THIS ISSUE

Financial

Management

for the

21st Century

Financial

Management

for the

21st Century

Changing of the Guard

RESOURCE MANAGEMENT

RM

1st Qtr 2001 PB-48-01-1
2 First Quarter 2001

A message from the Principal

Deputy Assistant Secretary

of the Army (FM&C)

Erin J. Olmes

What exactly is ìcertification?î Certification is test-based proof that

an individual meets the standards of a specific profession. Earning

certification means joining the ranks of professionals who have gained

recognition and respect in their fields of expertise. Within the Department of Defense, it is an important step toward improving the quality of financial management.

Professional certification is a useful measure of the talent and skills of our financial management

careerists. It is built around the need for continuous improvement. We have many FM-focused

professional certifications to choose from, including these:

Certified Government Financial Manager (CGFM). The Association of Government Accountants

(AGA), a professional association whose members include accountants, auditors, budget analysts

and others, sponsors the CGFM. Certification comes after passing an examination that includes

concepts and practices regarding the governmental environment, governmental accounting and

budgeting, and governmental financial management and control. Visit them at www.agacgfm.org.

Certified Management Accountant (CMA). The Institute of Management Accountants (IMA) offers

the CMA to candidates passing their examination on economics, finance, management, financial

accounting and reporting. More information is available at www.rutgers.edu/accounting/raw/ima/

ima.htm.

Certified Public Accountant (CPA). This is perhaps the most familiar certificate in our business as

well as a most prestigious recognition in the financial management field. Certification is offered

through the American Institute of Certified Public Accountants (AICPA), at www.aicpa.org/

index.htm.

Certified Information Systems Auditor (CISA). The Information Systems Audit and Control

Association (ISACA) sponsors the CISA certification for those who audit information system

standards, control practices and information systems security. Their Web address is www.isaca.org.

Quality Auditor and Quality Technician Certification. The American Society for Quality (ASQ)

offers these two certifications, among others, that are becoming of interest to a growing segment of

the CP 11 community. Visit www.asq.org/standcert/cert.html.

Certified Fraud Examiner (CFE). Administered by the Association of Certified Fraud Examiners

(ACFE), the CFE program is an accrediting process for individuals with the specialized skills necessary to detect, investigate and deter fraud. For more information, go to www.acfe.org.

Certified Defense Financial Manager (CDFM). This recent newcomer is the first program to focus

on DoD financial management. The American Society of Military Comptrollers (ASMC) makes CDFM

testing available to all who seek to demonstrate proficiency in a broad range of defense FM competencies. The candidate base for this certification is the corps of journey- and management-level

career professionals throughout the department. Applicants need to document certain minimum

mixes of formal education and DoD job experience and pass all parts of a three-part test. Thus far,

DoD-wide, we have over 200 Certified Defense Financial Managers, of whom 49 are Army. For more

information, visit www.asmconline.org/dfmc.html.

Achieving and retaining professional certification benefits you by quantifying your level of

experience. Certification improves your potential for personal upward mobility. Most importantly,

certification states that our financial managers possess the skills, talent and competency to handle

the changing responsibilities and demands being placed upon them.

I encourage each of you to seek CDFM or any of the other nationally recognized certifications

that suit your field of expertise.
First Quarter 2001 3

Resource Management is an official professional bulletin published quarterly and sponsored

by the Assistant Secretary of the Army for Financial

Management and Comptroller. Unless otherwise

noted, material may be reprinted provided the author

and RM are credited. Views expressed herein are

those of the authors and not necessarily those of

the Department of the Army or any element thereof.

RM provides a forum for expression of mature,

professional ideas on the art and science of resource management. It is designed as a practical

vehicle for the continuing education and professional development of resource managers through

thought-provoking articles. Send all correspondence to: DFAS - Indianapolis, Corporate Communications Office, Editor, Resource Management,

ATTN: DFAS-IN/DDC, Col 207E, 8899 E. 56th St.,

Indianapolis, IN 46249-0150. Queries may be made

by phone to DSN 699-1136 or commercial (317)

510-1136. Please send a copy of each submission

to Tony Polzak, SAFM-PO, ASST SEC ARMY FIN

MGT, 109 ARMY PENTAGON, Washington, DC

20310-0109.

POSTMASTER: Please send address changes to

DFAS - Indianapolis, Corporate Communications

Office, Editor, RM, ATTN: DFAS-IN/DDC, Col 207E

8899 E. 56th St., Indianapolis, IN 46249-0150.

RESOURCE

MANAGEMENT

This medium is approved for official dissemination

of material designed to keep individuals within the

Army knowledgeable of current and emerging

developments within their areas of expertise for the

purpose of professional development.

By order of the Secretary of the Army:

ERIC K. SHINSEKI

General, United States Army

Chief of Staff

Administrative Assistant to the

Secretary of the Army

JOEL B. HUDSON

0106003

Official:

DISTRIBUTION: Special

Assistant Secretary of the Army

(Financial Management

and Comptroller):

(Vacant)

Managing Editor,

the Pentagon:

Tony Polzak

Editor,

DFAS - Indianapolis

Ethel McCane

Periodical postage paid

at Indianapolis, Indiana

ISSN 0893-1828

First Quarter 2001 ìChanging of the Guardî PB48-01-1

Contents

Message from the PDASA (FM&C) 2

Message from the Undersecretary of Defense

(Comptroller) 4

Minimizing outsourcing risks 5

FA 45 Focus:

