Performance Royal Mail Essay

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Its undated and fairly dated - but I think of some interest.


Evaluation of the current performance measurement system of Royal Mail and a recommendation of how to improve its performance measurement.

Introduction

There is an old management adage ‘You can't manage what you don't measure', which very simply puts into perspective the purpose, usefulness and importance of measuring performance in any organization. The origins of strategic performance management can be traced to the concept of management by objectives (MBO). Performance Management System (PMS) is a technique to establish individual performance objectives which are tangible, measurable and verifiable. It must be noted that Performance Management is more than a process involving objectives and reviews and appraisals and other mechanistic tools. The increasingly competitive and constantly changing economic environment firms find themselves tapping into this critical asset which is a key to achieving sustainable competitive advantage.

Performance measurement is a key function of the human resource (HR) function. With the HR function gaining strategic importance, the importance of establishing effective performance management systems has gained considerable importance. The following paper will analyse and critically evaluate the performance measurement systems at Royal Mail. It will also provide recommendations of how the performance measurement systems can be improved at Royal Mail.

The PMS focuses on the contribution which each individual makes to the work of the organisation/department and the emphasis is on management rather than appraisal - managing development and careers so as to improve the chances of achieving success. It is based on clearly identifying roles and the range of competencies. The system is designed to give each person: clarity in terms of role, objectives and career expectations control in terms of participation, development and results, and contribution in terms of the business plan and the part they play individually and as a member of a team.

According to Bevan and Thompson (1992) the features that distinguish PMS from any other system is the fact that the organisation's visions and objectives are conveyed to all employees, not only departmental targets but individual targets are set as well, formal reviews of progress are conducted to achieve these targets, following the review training and development needs are identified and employees are encouraged to develop the needed skills and finally evaluation is carried out in terms of improving organisational effectiveness and supporting the use and value of human capabilities.

It would be important to highlight that the key elements and their respective purpose of performance management system is to have a have a process that establishes objectives that determine performance targets and goals. Secondly, it also requires organisations to se accurate measures of performance for achievement. Thirdly, a clear system of feedback must be established between the employers and employees so that individuals are aware of their strengths and weaknesses, and when required a channel exists to provide encouragement and. Finally, Organisations need good information on both performance and development in order to learn and direct resources effectively.

It is imperative for organisations not only to be able to have policies and procedures in place to set the standards of performance, it is equally essential to be able to measure them.

ROYAL MAIL

For decades Britain enjoyed a first class postal service that was the envy of the world. The industry was efficient and highly profitable, contributing millions to the Treasury's coffers. It offered value for money (with some of the lowest postal prices anywhere in Europe) and a high quality public service. Commercial freedom was meant to give Royal Mail more financial room for manoeuvre in an increasingly liberalised postal market. But, in reality, it has led to a short-term focus on cutting costs and restoring profitability which has seriously undermined quality and service standards and done nothing to address the years of chronic underinvestment.

Hence, in an attempt to improve its service, Royal Mai set for itself a total of 15 measurable performance targets. The key idea behind this concept was not only to improve the services provided to the customers but also to improve the internal processes in the organisation. Thus in this respect, Royal Mail incorporated PMS and devised to meet the following aims, namely,

To deliver “world class” service at the defined market price.

To deliver a savings profile that reflects in excess of 10% savings over the life of the contract.

To deliver a national help desk handling in excess of 200,000 calls per year for PPM and reactive planning and tasking using hand held and related technology.

To enable the organisational culture a chance to deliver a more customer focused, responsive service where excellence was the rule not the exception.

*Royal Mail targets explained:

First class stamped and metered mail is ordinary mail stamped or franked for delivery the next day.

Second class stamped and metered mail - as above, for delivery within three days.

First/second class postage paid impression - pre-printed alternative to stamps or franking.

First/second class pre-paid envelopes used for clients to respond to companies in a freepost envelope.

Mailsort 1 - next working day delivery.

Mailsort 2 - delivery in three working days.

Mailsort 3 - delivery in seven working days.

Presstream 1 - next working day delivery for newspapers and magazines sent out at least four times a year. Does not include catalogues, brochures or direct mail.

Presstream 2 - delivery in three working days for newspapers and magazines sent out at least twice a year.

