United States Government Accountability Office

GAO Report to Congressional Requesters

U.S. POSTAL 

SERVICE 

New Delivery 

Performance 

Measures Could 

Enhance Managers’ 

Pay for Performance 

Program 

September 2008 

 

GAO-08-996 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 2008

U.S. POSTAL SERVICE

New Delivery Performance Measures Could Enhance 

Managers’ Pay for Performance Program 

Highlights of GAO-08-996, a report to 

congressional requesters 

The U.S. Postal Service (USPS) pay 

for performance (PFP) program for

managers includes quantitative

performance indicators. PFP 

ratings are the basis for salary 

increases and lump sum awards for 

nearly 750 Postal Career Executive 

Service (PCES) executives and

about 71,700 other participants,

mostly Executive and 

Administrative Schedule (EAS)

employees. GAO was requested to

provide information about USPS’s 

PFP system. This report (1) 

describes the key features of 

USPS’s PFP system, (2) provides

information on the weight of its 

performance indicators in 

determining PFP ratings, and (3)

identifies opportunities for USPS to

incorporate delivery performance 

indicators into its PFP system. 

GAO obtained USPS documents 

and data, interviewed USPS

officials, and primarily based its 

assessment on laws related to

timely delivery and interviews with 

senior USPS officials. 

What GAO Recommends

The Postmaster General should 

incorporate new delivery 

performance indicators into its PFP 

program—such as indicators that 

cover Standard Mail and bulk FirstClass Mail—once the necessary

measurement systems are

successfully implemented, 

including the actions that mailers 

must take to permit meaningful 

performance measurement. USPS

agreed with the recommendation 

and stated that it is committed to

incorporating new delivery

performance measures into PFP. 

Key features of the PFP program are quantitative corporate and unit 

indicators of performance and individual performance elements that are used 

to rate participants and provide the basis for awards. Quantitative 

performance targets are established for corporate and unit indicators. 

Corporate indicators apply to all participants and include measures of timely 

delivery, productivity, revenue, and net income, among others. Unit 

indicators apply to selected groups of participants and vary according to the 

groups’ responsibilities and span of control. Individual performance elements 

are tailored to the participant group and, within some groups, to individuals. 

Individual performance elements may be defined by narrative standards or 

may be quantitative indicators defined with specific target performance levels. 

The overall PFP rating is based on results of corporate and unit indicators and 

individual performance elements and is used to determine the salary 

adjustment and any lump sum award. 

PFP indicators related to three USPS strategic goals—increasing efficiency,

improving service, and generating revenues—collectively account for twothirds of the average participant’s rating (see fig.). However, indicator 

weights vary considerably by participant group, based on the responsibilities 

and span of control of various positions. 

Percentage of Overall PFP Rating, by Type of Indicator: Average for All PFP Participants, 

Fiscal Year 2008 

10%

17% 22%

24% 27%

Customer-focused culture

Efficiency-related

Revenue generation

Individual performance elements

Service-related

Source: USPS.

As USPS implements requirements of the postal reform law for measuring 

delivery performance, it will have opportunities to incorporate new indicators 

into its PFP program, notably for timely delivery of Standard Mail (49 percent 

of mail volume in fiscal year 2007) and bulk First-Class Mail (25 percent of 

volume). Once new delivery performance measurement systems are fully

implemented and mailers’ participation is sufficient to generate representative

data, USPS will be able to incorporate new delivery performance indicators

into its PFP program. These new indicators would create a more “balanced 

scorecard” that uses service performance metrics for the mail that is 

measured to support personal and unit accountability. 

To view the full product, including the scope 

and methodology, click on GAO-08-996. 

For more information, contact Phillip R. Herr

at (202) 512-2834 or herrp@gao.gov. 
Contents 

Letter 1

Results in Brief 2

Background 4

Key Features of USPS’s PFP Program Include Quantitative 

Performance Indicators and Individual Performance Elements 7 

Overall PFP Ratings Primarily Depend on Results for Indicators 

Related to Efficiency, Service, and Revenues 14 

Opportunities to Incorporate New Delivery Performance Indicators 

into USPS’s PFP Program Will Follow Implementation of 

Delivery Measurement Systems 22 

Conclusions 24

Recommendation for Executive Action 25 

Agency Comments and Our Evaluation 25 

Appendix I Number of U.S. Postal Service Pay for Performance 

Participants, by Employee Type, as of December 5, 

2007 27 

Appendix II Objectives, Scope, and Methodology 30 

Appendix III Comments from the U.S. Postal Service 31 

Appendix IV GAO Contact and Staff Acknowledgments 33 

Tables 

Table 1: Percentage Increase in Salary for PCES Executives Based 

on Overall PFP Rating and Current Salary, Fiscal Year 2008 11 

Table 2: PCES Executive PFP Lump Sum Awards Based on Overall 

PFP Rating, Fiscal Year 2008 12 

Figures 

Figure 1: Percentage Increase in Salary for EAS Participants Based 

on Overall PFP Rating, Fiscal Year 2008 10 

Page i GAO-08-996 USPS Pay for Performance Program
Figure 2: Average PFP Awards for EAS and Other Non-PCES 

Participants, Fiscal Years 2004 through 2007 13 

Figure 3: Average PFP Awards for PCES Participants, Fiscal Years 

2003 through 2007 14 

Figure 4: Percentage of Overall PFP Rating, by Type of 

Performance Indicator: Average of All PFP Participants, 

Fiscal Year 2008 15 

Figure 5: Percentage of Overall PFP Rating, by Performance 

Indicator: Average of All PFP Participants, Fiscal Year 

2008 17

Figure 6: Percentage of Overall PFP Rating, by Type of 

Performance Indicator: Full-Time Postmasters in EAS 

Levels 11 through 16, Fiscal Year 2008 19 

Figure 7: Percentage of Overall PFP Rating, by Type of 

Performance Indicator: Postmasters in EAS Levels 21 

through 26, Fiscal Year 2008 20 

Abbreviations 

EAS Executive and Administrative Schedule 

EEO equal employment opportunity 

EXFC External First-Class Measurement System 

PCES Postal Career Executive Service 

PFP pay for performance 

USPS U.S. Postal Service 

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Page ii GAO-08-996 USPS Pay for Performance Program
United States Government Accountability Office

Washington, DC 20548 

September 10, 2008 

The Honorable Susan M. Collins 

Ranking Member 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

The Honorable Tom Carper 

Chairman 

Subcommittee on Federal Financial Management, 

Government Information, Federal Services, 

 and International Security 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

To help accomplish its mission of providing prompt, reliable, and efficient 

universal service, the U.S. Postal Service (USPS) has adopted a pay for 

performance (PFP) program for managers that includes a number of 

quantitative performance indicators. PFP ratings are the basis for USPS’s 

annual salary increases and lump sum awards for nearly 750 Postal Career 

Executive Service (PCES) executives and about 71,700 other participants, 

most of whom are members on the Executive and Administrative Schedule 

(EAS), which includes postmasters, supervisors, managers, as well as 

others who are ineligible for membership in a postal labor union.1

 USPS 

implemented its current PFP program for PCES executives in fiscal year 

2003 and for EAS employees in fiscal year 2004.