Current FA 45 challenges 8

Memorandum: Optional use of concurrent

vacancy announcements 12

Proponency for FA 45 Comptroller 13

Armyís annual financial report

Its intended audience and impact 22

Perspectives:

Deputy ASA (Financial Operations) 34

Resource analysis and business practices 35

Professional Development: 36

Guide for RM authors

Druzgal wins Staats Award 37

Funding transformation:

The challenge and lessons learned 38

Another path to a bachelorís degree 41

Confronting employee deficiencies 44

First Quarter 2001 3
4 First Quarter 2001
First Quarter 2001 5

To respond to the Office of Management

and Budget mandates of Circular A-76 and the

Federal Activities Inventory Reform or FAIR

Act of 1998, the Army finds itself challenged

with major management initiatives that will result in outsourcing (contracting out) a variety of

functions. These efforts have great potential for

cost savings, but they also are subject to several

risks. In Part I of this article, we looked at the

risks and examined private industryís efforts to

minimize them. In this concluding part are

proposals for how the Army might learn from

these experiences, as well as more strategies

from academic research and management experts to minimize the risks.

Managing Transition

 Transitioning from an in-house function to

an outsourcing arrangement involves a significant organizational change. There are several

important considerations in this organizational

change that will determine the success of the

outsourcing decision. These considerations can

be divided into two major areas, management of

the internal workforce and integration of the

contractor.

Managing Internal Workforce ñ Alienation

 Outsourcing a large number of peopleís

careers creates a large human cost that can

affect a companyís reputation. It also affects

the loyalty of the employees who remain after

outsourcing. Private firms can develop an image

of being heartless profiteers. Public service

providers can create political backlash.

Outsourcing also naturally creates resentment in

remaining employees, toward both the outsourcer

and the contractor. This resentment is counterproductive and extremely difficult to overcome.

Management must address the human resource

issues of outsourcing very early in the process.

The message here is, ìDonít forget your people!î

Private sector firms place a high emphasis

on supporting the outsourced employee. The

Army also has several programs to support

workers displaced by outsourcing. Programs

include contract provisions for the supplier to

employ displaced workers, retraining, help with

finding new employment, job counseling, early

retirement programs and other financial incentives. Regardless of the details of the considerations provided to the outsourced employee,

communication is critical to the transition process. It can build trust and demonstrate loyalty

to employees, and it can help the workforce

understand that outsourcing can strengthen the

companyís chances for long-term success.

Communication is a recurring theme in academic analysis and private industry experience

to address risks of the outsourcing transition

process. Some current opinions:

The process begins with communications,

says analyst Caolan Mannion of Dataquest Inc.

ìOver time, outsourcers and their clients have

come to believe that the earlier the employee

knows about an imminent transition, the better,î

he says. ìEmployees should be informed through

every stage from negotiating and bidding to

implementation. This forestalls any rumors

around the water cooler and keeps morale up.î

(Outsourcing-journal.com, 1999)

Simon Domberger states, ìThe importance

of communication is stressed by almost every

practitioner (and consultant) who has been involved with contracting. Immediately after a

management announcement to contract out a

service, fear and uncertainty by staff concerning

their future employment are greatest. To mitigate this, the objectives, effects and proposed

timetable of the contracting initiative should be

laid out. This can be done through written

communications, but if the numbers make it

possible, management presentations to employees would add weight to the message. Communications should continue throughout the period

leading up to the contractor taking over operations. They should involve all stakeholders, but

especially trade union representatives, who should

be won over at an early stage.î (Domberger,

1998, p. 147)

Minimizing outsourcing risks

Lessons learned from the private sector

(Second of a two-part series)

by Charles C. Ulfig
6 First Quarter 2001

The natural resentment of workers and

managers who have

watched colleagues

and friends lose their

jobs must be minimized.

Robert Rubin, CEO of Elf Atochem North

America, a $1.7 billion integrated chemical company, offers the following lessons for successful

outsourcing transitions:

 Make sure that youíve paved the way inside

the organization for changes brought in with

outsourcing.

 Keep your own people well informed of

exactly what is being done, and why.

 Pick a provider who is flexible and can adapt

to your companyís business.

 Similarly, listen to new ideas brought in by

the providerís team.

 Do everything possible to build bonds between the internal team and the outsourcing

vendorís people.

 Recognize the need for ongoing management of the relationship. (Johnson, 1999, p. 106)

Integrating the Contractor

 Outsourcing companies must devote a great

deal of work and management attention to make

a smooth transition into new agreements. Knowledge transfer is important to avoid service gaps

and allow contractors to get up to full speed as

soon as possible. British Petroleum (BP) learned

this through trial and error. BP outsourced its

transactional accounting processing to

PriceWaterhouseCoopers (PWC) in December

1996, becoming the first client

of PWCís new Center of Excellence in Rotterdam, Netherlands (outsourcing.com,

1999). The two companies

had some initial failures but

learned from them:

 ëThe biggest challenge

was knowledge transfer,í says

Street (of BP Oil Europe).

ëPWC recruited people locally.

They had the necessary language skills and varying degrees of financial

background, but no knowledge of the oil industry. They were introduced to each country to

learn our processes and build relationships with

the people to whom they would soon be delivering the services,í he explains. There were some

important lessons learned in that first phase,

which included Austria and the Benelux countries. The time required to train new people in

the processes, and particularly in dealing with

exceptions to standard transactions, was underestimated. Service quality suffered initially, and

this put a strain on relationships. But PWC

learned its lessons quickly; and, combined with a

greater hands-on involvement from BP management, the Swiss and German transitions

were successful (outsourcing.com, 1999).

