Once Again . . . A Moment Ripe for Change

By Vice Admiral Bill Moran, U.S. Navy

Milton Friedman, “Why Not a Volunteer Army?” New Individualist Review , Spring 1967

Opportunity availed by merit, increased autonomy and freedom, and earned trust in our institutions have long been driving forces for American progress, both economic and military. It wasn’t always this way, of course; it took many decades for our military finally to promote officers based on selection rather than tenure and another two generations to move courageously to an All-Volunteer Force. This progress was usually the result of spirited public debate by political leaders, scholars, and concerned citizens alike who leveraged America’s competitive advantages in response to the challenges of their time. Today, national demographics, social norms, and our knowledge economy continue to evolve, while our current systems to identify, groom, and retain talented Americans for national service may again lie locked in the assumptions, policies, and statutes of a previous era.

The next Congress will likely take on a new debate centered on modernizing current military pay and compensation in an effort to reconcile economic and national security, while still keeping national service rewarding for those who choose it. This debate will provide an opportunity to consider not only the restructure of benefits and retirement packages but the very way we access, retain, and reward talent. With looming decisions ahead of us as the prospect of another round of sequestration nears, now may be an opportune moment for bold action.

‘A War for Talent’

If the past 13 years taught us anything about the American spirit, it is that our most youthful generation in this volunteer force gets it. Officer candidates are breaking records for admission standards at our service academies, and our high-achieving recruits stand with the best entering cohorts in our nation’s history. In the cauldron of combat they are proving their mettle in ways that remind many of our Greatest Generation. Leading their peers (and sometimes their seniors), they often present creative solutions to our most vexing operational and even foreign-policy challenges, demonstrating the power of autonomy, opportunity, and trust where it matters most.

So, as we admire what this generation is accomplishing in service, we might miss the structural conditions of our profession that cause some of our brightest to leave. While our career paths offer significant and attractive authority early in young careers, that steep responsibility curve flattens while officers wait their turn for milestones like department head or as a new executive officer. Their peers working on Wall Street and Main Street may have marveled at their amazing responsibilities when the stakes were highest, but as each civilian and military cohort matures into their middle years, their latest stories of authority, entrepreneurship, and reward for creative thinking may appear to diverge. Although we don’t aspire to be a business, our military often looks to the competitive results of industry to acquire an edge in gaining efficiencies, valuing production chains, and understanding risk. So, too, we look to the talent-management movement—a volatile portfolio of promise—while technological advances and capital outlays remain relatively stable. What institutions are finding is the hidden profitability right before their eyes—their people. Companies scan their ranks for ways to groom, value, continually educate, and challenge their rising generations of leaders, working to keep them close.

For almost 20 years, consulting firms like McKinsey & Company have predicted a “war for talent” based on an exponential need for highly skilled employees and changing demographics, while lower-skilled workers are shed or face wage stagnation due to a global redistribution of tasks and automation. With full employment predicted by some in the next two years, high-potential people will find and demand even more choice in their means of employment. 1 And as this generation teaches us, it’s not just about the money. How they are valued, their purpose, and the quality of co-workers all matter greatly, as do, by extension, the career and life choices institutions offer in the quest to retain them. Without a doubt, these trends will affect our quality of recruitment and the vastly different talents we strive to retain.

A Changing Economy

The All-Volunteer Force was a bold leap, the product of great deliberation by political leaders, military officers, and public intellectuals like Milton Friedman. It was a calculated signal of faith in the inherent competitive marketplace of young American adults to provide adequately for national defense. During this last revolution in military manpower, much of the debate for ending conscription rested on capitalistic competition and the freedom to choose, or as Friedman envisioned, “making conditions of service more and more attractive until the whip of compulsion fades away.” 2

