How to solve a problem like Royal Mail

[Geezer]

http://www.realbusiness.co.uk/news/lead ... mail.thtml

by Anthony Holmes - Tuesday, 10th November 2009 -
How to solve a problem like Royal Mail

The Royal Mail strikes may be over for now but the root problems still remain. Turnaround expert Anthony Holmes has a rather unusual solution to the current stand off between management and the CWU.

Unstable large companies present problems for SMEs. They not only create a credit risk but also endanger the supply of vital goods and services. The Royal Mail dispute is a timely example. It’s not just a spectator sport but a problem that affects thousands of businesses that rely on Royal Mail’s services.

As a nation, we have a poor record of managing once-vibrant major employers. Royal Mail is the new coal, ship-building, steel or car industry: the problem is entirely about the socio-political impact associated with the fate of 165,000 employees.

There are five parties:

1. Royal Mail management – who want to assert their right to direct the affairs of the business.

2. The employees – who want reassurance that their economic welfare will be handled with sensitivity.

3. The CWU – who want to protect their members‚ interest and preserve their standing as a negotiating body.

4. HMG – that owns the business and wants to close a financial black hole without a political ordeal.

5. RM customers – who want a reliable, economical collection and delivery service.

Royal Mail’s scale and business model are no longer viable. The market it serves has evolved faster than Royal Mail has been able to adapt and poor industrial relations continue to impede its ability to change radically or rapidly.

Another serious problem is that Royal Mail employees no longer trust management. They have transferred their allegiance to the CWU.

HMG owns a two-part liability. Firstly, the circa £10bn deficit in the pensions scheme. Secondly, the negative cash flow from investment and restructuring costs.

Resolving the recent dispute has not brought long-term peace, as the fundamental problems remain unresolved. Only a radical approach that eliminates the union/management confrontation and establishes a new basis for progress can offer a stable solution.

Here's one solution: HMG could sell Royal Mail to the CWU for £1. Both the CWU and the workforce could operate the business in their interests. Under this structure, the preservation of jobs would depend on the capacity of the employee shareholders to deliver a cost-efficient and reliable service and the creation of a positive business value would contribute to employee benefits in the form of jobs, pay and pensions. Further industrial action would be pointless, as the CWU would have no-one to confront.

Too good to be true? Probably. The CWU’s business model requires a third-party adversary to confront and, ideally, a shareholder with unlimited funds. It would probably be suspicious of anything unconventional and may accuse HMG of attempting to abrogate its financial responsibility. However, most successful change requires a counter-intuitive approach, leading to an unconventional course of action.

Controversial as it may seem, this unconventional proposal has the virtue that it changes the balance of negotiation and, combined with new leadership, it may just provide the creative stimulus necessary to achieve a lasting solution.

I look forward to your views, Real Business readers.


* Add a comment

[careful]

great idea but who prepared stand up

[Post Off]

Nah sorry, but I can't even begin to wrap my mind around this. To me, this just looks like a total load of bollix. No, the real solution to this is of course to abandon that stupid European Directive crap, go back to being a monopoly, and to perhaps limit (or better still, kill) this downstream access or 'final mile' in some way?

Of course, I know monopolies are a thing of the past, and that 'wealth creating' is all the rage amongst business peeps, but to me there is only so far you can go before you destroy a once cherished service. Perhaps, instead of re-creating the Royal Mail, the government should go about making some vital repairs, and maybe some in-roads into restoring their humongous failings. I mean, if the government can bail out the banks with our money then why the readiness to abandon us?

If anything, the CWU should sue the barstewards for mismanaging our pensions, and also for destroying a service that once worked! Maybe after that can we be given the accorded status to yet again become the valued service that we once were.

[Big Daz]

Europe thinks banks are fine but postal serrvices are a big no no for monetary hep from the state.

[Tman]

Europe thinks banks are fine but postal serrvices are a big no no for monetary hep from the state.

Europe didn't want to help the banks really, but when the alternative is considered, it/they had no choice.
No comparison with postal administrations and banks.