GROWTH, EFFICIENCY AND INCENTIVES - JOINT STATEMENT

[TrueBlueTerrier]

Letter to Branches




No: 698/14

4th November 2014

To: All Branches with Postal Members


Dear Colleague

NATIONAL JOINT STATEMENT – GROWTH, EFFICIENCY AND INCENTIVES

Since the early summer CWU and RMG have been discussing the impact of accelerated direct delivery competition and the pressures this is creating across the business and on frontline employees.

Although dealing with these issues always was and remains central to the objectives of the Agenda for Growth agreement, it is clear that the developing situation requires national guidance and support to the field, particularly to ensure that the inevitable efficiency issues that will arise are managed fairly in line with our IR procedures and relevant National Agreements.

As part of these ongoing discussions it was previously reported that the Union wrote to Royal Mail stating that we understood the difficulties of the current environment and that we were willing to address efficiency issues, but that this must be part of a balanced approach generating a greater focus on growth and introducing new incentive arrangements. This led to negotiations taking place with the aim of securing a National Joint Statement covering growth, efficiency and incentives.

During the course of these negotiations there were regular update reports to the Postal Executive and feedback from CWU Divisional Representatives, both of which demonstrated that CWU members’ priorities are changing and that expectations on incentives were not necessarily top of the agenda. Instead, there was a growing recognition amongst CWU representatives and members that unfair competition now poses an increasing threat to jobs, terms and conditions.

Given the current environment this has proven to be a very testing set of negotiations for the national parties. However, after taking account of feedback and the input we have received, talks have now concluded with the attached National Joint Statement that was unanimously endorsed by the Postal Executive today. It can be seen from the content of the statement that we have achieved our objective of a balanced approach bringing growth to the forefront with a renewed focus and structured plan, securing very significant safeguards on efficiency, alongside a one year profit related scheme for employees, enhanced buy-down options and the review of MTSF being deferred from January 2015 to May 2015.

The salient points of the Joint Statement are as follows:-

The Plan for Growth

Achieving sustainable growth is the single most important thing to secure the future of the Postal Industry – but with our traditional work in structural decline and with increasing competition – it is also the single most difficult challenge to overcome. It will require a major shift in current thinking from the company, the Union and the workforce and means everybody must come to the table prepared to consider radical alternatives and enhancements to the services we provide and the way we work. The plan for growth in this Joint Statement represents a strong platform for CWU and the company to seriously develop the growth strategy and ultimately put Royal Mail in front of the marketplace, rather than simply responding to it. It includes the following commitments:-

A structured four point plan pursuing various strands for growth, including an immediate review of the current workplan/pipeline to explore radical opportunities outside the constraints of our existing networks and delivery specification.

Addresses an immediate concern about the Optimised Mail Preparation Project, integrating this into the wider work plan review and ensuring it cannot be considered in isolation to the overall growth strategy.

Dedicated resource to support the plan via project teams that will work under the auspices of the National Growth Forum.

New investment to support the plan with CWU involved in detailed sessions on the company’s investment strategy, inputting our views on the level and prioritisation of investment required to deliver the growth strategy.

Structured national and regional Growth Workshops, looking in depth at the commercial environment, current growth initiatives and putting forward new ideas.

A special focus on areas already facing significant direct delivery competition, with the opportunity to identify new work tailored to their circumstances, using where practical these areas to trial more radical solutions.

A report to be published, taking account of commercial sensitivities, on the output of the work of the project teams, encouraging the widest possible input and discussion on growth.

By January 2015, a process will be introduced to enable employees to input their ideas on growth.

Efficiency

In today’s industrial world dealing with companies who continually seek to improve efficiency is a reality for all trade unions. However, in Royal Mail, with structural decline in our traditional work areas, a highly competitive and privatised environment; and a Regulator crawling all over Royal Mail’s performance figures, the debate on efficiency is intensifying.

Against this background it is crucial that the Union continues to face up to these issues by providing CWU representatives with a framework for negotiations that allows them to fairly protect the interests of our members at local level.

The section on efficiency in this Joint Statement builds on the statement agreed in March, acknowledges the difficult environment Royal Mail operates within and above all secures important safeguards that recognise the situation is not the same everywhere. This includes:-

An equal focus on units where workload has increased as well as decreased.

In delivery, depending on local circumstances, a choice over how the review can be undertaken.

