On the Australia Post Facebook page, the comments, by the customers are now down to around 1 or 3 a day.
Digging a little deeper - with comments:
http://www.smh.com.au/business/four-graphs-that-show-why-australia-post-is-in-so-much-trouble-20150626-ghyvbe.html
Four graphs that show why Australia Post is in so much trouble
Date
June 27, 2015
Australia Post wants to slash almost 2000 jobs. But everyone gets mail, so what's the problem?
When was that last time you sat down and wrote someone a letter?
According to Australia Post, it must have been a while.
Posties' baskets have been getting lighter and lighter for years as people abandon the art of letter writing and instead turn to email and social media.
There's every chance your grandma sent you a text message on your last birthday instead of posting a card, while even engagement party invitations are now sent via Facebook.
More than 90 per cent of letters posted in Australia are now from businesses or governments, according to a government-commissioned report released by The Boston Consulting Group last year, and much of that correspondence is going online too.
This shifting communication landscape has left a gaping hole in the government-owned postal service's accounts and on Friday it announced plans to slash almost 2000 jobs to limit the damage.
Here are four graphs that show just what kind of trouble our posties are in.
01
The number of letters Australia Post handles each year is plummeting. Just five years ago, it handled 3,876 million letters, while last financial year that number had dropped to 3,173 million.
That's 700 million fewer letters. Even when the price of a stamp is only 70¢, that's still going to make a big dent in the bottom line ...
02
As we can see right here. All those stamps that were never sent left Australia Post's mail delivery business running at a $242 million loss last financial year.
This year's annual report isn't out yet, but managing director Ahmed Fahour said on Friday that losses were approaching $500 million.
Until recently, the profit made from delivering parcels was big enough to balance out the loss from delivering letters. But not for long.
03
As you can see, profit has been on a steady decline and Mr Fahour said on Friday that Australia Post would this year report its first full-year loss in more than 30 years.
And that's expected to just be the start.
04
The Boston Consulting Group predicts Australia Post would run up a loss of $12.1 billion in its letters arm and $6.6 billion across the whole business over the next 10 years.
But Mr Fahour is confident redundancies and other reforms will get the company back on track.
He even said on Friday that if the federal government passes reforms then there was reason to be "very optimistic about the future".
Although not everyone is happy with the plans and the Communication Workers' Union says Mr Fahour should be sacked.
"The Australian economy relies on fast, cheap, postal service to move the cheques, documents and parcels to keep business working," the union's assistant national secretary, Martin O'Nea, said on Friday.
"Mr Fahour plans to cut thousands of posties and double the price of a stamp. Mr Fahour and his crazy plan must go."
Australia Post employs 36,000 people, and about 23,000 of them work in the mail services business.
8 comments so far
Post is the bell weather for the economy and thanks to years of government and beauraucratic policy idiocy the coming economic downturn is not only going to cripple Post's business model but many other industries as well.
Commenter
seen it coming
Location
safely out of debt
Date and time
June 27, 2015, 7:12AM
The number of standard letters mailed in the USA in 1990 was 268,000,000,000 in 2007 this had already declined to 212,000,000,000 and in 2014 it declined to 141,000,000,000
The cost to mail a letter in 2007 was 30 cents and today is 49 cents, which is line with cumulative inflation, but the cost of delivering that letter today is significantly higher and will continue to be so as the volume declines, it’s obviously a ser vie that you can leverage but you need to maintain a high volume. Once that volume hits a critical point of ROI, you start to make a loss and have to either hike the price or reduce the cost for the ser vice, sadly people lose their jobs in such instances all the time.
It’s not something you can blame on one particular government or the other.
Personally, I don’t see why you would be so surprised given that most people (other than greeting cards) now use email or other forms of digital communication.
Commenter
Peter G
Location
Drummoyne
Date and time
June 27, 2015, 12:49PM
Invest $4.8 million and get a -$500 million return. Well done! You, TOO, should have a cigar!
