By Christopher Lee
Washington Post Staff Writer
Thursday, July 24, 2003; Page A19

The financially troubled U.S. Postal Service can become leaner and more efficient with a smaller workforce, time limits on collective bargaining and a pay-for-performance system, a presidential panel said yesterday.

The President's Commission on the United States Postal Service also recommended loosening limits on executive pay and requiring postal managers to justify their jobs and the size of their staffs.

"We're asking the Postal Service to act more like a business, and incentives -- pay for performance -- is part of being a business," said panelist Joseph R. Wright Jr., president of PanAmSat Corp., a provider of video and data broadcasting services. Later, he said: "We really do believe there is too much structure and too much staff."

The recommendations did not go down well with William Burrus, president of the American Postal Workers Union, who said they would hurt workers. He said union members will take their case to Congress to "ensure that none of this sees the light of day."

"It was indicative of the slant of the committee; they went into it with an intent to reduce labor costs," Burrus said. "And while they would say they 'adjusted' the collective bargaining process, they shredded it. . . . They've declared war on postal employees."

President Bush appointed the nine members of the commission, many of them corporate executives, in December to study ways to improve the Postal Service, which has 735,000 employees and an annual budget of $66 billion. The independent agency, hit hard by declines in first-class mail, is $11 billion in debt.

The commission's report will not be issued until next week, but panelists approved final recommendations yesterday and in a meeting last week. Many of the proposed changes would require legislative action.

Among other recommendations, the panel said the Postal Service should consider developing a system to track all mail for security purposes. And it said the post office should allow customers to buy -- at a premium -- personalized stamps bearing their photograph or other image or logo. Canada Post, the postal service in Canada, already offers a similar service.

"It brings out a certain creativity in people -- you've all seen vanity license plates," said James A. Johnson, co-chairman of the panel and a vice chairman of Perseus LLC, a merchant banking firm. "It might be quite profitable."

But most of the panel's focus yesterday was on labor, which represents the lion's share of the Postal Service's operating costs.

Panelists said the Postal Service should continue to shrink its workforce through attrition, noting that 47 percent of postal employees will be eligible for retirement by 2010. The commission also wants to limit the collective bargaining period over wages to 180 days, a sharp contrast to recent labor arbitrations that have taken as many as 17 months. And it wants to include pension and health benefits in collective bargaining.

Norman Seabrook, president of the New York City Correction Officers' Benevolent Association, was the only commission member who voted against the proposed changes in collective bargaining and pay. He said pay-for-performance systems would give rise to managers' rewarding their cronies rather than the best workers, with worker morale plummeting as a result.

"It becomes a 'good old boy' system that rewards people because of their associations with management," Seabrook said.

Other panelists acknowledged potential problems but said such a system, properly designed, could provide powerful incentives for better performance. "The clear tone of this recommendation is 'go slow' and do it with everyone's participation," Johnson said.

Last week, the commission approved recommendations to give the postal service more flexibility in setting rates and closing postal facilities.