State of the Union January/February 2011

Why Our Best Officers Are Leaving

Why are so many of the most talented officers now abandoning military life for the private sector? An exclusive survey of West Point graduates shows that it’s not just money. Increasingly, the military is creating a command structure that rewards conformism and ignores merit. As a result, it’s losing its vaunted ability to cultivate entrepreneurs in uniform.
A Market Alternative

Today’s Army requires a similar philosophical shift if it is to generate more-entrepreneurial leadership and start retaining its most talented officers. When presented with 10 proposed policy changes, the panel of West Point grads was strongly in favor of five, marginally in favor of three, split on one, and strongly against the last. Dead last was reauthorizing the draft instead of the all-volunteer force, a proposal that drew support from only 14 percent of respondents. So what did they think would help?

The Army should start by breaking down its rigid promotion ladder. The most strongly recommended policy, which 90 percent agreed with, is to allow greater specialization. Under the current system, company and platoon commanders are often “promoted” to staff jobs—that is, transferred from commanding troops in battle to working behind a desk on a general’s staff—even if they’d prefer to specialize in a lower-ranking position they enjoy. Rather than take an advancement they don’t want, many quit the Army altogether. Expanding early-promotion opportunities for top performers and eliminating year-group promotions also have strong support (87 and 78 percent, respectively). All of this might be hard to do while maintaining centralized management of rank and job assignments, but three-quarters of the panel favored ditching that system entirely in favor of an internal job market.

Indeed, an internal job market might be the key to revolutionizing military personnel. In today’s military, individuals are given “orders” to report to a new assignment every two to four years. When an Army unit in Korea rotates out its executive officer, the commander of that unit is assigned a new executive officer. Even if the commander wants to hire Captain Smart, and Captain Smart wants to work in Korea, the decision is out of their hands—and another captain, who would have preferred a job in Europe, might be assigned there instead. The Air Force conducts three assignment episodes each year, coordinated entirely by the Air Force Personnel Center at Randolph Air Force Base, in Texas. Across the globe, officers send in their job requests. Units with open slots send their requirements for officers. The hundreds of officers assigned full-time to the personnel center strive to match open requirements with available officers (each within strictly defined career fields, like infantry, intelligence, or personnel itself), balancing individual requests with the needs of the service, while also trying to develop careers and project future trends, all with constantly changing technological tools. It’s an impossible job, but the alternative is chaos.

In fact, a better alternative is chaos. Chaos, to economists, is known as the free market, where the invisible hand matches supply with demand. The Strategic Studies Institute report makes this very point. “Giving officers greater voice in their assignments increases both employment longevity and productivity,” it concludes. “The Army’s failure to do so, however, in large part accounts for declining retention among officers commissioned since 1983.”

Here is how a market alternative would work. Each commander would have sole hiring authority over the people in his unit. Officers would be free to apply for any job opening. If a major applied for an opening above his pay grade, the commander at that unit could hire him (and bear the consequences). Coordination could be done through existing online tools such as monster.com or careerbuilder.com (presumably those companies would be interested in offering rebranded versions for the military). If an officer chose to stay in a job longer than “normal” (“I just want to fly fighter jets, sir”), that would be solely between him and his commander.

Each of the four military branches is free to design its own personnel system, with minimal Pentagon interference. Yet each uses a similar centralized-planning department. It would take only one branch to lead the way by adopting the best practices of corporate America—where firms manage vast workforces by emphasizing flexibility, respect for individual talent, and executive responsibility. During my study, I surveyed ex-military officers at Citi, Dell, Amazon, Procter & Gamble, TMobile, Amgen, Intuit, and countless venture-capital firms. At every company, the veterans were shocked to look back at how “archaic and arbitrary” talent management was in the armed forces. Unlike industrial-era firms, and unlike the military, successful companies in the knowledge economy understand that nearly all value is embedded in their human capital.

I traveled to Silicon Valley to learn about the organizational design of firms there, and also to learn about the talent ecosystem. Nowhere is there a military-style 20-year retirement framework that distorts career decisions, and no one offers the security of lifetime employment. Instead, Silicon Valley attracts talent because it knows the importance of flexibility. Companies, unlike military units, are born and die out constantly, and the massive flow of labor across and within companies is highly turbulent. Not only can ambitious visionaries become top executives in half a decade, but employees can do the one thing they love for decades without worrying about getting “promoted” to management positions they don’t want. In the glassy buildings of Menlo Park, “being all you can be”—whether it’s coding C++, designing Web campaigns, or excelling in some other niche—isn’t just a slogan.

One Silicon Valley executive I spoke with, whom I’ll call Captain Smith, contrasted his time as a Marine company commander with his current job leading hundreds of employees, from software engineers to sales managers. Like other veterans in corporate America, he credits his military training with sharpening his leadership skills. But the analytical mind he uses to devise business models is just as sharp in assessing the military’s inept talent management. What’s the impact of merit on promotions in the Marines? “Virtually none,” says Smith. “On average, the best officers got out; the worst officers got out.” There are notable exceptions, he said. “But the larger trend I observed drives any organization toward mediocrity.”

When I asked him about Silicon Valley’s lessons for the military, he mentioned his firm’s internal market for matching engineers and projects, where the bottom line is that engineers rule. Team leaders have to advertise their projects and try to attract engineers, and it’s uncommon for an engineer to be told what he or she will do. Happier workers mean higher productivity. “I don’t want to oversimplify,” he says. “But this is about incentives and control.”

In contrast, only one in five of the West Point graduates thinks the Army today does a good job matching talents with jobs. And nearly two-thirds agree that using an evaluation system that singled out the best and worst members of a given unit—for advancement or release—would yield a more entrepreneurial leadership. Such a system, popularized by Jack Welch of General Electric, would give commanders better information, and also make personnel ratings a lot more useful than the politically correct write-ups in abundance now. It would also recast the personnel officers as headhunters, focused on giving advice, rather than orders, to job-seekers and to hiring commanders.

I asked Smith—a supremely tech-savvy, gung-ho leader—whether he would consider rejoining if the Marines recruited him to serve as a general officer, perhaps to command their cyber-security efforts. I anticipated that his resolute willingness to serve would offer a vivid contrast to the military’s closed-mindedness. But he surprised me. He thought quietly for a minute. Then, shaking his head, he said something much more damning: “I can’t see it,” the Silicon Valley marine said. “Even if they made that offer … I have no confidence that I could pierce the bureaucracy.”

Tim Kane is a senior fellow in research and policy at the Ewing Marion Kauffman Foundation and a former Air Force intelligence officer.
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