2

 Participants rely on the 

PFP program for their annual salary increase, since they do not receive 

cost-of-living adjustments, step increases, or other automatic increases to 

their salaries. PFP participants also do not receive locality pay. (See app. I 

for data on the number of USPS PFP participants by employee type.) 

According to USPS, the foundation of the PFP program is a “balanced 

scorecard” of independently verifiable performance indicators in several 

 1

PCES includes postal officers and other USPS executives. EAS includes most USPS

managerial and administrative employees. 

2

USPS’s former PFP program included an Economic Value Added Variable Pay Program for 

lump sum payments (fiscal years 1996 through 2002) and a Merit Pay Program for salary 

increases (fiscal years 1996 through 2003). 

Page 1 GAO-08-996 USPS Pay for Performance Program
areas—such as service, revenue generation, and efficiency—to align 

compensation with individual performance and organizational results. 

USPS uses this approach to help balance the need to keep postal rates 

affordable, address increasing financial pressure, and maintain quality 

delivery service for different types of mail. Specifically, according to 

USPS, the PFP program is a mechanism to help manage the organization

and its employees; align organizational, unit, and individual objectives; link

individual contributions to organizational success; compare individual 

performance with established targets; recognize and reward individual 

successes; and ensure accountability at all levels of the organization. You 

requested that we provide information about USPS’s PFP program. 

Accordingly, this report (1) describes the key features of USPS’s PFP 

program, (2) provides information on the weight of the PFP program’s 

performance indicators in determining participants’ ratings, and (3) 

identifies opportunities for USPS to incorporate new indicators of delivery 

performance into its PFP program. 

To address these objectives, we obtained USPS documentation for the 

PFP program and interviewed officials responsible for the PFP program. 

We also obtained data and information on PFP indicators, including their 

weight. We primarily based our assessment of opportunities for USPS to 

incorporate new delivery performance indicators into its PFP program on 

statutes related to timely mail delivery and interviews with senior USPS 

officials. We conducted a data reliability assessment of USPS’s PFP 

information and determined that the information was sufficiently reliable

for the purposes of our report. More details on our objectives, scope, and 

methodology appear in appendix II. We conducted this performance audit 

from October 2007 to September 2008 in accordance with generally 

accepted government auditing standards. Those standards require that we

plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our 

audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our audit 

objectives. 

Key features of the PFP program are quantitative corporate and unit 

indicators of performance and individual performance elements, which are 

used to rate participants and provide the basis for awards. Quantitative

performance targets are established for the corporate and unit indicators,

and the individual performance elements are tailored to the participant 

group and, within some groups, to individuals. Corporate indicators apply 

to all participants and include measures of timely delivery, productivity,

Results in Brief 

Page 2 GAO-08-996 USPS Pay for Performance Program
revenue, and net income, among others. The unit indicators apply to 

selected groups of participants, such as postmasters and managers at 

various mail processing facilities and vary according to the groups’ 

responsibilities and spans of control. Some unit indicators apply to most 

participants, such as the indicator of the unit’s total operating expenses, 

while others apply to relatively few participants, such as indicators of 

international mail delivery, which apply exclusively to managers at USPS’s 

International Service Centers. Individual performance elements, such as

leadership and communication, may have target performance levels 

defined by narrative standards. Alternatively, the individual performance 

elements may be selected from a predefined list, such as a list of indicators 

of operational effectiveness, and then defined more specifically with target 

performance levels, based on a discussion that involves the participant 

and the participant’s rater. USPS then calculates the overall PFP rating for 

each participant based on the results of corporate and unit indicators and

ratings for individual performance elements; this rating is used to 

determine adjustments to the participant’s salary and any lump sum 

award. 

Corporate and unit indicators related to three strategic goals in USPS’s 

updated Strategic Transformation Plan3

—increasing efficiency, improving

service, and generating revenues—collectively account for two-thirds of 

the average participant’s rating. More specifically, results for efficiencyrelated indicators, such as USPS’s overall productivity and unit expenses, 

account for 27 percent of the average participant’s PFP rating; results for 

service-related indicators, such as the timeliness of delivery for certain 

types of mail, represent 22 percent of the average rating; and results for 

revenue-generation indicators, such as national and unit revenues, account

for 17 percent of the average rating. However, the weight of PFP indicators 

varies considerably by participant group, based on the responsibilities and 

spans of control of various managerial and executive positions. 

As USPS implements the postal reform law’s requirements to measure and 

report to the Postal Regulatory Commission delivery performance for all 

market-dominant products, which collectively represent 99 percent of mail 

volume, USPS will have opportunities to incorporate new indicators into 

its PFP program. These new indicators would create a more “balanced 

scorecard” that uses service performance metrics for the mail that is 

 3

USPS, Strategic Transformation Plan 2006-2010: 2007 Update (Washington, D.C., 

December 2007). 

Page 3 GAO-08-996 USPS Pay for Performance Program
measured to support personal and unit accountability. Currently, PFP 

indicators of timely delivery apply to less than one-fifth of mail volume. 

USPS is in the process of implementing required measurement of delivery 

performance for market-dominant mail, including new delivery 

performance measurement systems for mail that is not being measured—

such as Standard Mail, bulk First-Class Mail, and Periodicals.4

 Together, 

these three mail types constitute 78 percent of mail volume, including 49 

percent for Standard Mail, 25 percent for bulk First-Class Mail, and 4 

percent for Periodicals. USPS has recognized that the successful 

implementation of these new measurement systems will depend, in part, 

on actions by mailers. USPS expects these actions—including barcoding 

mail and containers, as well as providing electronic information on 

mailings—to become more widespread over the next several years. Once 

the new delivery performance measurement systems are fully 

implemented and mailers’ participation is sufficient to generate 

representative data, USPS will have the opportunity to incorporate new 

delivery performance indicators into its PFP program. Such action would 

be consistent with USPS’s actions in the past to implement delivery 

performance measurement systems for Parcel Select and some types of 

International Mail, establish targets, identify opportunities to improve 

service, and to incorporate the measurement data into the PFP program to 

hold managers accountable for results. These actions have been credited

with improving timely delivery performance for these types of mail, both 

of which operate in a highly competitive marketplace. Accordingly, we are 

recommending that the Postmaster General incorporate new delivery 

performance indicators into the PFP program—such as indicators that 

cover Standard Mail and bulk First-Class Mail—once the necessary 

measurement systems are successfully implemented, including the actions 

that mailers must take to permit meaningful performance measurement. In 

its comments on our draft report, USPS concurred with the 

recommendation and said it was committed to incorporating new delivery 

performance measures into its PFP program. 

Delivering more than 210 billion pieces of mail each year, USPS has a 

mission vital to the nation’s communications and commerce. To meet its 

statutory universal service obligation, which requires it to “serve as nearly 

as practicable the entire population of the United States,” USPS must 

Background 

 4

The Postal Accountability and Enhancement Act, Pub. L. No. 109-435, §3652, 120 Stat. 3212

(Dec. 20, 2006). 

