PARTICIPANTS
Tim Kane, Chris Dauer, James Ellis, John Gunn, Rick Hanushek, Laurie Hodrick, Steven Langlois, Ed Lazear, Charles O’Reilly, Josh Rauh, George Shultz, John Taylor

ISSUES DISCUSSED
Tim Kane, JP Conte Fellow in Immigration Studies at Hoover, discussed his research for his forthcoming Hoover Press book, Total Volunteer Force, that offers a blueprint for Pentagon personnel reform, including the Leader/Talent analytical survey and reform ideas for jobmatching, compensation, and performance reviews.

In this work, Dr. Kane distinguishes the organizational culture of the military from what he describes as nuts-and-bolts managerial practices. He presented analytical survey evidence showing that relative to private sector employees, military employees themselves across the spectrum of rank praise the military’s leadership culture but rate the military’s talent management quite negatively. 

On many dimensions, the U.S. military achieves exceptional quality and excellence. Furthermore the average quality of enlistees relative to average civilians is both high and rising on a number of achievement dimensions. However, personnel costs have doubled between 2003 and 2013, and military pensions contain a type of cliff-vesting structure that many economists believe distort labor supply decisions. Personnel decisions in the military are also highly centralized and follow an “up-our-out” policy with rigid statutory timetables.

Dr. Kane gave a number of examples of bureaucratic anachronism in military compensation policy. For example, according to 2016 pay tables, a captain with 12-14 years of service is paid $1 more per month than a lieutenant colonel with 3-4 years of service. 

Dr. Kane categorized his overall recommendations in the blueprint into “Evolutionary” suggestions and more far-reaching “Revolutionary” ones. Among the Evolutionary recommendations included restoring decentralized command authority for hiring and dismissals, implementing web-based talent management, expanding pay flexibility, and using flexible rankings in performance evaluations to avoid a “grade inflation” problem. The Revolutionary suggestions included restoring service chief authority over promotion timetables, updating the promotion framework, transforming base pay to being about role and responsibility as opposed to tenure, and expanding retirement plan options.

Discussion in the group focused on how these recommendations related to economic theory of centralized versus decentralized decision-making in organizations. The group also discussed empirical evidence on such practices in other segments of the economy, including the corporate and civilian government sectors.