Air University Review, September-October 1978

RMS 1977--Encouraging Management
Growth and Productivity

The goal oriented individual is most likely to reach his potential under management or supervision concerned basically with objectives, permitting him to make his own decisions about risks. The task oriented individual is more comfortable with an organization which practices management by controls, seeking to manipulate his behaviour including his personal motivation and judgment.¹

Air Force publications repeatedly proclaim a requirement for goal-oriented as opposed to task-oriented people. Recent articles encourage implementation of management by objectives (MBO), while Frederick Herzberg develops orthodox-job enrichment at Hill Air Force Base, Utah, and commanders talk about increasing productivity through motivation. In this frenzy to improve job satisfaction and productivity through numerous behavioral science techniques, the basis for any enrichment program is being overlooked. On one hand the Air Force says that base level managers are responsible for resource consumption, but on the other hand managers are denied the decision authority to distribute resources for obtaining the goods and services necessary to do the job.

The manager must control the allocation of resources within his area of responsibility before he can be motivated by job enrichment or management by objectives. The fundamental principle of any job enrichment program is the trust of higher authority in the manager. This trust tells the manager that he controls his resource input and must make decisions involving risks.

Since the implementation of Project PRIME (Priority Improvement Management Effort), we have moved through the base accounting system for operations and entered into resource management at base level. But lower level managers are still starving for authority to make decisions concerning resource allocation. Now this decision authority is limited to the control of resources for TDY, supplies, and equipment, while really important decisions are centralized. Although we talk about resource management at the lowest level, resource allocation for specific requirements is slowly, but continually, elevated to higher levels. We seem to be at the crossroads of our resource management travels. Should we continue to centralize or reverse the trend and decentralize resource allocation decisions in the spirit that popularized the resource management system (RMS)?

We can go either way, but much will be sacrificed if the trend toward centralization continues. First, people in the Air Force want freedom to do their jobs; they do not want to be overly controlled. This freedom must start with the authority to determine resource allocation for specific purposes and could be the basis for job satisfaction. Second, Air Force efforts to improve worker motivation and create an enriched job environment would be blunted. How can you establish MBO if the manager does not control the resource input to achieve his goals? The USAF leadership and Management Development Center teams are aggressively frying to increase productivity by improving communication and worker satisfaction; however, managers are not trusted with decisions concerning the basic input to performance, resource allocation. Finally, an evaluation of a manager's performance based on effective use of resources will not be meaningful. Even now this basis for evaluation is questionable because base level Air Force managers are limited to TDY and supply management, while other decisions are centralized. Considering this limited scope of responsibility, we must stop the rhetoric about measuring a manager's worth based on his judicious use of scarce resources.

Centralization is not all bad. When resource allocation is controlled at a high level, redistribution processing is easier and quicker. For example, most major commands manage purchases of equipment costing $1000 or more. Base level managers submit justifications to purchase equipment items, and major commands evaluate the relative importance of the requests from all bases. Authority to purchase is distributed to each base for specific equipment. This procedure enables the major commands to monitor all equipment purchases at each base and quickly redistribute funds if required. If one base identifies a sudden important requirement, the major command can either provide money from reserve funds or withdraw funds from another base.

Centralization appears to be efficient because immediate, far-reaching decisions can be made and implemented in a very short period of time. However, the principal limitation of centralization is the perception of base level managers. They feel that everything is programmed, and higher level authorities do not trust them to make decisions. As a result, the manager loses interest, feels manipulated, and resists superficial job enrichment approaches. Decentralization tolerates a slower decision and response process, but the manager is given maximum authority to determine resource allocation for his needs. It provides the manager with a complete "piece of the action." He can program inputs, monitor progress, and evaluate the outcome. This control factor encourages him to use feedback for improving his work environment.

In addition to centralization, resource managers' responsibilities and authority are being transferred to a proliferation of councils and committees at base level. These include the Utility Conservation Board, Work Order Review Panel, Facility Review Board, Vehicle Utilization Council, Communications-Electronics-Meteorological Board, etc. Committee meetings consume valuable time and usually do not effectively achieve the purpose.

There is little relationship between management of specific resources and consumption of dollars by the manager. For example, the Utility Conservation Board meets monthly at most Air Force bases. During the meetings, many issues are discussed, and utility consumption for the previous month is thoroughly reviewed if meaningful conservation measures are recommended by the committee, very few are effective because there is nothing to bind individual managers. It seems that only mandatory decrees by the commander reduce utility consumption. So the time wasted by 10 to 15 people at Utility Conservation Board meetings does not change a thing.

These time wasters can be prevented by simply tying resources to dollar consumption by each manager. Then there would be only two principal meetings on base, the Financial Management Board and Budget Working Group. These committees would determine the allocation and distribution of scarce dollar resources. Then each manager would be required to prioritize his needs and purchase until his funds are exhausted. By tying all consumption to the dollar, managers would start making the decisions now imposed by committee, and the dynamics of the marketplace would regulate consumption.

There is still another important factor in the "responsibility for resource allocation picture." This factor could be called the "free issues" to base level Air Force managers. It is the base level manager's support in goods and services that is subsidized by the "big pot" of unlimited resources at a higher level. The manager may see this as a relief valve because he does not spend his resources to obtain the benefit. He can abuse priority systems, waste valuable assets, or overorder because he is not accountable for the costs. This factor also complicates an evaluation system for a manager based on his use of resources. He may manage the resources he buys, but those free issues are not translated in terms of dollars and are rarely managed at the consumption level.