All reviews will be carried out in accordance with National Agreements and our IR procedures.

Confirmation that Royal Mail’s own targets will not predetermine or dictate the outcome of the local review.

A very balanced list of objectives for the review that allows the Union’s agenda to also be at the forefront.

Specific confirmation that any change to duty times and/or attendance patterns are subject to local agreement.

The opportunity to increase part time contractual hours to reflect the hours actually worked and planned.

Actual offers of VR can only be made when the review is agreed and where surplus staffing exists.

The opportunity to undertake an initial joint scoping exercise to maximise the available choices for employees and integrate these reviews with other activities such as Postbox Strategy.

It is essential that when dealing with these local reviews the Union approaches this in a professional way and that where difficulties arise we fully utilise the terms of our Industrial Relations procedures.

Incentive Arrangements

With declining volumes in some locations and no nationally agreed level of performance, reaching agreement on new incentive arrangements has been extremely difficult. It must be recognised that the debate on incentives is also taking place against the background of one of the most successful pay deals in the UK, the introduction of free shares, the 100% increase recently achieved by the Union on the Christmas bonus and the SAYE Scheme put forward by Royal Mail being significantly oversubscribed. In the end, taking account of the overall picture, a settlement has been reached on an interim approach that better reflects the circumstances we are dealing with during the period April 2014 to April 2015. This includes:-

The introduction of a 1 year profit related scheme that has the potential to return a lump sum to employees for over achievement of the company’s operating profit target. This does not include profit generated by one off exceptions such as the sale of an existing Royal Mail site. However, the target is the same as that which triggers Royal Mail Executives’ incentive plans.

There are two enhancements to current buy-down options. Firstly, the company will pay 50% of the cost of tax and National Insurance for employees who choose to buy-down their hours. Secondly, there is a new option linked to pensions that increases the formula for the lump sum by 25% and also means this is tax and National Insurance free, under current HMRC Guidelines.

The national review of MTSF is put back from January 2015 to May 2015, with the opportunity to scope a restructured package that better supports the overall age profile of the workforce.

The company has committed to further incentive arrangements beyond April 2015, with consideration of more tailored incentives and talks on this are due to conclude by March 2015.

Conclusion

The content of this Joint Statement represents the strongest position the Union has achieved to date on taking growth forward and will lift the whole debate, pushing Royal Mail to do more and encouraging CWU representatives to come forward with our own ideas. As part of this the Postal Executive has agreed that at an appropriate point in 2015 the CWU will hold a Policy Forum on achieving growth.

The Statement gives the Union a strong element of control over how efficiency is tackled in the workplace, a subject that with or without this statement our members will still have to face at local level. With the statement, we have been able to introduce significant safeguards and also ensure that the different picture emerging across the UK can be catered for. Finally, we have a package of measures consisting of a one year profit related scheme, enhanced buy-down options and a deferred MTSF Review, all of which will help deal with current circumstances.

Please ensure the content of this LTB is circulated to all CWU Representatives and distributed in workplaces. Following the National Briefing the Union will be preparing a communication to individual members’ home addresses and this will cover key issues currently facing the Postal side of the Union.

Finally, you will note that the terms of the Statement will be discussed at the National Briefing, following which we will provide further guidance for our Representatives.

Any enquiries on the general content of this LTB should be addressed to the DGS (P) Department; specific functional enquiries should be addressed to the relevant Assistant Secretary.

Yours sincerely


Dave Ward
Deputy General Secretary (P)

Ray Ellis Bob Gibson
Assistant Secretary Assistant Secretary


Terry Pullinger Andy Furey
Assistant Secretary Assistant Secretary









ROYAL MAIL/CWU NATIONAL JOINT STATEMENT - GROWTH, EFFICIENCY AND INCENTIVES

1. Introduction

In recent weeks RMG and CWU have exchanged views and information about the growing challenges created by direct delivery competition and the rapidly changing market dynamics.

Addressing these issues was always central to the objectives of the Agenda for Growth Agreement. However, both parties recognise that the accelerated impact of direct competition in parcels and letters requires a more radical response in how we develop the growth agenda, alongside a package of measures to help maintain and where possible improve efficiency.

The purpose of this Joint Statement is to ensure a balanced approach to growth, efficiency and incentives, guided by the principles of the National Agreement.

