7 service in place of retail clerks.

The largest job elimination trend, which particularly comes into play at this time of year, is the substitution of online shopping for retail purchases.  In past years, my wife frantically traveled from store to store to buy Christmas gifts.  Today, she sits with her computer and orders everything online.  While the merchants that deliver in response to online orders certainly employ people, fewer people are needed for online transactions, compared with their retail counterparts.

In essence, the labor union and “living wage” movements, whether they want to admit this or not, are hastening the elimination of the jobs they are trying to protect and enhance. They will win for a few years, but eventually the desire for consumers to get the highest level of convenience and value at the lowest cost will override the desire to protect someone else’s overpaid job.

Her description of certain union positions rings true to me because I recall that the Stamford Youth Foundation (Stamford, Connecticut) could not staff the variety and volume of after-school activities that it would have liked because union contracts required it to pay every teacher for the extra hours worked after the regular school day.  This deeply bothers me.

I am not against labor unions, and I believe they serve a useful purpose in being a check-and-balance on abusive management behavior.  However, the notion that volunteerism must be stamped out if there is a worker ready, willing, and able to do the same job for market-rate pay is wrong-headed.

One of the fundamental issues in all societies is the question of when and how much someone should be paid for performing a task.  If we believe that every activity that is currently the subject of volunteer work, or perhaps below minimum wage work (like the cutting of a neighbor’s lawn by a 12-year-old wielding a lawn mower) should be converted into unionized, market-rate wage-driven work, we will significantly reduce the number and variety of goods and services we can offer to one another.

The one story in Malkin’s op-ed piece that particularly troubled me was the reference to a complaint by union officials against volunteer firefighters who built sandbag barricades to protect the city from record flooding. Ultimately, the reason governments at all levels are in deep financial trouble is that they have wildly overpaid unionized workers for relatively low-skilled tasks, or for tasks for which there should not have been premium pay.  As I have said in previous blogs, I do not blame the unions for trying to get the pay and benefits they received, but I deeply blame the government officials who caved in to these demands.

As a society, we need volunteerism at all levels.  There has to be a zone of activities that we will do without expecting to be paid by the recipient of our services.  This zone should include character-building community projects by such organizations as the Boy Scouts or the Girl Scouts, emergency services by first responders and other volunteers in the event of a disaster, and charitable work.  If someone wants to donate services, as my daughter does when she performs at senior citizens homes, she should be able to do so.  Taken to a logical extreme, the position attributed to SEIU and other unions would suggest that a unionized musician charging the senior citizen home market rates should have the exclusive right to deliver performances to senior citizens.  This is an outrageous position, and I hope our government officials never allow it to become the prevailing view.

I enjoyed this interview very much. Please click below to listen to the recording.

I have always believed that government officials and businesses get too enamored of the latest and greatest technology, without recognizing and trying to retain the benefits of older technologies. Pitney Bowes has strongly believed that the most secure system of all is voting by mail, which supplements traditional paper-based ballots with state-of-the-art address management software and ballot tracking and tracing systems.

The biggest problem identified in the article was the quirkiness and unpredictability of computer-based systems, which fail in unexpected ways on election days, because of the large number of people using them. The kinds of misuse possible when tens or hundreds of millions of people use a system are not all predictable, and, therefore, not preventable. This Freedom to Tinker blog post clarifies some points made in the article in reference to this topic.

The other problem not identified in the article, but equally contributory to the challenges of getting an accurate vote count is the fact that this electronic technology is designed to be used within a 12-15 hour window on one day. Errors are hard to detect, and breakdowns are extremely difficult to correct in that short a time window.

A voting-by-mail system, by its nature, stretches the voting process over a several-week period. It is simple to use, tolerant of errors, and it will fail, if it does, in predictable ways that can be prevented through sophisticated technological design. Moreover, because it is a system that is used over a several-week period, errors can be detected and corrected in virtually all cases without a disastrous impact in a short time window. It has the great advantage of producing a secure paper trail. Finally, it eliminates the challenges and headaches of provisional ballets.

The Pitney Bowes Relia-Vote™ system is elegantly simple. Every ballot is sent to a single registered voter. The ballot can be tracked all the way to the letter carrier’s bag, using the Postal Service’s CONFIRM technology, which scans mail every time it goes through a sorter. The voter is supplied with a pre-bar-coded return envelope, and the ballot is mailed back at the voter’s choice.

To prevent fraud, signatures on the envelope can be compared by the incoming mail sortation system with the signature already on file, which assists the election inspectors that have to deal with signature verification issues. Since one ballot is sent per voter and no more than one can be received back, there is no risk of a single individual voting more than one time.