Conclusions

 Outsourcing can be a very effective management strategy that can reduce costs, improve

service quality and allow management to focus

on their core competencies. However, these

benefits do not come without risks. The primary

outsourcing decision deals with the question,

Should we outsource? Cases presented here

have illustrated negative consequences that can

result from a bad decision. In many cases, it is

difficult to determine whether failures result

from the decision to outsource or from poor

implementation of the decision.

Monitoring a contractorís performance is

essential to minimizing outsourcing risk. Management cannot just outsource functions and

devote attention to their core business. Management can outsource performance, but they cannot outsource responsibility. There are significant costs associated with managing a contractor. Underestimating these costs can erase the

cost savings that were the drivers in the initial

outsourcing decision.

Effective contracting arrangements can

minimize the risks of outsourcing. Many companies spread the risks of outsourcing and promote

competition by using multiple vendors. This

strategy can have tremendous advantages, but it

also has significant drawbacks. It increases the

effort (i.e., resources) required to manage and

oversee multiple arrangements. Umbrella contracts covering many functions minimize costs

but increase risks. Companies like Microsoft

have approached the issue by using a combination of the multi-vendor and umbrella contract

models. They use umbrella contracts where

risks are minimal and use specialized contracts

where risks are high and/or where performance

is critical.

The transition from in-house performance

to contractor performance is a critical period for

minimizing risks. This period sets the stage for

success or failure. Contractors must be famil-
First Quarter 2001 7

iarized with the client organization and be trained

in the details of their duties. Knowledge transfer

is a fundamental requirement. Proper planning

and management can establish a productive

relationship with the contractor. Cooperation

helps the contractor get through the rough spots

of the relationship and minimizes temporary

performance losses.

Just as importantly, the organizational change

that occurs during a transition period is critical to

the client organization. The natural resentment

of workers and managers who have watched

colleagues and friends lose their jobs must be

minimized. The social impacts of displacing

workers can also damage the company. Private

industry uses several forms of transition assistance to soften the impact of worker displacement. Their experience, however, shows that

communication is the most important factor in

the transition formula. Communication can build

trust and demonstrate a companyís concern for

its employees.

Recommendations

 Use corporate knowledge. The Army

has developed a great deal of knowledge about

managing contracting risks. They have researched and used many of the strategies and

procedures used by private industry. One of the

most effective ways that the Army can minimize

risk is to use this knowledge. Take advantage of

guidance and assistance offered by the Armyís

office of assistant chief of staff for installation

management. Good use of corporate knowledge is possible through comprehensive commitment and leadership at all management levels.

 Devote adequate resources to contract

management. Minimizing the risk of outsourced

functions requires effective oversight and close

management interaction with the contractor.

Outsourcing does not abrogate management

responsibility.

 Use innovative contracting mechanisms.

Private industry is using innovative techniques

such as scorecards, progressive performance

targets and contractor participation in internal

meetings at all management levels. Relational

agreements that focus on shared goals can be

integrated into contracts or used as a complementary process. The Army should pursue

waivers if regulations conflict with new ideas

and Best Practices. Reinvention laboratories

can facilitate the process of obtaining waivers

and are dedicated to progress through new

ideas.

 Beware of hidden costs. The Army must

use due diligence in evaluating all costs of doing

business with a contractor. Hidden costs can

result from underestimation of a contractorís

learning curve or from labor laws applicable to

private vendors that do not apply to in-house

performance. The Army must anticipate hidden

costs, factor them into the selection process and

incorporate them into contract language.

 Evaluate risks to determine specialization and control needed for outsourced functions. Some functions have so much inherent

risk that they should be considered for standalone contracts. Multiple specialized, narrowscope contracts are more expensive to administer, but they can still generate savings. Umbrella

contracts, however, are appropriate in many

cases. Outsourcing vendors continue to develop

and expand expertise in multiple disciplines and

can offer the greatest opportunity for cost savings and service improvements. The Army

should carefully consider the business environment and unique circumstances.

 Leadership and communication are crucial. Outsourcing is a difficult choice that

employees and managers rarely embrace. Even

the most complete plans and programs to address the risks and human impacts of outsourcing

will be ineffective without management commitment and communication. Leadership can minimize employee resistance to outsourcing through

due diligence and communication. Remaining

employees will put the success of the organization first if they perceive that they are being

treated fairly.

About the Author: Charles C. Ulfig is lead managerial accountant at the customer order control

point,in the headquarters of the Army Materiel

Commandís Operations Support Command at

Rock Island Arsenal, Ill. A former Army bandsman, University of Illinois-schooled accountant

and private sector careerist, Ulfig joined the Army

as a civilian in 1985. This student paper written for

the 1999 class of the Army Comptrollership Program at Syracuse University, won the class research award.
8 First Quarter 2001

FA 45 FOCUS

For Professional Military Comptrollers

From the FA 45 Proponency Officer

Maj. Sean Hannah

This is an exciting time full of great opportunities for our functional area.

Over the next 12 months, we will see the

first OPMS XXI selection boards (beginning

with the July colonelsí board) conduct forcestructure reviews and briefings, continue the

study of merging FA 45 and the Finance Corps

and continue planning for the new intermediate

level education (ILE) system. We want you to

get engaged in these topics and send us your

opinions and recommendations.

OPMS XXI Selection Board Update

In the last RM issue, we laid out the processes and procedures for OPMS XXI promotion boards.

 The DCSPER is now discussing the ìnuts

and boltsî of how to conduct the boards to

ensure that OPMS XXI goals are met.