Commenter
Karl
Location
Noosa
Date and time
June 27, 2015, 8:42AM
Mr O'Nea seems to be very out of touch with modern business processes. Hasn't his union caught up with the 21st century yet? Has he not heard of EFT, scanners, email, couriers, etc?
And I wonder how much AustPost could save each year if the posties were encouraged to recycle the rubber bands used to bundle up the letters for their suburban deliveries. Everyday I see dozens of them littering suburban footpaths and gardens. That's just in a few streets on my way home, must add up to quite a lot nationally.
Commenter
Brian
Location
Kensington
Date and time
June 27, 2015, 10:01AM
TNT make a profit and are growing
Toll make a profit and are growing
FedEx make a profit and are growing
Startrack make a profit and are growing
DHL make a profit and are growing
Auspost Parcel make a profit and are growing
Whoever the heck is running auspost letters should have used the 2008 fall as an excuse to really cut numbers hard and stop hiring people and transfer people out.
One thing auspost needs to do is develop an 'atm' for stamps have a machine that sizes and weighs packages then prints a barcode for you on stick on it. Parcels, letters no human interaction. Enough with the 'postage paid' letters they are being exploited. Modern shipping and mail carriers have this.
Also... if it costs $3 a letter to deliver mail every day of the week charge $3!
US carriers recently as much as doubled or trippled their delivery fees because they hadn't been charging enough. If you provide a quality product people will use it.
Commenter
Mark
Date and time
June 27, 2015, 10:34AM
Toll is now 100% owned by the Japan Post Office who makes a big enough profit to gobble up Toll and all its subsidiaries in one transaction.
The Japanese did that by being efficient and not overpaying their top staff.
Commenter
Stranger in Paradise
Date and time
June 27, 2015, 1:48PM
When we separated at the airport we picked up the wrong phones.
My sister mailed mine back to me from Singapore with Registered (signature required) standard airmail package via SingPost. It cost her the equivalent of Australian $13. It arrived in 6 days.
I mailed hers back to Singapore same with Registered (signature required) standard airmail package via AustPost. It cost Australian $35. It took 17 days to get to her.
Commenter
skris88
Date and time
June 27, 2015, 10:45AM
Mr. Fahour is paid 4.5 million dollars a year: ten times the salary of the USA postal manager.
Commenter
Eagus Langbur
Location
Bellmere
Date and time
June 27, 2015, 12:05PM
http://www.abc.net.au/news/2015-06-26/australia-post-to-slash-1900-jobs-amid-mail-losses/6574752
Australia Post to slash 1,900 jobs amid $500m mail losses; boss warns of 'tipping point' as letters business plunges
Australia Post has announced major job cuts as the decline in its traditional letter delivery service continues to accelerate.
The ABC understands 1,900 voluntary redundancies will be offered over the next three years from metropolitan centres.
Australia Post has confirmed losses in its mail delivery business are approaching $500 million this financial year.
With the volume of ordinary mail expected to plunge by more than 10 per cent, Australia Post has warned it will report its first company-wide financial loss in more than 30 years.
The disruption created by email and other online message services has taken losses at Australia Post to more than $1.5 billion over the past five years.
Australia Post managing director Ahmed Fahour admits the decline in the mail delivery service is now critical.
"We have reached the tipping point that we have been warning about where, without reform, the business becomes unsustainable," Mr Fahour said this morning.
"We welcomed the Federal Government's decision to support reform so we can manage the mail service losses, meet the changing needs of our customers and continue to invest in growing parts of our business such as parcels and trusted services."
In announcing the voluntary redundancies, Mr Fahour confirmed there would be no change to postal deliveries five days a week.
However, earlier this year Mr Fahour flagged the possibility of a two-speed postage service for its loss-making letter deliveries business so it can focus on the lucrative opportunities in freight and parcel deliveries.
Mr Fahour said there would be no forced redundancies caused by the overhaul of the letters business and the focus would be on retraining and deployment.
"While reforming our business we have made a number of commitments to protect our employees, our Post Offices and the community," Mr Fahour said.