Page 4 GAO-08-996 USPS Pay for Performance Program
“provide prompt, reliable, and efficient services to patrons in all areas” and 

“render postal services to all communities.”5

 In selecting modes of 

transportation, USPS is required to “give highest consideration to the 

prompt and economical delivery of all mail.”6

 Although USPS is authorized 

by law to receive appropriations for reimbursement of public service costs 

incurred by it in providing a maximum degree of effective and regular 

postal service nationwide, in communities where post offices may not be 

deemed self-sustaining, USPS has neither requested nor received such 

appropriations since 1982.7

 USPS receives only minimal appropriations for 

reimbursement for providing free mail for the blind and overseas voting, 

which USPS refers to as “revenue foregone,” that, in fiscal year 2007,

represented less than 0.2 percent of its total revenues.8 USPS generated

99.8 percent of its total revenues from products and services, with mail 

revenues accounting for the vast majority (94.8 percent of total revenues). 

However, USPS faces an increasingly competitive environment. As some 

communications and payments have migrated to electronic alternatives, 

including the Internet, First-Class Mail, which historically has covered 

most overhead costs, has declined in volume, and more declines are 

expected. According to USPS, “The projected decline of First-Class Mail 

impacts the Postal Service’s ability to continue to finance the growing 

universal service network. This is the single greatest challenge facing the 

Postal Service.”9

 Although Standard Mail (primarily advertising) is USPS’s 

largest class of mail and key growth product, it is more price sensitive. 

Standard Mail volume has recently declined in the wake of postal rate 

increases and the economic downturn, and its future prospects are unclear 

as advertising expenditures continue to shift to the Internet. In this regard,

a joint USPS-mailer work group recently reported that “Standard Mail 

must be delivered in a timely and consistent manner to the end customer 

according to published standards, in order to remain a viable growth 

product for its users and the Postal Service, and to remain competitive 

 5

39 U.S.C. §§101(a), 403(a). 

6

39 U.S.C. §101(f). 

7

39 U.S.C. §2401(b)(1). 

8

39 U.S.C. §2401(c). For fiscal year 2008, Congress appropriated $118 million to USPS for 

these purposes. 

9

USPS, Strategic Transformation Plan 2006-2010, p. 7.

Page 5 GAO-08-996 USPS Pay for Performance Program
with alternative advertising media.”10 Standard Mail growth will be critical 

to offset rising costs, primarily rising compensation and benefits costs that 

have consistently represented nearly 80 percent of USPS’s expenses. 

USPS has restrained cost growth in recent years, in part through 

automation and other productivity initiatives that helped reduce the 

number of career employees from a peak of nearly 800,000 in September 

1999 to fewer than 670,000 in September 2007. However, as USPS has 

recognized, continued productivity gains are needed in the face of the 

changing mail mix, sustained and evolving competition, and a challenging 

economic environment. USPS has recognized that given its workforce 

costs, continued work hour reductions are necessary to achieve 

productivity gains. 

The 2006 postal reform act generally limits rate increases for most mail to 

an inflationary price cap.11 The reform act also abolished the statutory 

mandate to break even financially over time.12 As a result, USPS generally

cannot address financial losses with above-inflation rate increases, which 

underscores the need to remain financially viable by sufficiently growing 

revenues, restraining costs, or both. However, USPS recently reported that 

fiscal year 2008 revenues have not been covering costs, which have grown 

faster than the price cap. 

 10Mailers Technical Advisory Committee Workgroup #114, Establish Service Standards and 

Measurement, Final Recommendations Report (Washington, D.C., Sept. 20, 2007),

http://postcom.org/public/WG114/WG114_Final_Report_Sept_20.pdf, p. 34. 

11Pub. L. No. 109-435. 

12Postal rates and fees shall provide sufficient revenues so that the total estimated income

and appropriations to the Postal Service will equal as nearly as practicable total estimated 

costs of the Postal Service. Pub. L. No. 91-375, 84 Stat. 760 (Aug. 12, 1970). The 2006 postal 

reform law eliminated this provision. Pub. L. No. 109-435, §201(a). 

Page 6 GAO-08-996 USPS Pay for Performance Program
The PFP program includes quantitative corporate and unit indicators of 

performance and individual performance elements, both of which are used 

to rate PFP participants. According to USPS, the PFP program places 

emphasis on performance indicators that are objective and measurable. To

this end, target levels of performance, expressed in quantitative terms, are 

established for the corporate and unit indicators, and PFP participants 

receive higher ratings as higher targets are achieved. In fiscal year 2008, 12

corporate indicators apply to all PFP participants,13 including measures of 

timely mail delivery, productivity, revenue, and net income, among other 

things. A total of 53 unit indicators apply to selected groups of

participants, such as groups of postmasters and managers at various mail 

processing facilities, depending on their responsibilities and spans of 

control. Some unit indicators apply to most participants, such as the 

indicator of total operating expenses. Other indicators apply to relatively 

few participants, such as indicators of international mail delivery, which 

apply exclusively to managers at USPS International Service Centers. 

Key Features of 

USPS’s PFP Program 

Include Quantitative 

Performance 

Indicators and 

Individual 

Performance 

Elements 

Besides being rated on results for corporate and unit indicators, each PFP 

participant is rated on individual performance elements that vary 

depending on the participant group and, within some groups, are tailored 

to each participant. Some individual performance elements have target 

levels of performance defined by narrative standards that are centrally 

established by USPS. For example, EAS postmasters have two individual 

performance elements that are defined by narrative standards: (1) fiscal 

management and (2) leadership and communication. Alternatively, other 

individual performance elements may be selected from a predefined list 

and then defined more specifically with target performance levels, based

on a discussion that involves the participant and the participant’s rater. 

For example, some individual performance elements for a field operations 

manager must be selected from a list, which includes, among other things,

operational productivity, the rate of scanning barcodes on mail pieces, and 

overtime usage. If an individual performance element involving 

operational productivity is selected, it is then defined with target 

performance levels for specific mail processing, delivery, maintenance, 

and customer service operations, depending on the responsibilities of the 

field operations manager. 

 13National results on the corporate indicators serve as a controlling factor for determining 

ratings for headquarters employees. 

Page 7 GAO-08-996 USPS Pay for Performance Program
Corporate and unit indicators are weighted to reflect organizational 

priorities. More heavily weighted indicators play a larger role in 

determining the overall PFP rating, while less heavily weighted indicators 

play a smaller role. To the extent that indicator weights vary—which can 

be substantial, depending on the indicator and the participant’s position—

the indicator makes a different contribution to the overall PFP rating and 

the resulting salary adjustments and any lump sum awards. 

Corporate and Unit

Indicators 

USPS establishes 15 target performance levels for each corporate and unit

indicator. As more challenging targets (i.e., higher levels of performance) 

are reached, the indicator increases the overall PFP rating and the 

associated PFP award. Thus, indicator targets create incentives for PFP 

participants to maximize results for each indicator. 

