Like most military officers, I have experienced my share of frustrations with the current military personnel system (inflated performance reports, risk-averse culture, arbitrary job assignments by a faceless bureaucracy, etc). In this book, I think Tim Kane offers some innovative solutions to these problems that are worthy of further consideration. His core argument is that the problem is not cultural but a structural problem with personnel policy at the center. In order to retain talent, he argues the military must move away from centralized planning to an internal market for officer assignments, taking advantages of market incentives to more effectively measure performance, flexibly manage the force (supply and demand), and accurately match skills with jobs. He makes a compelling case that this fundamental change would be a vast improvement over the current system. However, some things in the book just didn’t sit quite right. First, his argument is built on a survey of the opinions of 250 West Point grads. Sadly, this just comes across as sophomoric and insufficient justification to support such wholesale changes to the system. Second, while he addresses the most common objections to his proposals, I don’t feel he offers an honest assessment of any potential negative second or third order effects (higher costs, retention, impacts to less desirable military installations, a potential return of favoritism and the good-ole-boys club, etc). Third, the statistics given for military officers leaving is largely concurrent with the peak of the fighting in the wars in Iraq and Afghanistan. These were prolonged conflicts with repeated deployments to fight in wars with muddy strategic objectives and limited potential gains. I think he dismisses these factors a little too flippantly based on the responses of those he surveyed. Finally, with regard to writing style, although most applicable to those serving in the military, the book is written to be understood by a general audience. This leads to a lot of explanations of military life and repetition of key points that those currently serving might consider annoying and unnecessarily long winded. Still, these issues aside, I think many of his proposals are worthy of further analysis and I commend the author for bringing so much attention to the problem.
What follows are my notes on the book:
Why does the US military generate some of the finest, most entrepreneurial leaders in the world, but then mismanage them using the most risk-averse bureaucracy possible? Even among active-duty officers there is recognition that the personnel system bleeds talent, externally through attrition and internally through misallocation. The author argues that the attrition rate of the “best” officers has become a crisis in the contemporary Army and proposes an evolutionary step forward (based on classical economics) on how the Pentagon manages its leaders. He calls this solution the Total Volunteer Force which has at its heart an internal market for officer assignments, matching supply and demand rather than the central planning system in place today (4).
As a veteran officer, he believes he is best positioned to address this issue (active duty cannot do so without jeopardizing their careers, and outside observers don’t want to be viewed as “not supporting the troops”).
The civilian sector is ruthless about getting the right people in place and weeding out those who don’t fit. The military bureaucracy takes the opposite approach…officers are almost never fired and seniority dominates the culture. Human capital management in the military is a quagmire, typical of government operations: opaque, inflexible, dominated by seniority over merit, and hostile to change (6-7). The shame of this anti-entrepreneurial bent in personnel management is that it ignores the successful revolution in recruitment when the “all-volunteer force” was implemented in 1973. Military moral and effectiveness returned when the Pentagon began using market mechanisms instead of central planning and built the highest quality force in history (7).
Many officer have tried to change the system (repeating clichés about our need to innovate) but have failed. The author argues that the reason they failed is because the problem isn’t cultural. It is a structural problem with personnel policy at the center. This system operates like a bureaucracy with a unionized workforce rather than a cutting edge meritocracy (10). It is a relic of the industrial era of mass production, treating people like replaceable cogs in a machine. As such, it does a horrible job at matching skills with institutional needs, wasting talent and discouraging excellent people (13).
Since WWII, the military has implemented centralized boards, which eliminated favoritism but also produced negative side effects including institutional hostility to true leadership (like the capacity to challenge orthodoxy, think creatively, and act independently) (17). Under centralized boards, the military sends powerful signals to young officers that there is something of a “golden path” to the top. In carefully planning a career, this forces ambitious officers to constantly change positions in order to check all the right boxes needed to get ahead. Centralized boards have little time to consider complex factors that would fit the skills of all the candidates with the job requirements that need to be filled (23).
It’s convenient to believe that top officers simply have more lucrative opportunities in the private sector and that their departures are largely inevitable. But the reason overwhelmingly cited by veterans and active duty officers alike is that the military personnel system is nearly blind to merit. Performance evaluations emphasize a “zero-defect” mentality, meaning that risk-avoidance trickles down the chain of command. Promotions occur on a schedule, regardless of an officer’s competence so that there is essentially no difference among officers the same age, even after 15 years of service. Job assignments are managed by a faceless, centralized bureaucracy that keeps everyone guessing where he or she will be shipped next (25). The author argues that implementing market incentives will not replace the culture of selfless service (duty, honor, and camaraderie) with a mercenary culture. The military began the shift to free-market forces (better pay and incentives) away from coercion (the draft) in the 1970s and the military maintained its culture. The author argues that implementing similar reforms in personnel management (direct hiring authority, lateral entry, market-based compensation, etc) instead of coercion (centrally managed assignments) will not harm military culture either (26).
