23 November 2015
A changed stakeholder planet
“Widespread digital accessibility provides an opportunity for unprecedented audience engagement, as well the mobilisation of disconnected communities”
A changed stakeholder planet
In recent years, postal operators have been facing an increasingly complex environment. Not only in terms of business challenges but also from a stakeholder perspective. The traditional vertical line between a government and the incumbent postal operator has blurred and a vast number of stakeholders have joined the process of interference and policy making.
Ensuring business sustainability certainly involves increasing operational efficiency and greater customer intimacy but also thorough internal and external stakeholder management. Understanding what trends and which decision makers have an impact in shaping the postal organisation is a theme that most CEOs now have high on their radar screen.
How has the stakeholder landscape changed over time and how have postal operators responded to them? What could be a more effective stakeholder strategy going forward in the disruptive economy?
Stakeholders are usually categorised as internal (e.g. employees, suppliers, shareholders) and external stakeholders (e.g. regulators, competition authorities, consumer organisations). The changing role of postal services and the refocus of postal operators to new business areas have led to another approach to stakeholders. How have these changes evolved? We mainly focus on external stakeholders here (see Fig 1):
Figure 1: a categorization of external stakeholders
Back in the past and driving to the future
A governmental authority without a dedicated stakeholder management
For decades, postal operators have been run as governmental authorities, usually as being part of a Ministry (PTT) together with a telecommunications (including telegraph at the time) branch. The concept of “client” or customer was barely evident and the drive for efficiency and forward looking business opportunities was not then in the DNA of that Post 1.0. In those times, the Minister was to some extent the CEO, an independent regulatory authority did not exist and ‘chinese walls’ between retail and wholesale operations were not even thought of.
External stakeholders were few in number and the type of stakeholder management was rather a vertical one: the government (as sole shareholder and decider on pricing, quality of service, deployment of post offices, employment, etc), the unions (high number of civil servants) and in some cases a small number of clients grouped together (e.g. newspapers). European law making was in its infant stage. The UPU was the (only) intergovernmental body that served as a place for Posts to discuss interconnections with each other. Business was concentrated on traditional mail (monopoly), parcels and basic financial services.
1992 –> 1997: a long wake-up call
The shift from these postal institutions from being embedded in Ministries to privatised entities took some time. The intermediate steps were mostly a phase of more autonomy or corporatisation of the body (public company), i.e. more or less privately run companies with governance bodies of a private operator. Clear separation was needed between the shareholder (government) and the operating company.
The focus of external stakeholder management also shifted. Not only the call for automation and a better customer focus and quality came into the picture, but also a heavy regulatory component in the European Union. Postal services constitute a critical sector - seen as essential “State services” in the early 20th century. After the signing of the EC Treaty, de-monopolisation of some industries (primarily network industries) was considered. The public character of postal delivery services interacts with the common development of the market and interferes in the usual way of building free competitive markets. Also, it was essential to guarantee at Community level a universal postal service encompassing a minimum range of services of specified quality to be provided in all Member States at an affordable price for the benefit of all users, irrespective of their geographical location in the Community.
The kick-off of the “Brussels calling” European stakeholder took place in the early nineties with the 1992 Green Paper on postal services. It was a wake-up call for most governments that were both owners and managers of their postal company. According to the European Commission in its Green Paper, if nothing was done, the problem facing the postal market would remain and even the degree of the problems would increase. Divergences (for instance, in terms of the scope of reserved services or the service performance achieved) would become larger and there would be opportunity costs. It could lead to the danger of a "two-speed" Europe and contribute to the marginalizing of certain peripheral regions.
Broadly, the 1992 Green Paper defined five areas of concern for the Community:
- The lack of harmonisation across the sector (that created problems of inter-operability and opportunity costs),
- Single market implications (Single market opportunities were lost as the poor reputation of some postal operators led product sellers not to communicate or prospect the regions covered by them),
- Cross-border service performance (since effective cross-border communications are essential for the commercial and social life of the Community, it was a matter of concern to the Community that service performance for cross-border services was so unreliable),
- Divergences (Postal services provided one way in which messages could be communicated and goods delivered. Any regions having unreliable postal services would therefore be disadvantaged in terms of their communications and goods delivery requirements)
Postal administrations received that signal loud and clear and started to have a concerted policy approach through PostEurop with a call for caution to the European co-legislator.
The International Post Cooperation (IPC) was created in 1989 as a kind of operational backbone for postal participants with regard to quality, service performance and inter-operator charging settlements. The express and courier industry developed separate stakeholder dialogue structures through the European Express Association.
1997-2008: eleven years of postal regulatory reform
After the Green Paper, it took five years of reflection and discussion at European level to adopt a more stringent reform. A postal services directive was then adopted in 1997, followed by 2 updates (2002 and 2008). Most of the hurdles mentioned in the original Green Paper are being resolved or are at least heavily regulated. The postal services directive constitutes the core regulatory framework of European postal services. It establishes common rules concerning the provision of a universal postal service within the Community; a gradual, stable and controlled liberalization; tariff principles and transparency of accounts for universal service provision; the setting of quality standards for universal service provision and the setting-up of a system to ensure compliance with those standards; the harmonisation of technical standards and the creation of independent national regulatory authorities.
