Can the Army be Efficient? Pt 2: The system

The last entry summarized a concept for changing the way the Army does its human-resources management. In short, I proposed moving from the central-planning concept currently in use to a market-based approach in order to increase efficiency, mission capability, and retention or job satisfaction of soldiers. This entry will outline a bit more of how the process could work. Some readers will have ideas that could improve the system or other considerations I didn’t think of; please include those in the comments section.

First, a quick refresher on some of the key tenets of the free-market system: A free-market is composed of individual actors motivated by profit competing for scarce resources which are allocated by price (that's my lay-definition). This is in contrast to a central-planning system in which resources are rationed by planners in accordance with a top-driven master-plan. The free-market system is more efficient than the centrally-planned system because individual actors have more local knowledge of their needs than does the central planner. To use Thomas Sowell’s example: A gas station owner on a street corner has more knowledge about what the locals will pay, when traffic is highest, what refreshments are selling, and etc., than does a corporate strategic planner a thousand miles away. If the strategic planner tries to dictate everything that the gas-station owner does in running his store, the result will be a less-efficient–though undeniably more uniform– and less profitable gas station. The Army has a centrally-planned human resources division. The premise of this series of posts is that there is a more efficient alternative, based on free-market theory.

So. The basis of the system is a personnel-marketplace, similar to what exists throughout America today. In this case, however, the system would be Army-internal, and the pool of potential candidates would come from either existing service-members, commissioning sources, recruits, or draftees, and the information clearing-house would be HRC.

Here’s how it would work: Units would have a budget determined by a number of factors. Individual service members would have records– essentially a resume package consisting of the ORB/ERB and past evaluations–at HRC. Units would post job openings, similar to what happens on monster.com or similar job opening sites. Individuals could contact the units or vice versa about job openings; mutually interested parties (units and service-members) would come up with and sign contracts assigning the individual to a job or range of jobs with a given unit for the contract-specified amount of time and pay. The individual would serve the terms of the contract, and at the end of the contract, the individual could re-negotiate or seek another opening in the Army. The Army could specify a minimum time in service for the individual and mission set for the unit as a general framework.

It’s that simple.

There are some additional refinements for the system, or rather, other considerations.

The only units involved in the bidding/hiring process would be divisions or equivalents. This would be done to keep the administrative competition at lower levels to a minimum, and enable them to fight wars. At the same time, it would give enough flexibility to tactical-level organizations that they could properly employ their local knowledge to compete for personnel. Corps is too high; Brigade is too low. Division looks just right. The current system allows units to request personnel based on their MTOE (Modified Table of Organization and Equipment); however, the actual allocation is up to, again, HRC, to come through and slice out personnel based on Army requirements. With a division- level manning program, soldiers would have visibility on the organization they were entering, stability, and be ensured that they were getting into a small enough organization that they wouldn’t be totally lost.

The budgetary and salary issues become a prominent issue in this discussion. Army personnel are paid on a fixed salary, with fixed benefits depending on their dependents and physical location. Retirement consists of a fixed percentage of the average of the 3 highest years of salary, as shown here, which starts at 50% for 20 years of service and moves up gradually with more years in uniform. This is quite the incentive to stay in the service. How would the free-market system deal with the retirement benefits package? This might be a case where the Department of the Army (DA) supplies funds for the benefits package, or alternatively, the package becomes fixed to rank and years in service regardless of the High 3 earning average. No doubt this would cause outcry from career officers, but it would be an excellent way to put to the test any claims of being in the service for the service and not the money. It would also be equitable from the paying units’ point of view– multiple units wouldn’t have to argue over who paid for retirement of the Colonel or Sergeant Major.

As a practical matter, this would have to be implemented in a phased manner, with units coming on-line in the system in a gradual manner, and individuals prior to the end of their first term-of-service being put under the new system. Current “lifers” have already legally committed to a system, and changing the terms of their current contracts would likely be illegal. This would also remove an institutional barrier against change–namely, the “I’m going to protect my piece of the pie” mentality of people in an organization. Newcomers would have eyes-open to what was going on and would be able to leave or to commit to more time in service.
This also raises the important question of having a draft vs. volunteer force. I believe a draft is a good idea for many reasons, but (and I say this without quantitative studies to back me up) I believe that either system would work equally well in the meritocratic Army-market.

