Post office’s spin-off cultivates high-tech culture

Epost’s independence from Canada Post allows startup to thrive

When an organization undergoes radical change, the kind that involves a completely new way of doing business, new tools and a new workplace culture, it typically faces two options. Either blow it up or take it outside.

This was the challenge faced by Canada Post a few years ago when it looked at ways to enter the world of e-commerce. The Crown corporation was looking at forecasts for declining volumes of letter mail and increasing use of e-commerce. With 70,000 employees located in communities across the country, Canada Post realized it had to move quickly if it wanted to expand its national mail franchise into a universal electronic service for Canadians.

“Canada Post was the first postal administration in the world to adopt electronic delivery,” boasts Roger Couldrey, president and chief executive officer of epost, a company spawned by Canada Post as an electronic solution.

“During the 1990s it took some brave people to contemplate electronic solutions to the traditional service of physical mail delivery. They were ahead of the curve in recognizing the global change to business communications.”

Canada Post developed and tested the concept of electronic delivery in-house. By 1999 it was ready to launch the world’s first electronic post office, called epost. To realize its vision, Canada Post needed an electronic delivery vehicle. It chose to partner with an existing purveyor of electronic communications: the Bank of Montreal’s e-commerce arm, Cebra. This 50-50 partnership was, in effect, an Internet startup, designed to be quick to market and to attract high-tech specialists.

Although an entrepreneurial culture already exists at Canada Post, says Lynn Palmer, vice-president of human resources, “it is hard to set up a new culture within an existing business culture. It is easier to go outside to start something new.”

In using the separate entity business model, Canada Post made use of the experience of the Bank of Montreal with Cebra. Epost president Couldrey says the model made sense because in order to survive, epost had to be culturally independent. Otherwise the two parent organizations would have stifled the startup.

“This was an enlightened decision that allowed us to succeed. Remember, it was the peak of the high-tech boom. There were others out there with a similar vision. It was important to be lean and nimble, and to move quickly,” says Couldrey.

“This is a knowledge-based company,” he adds. “People’s brains are what make us successful. Our task is problem-solving and solution development in electronic billing and payment. When the customer says, ‘This is what we want,’ we may have 60 per cent of the solution and we have to figure out the rest. Our staff have to be entrepreneurial. They can’t have a mindset with product boundaries or rigid role definitions.”

Drawing on the parent companies’ reputations

The two sponsors lent their reputations and credibility to the new entity. Canada Post brought the statutory mandate for mail delivery. The Bank of Montreal brought credibility in electronic payment transfers and its subsidiary, Cebra, had the high-tech expertise.

The link to the parent organizations was important in attracting the best people to work on the new technology, Couldrey adds.

“We could tell people, ‘You are critical to the long-term future of Canada Post, and we are the only ones with the staying power.’ But we were also a startup focused on technological responses to market opportunities and customer demands. We needed to attract people that typically neither of the parent organizations would attract.”

The startup drew talent from Canada Post, Cebra and Bank of Montreal. In the early days, everyone was either working on secondment or on a consultant’s contract because there was no legal entity. When the startup was incorporated in March 2001 as EPO Inc., everyone was asked to join epost as an employee, says Couldrey.

“We gave them a lot of time to make the decision. A large number moved over but some resumed their earlier careers. Those who joined us came for the teamwork and the open environment, with more information about our business than is typically found in most places. We discuss the challenges. We celebrate successes. We have fun.”

HR policies revised

In developing its HR program, epost drew on the policies and procedures of the parent companies.

Daryl Gauthier, director of human resources at epost, says there are just as many policies that need to be developed for a small startup as for a large business.

“The same things have to be covered. The difference is in the amount of consultation and the layers of approval. Our end-product is a package of simple, flexible HR tools that reflect our culture.”

Epost has to be flexible to bring in whatever expertise is needed at a given point in time. “We couldn’t be tied to narrow job descriptions because our needs change over time,” says Couldrey. “A product developer might be needed for subsequent maintenance or documentation. Staff are encouraged to make the transition and supported with training.”

Gauthier concurs: “We have thrown away the hierarchical organization. We pay the right price in the market to get the skills we need. We use a broad-banding pay structure based on expertise and performance. We verify it against the annual salary surveys of the Information Technology Association of Canada.”

Following employee interviews and feedback, epost adopted a total rewards strategy, says Gauthier, who describes the company’s benefits plan as one suited to a high-tech environment. Supplementing the core plan is a health-care spending account to meet individual employee needs. And in lieu of a defined benefits pension plan, which is what’s in place at Canada Post, epost offers employees a group RRSP.

“Incentives form a greater percentage of the base than at Canada Post, and we have a bonus program tied to our annual business goals,” says Gauthier, adding that the company is investigating equity-based compensation such as that found elsewhere in the high-tech world.

The end result is a lean organization of some 100 employees with a clear understanding of what needs to be done. “Others tell us our turnover rate of two per cent is unbelievable,” says Gauthier. “Once you adequately address compensation that is appropriate to the skills base, in line with the market and fairly administered, then people look for challenges in the work. They want to grow on the job and develop their skills. Our staff are IT specialists who feel they are contributing to something important.”

HR professionals at the Canada Post group of companies — which includes Canada Post, epost, Innovapost, Projistix and Purolator — come together in a senior HR council a couple of times a year to share best practices. Palmer, Canada Post’s vice-president of HR, says epost brings a distinct high-tech HR template that is portable to other Canada Post companies. Getting together as colleagues, adds Gauthier, creates an opportunity for him and his peers to “look at the best interests of the conglomerates going forward.”

In July 2004, epost acquired the assets of BCE Emergis’ webdoxs service that enables electronic document presentment and payment services. The acquisition has created a new HR challenge as it merges the cultures of the two former competitors into one, but epost president Couldrey says the company’s earlier experience in defining its culture makes its easier to meet this challenge.

“We are confident in what we are doing. We like our culture and we know it works. We can tell our new employees from Emergis to take their time to find their place on our project teams, and work with us to create the new epost together.”

Values defined

Gauthier notes that in a small organization it is easy to bring everyone together to share information or discuss a challenge. “We started from scratch to define our culture and values statements. The final product came together at an employee retreat.”

The result is five anchor points with multiple descriptors on the epost style of work. There is a focus on teamwork and a fun work environment. And rounding out the list are business excellence to maintain a competitive edge, a customer focus and an entrepreneurial style.

Now that epost is no longer a startup, the challenge is to respond to a changing environment, and to deliver on what has been promised. It takes different kinds of leadership for each stage of development, says Palmer.

“The startup phase is a skunkworks. At epost, the focus was on marketing and selling the idea of an electronic post office. The next phase was stabilizing the business model. Now the business is in a more mature state, and Canada Post is taking advantage of the epost technology culture in looking at new business areas,” says Palmer.

And so the cycle of change continues. Epost is now being used to support Canada Post Borderfree, a new business addition that enables the online purchase of U.S. goods in Canadian dollars. Canada Post is providing the staff and epost is providing the infrastructure. The HR templates developed at epost for a technology environment will be used with Borderfree. Epost will also provide the strategic HR consulting services.

Jacques Côté, Canada Post chief operating officer, sums up the epost experience: “We can’t fix the problem with small incremental changes to our current products. To sustain and improve profitability, we must introduce changes to our business model that respond more effectively to a world that is changing more quickly and dramatically than ever before.”

Susan Singh is a Toronto-based freelance writer.

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