2. The Plan for Growth

To generate a greater and more inclusive focus on growth, Royal Mail and CWU have developed a structured plan to pursue additional growth in the business via the following strands:-

Introducing enhanced customer offerings on our current product range

Examples of this are the initiatives already underway on the opening up of the network on Sunday’s and the trial on opening up enquiry offices and Sunday parcel deliveries, also looking at ideas to extend the product range in the USO and stem/slow letter decline.

Creating Growth through better utilisation of our existing pipeline

This includes exploring the opportunity for new upstream work in warehousing and the filling of empty legs in the logistics network.

Exploring more radical solutions

This involves an immediate review of the existing work plan and overall pipeline to look at radical opportunities for growth outside of the constraints of our existing networks and delivery specification, including consideration of more flexible acceptance and delivery times that can better meet customers’ needs and expand the options for growth


As part of this the Optimised Mail Preparation project will now be fully integrated into the wider pipeline/work plan review. Royal Mail confirms this particular project is only at the concept stage and CWU will be fully involved in its development, commencing with detailed modelling of the concept in selected units to help understand the potential impact on the entire mails pipeline/workplan. A Terms of Reference to trial this will be agreed separately and any output from the trial will be considered in conjunction with the output of the ongoing wider review. This will include consideration of whether such initiatives can support the overall strategy for growth.

Diversification of the Business

This is about creating new revenue streams by exploring completely new areas of work and business opportunities for Royal Mail to become involved in.

2.1 Resources to support the Growth Plan

The Growth Plan will be supported through project teams made up of RM and CWU nominees, who will be selected once the project content is known.

The work of the project teams will initially be for a six month period and will be coordinated through the National Growth Forum which will receive regular reports on the initiatives being developed and give appropriate direction where necessary.

As part of the Growth Plan we will seek to identify new and alternative work tailored to areas facing significant direct delivery competition, using those offices to trial more radical solutions where practical to do so.

2.2 Investment to support the Growth Plan

Royal Mail is committed to new investment as appropriate to support the plan for growth. Royal Mail has recently shared with CWU, in commercial confidence, its investment strategy over the next 3 years. The company’s investment strategy will now be the subject of a further detailed session at the growth forum and national growth workshop. As the plan for growth develops CWU will also have the opportunity to input its views on the level and prioritisation of investment required to deliver the growth strategy.

2.3 Growth Work Shops and Output

The growth plan will commence with a two day National Workshop in November attended by senior RM managers (including members of the commercial team), the CWU Postal Executive and a number of CWU Divisional Representatives.



This National Workshop will receive a presentation from the commercial and operational teams on current growth activities, will scope the wider commercial environment and be encouraged to put forward new ideas.

In January 2015, a series of Regional Growth Workshops will take place to give a broad overview of the work undertaken to date and also encourage the input of new ideas from managers and representatives within the regions. Any new ideas deemed viable will be factored into the work of the national project teams above.

The work of the project teams will conclude with a further two-day National Workshop in April 2015. This will involve a full report being presented of the work carried out and will also determine next steps in our joint approach.

Taking full account of commercial sensitivities, a report will be published for circulation across the business to encourage the widest possible input and debate on the growth strategy.

By January 2015 the National Growth Forum will also agree and implement a process to engage employees directly in seeking their input and ideas for growth.

3. Efficiency

The Agenda for Growth Agreement explained the need for RM and CWU to jointly address efficiency issues, taking account of the increasing competitive and regulated environment the business now operates within. In March 2014, a National Joint Statement on Efficiency was also issued, which set the parameters for ongoing local discussions whilst national talks continued.

As part of our ongoing discussions RM and CWU have also recognised that maintaining and improving overall business efficiency enhances long term employment prospects, opportunities for growth and the company’s ability to improve the pay, terms and conditions of the workforce.

In recent months, the national parties have exchanged information which demonstrates that direct delivery competition in letters and parcels has accelerated and that this is having a noticeable impact on traffic volumes within the business. Analysis of year on year trends shows a different picture emerging across the UK. In some locations traffic has dropped significantly over and above normal seasonal variations, in other locations traffic has remained stable or grown.

