WHAT GOES ON IN YOUR MAILROOM? Within the windowless walls, countless dollars get spent needlessly, and even then the mail too often doesn't go through. Here's what to do about it.
By Alan Farnham REPORTER ASSOCIATE J. B. Blank

(FORTUNE Magazine) – WHERE'S the letter mailed to you three weeks ago? What happened to that contract you sent yesterday? They're probably mired in your mailroom, where guys in smocks are smoking White Owls or something worse and shooting rubber bands at each other. One clerk has accidentally glued his fingers shut. Water drips. Steam hisses. Mail is strewn about. On the wall are posters of the kind that give silicone a bad name. No windows here on snowy vistas. This is Hell -- with postage due. Not all mailrooms fit the stereotype, but even cosmetically superior ones often house major problems. Staffed by underpaid workers with little hope of escape up the corporate ladder, largely overlooked both in modernization programs and by otherwise cost-conscious top management, corporate mailrooms can waste millions. Pitney Bowes, which makes postage meters and ought to know, estimates that the mailroom of a FORTUNE 500 company can go through $50 million a year in postage, salaries, and equipment -- more if the company belongs to a mail- intensive industry like finance, publishing, direct marketing, or insurance. Marcus Smith, editor of Postal World, a Washington-based newsletter for commercial mailers, estimates that most companies can cut 10% to 15% right off the top. They often don't, he says, because they still think of mailrooms as nickel-and-dime operations. ''It's quarters now,'' says Smith. Just the savings through the provident use of overnight express can run into the millions. Warren Boero, vice president for transportation at Bank of America, warns: ''Ignore your mailroom, and you'll pay an awful price.'' For example: -- Several years ago Crocker National Bank decided to upgrade its mail sorter. A ceremony was held to celebrate removal of the old machine. Bolts were loosened and the faithful unit swung away -- to reveal a pile of letters that had fallen through the cracks during its 15-year tenure. Some contained ''quite large dollar items,'' remembers Dave Main, a Los Angeles consultant on mailroom design. -- Though Merrill Lynch denies it, sources told FORTUNE a few years ago that staffers at the company's New York headquarters, irate about poor service, were sending interoffice mail by Federal Express. Memos were whisked from floor to floor via Memphis. -- The mailroom of a large manufacturer received ten sacks of mail a day, but could process only nine. The mailroom's solution: Toss out the oldest of the accumulating bags and keep the newest in hopes that they could someday be delivered. -- The secretary to the chairman of a market research company enjoyed the mailroom's confidence. One day she saw a mail clerk collect her boss's mail, look it over, and coolly drop it in the trash. She asked why. He winked conspiratorially and told her that, down in the mailroom, they didn't think much of the chairman -- thought, in fact, that he was kind of a grouch. To get his goat, they periodically threw out his mail. < -- Materials needed for a meeting of a financial services company's board were entrusted to the mailroom for ''special handling.'' The meeting arrived; the directors' mail did not. Hard words were exchanged. The next time board members met, the same thing happened. It's still a mystery why. Such mishaps are funny, of course, until they happen to you, and the odds of that go up as the education and skill level of mailroom workers sink. A generation ago buttoned-down young men like J. Pierrepont Finch, hero of How to Succeed in Business Without Really Trying, began their rise to the top in mailrooms. Basements were the business schools of their day. Look in one now: Nobody's singing. When companies stopped seeing the lowest starting level jobs as a source of future talent, employees started seeing those jobs as dead ends. ''No one wants to be a career mail clerk,'' says Salvatore Stabile, who ran E.F. Hutton's mailroom before joining Choice Courier, a management services company that manages other people's mailrooms. ''It's difficult work. The pay is at the low end. You get the immigrant, the dropout, the person who doesn't want to take responsibility.'' MOTIVATING these workers is an essential step to setting mailrooms right, and managers like Ed Meyers, whose staff of 81 delivers mail for the University of California at Los Angeles, have found ways to do it. Ask him how he improved mailroom morale and he stops you cold: It isn't a mailroom, it's a ''mail center'' -- workers found that name less derogatory, more professional. Besides renaming his department, Meyers designed a crisp logo and dressed employees in uniforms that display it. He also began measuring productivity. ''If you don't,'' he says, ''you're going to be stuck with the status quo.'' Compared with 1985, when he took over, the center handles 23% more mail (45 million pieces a year in all) with five fewer people. Traditionally, if top management