Would government vehicle abuse be reduced if managers and squadron commanders had to pay for repairs from their resources? Would telephones be moved each time there was a small organization change if the manager had to pay? Would managers evaluate their personnel resources more closely if they were accountable for the military pay costs of manning assistance? The conclusion is the same for each question. If managers were required to pay for everything, waste would be reduced.

There seems to be a twofold problem. On one hand managers feel that they are not trusted with important decisions. They do not have the authority to allocate resources required to perform their tasks because many decisions are made at a higher level or by committees. On the other hand managers abuse free issues because these resources are regarded as unlimited; the consumption is not considered in terms of dollars from their budgets.

How can these problems be solved? Let's start by giving base level managers more authority over resource consumption. In Frederick Herzberg terminology, the job should be enriched to provide real satisfaction. Relate the use of any resource in the work environment to consumption of limited dollars, and ask the manager to make the choices. This is the only environment for real management because nothing is free, and the manager must determine relative importance through the function of supply, demand, and the ability to pay. So now let's look at some environmental changes necessary to facilitate this process.

Air Force managers receive "free" data automation support, so there is no reason to feel that this is a scarce resource. Customers are careless and frequently ask for support they do not need. Listings are prepared in too many copies, programs are rerun because of overlooked input errors, and unused products are prepared because customers have not changed requirements. Managers must become aware of this high-cost service and realize that it should be conserved. This goal can be achieved by selling data automation support to the customers.

Data processing installations could easily fit a buyer/seller relationship. Remote terminal time and costs would be accumulated by the computer and provided to customers on a daily basis. Daily, monthly, and quarterly processing costs would be accumulated by standard rates based on the computer time required. At the end of each month, customers receive computerized bills for expenses incurred during the period. Ideally, the data automation installation at base level would become an industrial fund activity with invoices processed through the accounting and finance office. This procedure places data automation on a self-supporting basis and encourages managers to conserve because it costs money from the operations and maintenance budget.

Administrative reproduction is another free issue. Everyone gets administrative support at no cost, and little attention is devoted to preventing abuses. Managers are encouraged to get more copies than required, and unnecessarily urgent priorities are established. This resource would also be conserved if managers had to pay for it. For example, rates should be established for each type of work order with an increasing sliding scale for higher priorities. Priority one may cost an additional $10.00, while priority four would not have any added expense. This procedure encourages managers to review their resources and requirements thoroughly before ordering reproduction services. They would also be interested in planning ahead to avoid the expense of using high priorities; however, the priority system would be available for those really urgent jobs.

Managers already pay for TDY per diem and travel costs. But what about the use of government vehicles assigned to organizations? These are free issues, and vehicle abuse is a major problem. Wouldn't it be much more sensible if the manager paid for vehicles as rental items and vehicle abuse resulted in additional costs? Besides placing resource consumption in the proper management area, dollars would become the input for management decisions. The vehicle operations and maintenance areas of transportation also seem like naturals for industrial funding. The equipment would be capitalized and the services sold to base managers. This procedure adds to the manager's responsibility and encourages him to conserve because the dollar savings could be used in other areas.

Resource managers also need to get more involved in the civil engineering (CE) support they receive. Now, the priority for CE work orders seems to depend on a combination of panel actions and the discretion of civil engineering plans and programs. The manager who wants work orders completed has very little control over the process. He can attend the Work Order Review Panel meetings and advocate his requirements; however, he is not managing this resource. Someone else is doing it for him by establishing priorities and distributing the civil engineering minor construction effort through the in-service work plan.

If the principles of RMS are applied, managers of significant resource centers should also be responsible for the consumption of the civil engineering resources that support their organizations. The manager judiciously reviews civil engineering work orders and weighs them against other priorities. If he has the funds and believes that the work is needed more than other things (opportunity costs), he submits the work order and pays for the services from his budget. The controlling factor is scarcity of funds, not an arbitrary determination of the Work Order Review Panel.

Besides giving the manager more control over the factors that affect his work center, the preceding examples of environmental changes save personnel costs associated with conducting committees and panels to make the decisions that should be part of the manager's job. They could be implemented through the RMS expense distribution to cost centers concept or by capitalizing the functions and establishing industrial funds. The industrial fund concept seems optimal because there would be a recognized buyer/seller relationship between customer and provider. As industrial funded activities, the seller would possess the capability to accomplish the work, while the manager could only obtain the service if he had the required funds.

So let's give the manager this authority by first reducing all input resources to the lowest common denominator, the dollar. Provide the money to the manager through the Financial Working Group and Financial Management Board process. Then ask him to make decisions concerning allocations of scarce dollars on goods and services required to do the job. In essence, make the manager buy everything he needs. Resource consumption is then regulated in a natural way through supply demand and the ability to pay, and the manager will regain the authority to determine his productivity. Now, the basis has been established for real job enrichment because the manager has a complete "piece of the action."

Note

1. Everett C. Hughes, Social Psychology at the Crossroads (New York: Harper and Brothers, 1951), p. 38.

Major Barry D. Guyse (M.S., University of Southern California) is the comptroller at Aviano Air Base, Italy. Most of his Air Force service has been in the resource management field. Other assignments include accounting and finance officer at Clark AB, Philippines, and RAF Bentwaters, England. A lieutenant colonel selectee, Major Guyes is a graduate of Squadron Officer School and Industrial College of the Armed Forces and a Distinguished Graduate of the Professional Military Comptroller School and Air Command and Staff College.

The conclusions and opinions expressed in this document are those of the author cultivated in the freedom of expression, academic environment of Air University. They do not reflect the official position of the U.S. Government, Department of Defense, the United States Air Force or the Air University.

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