In order to respond to these fast moving market dynamics and help sustain the principles and employee protections that underpin the national agreement, Royal Mail and CWU have agreed to address efficiency issues in a structured and balanced way, reflecting the different situations that exist locally as follows:




3.1 Local resourcing and workload reviews

All offices will undertake a local resourcing and workload review. In Delivery, the local parties will jointly establish and agree, depending on their local circumstances, whether the review can be managed effectively through weekly resourcing meetings, or whether they require a more in depth reorganisation through a unit led revision or a full scale structural revision. These approaches will be carried out fully in line with existing national agreements, joint statements and guidelines, including the new delivery revisions guidelines and PIR, model week guidance V2 and where necessary the nationally agreed traffic measurement process.

Although these local reviews are part of a national programme, full account will be taken of offices that have already recently undertaken revision/resourcing activity or improved their performance through other initiatives.  A priority will be to address units that face Direct Delivery competition in their own locations and those units that have experienced sustained growth and now require additional support. 

All proposals arising from the local resourcing and workload review are subject to the full terms of our nationally agreed industrial relations procedures and these local reviews are designed to equally address situations where workload has increased as well as decreased.

It is recognised that all businesses have targets to achieve and Royal Mail is no different. However, it is reaffirmed that Royal Mail’s own targets will not predetermine or dictate the outcome of these reviews - instead this is a matter for discussion and agreement between the local parties.

The objectives of the local review are as follows:

To address increases or decreases in workload. In delivery the review of workload will also take account of changes in delivery points, delivery to neighbour and the overall mix of traffic, including parcels and door to door.
To address variability in workload.
To maintain and where possible increase efficiency and quality of service.
To enforce the right of employees to a fair and manageable daily workload, remembering there is a limit to what employees can reasonably be expected to do.
To maintain reasonable employee earning opportunities.
To reduce agency and casual staff.
To fully apply the terms of the national Job Security Agreement in relation to the employment of fixed term contract staff and the opportunity to increase part time contractual hours to reflect the hours actually worked and planned.

If arising from the local review formal proposals comes forward to change weekly attendance patterns or daily attendance times, these will be subject to local agreement, taking full account of the commitments made in the Business Transformation Agreement and other relevant National Agreements.

All local reviews will be carried out in accordance with the National Job Security and MTSF Agreements. It is re-emphasised that any offers of voluntary redundancy should only be made where the outcome of a review has been agreed and where a surplus staffing situation exists.

Given the different picture emerging across the UK, it may be beneficial to undertake an initial scoping preference exercise to open up and widen the opportunity for people solutions that work for employees and the business, in line with the national Job Security Agreement. This would be done in a jointly controlled way and coverage can be extended to whole areas and across functions, maximising the available choices for employees and enabling the integration of projects such as the Post Box Strategy. Information relating to this scoping exercise can also be shared across areas, with the national parities retaining an overview of the situation. Prior to any scoping preference exercise taking place a joint communication will be sent to employees in the relevant units.

Where a surplus situation exists this will be dealt with in accordance with the provisions of the MTSF Agreement. The people solutions must be workable and where VR is appropriate, planning for early release should be encouraged. Additionally, in areas where direct delivery competition has seen a significant drop in volume, maintaining the commitments in the national job security agreement may require people solutions involving, where practical, value added work in the short term.

There are approximately 30 outstanding Business Transformation revisions still to be undertaken and it is confirmed that these will be dealt with through the previously agreed interim arrangements process.

4. Incentive Arrangements

RM and CWU recognise that developing new incentive arrangements against the background of declining volumes in some locations and with no nationally agreed level of performance in place, has proven to be a very significant challenge.

Therefore, having taken full account of current circumstances, including the more challenging environment we are facing, RM and CWU have agreed that the following measures are better suited to both support and reward employees for the period April 2014 to April 2015.

4.1 Employee Profit Related Scheme

To fulfil our commitment to new incentive arrangements and reward employees for their efforts during the period April 2014 to April 2015, an employee profit related scheme will be introduced as set out below:-



- If the Royal Mail Group beats its annual profit target for the financial year 2014/15, CWU represented grade employees will each receive a pro-rata (full time/part time) lump sum based on whichever of the following calculations produces the highest return to employees.

either

– up to the first £15 million of profit achieved above target will go directly to employees.

or

– a 50/50 share of profit achieved above target.

- The company’s annual profit target has been shared with senior CWU National Officials. The profit is defined as group operating profit before transformation. The profit target must remain in commercial confidence due to business protocols and wider stock market considerations.

