Furlough Folly

By Delaying Pain, DoD Leadership Fails

(DEFENSE NEWS 28 JUL 13) … Michael Cadenazzi and Chris Daehnick

The slow motion, completely avoidable and politically unstoppable impact of sequestration will bite hard in coming weeks as one of its many anticipated horrors takes hold — specifically, reductions in spending that will furlough federal employees across the Department of Defense.

Despite the rhetoric, furloughs tangibly demonstrate that DoD leadership is more concerned with loyalty than improving performance — in the Pentagon and across the defense system.

The decision to exempt DoD personnel accounts, and thereby minimize the impact on active duty personnel and their families, was well received. But in cascading fashion, it added to the pressure on investment and, primarily, operations and maintenance accounts where defense civilians are funded.

Ultimately, a determined secretary of defense and senior leadership found additional savings across the department that not only avoided the need to fire civil servants in any tangible numbers, but also reduced furlough days from 22 to 13 and finally to 11.

While the department succeeded in this, there is one problem: A furlough is a terrible idea, but not for the reasons commonly discussed.

Setting aside the “logic” of sequestration itself (a political issue above our collective paygrade), the hard reality is that the decision to furlough, instead of actively reducing the size of the civilian force, reflects the broken nature of department decision-making.

In an attempt to minimize, and spread out, short-term pain, it runs the risk of causing deeper long-term problems, flies in the face of good business practices, and passes up an opportunity to make strategic improvements to the department.

Certainly, furlough days without pay hurt civilian employees and their families. This is reflected in reported frustration and morale declines across the workforce. This can hardly be good for DoD performance. Yet, clearly for civilian workers, it would be far worse to not have a job at all.

All things being equal, civilian employees will have gotten off easy compared with workers in other industries amid a downturn. Cold comfort, to be certain, but something to keep in mind given the experience of the national economy over the past five years.

The worse news is that with a furlough, you idle civilian employees of all abilities while protecting the employment of the bottom 10 percent (assuming that is roughly the amount that must be cut).

Add reductions on use of your best staff to the aforementioned morale issues, and you get a toxic mix at just the time when budget-tightening requires improvement, not the opposite.

Granted, DoD is not a commercial enterprise either in terms of human resources practices or organizational objectives. Politics being what they are, there’s a strong incentive to “preserve” jobs. An office-by-office “Chainsaw Al” or “Neutron Jack” approach to change management is neither likely nor appropriate.

But it’s hard to give credence to arguments that after DoD’s expansion of the civilian workforce from 650,000 in 2001 to 777,000 this year that there are no unnecessary positions or people who should not have been hired.

Reductions in force are not easy and will be unpopular. But taking the ostrich approach to avoid this major leadership challenge is an abdication of responsibility. The decision to furlough instead of fire stands in sharp contrast to DoD rhetoric and objectives about cost savings and improving business practices, and undermines the department’s credibility.

Take the Better Buying Power initiative by the undersecretary of defense for acquisition, technology and logistics, an effort to improve defense purchasing in light of tightening budgets. The nature of the defense industry is simple: It is a monopsony, with one buyer and many sellers. As a result, the commercial defense market takes its cues directly from the Pentagon.

If the Pentagon itself cannot effectively improve performance and cut costs at the low end of its personnel pool, there is small likelihood that industry will improve its efficiencies at the cutting edge of military technology and manufacturing.

Reports indicate that, unlike the President’s Budget Request (PBR) for FY14, the FY15 PBR must take into account the impact of sequestration, and presumably more civilian employee impacts. Having now set a precedent, DoD leaders will incur additional bureaucratic, morale and political penalties when they must inevitably shift from “keeping faith” to substantially “shedding capacity.”

Instead of getting ahead of this challenge, furloughs represent an organizational management decision that makes the short term worse and fails to deal with the long-term challenge.

Bad news for a department that aspires, and may need, to do more with less.

Michael Cadenazzi is a former U.S. naval officer and founder/CEO of VisualDoD. Chris Daehnick is a retired U.S. Air Force colonel and COO of VisualDoD.

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