ROYAL MAIL

Lions led by donkeys, represented by dinosaurs. That is my assessment of the situation facing the much loved Royal Mail. The decision to strike because they cannot agree on how to restructure the business to meet the rapidly changing environment is like trying to cure a headache by slitting your own wrists. The senior management of this crucial business lack a clear strategy, despite astronomical salaries. The trade union leaders are a throw back to a bygone era, resisting change and howling at the moon.

Reality check: the royal mail is very old fashioned, operates an antiquated culture and desperately needs to modernise to compete in an age where people in their eighties are sending e-mails to their grandchildren at university rather than a letter, where people are texting or going on facebook to stay in touch with their loved ones rather than putting pen to paper. We have seen this in my own office in the past few years. Letter volumes are declining, electronic traffic increasing.

As a result the royal mail is struggling. Apart from its revenue challenges, it has a massive pension fund shortfall due to incomprehensible decisions on employers contributions in the past decade. There are still great opportunities for this company – not least the parcel business as so many of us are now ordering goods online, together with the massive Christmas and greeting card business –but they need to up their game to benefit from it..

So what is there response to this future-threatening set of challenges? To go on strike in the run up to Christmas, in the middle of a recession. Everyday now mail order giants like Amazon are switching their lucrative delivery contracts away from Royal Mail towards some of their major competitors. Given the volatility and track record of Royal Mail I doubt if those contracts will ever be recovered. The government tried a partial privatisation, seeking to bring in major investment from a competitor, but could not find Parliamentary support in the run up to an election. In the current financial climate no government is going to take on its pension debt.

So this once great organization now lumbers towards the edge of the cliff. Choosing to strike at this time is sheer madness.

I hope the donkeys and dinosaurs can somehow bridge their differences and find a positive way forward before another British institution goes the way of Woolworths.

For the sake of the lions.