Targets for some indicators are based on actual results achieved for the 

current fiscal year (e.g., the percentage of a specified type of mail 

delivered on time), while others are based on year-to-year improvement 

(e.g., the reduction in formal equal employment opportunity complaints). 

In some cases, targets are based on the USPS budget. For example, unit 

indicator targets are defined for total operating expenses relative to the 

final budget. To the extent that operating expenses are reduced below the 

budgeted level, higher target levels are achieved. These targets can be 

adjusted by various levels of management throughout the fiscal year, 

depending on numerous factors, such as changes in USPS’s overall 

financial condition, increases in fuel prices, changes in local mailing 

volumes, and unexpected local expenses, among other things. 

Corporate and unit indicators are measured against targets at various 

levels of geographic aggregation, depending on the indicator and the 

participant’s group. For example, some corporate indicators are measured 

at the national level, such as indicators of productivity, revenue, and net 

income. Other indicators are measured at different geographic levels. For 

example, for a postmaster of a small post office, the unit’s total operating 

expense indicator is defined as the total expenses of that post office. For a 

district executive, the unit operating expense indicator is defined as the 

total expenses of the entire district. 

In some instances, USPS permits “mitigation” adjustments to the data used

to measure achievement against targets. Some individual mitigation 

adjustments are intended to take into account events that are outside the 

control of the participant, such as a fire that results in the temporary 

suspension of a post office’s operations. Other mitigation adjustments are 

processed in batches for multiple units and participants, such as 

Page 8 GAO-08-996 USPS Pay for Performance Program
adjustments that were made after postal operations were disrupted by 

Hurricane Katrina. 

USPS has established a structured process for administering the PFP 

program. Each participant is assigned a rater, who is generally the 

participant’s immediate supervisor. At the beginning of the fiscal year, the 

rater is required to discuss PFP indicators and targets with the participant,

including goals for corporate and unit indicators and individual 

performance elements. During the year, a midyear PFP review is used for 

the participant to record accomplishments to date, and the rater meets 

with the participant to review progress toward PFP targets. At the end of

the year, the participant records accomplishments, and the rater meets 

with the participant and rates the participant on individual performance 

elements. USPS then calculates the overall PFP rating for each participant 

based on the results of corporate and unit indicators and ratings for 

individual performance elements; this rating is used to determine 

adjustments to the participant’s salary and any lump sum award. 

The overall PFP rating is used to determine salary increases and any lump 

sum awards based on separate schedules that apply to EAS and PCES 

participants. First, for each participant, an overall rating is calculated 

based on the weighted outcomes for corporate and unit indicators and 

individual performance elements. Since each indicator and individual 

performance element produces an outcome ranging from 1 to 15, the 

overall rating also ranges from 1 to 15. The rating is rounded to the nearest 

whole number for the purpose of determining the PFP award. 

Administration of the PFP 

Program 

PFP Awards 

For EAS participants, all PFP awards are in the form of percentage 

increases to their salaries. For fiscal year 2008, the PFP award can range 

from 0 to 12 percent of the EAS participant’s salary, as shown in figure 1.

Page 9 GAO-08-996 USPS Pay for Performance Program
Figure 1: Percentage Increase in Salary for EAS Participants Based on Overall PFP Rating, Fiscal Year 2008 

0

2

4

6

8

10

12

14

16

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

PFP award (percent of salary)

Source: USPS.

Overall rating

00 0

2.5 3

3.5

5

5.75

6.5

8

8.75

9.5

10.25

11

12

Note: If an EAS participant is paid at or above the top of the salary structure, the amount of the salary 

increase over the maximum in the salary structure is converted into a PFP lump sum award. Similarly, 

if a participant’s salary increase would exceed the top of the salary structure, the salary is increased 

to the maximum at that level, and the remaining award is converted into a lump sum award. EAS 

participants do not receive any other PFP lump sum awards. 

For PCES executives, PFP awards take the form of salary increases and 

lump sum awards. Salary increases depend on the overall PFP rating, as

well as each executive’s current salary relative to the maximum of his or 

her salary range, as shown in table 1. However, no salary increases are 

converted to lump sum awards, as they may be for EAS participants. 

Page 10 GAO-08-996 USPS Pay for Performance Program
Table 1: Percentage Increase in Salary for PCES Executives Based on Overall PFP Rating and Current Salary, Fiscal Year 

2008 

Current salary

Overall 

rating

30.0% or more below 

maximum 

20.0% to 29.9%

below maximum 

10.0% to 19.9%

below maximum 

0.1% to 9.9% below

maximum At maximum

1-3 No increase No increase No increase No increase No increase 

4-6 Up to 7% increase Up to 5% increase Up to 3% increase Up to 3% increase Up to new salary 

maximum 

7-9 Up to 10% increase Up to 8% increase Up to 6% increase Up to 4% increase Up to new salary 

maximum 

10-12 Up to 12% increase Up to 10% increase Up to 8% increase Up to 6% increase Up to new salary 

maximum 

13-15 14% increase 12% increase 10% increase Up to 8% increase Up to new salary 

maximum 

Source: USPS. 

In addition to a salary increase, a PCES executive may receive a PFP lump

sum award that is based on his or her overall rating. This lump sum award 

is paid as a percentage of the executive’s salary, as shown in table 2, for 

individuals with an overall rating of 4 and above, which is considered to be 

a minimum threshold for a lump sum award. 

Page 11 GAO-08-996 USPS Pay for Performance Program
Table 2: PCES Executive PFP Lump Sum Awards Based on Overall PFP Rating,

Fiscal Year 2008 

PFP rating 

Salary increase

(in percent)

1 0

2 0

3 0

4 1

5 2

6 3

7 4

8 5

9 6

10 8

11 9

12 10

13 12

14 13

15 14-15

Source: USPS. 

Note: PCES participants may receive lump sum awards in addition to the salary increases shown in 

table 1. However, no PCES salary increases are converted to lump sum awards, as they may be for 

EAS participants.

Average PFP awards as a percentage of salary for EAS and other nonPCES participants14 are shown in figure 2, from fiscal year 2004—the first 

year of the current PFP program for EAS participants—through fiscal year 

2007. 

 14Other participants include attorneys and other headquarters employees not in PCES or 

EAS. 

Page 12 GAO-08-996 USPS Pay for Performance Program
Figure 2: Average PFP Awards for EAS and Other Non-PCES Participants, Fiscal 

Years 2004 through 2007 

0

2

4

6

8

10

12

14

2004 2005 2006 2007

5.2

3.7

1.5

5.1

3.9

1.2

5.6

4.6

1.0

6.5

1.1

5.4

Percent of salary

Fiscal year

Average lump sum payment

Average salary increase

Source: USPS.

Note: Other participants include attorneys and other headquarters employees not in the PCES or 

EAS. 

Average PFP awards for PCES participants are shown in figure 3, from 

fiscal year 2003—the first year of the current PFP program for PCES 

participants—through fiscal year 2007. 