Under the proposals, Mr Fahour said he would protect Australia Post's national network of more than 4,000 post offices.
He said there would be financial support for licensed post offices and community postal agencies which make up 80 per cent of the business.
Australia Post said that, since October 2013, more than 4,000 staff have been transitioned into different roles with an emphasis on its fast growing parcels delivery business.
https://theconversation.com/australia-posts-cash-cow-is-drying-up-time-for-some-new-thinking-37838
Australia Post’s cash cow is drying up: time for some new thinking
February 23, 2015 4.40pm AEDT
Australia Post’s first half results, released today, mark more bad news for our national letter carrier. The headline group profit of A$98 million partially masks a steep and accelerating decline in the profitability of the letters delivery business – which lost A$151 million in the first half and is in line to drive group results into the red for the full year ending June 30, 2015.
The decline in the letters business has been well flagged, even if the precipitous decline we are now observing surprises some. Remedies in this area are clear and relatively uncontroversial – higher prices for letters and a staggered weekly delivery schedule for most homes and businesses. The fact that these initiatives will further erode letter volumes is unavoidable.
Parcels turnaround
The real problem for Post, however, lies not in letters but in its lacklustre performance in the “cash cow” of parcel delivery where parcel revenues and volumes were up around 5%, while e-commerce sales in Australia (one of the key drivers for the parcels industry’s growth) are expected to grow by 14.4% between 2014 and 2015.
Taken together these figures suggest that while Post’s revenues in parcels are increasing, its market share is in decline.
In its most recent annual report, Post reported that parcel revenues increased by 16.4% while volumes increased by only 12.8%.
Today, it reported that volumes growth (5%) outstripped revenues growth (4%) in parcels. This tells us two things – for a while Post was able to leverage its market power to increase revenues at the expense of its customers – even while its costs per parcel were in decline. Today’s announcement tells us those days are past.
The explanations for this are clear. Ahmed Fahour, Post’s CEO, noted the increasingly competitive context of the Australian parcels business. Australia is attracting significant investment in parcel delivery infrastructure, both from global players like DHL, and also from smaller home grown players like Toll and Pack & Send.
In part, Post can take some blame for this. The ease with which it could increase prices for parcels while accruing to itself the emerging scale and scope economies of its network was a “red rag” to the global parcel delivery bulls. Its own customers, too, became irked by its rising prices and lacklustre service. Together, we have seen customers willing to switch, and new entrants keen to grow their business.
Last week’s announcement that Japan Post would acquire Toll is more bad news for Post’s parcel business. We are seeing the emergence of global players in the parcels industry able to benefit from freer trade and the rise of cross-border e-commerce. Toll’s acquisition sees Japan Post as part of this emerging club. Post, however, looks like being left standing at the proverbial altar – certainly under its current ownership and regulatory structure, it could not be acquired even if it was wanted.
Bleak future?
The structural separation now ongoing within Post is part of a long-term process that will likely see the parcels business spun off in some form or other in the future. It’s clear the parcels business would be an extremely attractive acquisition for one of the global players seeking to grow its Australian parcels market share.
And yet, keeping a strong and vibrant Australia Post, especially in the regions, is of vital importance to our national fabric.
Perhaps its time for some fresh thinking. Traditionally, governments have seen ownership and privatisation as polar opposites – you can have one or the other. However, the fundamental economies of scale available to Australia Post were it to partner with a global player in the parcels business are compelling. The letters business, however, without the parcels business would be a financial albatross for government.
Is it time to consider a hybrid arrangement – where Post is able to harness the benefits from integration with a global player while also supporting its key community role, especially in regional Australia?
Such an approach is unlikely, as the bankers who manage such privatisations like things clean and simple. And yet such an innovation provides perhaps the only solution to Australia Post’s need to improve performance and Australia’s need for a strong national network of outlets.
Russell Hamilton
The loss on delivering letters is ridiculous - everybody expects to pay what it costs to send a letter. There will always be occasions for sending a postcard, birthday card, condolence card, letter or whatever, and it should cost what it costs.