The author identifies five core issues: 1) personnel management is centrally planned and managed, 2) promotions are constrained by seniority rules and made arbitrary by box-checking, 3) compensation is almost entirely merit free, 4) assignments do not match jobs with officers very well, and 5) evaluations are ineffective in giving feedback or assessing skills. The author goes on to point out that the military has adapted to this and developed an unwritten method of measuring merit outside the rank structure (specific jobs often count more than rank in determining merit). The military’s up-or-out philosophy thus requires careful management of all personnel along the hierarchical pyramid, meaning the time allowed for an officer to stay in a job is tightly scripted by central planners and officers are prohibited from staying somewhere or developing specialized expertise (highly trained pilots forced to do staff tours or command for example) (29).
The problem at the center of this Gordian knot is how to efficiently match supply with demand. Because time and information available to central planners is limited, their matches are inefficient and sub-optimal. Flexible prices are the only way a market can efficiently match supply (a soldier demanding a price for his skills) and demand (a commander making a competitive bid). For this to work, commanders need the freedom to fire ineffective individuals and the freedom to hire or promote whoever they think is the best fit for their unit (even if it means promoting them ahead of more senior officers) (31-33). He argues this would be a much more effective way to evaluate merit than the shadow method currently employed (box checking, attending professional schools at the right time, earning “distinguished graduate” at those schools, etc) (88). There is no flexibility in the current system. If an officer declines command (regardless of reason) that decision is held against them for the rest of their career, derailing future promotion and assignment opportunities (90).
In the author’s survey of 250 West Point grads, only 9% indicated that deployment cycles and operational tempo were their most important reason for leaving the Army. Almost 75% said financial reasons were the least important consideration. The two factors that emerged were an organizational inflexibility and a lack of commitment to innovation. Specifically, the number one reported reason for separations among the respondents was a limited ability to control their own careers (102-103). When faced with an exodus of officers (like in 2005-2007), the Army responded like a giant inflexible bureaucracy by throwing money at the problem, offering cash bonuses to any officer who would stay. The author argues this merely bandaged the wound and didn’t solve the underlying cause.
Modern military HR is built on four flawed assumptions that can all be traced back to the centralization of power: 1) the generalist assumption, that all officers should have broad experience rather than specialized expertise, 2) the up-or-out promotion system with incessant box checking to make rank (even if officers are not interested in command), 3) a centralized bureaucracy that oversees evaluations, promotions, and job assignments, and 4) standardized evaluations based on one-size-fits-all measures for all officers (125). Since the path to command is so narrow, the struggle to get assigned “key and developmental” jobs is fierce but also a function of luck. As a consequence of the need to check career boxes, officers have traded off career depth for breadth: fewer, shorter assignments. What is lost is the ability to specialize, and those that do are effectively punished. For example, language capacity is very much in demand in the field, but is not rewarded by the promotion system and so remains in critical short supply (126).
The author submits that there is no incremental way to fix the problem, yet that is all that is ever suggested by critics. The system can only be changed by fixing the false premise at the heart of it (i.e. that centralized planning will work if only you have enough data and computer power) (129). Only an internal officer talent labor market can efficiently and effectively resolve the problem. So how would this “Total Volunteer Force” work?
Step 1: Create an internal market for job assignments and promotion. In a market system, demand agents have hiring authority. Local commanders would be given final, but conditional hiring authority. Promotion boards would shift to become authorization (qualifying) boards. Any officer who qualifies could submit an application to a unit (on something like monster.mil). Rank would be tied to jobs. This would solve both the distribution problem as well as force shaping (i.e. if the Army needs to shrink 5% they eliminate the billets and those who can’t get a commander to hire them are let go… [Reminds me of Office Space “We just fixed the glitch”]. This system would eliminate the need for central planners (HRC, AFPC) (136-137).
Step 2: End the use of year groups. By default, a free labor market would end year groups. After a few years, it is experience (not time) that matters. This would also lift the ban on technical specialization and break the up-or-out promotion system. The big effect is that officers would become experts at their jobs, not to mention the potential cost savings from fewer PCS moves (137-139).
Step 3: Open the officer market. In the commercial sector, compensation is a powerful signal of value. Commanders could choose the best allocation of their resources when building their team (do we spend $70K on a sniper or $80K on a linguist, or find someone with both skills for $110K, etc). Since officers could apply to any job, rank would become a two way street (i.e. they could choose to move to a position at a lower rank). Another component would be lateral entry of former military veterans. Finally, end the 20-year vested retirement in favor of a defined contribution plan (401K) (139-141).
The common objection raised is that this sounds all well and good for most jobs, but who would choose to apply for a job in Afghanistan, Diego Garcia, Thule, or less desirable US locales (177). The author argues that a market system would automatically correct this problem. There would be a finite number of positions at desirable locations (Hawaii, etc). The market would eventually work out the problem of balancing demand with supply (178).