Special delivery - guaranteed next day delivery.

Standard retail parcels - ordinary parcels.

The above table shows the performance target benchmarks and the actual performance. Despite setting benchmarks and performance indicators, Royal Mail failed to hit any of its 15 performance targets in the quarter to June 2004. This led to the closures across post office and a lot of bad publicity, like late and missing post. As reported on BBC's website,

“For the three months to June, just 88.3% of first class letters were delivered the next day, against a target of 92.5%.... More than 1.7 million first class letters were not delivered on time between April and June, Postwatch said, adding that Royal Mail had only exceeded its targets in six of the country's 121 postcode areas.”

Thus, despite the efforts made Royal Mail has not successfully been able to meet its targets. Nevertheless, it has taken steps in the right direction, i.e., it is building a culture in its organisation where it is inculcating in its employees that service to customers is important. As it is already known, that bringing about change in the culture of an organisation takes time and the results can only be seen after a while.

As confirmed by the Chief Executive of Royal Mail, Adam Crozier, Royal mail hit 4 out of its 15 performance targets in August. When he took control over the business the only 87.2% of the first class mail was being delivered against the improvement of 88%. Similarly, About 98.5% of second class post in August was being delivered on time, compared with 98.3% in April. The above figures prove that the efforts of Royal Mail to set benchmarks have not been futile. The fact that Royal Mail confirmed to pay out £50m in compensation for late delivery is also a sign that Royal Mail is determined to improve the level of its service.

The efforts made by Royal Mail in the direction to improve it service and maintain its reputation for quality service are commendable. Even though the results have not been as forthcoming as they would have expected, the strategy deployed has been a sensible move. In order to enhance its performance measurement system, it could Whilst, traditional approaches to performance measurement typically inform about 'what' has happened but do not address the 'why', leading many managers to view the innovation process as a 'black box' that defies rational managerial analysis. It only shows that for success to be achieved Royal Mail would have to incorporate elements of innovative performance measurement.

In addition to the above, to effectively manage and measure performance, Royal Mail should integrate PMS into the structure of the organisation, so that staff collects and report the necessary information as part of their daily routine It can be achieved by agreeing corporate and departmental objectives, followed by devising performance indicators to measure achievement of the objectives. Targets would need to be set for appropriate indicator and responsibilities would be assigned to the managers or achieving these targets. Once the targets have been set, they should then be broken down into individual/team targets. It must be ensured that mechanisms are in place to gather data on performance indicators and targets; and finally it should be reported to senior members and the data gathered can be used to review corporate and departmental objectives.

CONCLUSION

>From the preceding paragraphs it can be concluded that Royal Mail has taken the steps in the right direction when it comes to measuring performance. The fact that it is able to recognise its mistakes and take further steps to improve its performance is in itself a positive step in the direction of improving the delivery of its service. It can be said that Royal Mail has become more strategic in its approach by proactively measuring its performance levels. Thus with its continuous effort and incorporating its performance measurement systems in the culture of organisation would result in achieving the results sooner than expected.

BIBLIOGRAPHY

Bacon, C., Practical Portfolio Performance Measurement and Attribution, (2004), John Wiley and Sons Ltd.

CIMA Examination Text, Management Accounting: Performance Management, (2003), The Financial Training Company

Harbour, J.L., Basics of Performance Measurement, (1997), Quality Resources Publishers

Meyer, M., Rethinking Performance Measurement: Beyond the Balanced Scorecard, (2003), Cambridge University Press

Rampersed, H, Total Performance Scorecard: Redefining Management to Achieve Performance with integrity, (2003), Butterworth-Heinemann

Journals and Articles

Birchall, D., Tovstiga, G., Morrison, A., and Gaule, A., Innovation Performance Measurement, Striking the Right Balance, Henley Management College

Royal Mail performance met with dismay, Business Hotine Publications (2004)

ROMEC (Royal Mail) - History and Background - Royal Mail Website

Other Internet Sources

Royal Mail website [ http://www.royalmail.com" onclick="window.open(this.href);return false;]

BBC website [http://news.bbc.co.uk/1/hi/business/3613158.stm]

Economist [www.eonomist.com]