Page 13 GAO-08-996 USPS Pay for Performance Program
Figure 3: Average PFP Awards for PCES Participants, Fiscal Years 2003 through 

2007 

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007

6.1

2.7

3.4

7.9

3.6

4.3

8.7

3.5

5.2

11.4

4.3

7.1

12.7

7.8

4.9

Percent of salary

Fiscal year

Average lump sum payment

Average salary increase

Source: USPS.

Note: Data are for participants in PCES level I. A separate PFP program applies to PCES level II, 

which consists of USPS officers. 

Overall PFP ratings primarily depend on results for corporate and unit 

indicators related to USPS’s strategic goals of increasing efficiency, 

improving service, and generating revenue. Collectively, these indicators 

are weighted so that they account for two-thirds (66 percent) of the PFP 

rating for the average PFP participant in fiscal year 2008 (see fig. 4). 

Overall PFP Ratings 

Primarily Depend on 

Results for Indicators 

Related to Efficiency, 

Service, and Revenues

Page 14 GAO-08-996 USPS Pay for Performance Program
Figure 4: Percentage of Overall PFP Rating, by Type of Performance Indicator: 

Average of All PFP Participants, Fiscal Year 2008 

Source: USPS.

10%

17%

22%

24% 27%

Customer-focused culture

Efficiency-related

Revenue generation

Individual performance elements

Service-related

Note: Results are rounded to the nearest percent.

Figure 4 shows that for fiscal year 2008, results for efficiency-related 

indicators, which are corporate and unit indicators, such as USPS’s overall 

productivity and total unit expenses, make up 27 percent of the PFP rating

for the average participant. Results for service-related indicators, such as 

corporate and unit indicators for timely delivery of different types of mail,

represent 22 percent of the average rating. Results for corporate and unit 

revenue-generation indicators, such as national and unit revenues, account

for 17 percent of the average rating. An additional 10 percent of the rating

consists of results for corporate and unit indicators related to USPS’s 

strategic goal of creating a more customer-focused culture.15 The 

remaining 24 percent of the rating reflects the results for individual 

performance elements, such as oral communication and other quantitative 

indicators, some of which were tailored to the individual. 

 15No corporate and unit indicators for fiscal year 2008 were classified as primarily related 

to USPS’s goal of enhancing sustainability, which USPS added to its list of strategic goals 

after the fiscal year began (i.e., when USPS issued its updated Strategic Transformation 

Plan in December 2007). 

Page 15 GAO-08-996 USPS Pay for Performance Program
USPS officials have stated that indicators are weighted to reflect their 

relative importance to accomplishing USPS’s strategic goals, as well as 

their applicability to individual positions based on the individual’s 

responsibilities and span of control. According to USPS, the PFP program 

thereby recognizes and rewards individual performance that improves 

corporate and unit performance, particularly in high-priority areas. 

Consistent with this approach, some indicators are more heavily weighted 

than others. Among efficiency-related indicators, two indicators make the 

largest contribution to the overall PFP rating: total unit expenses (16 

percent of the overall rating) and national productivity (5.6 percent of the 

rating) (see fig. 5). The 22 other efficiency-related indicators account for 5 

percent of the overall rating, in part because some of these indicators 

measure results for specific USPS operations and, thus, are applicable to 

relatively few PFP participants. However, these indicators can have a 

significant weight for the participants they apply to. Among service-related 

indicators, the 13 indicators measuring timely delivery of the various mail 

types account for 16.4 percent of the overall rating. The 10 other servicerelated indicators account for 5.4 percent of the rating. Among revenuegeneration indicators, the two most heavily weighted indicators are unit 

retail revenue (e.g., revenue from individual pieces of mail deposited at a

post office), which represents 7.7 percent of the overall rating, and 

national revenue, which represents 5.7 percent of the rating. Five other 

revenue-generation indicators account for 3.9 percent of the overall rating. 

Page 16 GAO-08-996 USPS Pay for Performance Program
Figure 5: Percentage of Overall PFP Rating, by Performance Indicator: Average of

All PFP Participants, Fiscal Year 2008 

16%

5%

Source: USPS.

Total unit expenses

National productivity

National revenue

3.9%

Other revenue generation

3.8%

Injury/illness rate

3.8%

Employee survey results

2.8%

Other customer-focused culture

Individual performance elements

Timely mail delivery

5.4%

Other service-related

Unit retail revenue

Other efficiency-related

23.9%

5.6%

16.4%

5.7% 7.7%

Note: Efficiency-related indicators include total unit expenses (a unit indicator), national productivity (a 

corporate indicator), and other efficiency-related indicators that are unit indicators. Service-related 

indicators include corporate and unit indicators for timely mail delivery and other corporate and unit 

service-related indicators. Revenue-generation indicators include unit retail revenue (a unit indicator),

national revenue (a corporate indicator), and other corporate and unit revenue-generation indicators. 

Customer-focused culture indicators include the injury/illness rate and employee survey results (both 

corporate indicators) and other corporate and unit customer-focused culture indicators. Results are 

rounded to the nearest 0.1 percent and add to 100 percent. 

Page 17 GAO-08-996 USPS Pay for Performance Program
The weight of PFP indicators varies considerably by participant group, 

based on the responsibilities and spans of control of various managerial 

and executive positions. For example, for the 14,754 full-time postmasters 

in EAS levels 11 through 16, who generally head small post offices,16 33 

percent of the overall PFP rating is based on the total unit expenses 

indicator (see fig. 6). In contrast, this indicator accounts for 12 percent of 

the rating for the 2,365 postmasters in EAS levels 21 through 26 (see fig. 7), 

who generally head larger post offices.17 The overall rating of postmasters 

in EAS levels 21 through 26 is more dependent on a variety of other 

indicators related to efficiency, timely mail delivery, and revenue 

generation. 

The Weight of PFP 

Indicators Varies 

Considerably by 

Participant Group 

 16Post offices headed by EAS postmasters in EAS levels 11 through 16 generally have 

annual revenues between $30,000 and $300,000. EAS levels are assigned to postmasters 

based on a combination of their responsibilities, the number of their employees, the size of

the post office facility, and various operations performed by the post office. 

17Post offices headed by EAS postmasters in levels 21 through 26 generally have annual 

revenues between $5 million and $150 million. 

Page 18 GAO-08-996 USPS Pay for Performance Program
Figure 6: Percentage of Overall PFP Rating, by Type of Performance Indicator: FullTime Postmasters in EAS Levels 11 through 16, Fiscal Year 2008 

5.5%

Motor vehicle accident rate

2.5%

Employee survey results

3.75%

National productivity

3.75%

National revenue

5.5%

Retail customer satisfaction

2.5%

Injury/illness rate

5.5%

Unit retail revenue

2.5%

Net income

Individual performance elements

Timely mail delivery

Total unit expenses

5.5%

Sorting mail into delivery order

20%

10%

33%

Source: USPS.