As the industrial age waned, so too did some of the reasons behind the basic assumptions of our military’s human-resources management, which even the authors of the All-Volunteer Force knew would have to change. The military was then often a candle for technologies and methods that lit the fires of industrial production. Today our military may be seen as an island, perhaps less critical to the strength of American business and more reliant on the technologies and platforms of the information age. It is an island that an increasing number of recruits enter from extended military bloodlines, which widens a troubling civil-military divide and further separates it from the nation. It is an island, too, of closed-loop, linear career progression amidst a shifting global economic sea. 3

Pay differentials leaning in the military’s favor, gained from needed parity increases of the past, as well as gold-standard healthcare programs and stable retirement packages all worked to make this island more attractive, especially during a post-recession transition period. All of this is mere relative motion, however, as the civilian marketplace “learns”—placing more burdens on employees to learn new skills quickly and catch up to the speed of change. Since the recession of 2008, sources of employment that provide stable wages have changed, moving away from manufacturing and construction and toward more technical services, healthcare, and specialized processes. 4 Corporations increasingly note the lack of skilled labor available to fill these needs, especially those produced at the community college and technical trade-school level, finding current regional talent pools wanting. 5

We now try to make sense of what may be a retention bubble as civilian wage growth moves higher in a war-weary nation. And we prepare possible retention levers to adjust, yet we find that our old measures like simple unemployment figures aren’t adequate to predict future behaviors. Further, our pay and retirement systems, so attractive in the past few years, may end up swinging behind the pitch, offering neither the competitive edge nor the mobility that will entice high performers to stay or to allow them to leave and then return. The predicted “war for talent,” perhaps partially delayed by a deep recession, has finally arrived on our military island, where the ocean of change rushes past once again, but in a direction not nearly as advantageous as the last six or seven years.

A New Opportunity

To be clear, we’ve seen this movie before. Drawdowns and surges are part of maintaining a military that serves a democracy striving to balance national security with economic security, and America’s sinusoidal resourcing curve for defense is well known. Even between our largest wars, our long-standing challenge in creating national efficiencies has always been to understand the quality within the quantity of our people being shed. Today, in a military of ever-greater demand, yet bound to grow even smaller, more specialized, and higher skilled, just as Friedman predicted, we still have neither the enterprise-wide metrics to measure nor the tools necessary to nimbly and flexibly shape our force in terms of quality rather than quantity. It is there, with our peers in industry (enablers and partners, to be sure), where we compete for the differentiated talents of America.

What business does not face as directly as our military (although certainly exposed to its risks) in this changing operational environment is the specter of sequestration nor the same limitations in dealing with it. Without question, the age-old debate between force structure, operations and maintenance, and our people will emerge again. And although we will all agree that our people are our most vital resource, they are also our most fungible—an easy trade in the “near” years of program execution, accompanied by the promise to recover much later.

We should look at this challenge with fresh eyes. A bold argument could be made for needed modernization of the All-Volunteer Force in concert with the end-strength, pay and compensation, and retirement reform debates that surely must follow. In fact, those individual debates should be united—just as personnel management policies, organizational design, and compensation are linked inside the labor marketplace in which we all compete for talent. As the Military Compensation and Retirement Modernization Commission makes its recommendations to the President in February, and a new Congress takes up their hand, sorting the most pressing issues of our nation, the time could be right to offer potential solutions for the strategic future of our force in ways much deeper than mere quantity.

Taking fuller stock of the social and economic changes only briefly summarized here, we might then stake out the first principles of an argument for an offense-in-depth: How might our All-Volunteer Force not merely weather the sequestration storm but leverage its tremendous strength to evolve into an even more capable and ready military based on quality. These principles align with our past successes, exploit our structural advantages, and plot a steady course, using lines of bearing provided by today’s public intellectuals and, most important, our youngest uniformed generation now growing into senior levels of responsibility for our nation.

