Home > Postal Opinion/Editorial


Salary Cap Hinders USPS From Hiring Top Executive
for Postmaster General

By T.L. Righter, 5/21/2002

The recent process concerning the selection of Postmaster General highlights the need for changes in how the U.S. Postal Service compensates its top executives. The promise that a Stephen Goldsmith selection held further illustrates the point. A $161,200 annual salary is not sufficient to attract the top-caliber executive that the USPS needs at its helm.

Today, John E. (Jack) Potter was selected as the new postmaster general of the United States Postal Service. His selection came after months of intense searching. The Board of Governors had retained the services of the well-renowned executive search firm of Korn/Ferry International. It was evident that the USPS needed a fresh perspective from a top individual (preferably from the private sector) who could steer the USPS back into the black and into the 21st century. Of course, there was one small problem – compensation. The USPS could only offer $161,200 annually as total compensation. Seems like a lot of money – and it is. But:

The USPS is ranked #14 in the Hoovers 500 listings, which ranks by sales. This puts the USPS right behind Verizon Communications Inc. (#13), AT&T (#12) and ahead of such notable companies as J.P. Morgan Chase & Co. (#15), Texaco Inc. (#20), Sears, Roebuck and Co. (#35), and Microsoft (#92). Furthermore, each of the Postal Service's seven product lines would qualify as a Fortune 200 company on its own. You can bet that none of the CEOs of these companies earned just $161,200 for the year. Furthermore, the USPS is the nation's second largest employer with approximately 800,000 employees. Moreover, the U.S. Postal Service is one of our nation's most critical assets, providing a secure communications network that links all parts of the country and beyond. To sum it up, the USPS is one of our nation's largest (in capital assets, sales, and employees) and most important institutions. Accordingly, the USPS should have at its helm one of the best executives in the country. The USPS needs (requires) a Jack Welch, or a Lee Iacocca, or a Ross Perot, or a Stephen Goldsmith type individual at its helm for the USPS to reach its fair potential.

Instead, with the salary cap, we have Mr. Potter. Note: This editorial does not seek to discredit Mr. Potter. Potter is a talented, capable, and dedicated individual who has much to offer the USPS. However, Mr. Potter received his current post almost by default, after a more suitable preferred candidate from the private sector, who was willing to work for $161,200 a year, could not be found.

Many people are calling for the USPS to be run more like a business. Many in the postal industry agree that the USPS must adopt private-sector practices in order to survive in an increasingly competitive and changing market. Yet, the USPS pays its top executive a government bureaucrat's salary of $161,200. Guess what? The USPS is run like a government bureaucracy! The old adage holds true: You get what you pay for! Bottom line, for the USPS to be run like a business (ie. a Fortune 200 company), the USPS must be able to offer Fortune 200 salaries.

I believe that many in the USPS would assume that rank and file craft employees would balk at seeing the postmaster general's salary increased beyond its current cap. True, some would balk. However, many others wouldn't - if the right person were selected. Recently, PostalWorkersOnline.com asked its viewers for their picks for the next postmaster general. Lee Iacocca, Herb Kelleher, and Ross Perot were a few of the names mentioned. None of these names come cheap.

So how much should the postmaster general's salary be increased to attract a top executive capable of effectively and efficiently running a company with $64.5 billion in sales and 800,000 employees? The answer is, "let the market decide". That's not to say the USPS should necessarily have to offer millions in annual salary and tens of millions in stock options or other compensation. But here's my solution:

First, the USPS should seek legislative approval to remove the salary cap. Then, the next time the postmaster general position needs to be filled the USPS should contact Korn/Ferry and place an ad in the Wall Street Journal indicating it is in need of a suitable candidate. The ad should include the words "salary commensurate with experience" or "send salary requirements to…". This way, the Board of Governors would be able to consider all aspects – the candidates, their experience, and salary expectations, just as private-sector and top 200 companies do. The Board of Governors, just like any Board of Directors, would then be able to pick the person who would best serve the U.S. Postal Service's interests.


Terms of Use  |  Privacy Policy

Copyright PostalMag.com, All Rights Reserved