Note: Post offices headed by EAS postmasters in EAS levels 11 through 16 generally have annual 

revenues between $30,000 and $300,000. EAS levels are assigned to postmasters based on a 

combination of their responsibilities, the number of their employees, the size of the post office facility,

and various operations performed by the post office. Efficiency-related indicators include total unit 

expenses (a unit indicator) and national productivity (a corporate indicator). Service-related indicators 

include corporate indicators for timely mail delivery and other corporate and unit service-related 

indicators. Revenue-generation indicators include corporate indicators for national revenue and net 

income. Customer-focused culture indicators include the injury/illness rate and employee survey

results (both corporate indicators) and other corporate and unit customer-focused culture indicators. 

Results are not rounded and add to 100 percent. 

Page 19 GAO-08-996 USPS Pay for Performance Program
Figure 7: Percentage of Overall PFP Rating, by Type of Performance Indicator: 

Postmasters in EAS Levels 21 through 26, Fiscal Year 2008 

12%

16%

Source: USPS.

Total unit expenses

National productivity

National revenue

Net income

Injury/illness rate

Employee survey results

Individual performance elements

Unit retail revenue

Timely mail delivery

20% 6%

6%

4%

4%

4%

28%

Note: Post offices headed by EAS postmasters in levels 21 through 26 generally have annual 

revenues between $5 million and $150 million. EAS levels are assigned to postmasters based on a 

combination of their responsibilities, the number of their employees, the size of the post office facility,

and various operations performed by the post office. Efficiency-related indicators include total unit 

expenses (a unit indicator) and national productivity (a corporate indicator). Service-related indicators 

include corporate indicators for timely mail delivery. Revenue-generation indicators include corporate 

indicators for national revenue and net income. Customer-focused culture indicators include 

corporate indicators for the injury/illness rate and employee survey results. Results are not rounded 

and add to 100 percent. 

Additional examples of how indicator weights vary for participants in 

different positions include the following: 

• The retail revenues indicator is most heavily weighted for upper-level EAS

postmasters. This indicator accounts for 35 percent of the overall PFP 

rating for the 6,853 postmasters in EAS levels 18 through 20 and 28 percent 

of the rating for the 2,365 postmasters in EAS levels 21 through 26; it 

makes up 5.5 percent of the rating for the 14,754 postmasters in EAS levels 

11 through 16 and does not factor into the overall PFP rating for the 1,126 

part-time EAS postmasters of small post offices (i.e., Cost Ascertainment 

Page 20 GAO-08-996 USPS Pay for Performance Program
Grouping levels A through E). To put the use of this indicator into context,

USPS is looking to generate revenues through postmaster and other 

employee outreach to households and small businesses and has multiple 

programs for outreach to small business customers to promote the 

convenience and value of postal services. 

• Three indicators related to equal employment opportunity (EEO) account 

for 35 percent of the overall PFP rating for the 167 managers with 

responsibilities in this area. These indicators measure outcomes of EEO 

complaints, including the percentage of informal complaints that become

formal complaints, the number of formal complaints, and the processing

time for complaints that are mediated. These indicators support USPS’s 

emphasis on improving EEO processes and processing EEO complaints in 

a timely manner, and USPS classified these indicators as related to its 

strategic goal of creating a more customer-focused culture. USPS has 

provided training to supervisors and managers on the importance of EEO, 

open communication, and the benefits of resolving complaints at the 

lowest possible level. 

• Various unit indicators apply to the 13,458 EAS field managers who work 

in the mail processing area, such as indicators of the efficient use and 

maintenance of mail processing equipment. These indicators support 

USPS’s efforts to improve efficiency and service, and for some field 

managers, represent 21 percent of their rating. Other mail processing 

indicators measure the scanning of barcodes on mail containers and 

equipment used in mail processing operations—an activity that is critical 

to USPS’s efforts to track mail, thereby improving service and efficiency.

Page 21 GAO-08-996 USPS Pay for Performance Program
As USPS implements the postal reform law’s requirements for measuring 

and reporting its delivery performance for all market-dominant products, 

which collectively make up nearly 99 percent of mail volume, USPS will 

have opportunities to incorporate new indicators into its PFP program, 

notably for Standard Mail and bulk First-Class Mail. 

PFP indicators of timely delivery apply to only some types of mail18

because, as we reported in July 2006, USPS measures timely delivery for 

less than one-fifth of mail volume, with no representative measures for 

Standard Mail (48.8 percent of volume), bulk First-Class Mail (25.3 percent 

of volume), Periodicals (4.1 percent of volume), and most types of 

Package Services (0.5 percent of volume).19 However, in December 2006, 

Congress enacted postal reform legislation that requires USPS to measure 

and report to the Postal Regulatory Commission on the delivery 

performance of market-dominant products, which include mail such as 

Standard Mail, bulk and single-piece First-Class Mail, and Periodicals. 

USPS is in the process of implementing new delivery performance 

measurement systems for market-dominant mail types that are not 

currently being measured—such as Standard Mail, bulk First-Class Mail, 

and Periodicals. Together, these three mail types constitute 78 percent of 

mail volume, including 49 percent for Standard Mail, 25 percent for bulk 

First-Class Mail, and 4 percent for Periodicals. USPS has recognized that

the successful implementation of these new measurement systems will 

depend, in part, on mailers’ barcoding mail and containers, as well as 

providing electronic information on mailings. USPS expects these 

activities to become more widespread over the next several years. Once 

such systems are fully implemented and mailers’ participation is sufficient 

to generate representative data, USPS will have the opportunity to 

incorporate new delivery performance indicators into its PFP program. 

Such action would be consistent with the approach USPS has taken in 

Opportunities to 

Incorporate New 

Delivery Performance 

Indicators into USPS’s

PFP Program Will 

Follow 

Implementation of 

Delivery 

Measurement Systems

 18The fiscal year 2008 PFP program uses several indicators of timely delivery for the mail 

types that are currently measured, which include single-piece First-Class Mail, Priority 

Mail, Express Mail, some Package Services Mail, and some International Mail. These 

indicators are weighted to collectively make up 16.4 percent of the average PFP rating,

including single-piece First-Class Mail (7.6 percent of the average rating), Priority Mail (5.9

percent), Express Mail (1.9 percent), Package Services (0.9 percent), and International Mail 

(0.1 percent). The International Mail indicators are a very small percentage of the average

PFP rating because they are only factored into the PFP ratings of managers who work in 

International Mail Centers. 

19GAO, U.S. Postal Service: Delivery Performance Standards, Measurement, and

Reporting Need Improvement, GAO-06-733 (Washington, D.C.: July 27, 2006). 

Page 22 GAO-08-996 USPS Pay for Performance Program
recent years to incorporate new performance indicators into its PFP 

program. 

In addition, the External First-Class Measurement System (EXFC), which 

is incorporated into the PFP program to measure the timely delivery of

single-piece First-Class Mail, has not been a systemwide indicator for this

type of mail, in part because EXFC has measured delivery performance for 

mail deposited in collection boxes only in selected areas of the country.20

USPS is expanding EXFC coverage to include nearly all geographic areas. 