Maintaining A Quality Force

Principle 1: Knowing Our Strengths, Further Revealing Our Advantages. When considering the driving forces of change, it’s easy to see an increasing reliance on inherent structural advantages of America—found in the country’s beginnings—that allow people to maximize their potential. Should we not design a personnel system that further encourages competition and rewards achievement with more challenge and greater authority, earlier? Should it not enable mobility and the opportunity to serve in more than just a linear path? A strategy for our people should match the values of those people, and there is no better place to look than our youngest generation for important lessons: the power of choice, opportunity, and of teams comprised of what Netflix famously referred to as “stunning colleagues”—or what we readily call brothers and sisters in arms. 6

We should further consider the patience we expect from this generation when it comes to achieving greater responsibility faster, especially in an improving economy. Legislation such as the Defense Officer Personnel Management Act of 1980 updated but maintained the “up or out” selection process established just after World War II. This was certainly a significant improvement over the “waiting for dead men’s shoes” approach of upward mobility, yet it is constraining in its “failure of selection” language and limitations of “control grade” populations (O-4 to O-6), which the services have parsed into policy mechanisms, setting promotion by heel-to-toe year groups instead of by attainment of certain milestones. 7

Milestone-based advancement, for example, might allow officers and enlisted side-ramps to service, applying for positions based on education and experience gained in commensurate, upwardly-mobile “cylinders” of expertise in civilian life, such as cyber-security. Think of the value both individuals and institutions would gain if high-performers felt free to leave the service in order to join a consulting firm or other parallel employment, and then return in uniform with greater responsibility? 8 Relaxing some of the restrictions accompanied with entering and re-entering service such as year-group designations and more creative use of active and reserve component career flows may allow us to cast deeper into otherwise hard-to-reach American talent pools.

Principle 2: Centralized Resourcing, Decentralized Force Management. Our Navy rises and falls with the successes of our command teams in the Fleet. What if commanders could tailor learning through a virtual means, resulting in preparation for advancement exams that better measure the ability of sailors to perform the duties they will see in combat? Imagine if commanders could schedule advancement exams—delivered electronically—when they saw fit. Further, what if those exams and training materials were continually updated as platforms and systems were designed, connecting resource sponsors, systems commands, and type commanders? A centralized content, more decentralized approach to learning is on the horizon, which will conserve resources and feed the competitive nature of our people in a way that builds better warfighters. Decentralizing authorities to differentiate talent and invest in our people begins in the hands of our commanders, at all echelons. The inherent trust we extend to them in combat must evolve into our enhanced confidence in building our force for the future. We should work to put the “bureau” out of business, becoming more of an “agent” between sailors and commanders who could then market themselves and their requirements using a single, transparent, information technology–driven medium.

For example, one of our challenges today is officer “over-execution,” where we pay for a greater inventory than needed to fill the billets authorized to make up for extensive losses incurred after minimum service obligations are complete. What if we were to positively identify our top 20 percent of officers and had the ability/flexibility to offer a two-year civilian graduate education of their choice, in residence, for an additional five years of service? What if we empowered our type commanders, immediate superiors-in-command, and commanding officers with authority to make decisions about bonus pools, minimum-service requirements, and education opportunities, monetizing choices into a competitive market to retain the talents they desire? Some, if not all, of these ideas might help us tap the capacity of our talented people and maximize the decision-making judgment accumulated by our commanders.

Principle 3: Extending Trust, Creating Balance, and Ensuring Stability. What unites successful leaders across generations is trust. In many cases, trust starts with demonstrated competence, transparency, and an obvious and active interest in creating value and goodwill. A more transparent personnel management system, which offers more options to serve, creates a market with those options, rewards the most competitive members in an ever-improving meritocracy, and is easily explainable to all in plain English will go a long way toward building and maintaining trust.

Sailors yearn for stability and balance in their lives: more stable opportunities to progress and greater balance in the speed of that progression, from sea to shore and back. Balance also comes in the form of choices about how to serve and pursue dreams at the same time—not to “have it all” but rather to “do it all.” A regimented, narrow-straits career path that does not allow for significant flexibility, which could include sabbaticals, exit and re-entry, transitioning from active duty to reserve and then back to active, serves no one well and leaks vital talent.