I want a government owned post office, but this one is so badly managed I try not to use it. The nearest PO to me doesn't open on Saturdays, the next nearest opens Saturday mornings ... but that's not where parcels go. Parcels are stored miles away at a "business centre" - also not open on Saturdays.
Some time ago I went to the 'business centre' to collect a parcel to find that because they were full up my parcel had gone to a business centre even further away - in a forlorn new little industrial estate that you could never reach but by driving there. I now specify that any company sending me a parcel not use Australia Post.
Australia Post management is hopeless, they're living in the 1950s.
a year ago
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John O'Nokes
In reply to Russell Hamilton
Not to mention the fact that you can receive a parcel from the USA within a few days, while it takes AusPost two-three weeks to send something from Brisbane to anywhere else in Australia.
Not even going to start on the hassle involved in acquiring a passport...
a year ago
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Rod Ewins
Rod Ewins is a Friend of The Conversation
In reply to John O'Nokes
You are absolutely right about the inefficiency of AusPost's parcel service, but the serious downside is the cost. I can buy a book from Amazon and have it sent to me fro the East Coast of the USA for about A$15, to arrive in a week or so, using their privatised mail service. It costs about the same to send it in a satchel within Aus, and takes at least as long. BUT for me to send that same book back to E.Coast USA via AusPost costs over A$40, and it usually takes considerably longer. Singlehandedly, AusPost has almost killed off the book-publishing industry in this country, because Australia is too small a market on its own, and when postage is factored in, it costs way too much to sell overseas.
AusPost should have been anticipating the letter downturn for at least a decade, and devising strategies to deal with it. But to rely on the boom in internet shopping, hence parcel post, while at the same time hiking the cost of it through the roof, is just plain stupid. It would actually make a lot more sense for them to reduce parcel post charges way down and subsidise volume selling overseas by Aus retailers. That would be a win-win for both AP and business, would stop Jerry Harvey's bleating, and re-boot a lot of small-item industries that have nearly or completely died here.Their current strategies, if you can dignify them as such, are going to lead them into total collapse, and leave us at the mercy of private providers.
a year ago
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Chet Mannly
In reply to Russell Hamilton
Absolutely with you there Russell - Aus Post's service levels are abysmal. My local branch opens at 9:30 and locks its doors at 4:30, and only Monday-Friday. The branch also doesn't even attempt to deliver parcels like they are supposed to - they just put a card in your letterbox without checking if anyone is home.
I shudder to think at how much money was wasted in those digital parcel lockers they scattered all over the country. Massively expensive for Aus Post to set up, and as their address is a PO box no online places will ship to them.
All they had to do was make all their branches open on Saturday mornings and the problem was solved. Instead they invested millions on an initiative that doesn't work...
These days more and more of my online purchases are sent by private courier. Sometimes $2-3 more, but dramatically faster and more reliable.
a year ago
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Mike Swinbourne
logged in via Facebook
Let's just get rid of letter deliveries all together. They are a thing of the twentieth century - there are far better alternatives today.
a year ago
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Stephen Davis
In reply to Mike Swinbourne
Clarificatiom please. There a far better alternatives to letters or letter deliveries?
a year ago
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Mike Swinbourne
logged in via Facebook
In reply to Stephen Davis
Email Steve.
a year ago
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Russell Hamilton
In reply to Mike Swinbourne
"Let's just get rid of letter deliveries all together."
Better to provide a service people want and are prepared to pay for. There are many people who will want to send a card, a letter ... why not continue to provide that service, at the proper price?
Why didn't Australia Post provide email to the nation? They could have offered a stable lifetime email address with the promise that one's email wouldn't be scanned and profile sold to advertisers. The only advertising one would get would be from Australia Post, which should have been able to take a large slice of the PC, laptop, tablet etc market from Harvey Norman and JB HiFi. Instead of all the tat they fill their shops with they should specialise in stationary, computers and 'phones (communication - the market they've always been in?!). What other retailer has a branch in every suburb across Australia, with a trusted reputation and government backing. Making a profit shouldn't be that hard.
a year ago
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Stephen Davis
In reply to Mike Swinbourne
Based on that logic, we should scrap public transport since it runs at a loss and there are far better alternatives
a year ago
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Chet Mannly
In reply to Russell Hamilton
Problem is that Aus Post already uses your email address to spam you with messages from advertisers who pay them.