Details such as board member composition, allocation of below-zone quotas, and conduct of the selections for the four career field

competitive categories are under development.

The July board will set the tone of success

for OPMS XXI, so weíre anxiously awaiting the

results and will provide you with our analysis.

We expect FA 45 to maintain the trend of

meeting or exceeding Army averages.

FA 45 Force Structure

Another critical area of review is force

structure.It is imperative that we mold a structure to ensure financial management expertise is

allocated across the Army, developmental assignments are available to all FA 45 officers, and

robust promotion opportunities exist.

As the Army promotes to requirements,

promotion rates are an indirect result of the ratio

of ìfaces to spaces.î

It is thus absolutely critical that FA 45 force

structure be properly shaped.

The Army as a whole is grappling with

force structure imbalances and is attempting to

get them in line with OPMS XXI.

For instance, there are currently over 360

infantry colonels in the population but only 68

authorized billets ó the result of the warfighting emphasis of the pre-OPMS XXI promotion system. These excess officers previously

worked in either branch-immaterial assignments

or their functional areas.

Under the old dual-track system, separate

branch and functional area force structure wasnít

as critical. To meet assignment requirements,

functional areas such as FA 45 could reach over

and pull from the population of dual-track officers at will.

Before OPMS XXI, officers competed

against the general population as a whole; thus,

aggregate Army-wide faces and spaces theoretically determined promotion numbers.

Now that ìfencesî divide the four new

career fields, it is more critical that individual

branch and functional area structures be properly shaped to support their own ìpyramids.î

Iíll try to simplify the post-OPMS XXI

process. The number of faces (population) is

initially set, by year group, through the careerfield designation or CFD process.

These numbers are the result of a model

used in the office of the deputy chief of staff for

personnel (ODCSPER). FA 45ís CFD numbers

are expected to average between 20 and 25 per

year, as explained in last issueís article. This

population is then adjusted by retirements and

other attrition factors.

The other side of the ratioóofficer requirements ó is also set by year group, using

unit document authorizations (TOE, TDA, for

deployable and non-deployable units, respecCurrent FA 45 challenges, opportunities
First Quarter 2001 9

Pla

tively); training, transients, holdees and schooling or TTHS requirements and other factors.

Now, what does that mean to FA 45? Like

most functional areas, we are a predominantly

TDA-based (non-deployable) force.

Whereas the population is centrally controlled through CFD, control of the TDA authorizations is decentralized to the commands.

Field commanders have the authority to

make continuing changes to their TDAs to meet

their needs. These needs, however, may run

counter to the needs of the functional area to

provide developmental opportunities, key assignments and ample promotion opportunities.

The commands are under great pressure to

meet the personnel requirements of Army transformation and the objective force, and the TDA

slots have, unfortunately, usually been the billpayers.

The good news is that the deputy chief of

staff for operations and plans (DCSOPS), the

Total Army Personnel Command (PERSCOM)

and DCSPER all recognize this disconnect under OPMS XXI.

They are attempting to get a handle on

TDA structure through centralized documentation (CENDOC), which would require TDA

changes to go through a force-development

process similar to TOE changes.

We as a proponent therefore stand to gain

increased control over TDA force structure.

Until CENDOC is implemented, we need your

help in the field to ensure that commanders are

informed on the impact of FA 45 structure

changes before they are made.

On a high note for FA 45 ó going back to

the infantry example of 68 authorized colonel

slots ó our functional area has 46 colonel

authorizations and a much smaller population of

promotion eligible lieutenant colonels.

What that means is that FA 45 can theoretically continue to see selection rates above Army

averages.

FA 45 and Finance Corps Merger

In order to establish a world-class corps of

military financial managers, the assistant secretary of the Army for financial management and

comptroller (ASA(FM&C)) in 1997 conceptually approved combining core competencies of

the Finance Corps (branch code 44) and the FA

45 community.

The Army Finance School last year sponsored a contract to get views from corps and

division commanders on current and future financial management core competencies, processes and structure.

Last February, the school hosted a symposium of FA 45 and Finance Corps colonels and

general officers to discuss challenges and opportunities, address the OPMS XXI environment and establish milestones.

The symposium consensus was to further

analyze issues that included force structure at

corps and below and at echelons above corps;

other military services' approaches to financial

management; core competencies and business

practices and officer and noncommissioned officer training, certification and career progression.While the analysis continued, the Finance

School commandant early in March briefed the

acting ASA(FM&C) and selected general officers and senior executives on the contract survey

recommendations and he recommended courses

of action for force structure development.

The acting ASA(FM&C) reconfirmed approval of the merger concept but withheld force

structure approval pending further analysis.

The FA 45 proponent plans to work closely

with the Finance School to resolve concerns and

conduct further joint analysis.

The two proponents together will research

force structure, doctrine, training and other issues to ensure that the Army's needs are best

met and that issues affecting noncommissioned

officers and officers are resolved.

Approved milestones include a briefing to

the TRADOC Combined Arms Support Command (CASCOM) commander and another joint

44/45 session in May, followed by a briefing to

the TRADOC commander in June.

This is a long-term project. The current

concept entails a phased merging of the functions of finance and comptroller.

An interim phase would include merging

functions at corps and lower levels beginning

with a provisional unit test in 2003 or later.

Since nearly 80 percent of current FA 45

force structure is at echelons above corps, this

phase would affect about 20 percent of FA 45

organizations and structure but would have a
1 0 First Quarter 2001

much broader effect on the Finance Corps'

structure.