We’ve experimented with ideas to open what is essentially a closed-loop human-capital system in our Navy. Initiatives like the Career Intermission Program (CIP) allow women and men to take a partially-paid sabbatical to start and build a family, work on a doctorate, or explore the world in return for additional years of service. Yet, as of this writing CIP is a limited pilot, constrained by law to only 20 officers and 20 enlisted each year. It is further limited by excluding those on career-skills retention bonuses or serving under minimum-service obligations—meaning, for example, that we cannot offer this opportunity to the large numbers we are most interested in retaining. CIP certainly isn’t the only answer or necessarily the best one. Listening to our Fleet, including women who are leaving the Navy at double the rate of men, often encourages us to make better business decisions about our return on investment, with an approach that does not challenge the realities of nature.

Founded On Conviction

All of these initiatives strive to make our nation’s business plan of freedom, equality, and opportunity also work for our military’s competitiveness in an information age. But the individual ideas and “what ifs” are not meant to be all-inclusive—nor are they necessarily new. They are merely a call to further the proper study of all means of national defense, centered upon our people, and leverage the forces of sequestration to our larger advantage. The next two years may be our best opportunity to modernize our military personnel, pay and compensation, and retirement policies all at once, using quality as the denominator rather than mere measures of quantity.

We could do far worse than the studied and passionate approach of our forefathers, who eagerly engaged in hearty discussions about personnel reforms they saw so critical to the progress of their military then—and are just as important in impact to us today. Our current, possibly narrow window of opportunity in the next Congress will again require the voices of leaders from all persuasions, civilian and in uniform, to widen and insert a discourse informed by today’s social and economic realities. The one constant of national security that binds us and bridges our military island to civil life is our people. There’s no more essential a subject to consider, no more enduring function of civil-military relations, no more worthy debate than one about those who have served, are serving, or may one day serve our nation.

As the time again nears for earnest discussion about what kind of military our nation requires as our world of increasingly complex threats and grave fiscal pressures force tough decisions, we might start best by reviewing, and continually renewing, those same principles of competition, decentralized authority, and extended trust that have served us well for over 239 years. If properly nurtured and leveraged through holistic policy change—and better attuned to evolving social and economic forces at work—these founding principles will continue to provide the talented, courageous edge America has always counted on for its bright future.

1. Gad Levanon and Bert Coljin, “Not Enough Workers,” The Conference Board , September 2014.

2. Milton Friedman, “Why Not a Volunteer Army?” New Individualist Review , vol. 4, no. 4 (Spring 1967), 4.

3. Katie Helland, Joint Advertising, Market Research & Studies , “New Recruit Survey: Wave 3,” Report No. 2014-09, August 2014, 7, http://dmren.org/static/document_library/2014-08-22/NewRecruit_Fall2013_... .

4. Jeremy Ashkenas and Alicia Parlapiano, “How the 2007­–8 Recession Changed the Economy,” The New York Times , 6 June 2014, www.nytimes.com/interactive/2014/06/05/upshot/how-the-recession-reshaped... .

5. Jim Tankersley, “America’s top execs seem ready to give up on U.S. workers,” The Washington Post , 11 September 2014, www.washingtonpost.com/news/storyline/wp/2014/09/11/americas-top-execs-s... .

6. S. Chris Edmonds, “Netflix’ Unique Culture, Beautifully Defined,” The Purposeful Culture Group , 23 August 2010, http://drivingresultsthroughculture.com/netflix-unique-culture-beautiful... .

7. Peter Schirmer, Harry J. Thie, Margaret C. Harrell, Michael S. Tseng, Challenging Time in DOPMA: Flexible and Contemporary Military Officer Management, RAND, 2006, www.rand.org/content/dam/rand/pubs/monographs/2006/RAND_MG451.pdf .

8. Reid Hoffman, Ben Casnocha, and Chris Yeh, The Alliance: Managing Talent in the Networked Age , (Harvard Business Review Press, 2014).

Vice Admiral Moran is the Chief of Naval Personnel.


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