According to a senior USPS official, as EXFC coverage is expanded in 

fiscal year 2008, the additional data are being incorporated into the fiscal 

year 2008 indicators for single-piece First-Class Mail. This development is 

consistent with USPS’s actions in the past to implement delivery 

performance measurement systems for Parcel Select and some types of 

International Mail, establish targets, identify opportunities to improve 

service, and to incorporate the measurement data into the PFP program to 

hold managers accountable for results. These actions have been credited

with improving timely delivery performance for these types of mail, both 

of which operate in a highly competitive marketplace. 

To put these developments into context, in 2006, USPS said that its goal of 

improving service—which continues to be one of its primary goals—is 

supported by a “balanced scorecard” that uses service performance 

metrics for the mail that is measured to support personal and unit 

accountability. USPS noted that goals for these metrics—which include 

delivery performance indicators, as well as operational indicators that 

USPS said are critical to on-time service performance—were incorporated 

into the PFP program. We have agreed with USPS’s focus on improving 

service and holding its managers accountable for results but noted in 2006 

that USPS has not yet achieved its aim of a “balanced scorecard” for 

delivery performance because its delivery performance indicators cover 

less than one-fifth of mail volume, and these indicators do not cover 

Standard Mail, bulk First-Class Mail, Periodicals, and most Package 

Services mail. We observed that this gap in coverage has impeded USPS’s

potential for holding its managers accountable for the delivery 

 20EXFC, administered by a contractor, measures when test mail pieces are deposited in 

collection boxes and received at various addresses. In recent years, EXFC has covered 463 

three-digit ZIP Code areas (i.e., ZIP Codes with the same first three digits) judgmentally 

selected based on geographic and volume density. It does not cover remittance mail (i.e., 

bill payments) that companies pick up at USPS facilities.

Page 23 GAO-08-996 USPS Pay for Performance Program
performance of all types of mail and for balancing increasing financial 

pressures with the need to maintain quality delivery service.21

In 2007, the Chairman of the USPS Board of Governors noted in 

congressional testimony, “To improve service, we need better metrics on 

performance. As George Mason University President Alan Merten says, 

‘What gets measured gets better.’”22 The delivery performance indicators 

that USPS has implemented and incorporated into PFP incentives have 

been credited with stimulating improved service. For example, USPS 

created delivery standards and indicators for Parcel Select service in 1999,

which it then incorporated into PFP incentives. In September 2007, the 

Deputy Postmaster General cited USPS’s delivery performance for Parcel

Select as an example of substantial improvement resulting from measuring 

and building results into its PFP program, thereby holding managers 

accountable. 

To fulfill its mission of providing universal postal service, USPS is required 

to provide prompt mail delivery throughout the nation. USPS can help 

improve delivery service by incorporating new delivery performance 

indicators for market-dominant products that represent most mail volume 

into its PFP program. Incorporating new delivery indicators would hold 

postal managers accountable for results. We recognize that incorporating 

such indicators would depend on successful implementation of the new 

measurement systems—which will depend not only on USPS but also on

mailers, who must barcode the mail and provide necessary information in 

electronic format, among other things. It will take time to implement new 

delivery performance measurement systems at a level that permits 

meaningful performance measurement and incorporation into the PFP 

program. Thus, over time, USPS will have an opportunity to incorporate 

new delivery performance indicators into its PFP program—such as 

indicators of timely delivery for Standard Mail and bulk First-Class Mail—

to produce a more balanced scorecard of PFP indicators. As USPS has 

recognized, what gets measured gets better, and PFP indicators help drive 

performance improvement. 

Conclusions 

 21GAO-06-733. 

22Prepared statement of James C. Miller III, Chairman, Board of Governors, U.S. Postal 

Service, before the Subcommittee on Federal Workforce, Postal Service, and the District of 

Columbia, Committee on Oversight and Government Reform, U.S. House of 

Representatives (Washington, D.C.: Apr. 17, 2007). 

Page 24 GAO-08-996 USPS Pay for Performance Program
We are making one recommendation that the Postmaster General 

incorporate new delivery performance indicators into the PFP program—

such as indicators that cover Standard Mail and bulk First-Class Mail—

once the necessary measurement systems are successfully implemented, 

including the actions that mailers must take to permit meaningful 

performance measurement. 

USPS provided written comments on a draft of this report in a letter dated 

August 4, 2008, from the Senior Vice President of Operations and the Vice

President of Employee Resource Management. USPS’s comments are 

summarized below and the letter is reproduced in appendix III. In separate

correspondence, USPS also provided technical comments, which we 

incorporated, as appropriate. 

USPS concurred with our recommendation and said it was committed to 

incorporating new delivery performance measures into its PFP program. 

USPS noted that in its June 2008 response to Congress regarding the 

Postal Accountability and Enhancement Act,23 USPS identified 

implementing expanded measurement systems for single-piece First-Class 

Mail, new systems for bulk First-Class Mail, Standard Mail, Periodicals, 

and bulk Package Services mail and stated that implementation of these 

systems will continue through fiscal year 2009. USPS agreed with our draft 

report that successful implementation of new measurement systems will 

depend, in part, on mailers barcoding mail and containers, as well as 

providing electronic information on mailings. USPS said that in addition to 

expanding measurement systems for its market-dominant products during 

fiscal year 2009, it will also develop historical data to assist with the 

creation of future performance targets. USPS also provided comments on

its PFP program, stating that the program’s approach has been responsible 

for substantial performance improvements and is consistent with past 

efforts to ensure the proper balance of performance indicators. 

We are sending copies of this report to the Chairman of the Senate 

Committee on Homeland Security and Governmental Affairs; the Ranking

Minority Member of the Subcommittee on Federal Financial Management, 

Recommendation for 

Executive Action 

Agency Comments 

and Our Evaluation 

 23USPS, Postal Accountability and Enhancement Act §302 Network Plan (Washington,

D.C., June 2008), required by the Postal Accountability and Enhancement Act (Pub. L. No. 

109-435, §302). 

Page 25 GAO-08-996 USPS Pay for Performance Program
Government Information, Federal Services, and International Security, 

Senate Committee on Homeland Security and Governmental Affairs; the 

Chairman and Ranking Minority Member of the House Committee on 

Oversight and Government Reform; the Chairman and Ranking Minority 

Member of the Subcommittee on Federal Workforce, Postal Service, and

the District of Columbia, House Committee on Oversight and Government 

Reform; the Chairman of the USPS Board of Governors; the Postmaster 

General; the USPS Inspector General; and other interested parties. We also 

will provide copies to others on request. In addition, the report will be 

available at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me at herrp@gao.gov or (202) 512-2834. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made key contributions to this report are 

listed in appendix IV. 