An objective phase in 2010 and beyond

would include documenting the merged officer

specialties in the total Army analysis for 2011

(TAA 11), as well as further consolidating organizations at echelons above corps. We plan to

keep you informed of the progress.

Intermediate Level Education

Weíve doubtless all heard about the plan

for ILE and universal military education level 4

(UMEL4) since the late 1990ís.

In an attempt to keep everyone informed,

FA 45 Focus will provide an update on current

developments.

Note that as this issue went to press, no

final decisions had been made by the Army

leadership or by the Armyís Training and Doctrine Command (TRADOC) commander.

TRADOC staffed a draft leader development annex to the Army transformation operational concept and organizational design or O&O

document last December. From this O&O and

from previous correspondence, it appears that

the ILE concept will be phased in sometime

between October 2002 and September 2004.

The Command and General Staff Officer

Course, as we know it today, will break into two

segments, to be called phase I and phase II ILE.

Both phases will offer a resident option at

Ft. Leavenworth, Kan., which will be open only

to officers in the basic branches and in the

psychological operations and multifunctional logistician functional areas.

All other functional area officers should

plan to take phase I ILE by nonresident (correspondence) study or in the satellite campus

mode, which TRADOC is still developing.

Functional area proponents will become

responsible for providing phase II ILE content

and oversight specific to their own areas.

We view this as a great opportunity to tailor

a robust resident educational experience for our

officers.

Although resident CGSOC provided intangible benefits, such as relationships built with

fellow U.S. and allied officers, its curriculum

failed to meet the needs of a professional financial manager. We welcome this opportunity to

set our own course.

Your proponent is discussing options of

centering FA 45 ILE on advanced civil schooling

(ACS), as well as possibly combining ACS with

some of the hard-skill military comptroller training found in our existing courses.

We have also discussed a ìschool of advanced military studiesî or SAMS equivalent for

our FA 45s. We welcome your suggestions and

opinions on this concept.

Maj. Shawn Murrayís article elsewhere in

this issue offers another viewpoint on this subject for debate.

Get Your Own RM Issue in the Mail!

Obviously those who donít subscribe to

RM or who have outdated addresses may not be

reading this ó so Iíll ask your help to spread the

word.

Many donít know they have to sign up

through DFAS to receive this publication. Please

ensure that all FA 45s in your organization send

mailing instructions to the address shown at the

bottom left of page 3 (the table-of-contents

page) of each issue.

We are specifically hoping that this FA 45

Focus section provides useful information and a

forum for communications to our officers.

From the FA 45 Assignments Officer,

Maj. Brent Penny

FA 45 Board Results

Since publication of the last RM issue, the

Army released results of the fiscal year 2000

colonelsí promotion board. FA 45 again did

exceptionally well, achieving selection at a 60

percent rate versus the Army-wide 52 percent

rate.

 The FA 45 selecteesí experience in FA 45

jobs averaged 75 months, and all had masterís

degrees.

How Are Assignments Determined?

Does the assignments officer use a crystal

ball when making assignments? By flipping a

coin? Believe it or not, there is a methodology.

Following is an explanation to dispel assumptions

and misgivings about how the process works.

Assignments are made on a quarterly basis.

Figure 1 shows report months and when

requirements open and close. For example, if an

officer is due to rotate out of an assignment in

July, we need preferences by the preceding

November or early December. Regarding va-
First Quarter 2001 1 1

Report Months Requirements Open For Fill Requirements Closed For Fill

October-December April-June End of June January-March

July-Nov Beginning of November April-June September-December

End of December July-September December-March Beginning of March

Figure 1

cant requirements (billets), we can fill only the

vacant requirements that also have officer distribution plan support.

ODP support means the number of officers

currently on hand and available in the comptroller (FA 45) population, minus those in the TTHS

account. As you can see from the diagram

above, it is important to make your request

known early. Ideally, we try to make an assignment five to six months in advance of the report

date. However, that isn’t the case with most

assignments, and officers typically have been

getting assignment instructions three to four

months out, due to factors addressed below.

The assignment window looks like it should

give plenty of time to make assignments, but in

reality it is of short duration.

As of February, for example, I was still

working the tail end of the April-June cycle that

supposedly closed the end of December.

At the same time, I was also working the

senior service college slate and the military

education level 4 distribution and preparing files

for the lieutenant colonels’ board which was to

meet the end of February.

Again, not much time, and if an officer

requests a specific location or duty assignment

late in the window (e.g., mid-February), the

choices will be very limited.

What types of “factors” have impact on

assignments? Time on station (TOS) and location always affect an assignment. All continental

U.S. tours are 36 months.

Most overseas “long” tours are also 36

months, and exceptions are dealt with on a caseby-case basis. Unaccompanied tours are 12

months. Curtailing a U.S. or an overseas long

tour (less than 36 months TOS prior to the report

date) requires approval of the Personnel

Command’s officer personnel management director.

Military couples’ assignments affect each

other, since career paths and professional development time lines of both officers must be

considered. In many cases, options are limited to

account for the professional development of

both officers.

Exceptional family member program or

EFMP considerations may also limit available

assignments. In some instances, officers cannot

accept certain assignments because a desired

location may not have medical or social services

to meet the family’s needs.

Besides the above factors common to all

officer assignments, nominative jobs go through

an additional two-step process: first, approval of

a nomination by PERSCOM; then, final decision

by a gaining agency or command to accept or

decline the nominated officer.

All of these factors can and do delay

officers’ assignment instructions. Any time that

both officers and their families are involved, the

assignment process can become quite complex.