thought of mailroom performance at all, it was only when personally annoyed by something: ''Nothing gets me into a company faster than the chairman not getting his Wall Street Journal on time,'' says Philadelphia postal consultant Bob Belz. Now, however, computer software can measure productivity, and mailroom managers are using it to justify the cost of new mail-handling equipment necessary to upgrade service. ''It used to be,'' says Belz, ''that when managers fought for pieces of the company pie, the mailroom lost out: There was no way to substantiate its needs.'' Now managers brandish efficiency reports. By keeping track, they can also charge back mailroom costs to departments that incur them. What goodies are on the mail manager's shopping list? Sorting machines, bar- coders -- even robots. Bell & Howell sells a self-propelled, mail- delivering robot called Mailmobile, which roams the halls now at Reader's Digest and other companies. It looks like what it is -- a sorting box on wheels. The unit moves between predetermined destinations, beeping to announce its presence. Nonbeeping personnel become fond of Mailmobiles, giving them nicknames (''Norman Mailer'' is popular). The robot justifies its $30,000 price tag two ways: It costs less over time than an employee, and it increases the frequency of mail delivery. Reader's Digest used to offer three mail calls a day; now, six. Before you dream of major reductions in the human element, however, a word of caution: Mailmobiles know where to go by following an invisible chemical trail. Bell & Howell tries to keep that chemical stored off customers' premises to deter pranksters bent on sending ''Norman'' into ladies' rooms or down stairs. Bell & Howell says its unit goes down stairs only once -- very fast. ELECTRONIC MAIL delivery may ease but won't eliminate the mailroom logjam, because electronic blips tend to get printed out at some point and turn into conventional mail. So it's likely that the problems of the past will remain the problems of the future -- cartons marked this side up will arrive and mail addressed to Chicago will arrive in Mexico City (the two have similar zip codes). A few prosaic, cost-saving reforms can produce generous rewards: -- Clean up your mailing lists. Hunter-killer software roots out incomplete addresses. Use even correct addresses intelligently. Sending circulars for lawn-care products, say, to people with ''Apt.'' after their street addresses probably doesn't make sense. -- Stop employee abuse. An audit of outgoing mail at Time Inc. (publisher of FORTUNE) found that employees were mailing credit card, telephone, and utility bills at company expense -- $70,000 a year in pirated postage. Two hundred purple invitations to a private social event of indeterminate nature also were intercepted. -- Educate. ''Everybody dumps on mailrooms,'' says Gary Bailey, Simon & Schuster's mail boss. But in fact many abuses can be traced to higher-ups. An executive at one company had told his secretary to paste 90 cents' postage on all first-class letters. Why? ''They get there faster,'' he said. (They don't.) Consider sending personnel to seminars. The U.S. Postal Service offers some for a nominal fee. Pitney Bowes gives a course on mailroom management for $600 a student. -- Cut overnight express. Customers regularly underestimate what they spend by a factor of three. Consultant Phil Binkow, whose company, PayTech, helps cut these charges, advises seeking competitive bids. Marriott does and saves $1 million a year. Bank of America saves $4 million by comparison shopping and by restricting employee access to air bills. Make sure the things you are sending by courier absolutely, positively have to get there overnight. -- Consider using an outside contractor. Companies that want to manage your mailroom for you include Pitney Bowes, Charles P. Young, Choice Courier, and Archer Services. They may not save you much money (expect no more than a 10% break on what you're spending now), but they do wonders for how well you sleep. ''I pay a flat fee and have no worries,'' says Gordon Satterley, office administrator for Patterson Belknap, a Manhattan law firm using Charles P. Young. One advantage is worker motivation: A messenger or mail clerk working for a contractor can rise to manage one mailroom, then go on to larger ones. -- Capture Post Office discounts. With 800,000 employees, the Post Office has the same personnel problems you do and processes 40% of the world's mail. It delivers in half a day what Federal Express does in a year. It needs all the help it can get and offers postal discounts to companies that presort outgoing mail, add bar codes, or use zip-plus-four (extra digits that direct the mail even more precisely than the basic zip code). What's more, if you help the Post Office, you will feel like a good citizen. You'll free Postmaster General Anthony Frank, former head of First Nationwide Bank, to concentrate on weightier matters, such as whether to issue an Elvis commemorative stamp. ''Do we show the fat Elvis or the thin?'' he asks. ''The fat would need a bigger stamp.''