CHANGE AT TOP 'ONLY WAY OUT FOR CONSIGNIA'
INCREASING labour costs, poor industrial relations and unimaginative leadership have contributed to the “appalling” losses announced by Consignia, the Post Office consumer watchdog said last night.
Peter Carr, the chairman of Postwatch, delivered a scathing verdict on the performance of Consignia’s management and said that a change at the top was the company’s only chance of returning to profit.
Mr Carr, the former managing director of Debenhams, said consumers were rapidly losing confidence in a service that too often was failing to achieve its key target: next-day delivery of first-class mail.
He identified several reasons for Consignia’s plunge into the red and its failure to generate enough revenue to cover rapidly rising costs.
“If the rate of growth of your costs exceeds your revenues, you’re going to make a loss; it’s as simple as that,” he said. “At the Royal Mail in particular, the rate of growth in mail volumes has not been as great as they expected, but the growth in costs, particularly labour costs, has gone out of control.”
Mr Carr said Consignia was paying more for its labour than it was earning in revenue, a plight caused in part by its dire relationship with its workforce. Its industrial relations have been appalling. The company lost 62,000 days to strikes last year, more than half of all the strikes in the whole country in an organisation which employs only 200,000 people.
“Last year, they reached a deal with the unions called ‘The Way Forward’ which required them to pay more in return for extra productivity. They’ve paid the extra wages, but they haven’t received the productivity increases.”
Mr Carr also blamed Consignia’s leadership for lacking innovation and creativity, a “no-change culture” linked to an “incestuous” habit of internal promotions at a time when the company desperately needed “a fresh perspective on the market and how it can be changed”.
He said: “Last year saw the closure of 547 post offices and several thousand more are expected to go over the next few years, but that’s partly because the product range has hardly changed over the past 20-30 years. Yet 28 million people a week go to a post office. That’s something you could exploit if you had new and fresh and exciting products.”
Postwatch focus groups have found that the consumer’s main priority is the next day delivery of first-class mail, yet with each passing year Consignia was falling further behind its 92.5 per cent target, Mr Carr said.
“People want a reliable, regular service. They want deliveries made at the same time every day by the same person. That’s what gives them the confidence, but at the moment more than two million letters a day are not being delivered on time.”
He called for Consignia to improve its communications with the the public and its workforce to explain the changes it wanted to make. “Postmen are generally not militant people – they’re proud of the job they do and they want to give good service to the public, but they are not always treated as they should be by their employer.”
The cost of the Post Office’s changeover to Consignia was Pounds 2_million.
(c) Times Newspapers Ltd, 2001