The postal sector in Europe today has evolved since then with fully privatised incumbent operators present in Malta, the Netherlands and Portugal. The following countries have incumbents with less than 100 % public ownership: Germany (25.5%), Belgium (50,01%), Austria (52.8%), Romania (75% with a further privatisation ongoing), Greece (90% with planned further privatisation), the United Kingdom (less than 40 %). Italy plans to privatise its postal operator.
The only merger among incumbents took place in the Nordics in 2009. Post Denmark and Sweden Post are now owned by Post Nord, a holding company owned 60 per cent by the Swedish government and 40 per cent by the Danish government.
The concept of public service is somewhat intertwined with the governance status of the company. For example, the statute of La Poste in France is that this institution is still a public service embedded in the system and public perception. The Group La Poste became a société anonyme but is claimed to be inprivatisable.
Tension between providing public services and the governance of the historic postal operator have been resolved by the European lawmaker. In December 2011 the European Commission adopted a package of rules and guidance on the public compensation of services of general economic interest. Compensation by the State of public services that are entrusted to the postal operator has to follow strict rules and oversight.
Since 2010: EU-28 single market thinking
Postal operators warned stakeholders of the limits of regulation in a blurring market. Since 2010, a new wave of regulation discussions came into the picture: the concept of the universal service in a liberalised market without necessarily a guaranteed funding for a declining universal service market; the growing attention to parcel delivery and the e-commerce value chain against a framework of regulations that are built to serve the universal service customer; and a call for more interconnected and seamless operational flows of parcels in the cross-border parcel delivery segment.
The stakeholder landscape has become more complex:
- European Commission: DG GROW, DG CNECT, DG JUST, DG EMPL, DG TAXUD, DG MOVE, …
- European Parliament: IMCO, LIBE, JURI, TRAN, …
- European instruments: from a postal regulatory stable corridor policy, a clear shift to e-commerce in a digital single market is a vast agenda of the new Commission. Thinking lines are not necessarily as the postal directive as such but rather other instruments to achieve more seamless cross-border flows of goods with more transparency from all partners in the e-commerce chain and ultimately lower pricing.
- Coalition organisations: PostEurop, IPC, EMOTA, E-commerce Europe, EuroCommerce, EEA, BEUC, …
- Various studies from the academic world and consultancies
- Regulators through a EU-steered group of regulators (ERGP)
The evolution of the stakeholder approach is illustrated in the figure 2 below:
Figure 2: changing stakeholder approach
Over the same period there has been a paradigm shift amongst postal operators:
Increased business focus
: from a monolithic and monopolised letter mail offer, combined with parcels and financial services through a rather inefficient network of post offices towards a multi-stage diversified offer of physical, logistic, e-commerce (parcels being the new normal), electronic, financial and advisory services through a multi-channel network;
Greater employment focus
: from an internal focused employer largely of civil/public servants to a more customer oriented, incentivised and more flexible attention to people with a changed understanding of the role of the unions;
: from a focus on universal service and preserving the reserved area to finance the cost of the universal service to a legal and regulatory framework that is stimulated by the non-core postal value chain with a multitude of regulatory oversights and stakeholders;
Environment and climate issues
: posts are transforming their businesses to ensure sustainable growth into the future where corporate social responsibility becomes a priority. The triple bottom line – people, planet and profit – is increasingly being integrated into the way posts do business. IPC has set up the Environmental Measurement and Monitoring System (EMMS) with the goal to achieve a score of at least 90% in carbon management proficiency by 2020.
The world is getting more complex with a lower reliability of information. The public has unfiltered access to information and much less reliance on traditional intermediaries to “translate” that information (democratisation of everything). As an example, European institutions are among the most transparent political bodies in the world and all relevant information is publicly available in real time. The public has unfiltered access to documents and debates and need fewer intermediaries to form an opinion, although the sheer volume of information starts to become overwhelming and sometimes hard to validate.
Events are increasingly interrelated. The approach towards stakeholders becomes more systemic instead of analytical (understand a phenomenon and its context, understand the logic of interactions, determine possible moves of stakeholders, define possible (re-) actions).
The power and role of the media has substantially changed - with tensions between old and new media over digital strategies. Press releases, corporate backgrounders, opinions, positions, academic studies and other materials with proof-points now need to undergo a digital strategy facelift to be effective. In contrast to these traditional tools, widespread digital accessibility provides an opportunity for unprecedented audience engagement, as well the mobilisation of disconnected communities. If channeled correctly, these elements combined with the right messaging can prove to be powerful motives for policymakers to take action.
But the story is not enough. It has to be heard. Science and data do not necessarily impress policy makers, even the technocrats. Crafting messages and positions is sometimes taken as a high priority without devoting much time to finding out who the real target audience are and what will be the 'take-away' for them. The public demand grows on any sizeable economic operator in any sector to effectively manage this transparency, risk and consumer relations with corporate responsibility.
Question for thought and discussion
How could Posts be more effective in channeling their vast information and intelligence to the public and other stakeholders? In an intertwined world of traditional and digital communication, how does this change the stakeholder landscape for the Post?
Contribution published in the book “Reinventing the Post. Building a Sustainable Future”, D. Esborn (editor), Libri Publishing, Oxfordshire, September 2015