Besides, with the plethora of free email services around, who needs one run by an organisation as inefficient as Aus post?
a year ago
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Andy Saunders
In reply to Russell Hamilton
"There are many people who will want to send a card, a letter"
The problem is basically not the sending, but the delivery. The postie has to walk/ride/drive past every mailbox, every week-day regardless of whether there is a letter to deliver or not. And there often isn't - have you noticed how little mail you get these days compared to say 10 years ago? And what proportion of that is direct mail (advertising, generally a growing but low-margin segment) or bills (a declining segment) rather than from a human you know (a tiny segment).
As for e-mail to the nation, well they've sort-of done that, none too successfully as yet.
a year ago
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Mike Swinbourne
logged in via Facebook
In reply to Stephen Davis
"....Based on that logic, we should scrap public transport since it runs at a loss and there are far better alternatives...."
Not sure I follow Steve. What better alternatives are there to public transport?
a year ago
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Gary Luke
In reply to Andy Saunders
If junk advertising has become the main item needing the postie to walk the beat then charge more for it.
a year ago
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David Reid
logged in via Twitter
In reply to Russell Hamilton
Australia Post's retail network is a vastly underutilised potential moneyspinner. Depending on location there are a whole range of products and services they could be selling, at greater profit, than the quite limited range of office products that seems to be the standard in most post offices.
a year ago
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Janeen Harris
Maybe they should have a think about the massive pay packets handed to senior management. It's not value for money. But then, what massive pay packet is?
a year ago
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Garry Baker
Meanwhile, Ahmed Fahour, Aust Post’s CEO,is being paid $92,000 per week to run this public asset into the ground. Not even the Postmaster General in the US earns anything like this sum (say less than a quarter) yet the US Postal Service is many times larger than ours. This pay rate is obscene to say the least, given the man is a public servant
Candidly, most people view our postal service as a public good, where Australia Post in toto, should at least break even profit wise ..which it does, but here we have a CEO cherry picking the non profitable elements, as if somehow his brain waves can make for a better service. They cannot because his thinking muscle doesn't appear to be up the the challenge .. AP is more than 200 years old, and during that time many challenges needed to be met, including the tyranny of distance and a low population
The flawed mentality of having every element of life here showing a profit is a pretty sick reflection of where Australia is heading ... The user pays credo
AP needs an overhaul alright .. but it's a top down overhaul. Not this mindless notion that services should start with price of a letter
Read more
a year ago
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Meg Thornton
In reply to Garry Baker
For the sort of money we're paying for the bloke, the business should be doing a damn sight better than it is, quite frankly. Heck, with a CEO we're paying $5 million a year for (10 times what we pay the Prime Minister!) we should have a postal service which is the envy of the world, and which should be easily out-competing its rivals. I'd be starting to wonder where most of the money is being stashed - and checking his portfolio to ensure he isn't investing in his immediate competitors (we require our MPs to disclose their investment histories in return for far smaller sums per annum - the request isn't unreasonable).
a year ago
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Rod Ewins
Rod Ewins is a Friend of The Conversation
In reply to Meg Thornton
Indeed, one way the government could force productivity improvements and thus help the budget would be to legislate that executive salaries paid by companies operating in Aus are performance based past, say, $200K (which is still a decent income for one person). A bit like car salesmen who are paid a base income plus commission. There would be damn few execs earning over a million a year if performance of their companies was the determinant of their income, and as you say, certainly not Mr Fahour, Mr Joyce, or a host of other execs presiding over the collapse of their companies while they laugh all the way to the bank.
a year ago
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Andy Saunders
In reply to Garry Baker
I think comparisons with the US Postal Service aren't warranted. It is a real basket case.
a year ago
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Garry Baker
In reply to Meg Thornton
Doubtless, he will move on to better rides in the future.. perhaps even another government department when Australia Post is sold off. ..Privatised, as the LNP say, for the common good.