Opponents of voting by mail sometimes make the argument that individuals can be bribed or coerced into voting a certain way when they are filling out the ballot, whereas in-person voting has tight controls that prevent coercion at the polling place. The best solution for the coercive vote is to give the voter the ability to rescind the vote mailed in at any time up to an election day deadline. By allowing voters to rescind their choices and vote in person on or up to election day, election officials can also address another concern of early voting by mail, the argument that voters may not absorb all of the relevant information from the candidates or from proponents of referenda late in the campaign before they cast their vote.

Proponents of in-person voting can retain that option, while allowing no-excuses voting by mail, but I believe that if security and confidence in the election results is the highest-priority goal, secure voting by mail is the best solution.

The Election Law blog cites a useful report issued by Common Cause, which reviews the benefits of vote by mail elections, as well as proposed solutions for potential problems cited by opponents.

There may be other reasons to retain in-person voting, especially if it is allowed to be done over a several-week period, as is the case in Texas, but “no-excuses” voting by mail should always be an option.

The findings are quite interesting:

• To the degree that “Do Not Mail” proponents have cited environmental arguments, they have successfully left with the public a number of misimpressions about mail’s environmental impact, all of which grossly exaggerates mail’s negative environmental impact:

• While mail constitutes about 2% of solid waste in landfills, the public believes it constitutes over 33%.
• Similarly, the whole issue of the cutting of trees to produce pulp and paper has been wildly misunderstood. The practice of cutting and harvesting older trees and replacing them with new plantings, usually accounts for very little negative environmental impact.
• The public correctly understands that poorly addressed and poorly targeted mail is wasteful. As a Company, Pitney Bowes has been passionate about selling solutions to reduce the production and delivery of wasteful mail, so I could not agree more with this perception.

• The public wants more recycling of mail, as they should. Today, newspapers are recycled at a rate of about 77% of the newspapers bought and read by consumers, whereas mail is recycled at a rate of about 35%. This can be improved by having more robust recycling capability at the municipal level, as well as better waste mail collection systems.

• The public correctly understands what some would call “junk mail” is not only of low value to them, but of low value and offensive to society as a whole. For example, mail that contains content aggressively selling credit cards and home mortgages is now at the top of the list of the mail considered to be “junk” by approximately 90% of those surveyed. The public correctly understands that when vendors use high-pressure tactics to sell services or products to vulnerable populations, like people with poor credit histories, those vendors are demeaning not only the services and products they sell, but mail as a medium. Policing deceptive content or content that is inappropriate for a particular recipient, such as the prohibition of pornography being sent to children, are critical to staving off “Do not mail” legislation, because this is the kind of content that makes voters more likely to demand legislation which has a significant risk of being over-reaching.

Three other observations:

• Members of the public who support “Do Not Mail” registries do not understand that the consequences are not comparable to what happened with the “Do Not Call” registry regulation. “Do Not Call” registries had no noticeable effect on the cost of a telephone call because outbound telephone solicitations are a tiny part of the total telephone message stream. On the other hand, if we saw a significant part of the advertising mail stream disappear, the price of postage would skyrocket and have other bad consequences:

• Non-profits and businesses that depend on the mail for attracting donors or customers would see their costs skyrocket by 20-25%, and would lose some of their donor or customer base. Ted Grigg reviews how direct mail is still the core medium for fundraisers in his direct marketing blog.
• Many small businesses that depend on the mail either to attract customers or to ship packages would have great difficulty surviving.
• Many popular magazines would no longer be published.
• Libraries and bookstores that ship books to us would be paying a lot more to get them to us.

• There continues to be no public comprehension that, to the degree that mail substitutes for a trip in an automobile, it is environmentally positive. There are groups that want to reduce consumption and change our well-established consumption habits. I do not think they have much chance of succeeding. If we eliminate direct mail as a trigger for consumption, consumers will find another way to acquire what was presented to them through direct mail. What we most need to do is find ways of making mail as a communications, marketing, and delivery medium as environmentally friendly as it can be. This Print CEO blog post reviews how the printing and publishing industry is moving toward the use of recycled paper and other methods to reduce its environmental impact.

• Finally, no one thinks about the relative environmental merits of electronic communications media. I think that the public tends to ignore the negative environmental impacts of electronic communication either because they have never seen the data centers used to store and transfer electronic messages or mistakenly believe that additional electronic messages do not require additional computer hardware. The impact is highlighted in this TechRepublic blog post. Not surprisingly, companies dependent on electronic messaging are not regularly broadcasting the impact of data centers on the environment. We must do a better job of educating the public on this subject.