The annual profit target that will operate for the employee profit related scheme is the same as that which triggers senior Royal Mail Executives’annual incentive plans. Any payments due from the employee profit related scheme will be paid in June 2015, following validation of the annual accounts in May 2015.

4.2 Review of MTSF and enhanced buy-down options

The MTSF Review due in January 2015 will now commence in May 2015 and conclude in June 2015. In the meantime, current MTSF terms will continue, with the exception of the following enhancements to the buy-down options, which will apply only until the 31st May 2015.

When buy-down of hour’s compensation is taken as a lump sum payment, the company will enhance the overall payment to cover the cost of 50% of the lower rate tax and National Insurance levy on the original sum.

Employees will have the opportunity for their buy-down of hour’s compensation payment to be paid as an additional voluntary contribution into their Royal Mail Pension Plan or Royal Mail Defined Contribution Plan. Under this option the lump sum due will be calculated with a 25% increase to the current MTSF formula. This option also means employees will not be liable to pay any income tax or National Insurance contribution under current HMRC guidelines.

In preparation for the formal MTSF Review, in the period between now and May 2015 the national parties will scope the overall cost of the MTSF package and the age profile of employees that have utilised it, with a view to restructuring the package in a way that will better support the overall age profile of the workforce and respond to the challenges of the future.

4.3 Incentive Arrangements beyond April 2015

Further discussions will take place to introduce incentive arrangements beyond April 2015, including consideration of more focused and tailored incentive arrangements that support the future success of the business. The aim will be to conclude these discussions in March 2015.

[jack~jack]

In the statement, it talks about Royal Mail, the Union and the workforce. Just one question why are we the workforce talked about as separate from 'our' union. Arn't we the union?

[freelunch]

In the statement, it talks about Royal Mail, the Union and the workforce. Just one question why are we the workforce talked about as separate from 'our' union. Arn't we the union?

Substitute the word "union" or "CWU" with "sock-puppets" and it will become clearer

[Red Robbo]

Joint Statement who are they kidding, Royal Mail have their own agenda and ignore whats been agreed and carry on regardless !!

[The_Wax_Man]

I do actually think this is the way forward. If...

The objectives of the local review are as follows:

To address increases or decreases in workload. In delivery the review of workload will also take account of changes in delivery points, delivery to neighbour and the overall mix of traffic, including parcels and door to door.
To address variability in workload.
To maintain and where possible increase efficiency and quality of service.
To enforce the right of employees to a fair and manageable daily workload, remembering there is a limit to what employees can reasonably be expected to do.
To maintain reasonable employee earning opportunities.
To reduce agency and casual staff.
To fully apply the terms of the national Job Security Agreement in relation to the employment of fixed term contract staff and the opportunity to increase part time contractual hours to reflect the hours actually worked and planned.


What I would like to see added.

To Maintain and keep a volumised headcount at DO level in accordance with traffic volume forecasts and number of walks. Including fast responsive teams that can be used for covering Long Term Sick and displaced walks through leavers etc

To Ensure that this Joint Statement (Unlike the many others that are launched, then forgotten about and never heard again) will receive full transparency at all levels and staff kept informed through all and each of the stages.

To define a balanced system that is laid out in a single format in each DO that explains in laymans terms what limit an employees can reasonably be expected to do. Example definitions being walk speed, number of packets per hour, averaged DTN built in time etc.

Provision and Access to each Walk model week information which gives breakdown of D2D, Packet and Livemail volumes.

Communicate, communicate and communicate. Stick to responsive project time scales and not let them fall away or 'blend' into oblivion.

With the right person/people overseeing this joint statement, with the correct pushing and management interaction, it could be very good for the business. It's time it's changed, let people become people and not just a number. - You may find that you get more back from a person than just a number.

Certainly going to keep my eyes on this one.

[k979aaa]

Seams to me the CWU have all but surrendered our terms and conditions so after 31/05/2015 you could find yourself on the s**t end of a stick!

[caraidalba]

Just a quick query - Is the profit related scheme only for CWU members or all employees? Only ask because it says "CWU represented grade employees". Cheers.

[clashcityrocker]

Just a quick query - Is the profit related scheme only for CWU members or all employees? Only ask because it says "CWU represented grade employees". Cheers.

All employees.
It would be wrong to discriminate against staff not in the union.
But they should join anyway.