My intent as your FA 45 assignments officer is

to match each of your preferences with Army

requirements. However, in some cases the optimum match is not possible, and in the end I must

match an officer’s skill set with requirements

that overall best serve the officer and the Army.

Army Comptrollership Program

(ACP) Military Selectees

PERSCOM’s advanced civil schooling office has confirmed participation in the ACP

class of 2002 at Syracuse University for FA 45s:

Maj. Michael Barkett Capt. Thomas Belkofer

Capt. Charles Bledsoe Capt. Thomas Davies

Capt. Keith Igyarto Maj. Karl Lindquist

Maj. Charles MacDonald Maj. Daniel McGreal

Maj. Chrisopher McManus Capt. Earl Rilington

Capt. Scott Roth Maj. David Savold

Capt. Robert Unger Maj. Florian Webster.

The 14-month, 51-semester-hour Master

of Business Administration program starts early

next June and ends in August 2002.

Congratulations to all; you’ve got your life’s

most intensive academic work just ahead!

?
1 2 First Quarter 2001
First Quarter 2001 1 3

by Maj. Shawn Murray

The Armyís officer professional management system for the 21st century, OPMS XXI,

fundamentally restructured the officer corps by

forming career fields of highly specialized functional areas.

This new structure recognized the need for

officers to develop specialized skills to help

better manage the Army. Functional area 45

officers represent the Armyís resource management experts, whose jobs it is to advise

commanders on the efficient and effective use

of allocated resources.

To develop these competent resource managers, the Comptroller Proponency Office in the

Office of the Assistant Secretary of the Army

for Financial Management and Comptroller,

OASA(FM&C), has the responsibility for all

life cycle management functions for military

comptrollers.

My purpose is to recommend management

policies and procedures that may help to develop

world-class Army military comptrollers.

Iíll start with a focus on the current FA 45

program by describing the purpose and functions

of military comptrollers; required skills, knowledge and attributes; professional development

opportunities and qualification requirements of

the life cycle development model; and FA 45

proponency missions and functions.

With that as a start point, Iíll then address

three different issues:

1. Whom should the Proponency office target

among military comptrollers for acceptance into

the Army Comptrollership Program (ACP)?

2. What should be the functional area specific

portion of intermediate level education (ILE)

qualification for FA 45 officers? and,

3. What policies or practices can the Comptroller Proponency Office adopt that would improve

the management of military comptrollers? Iíll

conclude with several recommendations for the

Comptroller Proponency Office.

Proponency for

Functional Area 45,

Comptroller

My purpose is to examine the proponency of

FA 45 through all life cycle functions in order to

make recommendations designed to improve the

quality of FA 45 development and management.

I began by researching current FA 45

proponency policies, guidance and doctrine to

identify current professional development requirements and FA 45 management responsibilities. By examining current personnel management issues applicable to all branches and researching life cycle management programs for

other functional areas within the institutional

career field, my intent was to identify good ideas

worthy of examination and make policy and

procedural recommendations to help create

highly-trained military comptrollers.

The Current FA 45 Program

FA 45 officers ìprovide commanders with

the advice, expertise and guidanceî necessary

to cover the full spectrum of resource management requirements.

Specifically, Department of the Army pamphlet (DA Pam) 600-3 lists the following key

resource management functions:

· Issuing instructions for and developing and

preparing the program and budget

· Providing resource-related recommendations to leaders

· Monitoring execution of the program and

budget

· Developing performance factors, analyzing

capabilities based on available funds and recommending appropriate funding to implement approved programs

· Exercising staff supervision and control of

accounting and financial services

· Performing cost and economic analysis

· Evaluating organizational structure and functional responsibilities

· Providing for manpower management and

documentation of civilian workforce and military

[table of distribution and allowances] structure

· Coordinating review and analysis presentations and making recommendations

· Administering internal controls.

The overall intent is for comptrollers to serve as

honest brokers and to help commanders efficiently and effectively utilize available resources.

In addition to being premier war-fighters

who are up to date on Army structure, organiza-
1 4 First Quarter 2001

tion and doctrine, comptroller functional area

officers must possess unique skills, knowledge

and attributes.

Thorough understanding of and ability to use

automated financial management systems is a

given. Comptrollers have to be able to effectively articulate orally and in writing technical

financial information to commanders.

More importantly, RMs have to be able to

translate detailed financial information into meaningful conclusions and recommendations for

commanders to improve resource allocation and

expenditure.

Additionally, FA 45 officers are expected to

be well organized, able to work in the absence of

guidance, and able to anticipate and react to

changes affecting sensitive political and legislative considerations.

In terms of unique knowledge, comptroller

functional area officers must understand the

complete RM process, including manpower,

from Congress down to the unit level.

Further, RMs must understand the laws and

regulations governing proper use of funds and

how to positively influence the funding cycle at

all points along the chain.

Lastly, comptrollers need to remain current

on economic trends, developments on the civilian side of the RM community (CP 11), and

technical updates affecting automated financial

management systems. In addition to special

skills and knowledge, DA Pam 600-3 identifies

unique attributes for FA 45 officers. These

attributes include being oriented on technology

and training, abstract thinkers, and creative problem solvers.

Finally, comptrollers ìmust be war-fighters

who possess the highest standards of discretion,

judgment, integrity and professional ethics.î

Life Cycle Development Model

The professional development goal for FA

45 officers is ìto produce and to sustain highly

qualified tactically and technically proficient officers who are able to lead, to think and to

leverage existing and future technology in performing resource management functions.î

With no authorizations for lieutenant positions and no officers in the grade of lieutenant

authorized in the comptroller functional area, the

life cycle development model does not begin for

FA 45 officers until the rank of captain.

