Postmaster General Slashes Overhead

THE first stage in a massive United States Postal Service overhaul designed by the new postmaster general, Marvin Runyon, will eliminate 25 percent of management positions within three months.

The immediate savings will give consumers at least a one-year reprieve - until 1995 - before the cost of a first-class postage stamp rises from 29 cents to 34 cents. It might also result in better service, Mr. Runyon said in announcing the plan Friday.

Trying to eliminate the $2 billion Postal Service deficit expected by the end of fiscal year 1993, Runyon said that overhead - which he defines as jobs that do not involve touching the mail - is being drastically reduced.

The work force reduction plan offers the service's 140,000 managers early-retirement incentives, including a six-month pay bonus. While the target is to eliminate 30,000 jobs out of a total work force of 735,000, Runyon says 40,000 employees are expected to take advantage of the plan. (The 10,000 excess will be made up with new hires at lower pay.)

The plan will reduce the top management layer immediately below the rank of postmaster general from 42 to 24 positions.

Net savings from the reductions are expected to be $700 million in the first year, and $1.4 billion in the second, Runyon said. The reductions will also streamline the management hierarchy so that communication is improved - and that, in turn, should improve morale and service, Runyon said.

The new postmaster general came to the job just a month ago with a reputation for successful cost-cutting and streamlining at the Tennessee Valley Authority. At TVA, he stopped a 20-year spiral in power rates - averaging 10 percent a year - and kept the rates level for eight years.

Widely considered a fat, bureaucratic dinosaur, the postal service has fared poorly against its modern and efficient private competitors - the United Parcel Service, Federal Express, and other newcomers like magazine delivery agencies.

Runyon's plan initially drew broad approval from those affected, ranging from postal workers unions to private industry mailers.

"There's been nothing equal to it [in Postal Service history] in the numbers being cut and the magnitude and scope of restructuring," said Van H. Seagraves, publisher of Business Mailers Review, a trade newsletter.