My fundamental observation is that many actions taken for environmental reasons end up having unintended negative environmental consequences, such as the substitution of electronic communications for mail.

At the same time, this survey indicates that, although the consumers responding to the survey may have gotten the environmental arguments wrong, their opinions about what is valuable about mail and what is inappropriate are right on target, and we ignore those opinions at our peril.

Every one of these parts of the mailstream has different future prospects. Paper-based consumer-originated personal correspondence has been declining for a long time. Transaction statements are a mixed bag. Some bills and statements are going electronic, such as bank and insurance statements. Others, like health care statements, are growing as we all spend more on health care. Mass circulation magazines and newspapers are declining, but a high-end publication like The Economist is growing nicely.

The Direct Marketing Association (DMA) has just launched a new mail preference service that will allow mail recipients to register to receive more of what they want and to eliminate or reduce what they do not want. The DMA has delivered a significantly enhanced service for mail recipients who want to have more control over what they receive.

But regardless of what happens to these categories of mail, there are some great growth opportunities in the remainder of the mailstream.

I have discussed remote commerce a lot in this Blog and in public speeches, so I will not elaborate on my view that when people receive something they need through the mailstream, rather than having to experience the inconvenience of driving somewhere and waiting to be served in a retail process, this is a great use of mail. For example, think about the difference between receiving your motor vehicle registration in the mail, as opposed to waiting in a long line to be served in a motor vehicle bureau.

But there is another potentially big opportunity, and it is described as the growth in businesses, non-profits and even governments having regular dialogues with their customers, some of which will go through the mailstream.

In the business world, retail establishments generally are remarkably poor in getting to know their customers, and communicating regularly with them. Most successful retailers understand that they need a great location for their store, the right products and services at the right prices, good presentation of the offerings inside the store, and, depending on the amount of assistance needed, the appropriate quality of in-store personnel.

However, they do not take advantage of what they can learn about a customer while he or she is in the store, and what they can communicate and learn when the customer is away from the store. In effect, they do not have an institutionalized knowledge base about the customer that helps them get to know customers as individuals. When I refer to an “institutionalized knowledge base,” I mean a usable computerized record of critical information about the customer.

The transaction history is a good place to start, but many retailers either retain a transactional framework that involves cash, debit cards, or credit cards, none of which are designed to give individual retailers a comprehensive transaction history about an individual customer.

There are three easy ways to get customer information:

• Granting credit and billing the customer through a retail account relationship;
• Creating a loyalty or reward points program; and/or
• Getting customer data through techniques as simple as soliciting business cards for a drawing or requesting that customers complete survey forms.

None of these approaches are expensive or complicated, but few retailers use them. The Customer Evangelism blog further reviews the advantages of implementing and maintaining a comprehensive customer database.

Non-profits also need to get to know donors better. Most still do “elephant hunting,” meaning that they go to big organizations like the United Way, large corporations, or large foundations to solicit funds. They need to get wealthy individuals to donate, but finding a wealthy donor is like finding the proverbial “needle in a haystack.” The easier way to get larger individual donations is to nurture those who have given small donations in the past, and to get them to increase their donations over time. In the Getting Attention blog, nonprofit marketing expert Nancy Schwartz reviews strategies nonprofits can use to enhance their marketing programs. In this post many of her recommendations are centered around improved communications and targeted messaging.

Personalized mail that conveys relevant and powerful information is an essential tool in both the business and the non-profit processes. Sometimes the mail is nothing more complicated than a thank-you note, a reminder, or a postcard suggesting a link to a web site. Sometimes, it is a newsletter or a survey. Sometimes, it is a seasonal greeting card that has a personal touch to it. But, whatever the technique used, it needs to be part of a regular dialogue to keep an organization connected to its customer. Yaro Starak discusses the need for more personalized contact in his blog Entrepreneur’s Journey. While the specific post I have cited focuses on email, the philosophy can be applied to all forms of communication.

Even government can improve its use of the mail. When it sends out its reminders on motor vehicle or drivers license registrations, it can include public service messages the citizens would find valuable. It can also send postcards to notify citizens about public hearings broadcast on the local cable TV channel. Where I live, Cablevision broadcasts state government meetings on Channel 84 and local government meetings on Channel 79.

The efficiency of mail is further debated in this Branding & Marketing blog post. The author feels that a combination of both online and offline communications is the most effective approach at establishing and building relationships with customers.

Customer, donor, and citizen engagement through the mail as one channel in a multi-channel relationship or conversation is a tremendous growth opportunity for those who sell mailing solutions. I always get tremendous satisfaction when one of our sales professionals breaks through with a customer to teach the customer how to use the mailstream in this very effective way of growing its business.