Units would still receive a given mission-set requirement from Big Army and would have to meet evaluation and performance standards to earn a budget. The unit could man itself any way it liked, as long as it could fulfill the mission requirements of its various staff and operational functions. Budgeting would be a combination of evaluated performance from scheduled on-post exercises, Training Center rotations, and surprise/short-advance notice evaluations and exercises. Impending combat tours could be factored into budgeting to allow units to come up to strength– to compete with other units for personnel.

Now we have a system where units are free to work to meet their mission needs, balanced against a reasonable measure of performance, mixed with a price-based allocation system that meets service-members’ needs and avoids the surplus/shortage symptoms of a centrally managed economy. Let’s move on to some effects of the system.

Can the Army be efficient? Pt 3: Effects

I've covered a new idea for the Army's allocation of manpower, moving from a centrally-planned depot system to a free-market system of allocation. Now I'll explore some of the effects of implementing such a system.

A system like this would allow Army units much more flexibility in choosing their soldiers and leadership. The leadership selection would no longer be driven by HRC, and the implied importance of OERs and personal relationships; it would be driven by the units themselves, competing to acquire the best leadership available. This would go a long way to solving a long-standing problem of the military, namely, the ass-kissery so prevalent among Officers and NCOs alike. A bidding system would reduce--though not negate--the importance of subjective evaluations and place those evaluations in a subordinate role to the objective accomplishments of the individual, communicated formally (OER/ORB and enlisted counterparts) and informally (individual and unit reputation, interviews, et cetera).

Sought-after leaders would be the ones displaying the traits necessary to succeed. This would be effected through the public nature of Army missions and assignments. The Army is a relatively small community; there are extensive personal networks in the Army, and every level from individual through corps has a reputation in the relevant arena. For Staff Sergeants to Colonels in this system, reputation as well as job position filled would go a long way in determining worth, which is not something that the current OER/HRC system can necessarily claim. In short, the Army would take a sharp tilt towards a meritocratic method of advancement and promotion, based on performance in assignments.

As an end result, the Army's best leaders and soldiers would be rewarded for doing a good job, and non-performers would be relegated to positions they did passably, or they could opt out of the Army. Recruiting would go up if the volunteer Army remained--the Army would stop being a welfare agency, and instead become an opportunity for economic as well as service-oriented achievement--or a draft could fill slots based on losses. This last assertion is based on a back-of-envelope analysis, but seems to be born out based on why people join the military-- it's not based on service or nationalistic tendencies, but rather tends to be to get away from bad circumstances or get job training. Better opportunities would also equal better recruits joining up.

On strictly personnel-management based grounds, this would have a couple of other effects. Individuals would manage their own careers directly, instead of dealing with the caprices of a branch manager or Army-planned jobs. Organizations would manage their own personnel needs, instead of relying on an HRC which bases personnel allocation on an MTOE that is not always filled, or not always suited to the assigned mission. For an organization that is stretched thin, I know a lot of folks who are in positions that they shouldn't be; this either because there truly is no better place for them in the Army, or because the Army is doing a poor job of personnel allocation. I tend to believe the latter, though because I am not privvy to the HRC databases, my evidence is purely anecdotal.

Budget compliance should also increase. I have seen units purposely blow budgets in order to get more money, immediately or in the following year. This is a good tactic, in the military; but how far would it go in the civilian sector? There are two responses of the parent organization: 1) Go for it! Your division/organization is more important than the other things we have going on, so we'll give you more of our precious resources to execute, and 2) Tough noogies; you spent it, you're done. The Army, because the US is at war and because it is a government organization with access to gov't coffers, tends towards solution #1. This is justified on grounds of winning wars, but instead can frequently turn out to be cover for waste and inefficiency.

How would this system affect mission readiness? Well, if you follow the point of the system, which is that we're looking for the most efficient way to allocate the scarce personnel resources in the Army, then mission readiness and effectiveness would-- at a cursory glance-- increase. I am not sure what metrics to use for this question, although personnel turnover during training cycles and deployments could be one, surveys of army personnel and retention rates would work, and number of "Mission Accomplished" banners would certainly be a large one. Under this system, retention rates should go up as individuals find the units they are suited to, the home stations they desire, and the career experience they want.

However, in the current low-intensity, asymmetrical environment, measuring numbers of Missions Accomplished can be very difficult, particularly 1) in near-real-time, and 2) at the varying levels of operations. Which leads to the next point, covered in Objections, in the next post.

As always, I welcome comments and critique.