Meanwhile on the question of where most of the money is being stashed .... "Australia Post donates boss Ahmed Fahour’s $2m bonus to Islamic Museum of Australia" .....
http://www.heraldsun.com.au/news/australia-post-donates-boss-ahmed-fahours-2m-bonus-to-islamic-museum-of-australia/story-fni0fiyv-1226958003540
a year ago
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Garry Baker
In reply to Andy Saunders
It's not quite a basket yet, since Congress hasn't declared it so. . Perhaps think upon it as a precursor to where AP could be heading with the sort of folk we have running the show
http://www.nytimes.com/2015/01/07/us/politics/postal-chief-says-congress-and-unions-block-efforts-to-restore-financial-health.html?_r=0
Meanwhile, Japan Post (a government owned entity) pours $6.5b of its own money into what it sees as a cash cow in Australia ... dumb Aussies, and all that
a year ago
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Philip Morey
UK stamp costs $1.22. Perhaps we should just raise the cost.Auspost for parcels here is pretty good. I've found that couriers will only get to my address once / week and I'm only 24 km from Sydney CBD. Perhaps we could invest in the organisation and turn into a DHL or JapanPost and become a big player . Both were government owned . Give Auspost some money and let them buy Toll or its equivalent
a year ago
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Gary Luke
If we're at a historical turning point for postage it's worthwhile noting that international postage agreements have been the longest lasting international treaty in the world. The Treaty of Bern was signed in 1874, later re-formulated as the Universal Postal Union.
a year ago
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Paul Wittwer
I am one of those 'meanies' who think the GST should be collected on all those currently exempt imports under $1000, AND that the importers should pay the full cost of collection and payment.
This would be a nice little earner for Australia Post.
a year ago
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Chet Mannly
In reply to Paul Wittwer
GST is paid to the ATO - how exactly would Aus Post benefit from that?
a year ago
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Paul Wittwer
In reply to Chet Mannly
As I wrote in my first post, the importers should pay the full cost of collection and payment. Given that so many of the imports under $1000 pass through Australia Post it would make sense for them to do the GST collection and payment and bill the importer for the cost of providing that service.
a year ago
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John Hermann
Higher prices and/or reduced services will not solve the problem. The simplest solution is to re-nationalise the post office. Essential services like the postal service, electricity, water supplies, etc should never have been privatised in the first place.
a year ago
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Rod Ewins
Rod Ewins is a Friend of The Conversation
In reply to John Hermann
Hear, hear, John!
a year ago
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John Kelmar
I am not surprised that Australia Post is running at a loss, as the CEO has scant regard for efficient business practices. Putting the prices up will only result in a reduction in usage - dumb move!
One need to put more effort into attracting customers with special deals, attractive marketing, and superior service.
In the meantime staff need to accept that their salaries and benefits need to be reduced in line with the decline in profits. This can start at the CEO level whereby his salary and total package should only be paid based on success and profits. So too should all staff have a salary based on the profitability of their section.
The other problem with Australia Post is that they employ far too many Managers and others who are not doing anything to assist in producing revenue, instead they are just watching others.
This business needs to be run like a business and not a Government Department.
a year ago
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ben gershon
left Aussie Post 15 years ago and even then staff was treated as mushrooms .management controlled by computer back to central command removing responsibility and initiative from individuals.pay was determined by the number of staff you were responsible for not by what you did .experts (drips under pressure )were constantly brought in to change systems rather then refine them.
a user council for top users lobbied the management for better deals .but no user council was set up on the UK model to help AP to adept to what was needed and how to do it .the politicians when approached did not want to know. bar for senator Vigdor of SA
AP can be fixed and deliver within 4years given proper management and staff input
ben
a year ago
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