Phillip R. Herr 

Director, Physical Infrastructure Issues 

Page 26 GAO-08-996 USPS Pay for Performance Program
Appendix I: Number of U.S. Postal Service Pay 

for Performance Participants, by Employee 

Type, as of December 5, 2007 

U.S. Postal Service (USPS) employee type Number of participants 

Executive and Administrative Schedule (EAS) and other non-EAS participants 

• EAS Postmasters 

Postmasters, level 21-26 2,365

Postmasters, level 18-20 6,853

Postmasters, level 11-16 14,754

Postmasters, level A-E 1,126

Subtotal 25,098

• Other field EAS employees (including district and facility EAS) 

• Field customer service EAS

• Manager of Customer Service Operations at a post office 447

• EAS at Postal Career Executive Service (PCES) post office 1,307

• EAS at grade 21-26 post office 8,258

• EAS at grade 18-20 post office 2,525

• EAS level 21 and below at a station or branch 2,766

• EAS level 22 and above at a station or branch 1,822

Subtotal 17,125

• Field mail processing EAS 

• PCES plant 765

• EAS plant 2,139

• Distribution Operations: Processing and Distribution Center, Processing and Distribution 

Facility, Customer Service Network Processing Facility 

3,999

• In-Plant Support: Processing and Distribution Center, Processing and Distribution 

Facility, Customer Service Network Processing Facility 

1,224

• Maintenance: Processing and Distribution Center, Processing and Distribution Facility, 

Customer Service Network Processing Facility 

2,203

• Transportation: Processing and Distribution Center, Processing and Distribution Facility, 

Customer Service Network Processing Facility 

810

• Air Mail Center or Air Mail Facility 291

• Bulk Mail Center or Bulk Mail Facility 1,429

• Priority Mail Processing Center or Logistics and Distribution Center 222

• Remote Encoding Center 127

• Surface Transportation Center or Hub-and-Spoke Program 64

• International Service Center 185

Subtotal 13,458

• District EAS 

• Business Mail Entry Unit 420

• Business Service Network 218

Appendix I: Number of U.S. Postal Service 

Pay for Performance Participants, by 

Employee Type, as of December 5, 2007 

Page 27 GAO-08-996 USPS Pay for Performance Program
Appendix I: Number of U.S. Postal Service Pay 

for Performance Participants, by Employee 

Type, as of December 5, 2007 

U.S. Postal Service (USPS) employee type Number of participants 

• Consumer Advocate 53

• Finance 1,062

• Human Relations 2,951

• Marketing 727

• District Manager’s Office 580

• Manager of Operations Program Support 2,205

• Manager of Post Office Operations 461

• Retail 184

• Stamp distribution 57

• Statistical programs 117

• Time and Attendance Collection System 75

Subtotal 9,110

• Area EAS 

• Business Service Network 58

• Distribution Networks Operations 373

• Delivery Point Sequencing 78

• Finance 124

• Human Resources 302

• Maintenance 56

• Marketing 91

• Methods Improvement Program 99

• Management Operations Support 79

• Retail 14

• Small Business and Mail Acceptance Unit 7

• Area Vice President’s Office 16

Subtotal 1,297

• Equal employment opportunity field operations EAS 

• Capital Metro Area 13

• Eastern Area 13

• Great Lakes Area 24

• New York Metro Area 17

• Northeast Area 12

• Pacific Area 18

• Southeast Area 23

• Southwest Area 26

• Western Area 21

Subtotal 167

Page 28 GAO-08-996 USPS Pay for Performance Program
Appendix I: Number of U.S. Postal Service Pay 

for Performance Participants, by Employee 

Type, as of December 5, 2007 

U.S. Postal Service (USPS) employee type Number of participants 

• Postal Police 126

• Headquarters (HQ) and HQ-related EAS employees 

• Attorneys on the Attorney Compensation Schedule 183

• Sales EAS 667

• Other HQ and HQ-related EAS 4,471

Subtotal 5,321

Total 71,702

Postal Career Executive Service (PCES) 

• PCES field executives (including PCES Postmasters) 

• Air Mail Center or Air Mail Facility 1

• Area Distribution Networks Operations 9

• Area Delivery Point Sequencing 10

• Area Finance 9

• Area Human Resources 10

• Area Maintenance 9

• Area Marketing 11

• Area Methods Improvement Program 11

• Area Manager of Operations Support 10

• Area Vice President’s Office 4

• Bulk Mail Center or Bulk Mail Facility 16

• District Leadership 116

• International Service Center 1

• PCES plant 88

• PCES post office 37

Subtotal 342

• HQ and HQ-related PCES executives 405

Total: PCES 747

Grand total 72,449

Source: USPS. 

Note: According to USPS, on December 5, 2007, an additional 221 individuals appeared to be PFP 

participants but had not confirmed their employee profile information in the PFP program. As a result, 

USPS was unable to categorize these employees and they were not included in this table. 

Page 29 GAO-08-996 USPS Pay for Performance Program
Appendix II: Objectives, Scope, and Appendix II: Objectives, Scope, and Methodology 

Methodology 

Our objectives were to (1) describe the key features of the U.S. Postal 

Service’s (USPS) pay for performance (PFP) program, (2) provide 

information on the weight of the PFP program’s performance indicators in 

determining participants’ ratings, and (3) assess opportunities for USPS to 

incorporate new indicators of delivery performance into its PFP program. 

To address these objectives, we obtained documentation from USPS on its 

PFP program and interviewed USPS officials responsible for the program. 

To assess opportunities for USPS to incorporate new delivery 

performance indicators into its PFP program, we also obtained 

documentation on USPS’s plans to implement new delivery performance 

measurement systems. We primarily based our assessment on applicable

laws—such as laws related to USPS’s statutory mission of providing 

prompt, reliable, and efficient postal services to patrons in all areas at 

reasonable rates and statutory reporting requirements related to USPS’s 

delivery performance—as well as on interviews with senior USPS officials. 

We also developed assessment criteria from our past work on other 

agencies’ PFP programs and best practices used by high-performing 

organizations. We conducted a data reliability assessment of USPS’s PFP 

information and determined that the information was sufficiently reliable

for the purposes of our report. Our assessment was based on a review of 

the documentation and data provided, comparing the consistency of 

information provided by multiple sources and in multiple data files; 

interviews with USPS officials to discuss the documentation; and data, 

including how the data were developed; and follow-up questions to obtain 

further information. 

We conducted this performance audit from October 2007 to September 

2008 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

Page 30 GAO-08-996 USPS Pay for Performance Program
Appendix III: Comments from the U.S. Postal Appendix III: Comments from the U.S. Postal Service 

Service 

Page 31 GAO-08-996 USPS Pay for Performance Program
Appendix III: Comments from the U.S. Postal 

Service 

Page 32 GAO-08-996 USPS Pay for Performance Program
Appendix IV: 

A

GAO Contact and Staff 

cknowledgments 

Page 33 GAO-08-996

Appendix IV: GAO Contact and Staff 

Acknowledgments 

Phillip R. Herr (202) 512-2834 or herrp@gao.gov

In addition to the above individuals, Gerald P. Barnes (Assistant Director), 

Elizabeth Eisenstadt, Brandon Haller, David Hooper, Kenneth E. John, 

Belva Martin, Laura Shumway, and Crystal Wesco made key contributions 

to this report. 

USPS Pay for Performance Program

GAO Contact 

Staff 

Acknowledgments 

(542132) 
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