Sometime between the 5th and 6th year, all

commissioned officers receive designation in a

functional area. After designation as an FA 45

officer and following basic branch qualification

as a captain, FA 45 officers are eligible to apply

for advanced civil schooling through the ACP at

Syracuse University and/or serve in an initial

comptroller assignment.

While serving in a comptroller assignment

as a captain can be helpful during the career field

designation process, an FA 45 officer is not

required to serve as a captain in a designated FA

45 position. Entry level training courses available, but not required, are the planning, programming and budgeting execution systems course

and the resource management budgeting course.

PPBES focuses on the fundamentals of resource management and the budget process,

while RMBC extends beyond PPBES with a

focus on Army budgeting procedures.

Qualification and development requirements

begin at the rank of major. Following promotion

to major and career field designation into the

institutional support career field, FA 45 majors

serve the remainder of their careers as comptrollers.

The only exception is the occasional assignment to a branch/functional area generalist position. These generalist positions include assignments in recruiting, ROTC, U.S. Military Academy faculty and staff, Inspector General, and

Reserve Component.

 DA Pam 600-3 states that comptrollers can

expect one 24 to 36 month tour in a generalist

position prior to selection for Colonel.

However, the FA 45 personnel manager

does not believe that this policy will pertain to all

comptrollers based on the fact that FA 45 has yet

to receive any generalist positions to fill with

career field designated majors or lieutenant

colonels.

To be considered qualified, FA 45 majors

must successfully ìcomplete Command and Staff

College (CSC) ([military education level] 4),

complete the Army Comptroller Course (ACC)

and successfully serve 24 months in an FA 45

assignment.î Beyond the education requirement of completing ACC and either resident or

non-resident CSC, the intent is for most FA 45
First Quarter 2001 1 5

majors to enhance their RM skills by completing

graduate level education or participating in military or civilian financial management training

opportunities.

Lieutenant colonels can expect primarily to

serve in senior staff FA 45 assignments. All

positions coded as FA 45 assignments for majors, lieutenant colonels and colonels are considered qualifying assignments.

The minimum cumulative experience for

LTCs to be considered functional area qualified

is 48 months. Finally, qualified FA 45 LTCs must

successfully complete either the Professional

Resource Management Course (PRMC) or the

Professional Military Comptroller School

(PMCS) and should have an accredited masterís

degree (CEL 2).

Considered intermediate-level education, the

PRMC is a Department of the Army course for

present and future RMs taught at Syracuse

University. This 4-week course is intended to

provide a better understanding of the Armyís

RM process and improve management skills.

The PMCS is a 6-week DoD course intended to

ìexpand resource managersí knowledge of issues and policies affecting defense resource

allocation and military readiness.î

Colonels are considered ìthe senior practitioners in the comptroller functional areaî and

can expect to serve on high-level staffs as RMs

or in generalist positions. There are only two

requirements for functional area qualification at

the colonel level. First, qualified colonels must

complete either a senior service college or the

non-resident U.S. Army War College Distance

Education Course. The second requirement is

completing a minimum of 60 months of cumulative service in FA 45 assignments.

FA 45 Proponency Missions and Functions

ìThe comptroller functional area goal is to

maintain a healthy, viable career path for FA 45

officers.î

Toward this objective, several offices and

organizations play key roles in the management

and professional development of FA 45 officers.

Most involved in the management of military

comptrollers are the ASA(FM&C), the Comptroller Proponency Office, the FA 45 career

manager and the U.S. Army Finance School.

As the leading Army RM authority, the

ASA(FM&C) ìexercises the comptroller functions of the Department of the Army and advises

the Secretary of the Army on financial management.î

The major offices of the ASA(FM&C)

include the Principal Deputy ASA(FM&C), the

Deputy ASA (Budget), the Deputy ASA (Financial Operations), the Deputy ASA (Resource

Analysis & Business Practices) and the Deputy

for Cost Analysis.

The Comptroller Proponency Office supports the ASA(FM&C) ìwith proponent oversight and management of the Comptroller Functional Area (FA 45) and the Comptroller Career

Program (CP 11).î

As such, the proponency office is responsible for the career management and professional development of both civilian and military

comptrollers.

 On the military side, the proponency office

performs management oversight of all FA 45 life

cycle functions, including ìstructure, acquisition,

individual training and education, distribution,

individual and unit deployment, sustainment, professional development, and separation.î

Though the proponency office has numerous functions and responsibilities, the following

five key functions relate directly to issues, analysis and recommendations follow:

1. Publish the Functional Area 45 (Comptroller) Career Field Professional Development

Guide.

2. Manage the nomination and selection process for both military and civilian students attending intermediate-level professional development courses, including PRMC, PMCS and

ACC.

3. Provide functional support to Army schools

and training programs involving RM instruction.

4. Coordinate ASA(FM&C) input to RM doctrine and policy.

5. Administer and support proponency/career

management advisory boards, e.g. the CP 11

Executive Council and the CP 11 Junior Executive Council.î

Another major player in the management of

military comptrollers is the FA 45 assignments

officer, who serves as the primary link between

the proponency officeís policies and guidelines

and the active duty military officers serving in
1 6 First Quarter 2001

FA 45 positions.

In addition to filling required positions, the

FA 45 assignments officer is responsible for

ensuring that officers within the functional area

receive minimum education and experience to

remain qualified and competitive.

For entry-level training associated with the

basic developmental phase of professional development, the FA 45 assignments officer can

approve and schedule officer attendance at

both the PPBES course and RMBC.

An important change under OPMS XXI

gives the FA 45 assignments officer authority to

nominate candidates for the ACP.

However, the proponency office retains

final approval authority for acceptance into this

program.

Similarly, the FA 45 assignments officer

nominates qualified officers for intermediate

and advanced education courses, while the

proponency office retains the approval authority.

The Finance School serves as the Training

and Doctrine Command (TRADOC) doctrinal

proponent school for finance and RM operations. As such, the Finance School conducts all

training covering finance operations and entrylevel RM instruction for military and DA civilian

personnel.

The school performs two significant functions with respect to FA 45 officers.

First, its Financial Management Operations

department conducts the PPBES course and

RMBC at Fort Jackson and abroad for FA 45

officers.

Second, the school is the doctrinal proponent for Army field manual (FM) 14-100, Financial Management Operations.

FM 14-100 merged and superseded FM 14-

6 and FM 14-7 to become the primary doctrinal

reference for finance and RM operations within

the Army.

Issues for Analysis

Whom should the proponency office target

among military comptrollers for acceptance

into ACP?

While advanced civil schooling is an option

for officers with fewer than 17 years of active

federal commissioned service (AFCS), the target population for this program remains basic

branch qualified captains, preferably between

the sixth and eighth year of AFCS.

Prior to OPMS XXI, this target demographic made good sense, since earlier completion of the program increased the likelihood of

getting another comptroller utilization tour beyond the mandatory three-for-one payback utilization tour.

However, OPMS XXI presents significant

changes to the personnel management system

that warrant a reexamination of eligibility preferences for this outstanding academic program.

Unlike the previous dual-tracked personnel

management system, OPMS XXI introduces a

new decision point at the time captains are

considered for promotion to major.

This decision, known as career field designation (CFD), involves designating all officers

within either a basic branch or a functional area.

From this decision point until retirement,

officers can expect to serve within their designated specialty.

The benefits of keeping the current ACP

eligibility preferences include the opportunity to

get a much greater return on investment with

increased years of service as a comptroller ó if

these ACP selectees become full-time FA 45

officers during the CFD process.

The status quo increases risk that ACP

graduates could serve less time as comptrollers

under this new system.

For example, non-promotable captains can

complete ACP, serve their required utilization

tour, and then select their basic branch during

CFD.

At this point, these officers lose the FA 45

designation and serve no more time as comptrollers.

Extending this scenario further, some officers might not even serve as comptrollers long

enough to fulfill their active duty service obligation.

Captains who enroll in ACP later or become

promotable early, then select their basic branch

during CFD could reasonably expect to serve

only two years or fewer of the required 3-year

utilization tour.

The ACP class of 2000 had one officer who

requested designation within his basic branch,

i.e., not to become designated as an FA 45
First Quarter 2001 1 7

Comptroller. As he will be attending the Command and General Staff College next year and

will likely be tracked as a basic branch officer, it

is possible that he may not serve any of his active

duty service obligation.

Another option (recommended) is to target

promotable captains and junior majors who have

been career field designated as FA 45 comptrollers within the institutional career field.

This option would increase the return on

investment in terms of breadth and depth of

service, by ensuring that all ACP graduates

would serve as comptrollers for the remainder of

their careers.

Further, each graduate would expect to

serve for an average of six to eight years as a

full-time comptroller before becoming retirement eligible. Additionally, targeting newly CFDíd

FA 45 majors is consistent with comptroller

assignment opportunities and qualification requirements.

Majors have more FA 45 job opportunities

than captains, and education and experience

qualification requirements do not begin until FA

45 officers become majors.

Disadvantages include the possibility of limiting FA 45 utilization return on investment and

compressing too many requirements into an

already tight time line for FA 45 majors.

The FA 45 Professional Development Guide

states that officers who request ACP ìshould

realize their acceptance in ACP will probably

get them board-designated as ISCF [institutional

support career field].î

However, the same guide also states that

personal preference weighs heavily in the selection process and that ìto stand a chance of

getting selected [in a function area] you must

make that your first choice.î

The implication is that having graduated

from ACP may not outweigh personal preference in instances where the officer requests to

remain in the operational career field.

The CFD results to date confirm this implication in that 100 percent of officers who requested the operational career field received

their first choice.

Under the current system, FA 45 majors

have tight career progression time lines. For

officers attending the 10-month resident CGSC,

adding ACP makes completing these qualification requirements more difficult prior to their

LTC selection board. Until implementation of

changes under OPMS XXI, FA 45 officers who

attend resident CGSC will have a difficult time

attending ACP and gaining the required 24

months of comptroller experience unless they

served in comptroller positions as captains.

For the half or more of FA 45 officers who

will not attend resident CGSC, attending ACP as

a major should be a problem.

In summary, my recommendation is that the

proponency office change the eligibility preferences and provide guidance to the FA 45 assignment officer to favor ACP applications from

fully qualified officers who have been career

field designated within the institutional career

field as FA 45 officers.

With personal preference so heavily

weighted as a decision criterion in the CFD

process, it makes good sense to wait until after

the CFD process before sending officers to the

ACP. This recommendation ensures the greatest return on investment with ACP graduates

expecting to serve for the remainder of their

careers as comptrollers.

Intermediate Level Education (ILE)

The universal education requirement for all

majors, ILE [functional variants of the old onesize-fits-all CGSC] poses the second issue: What

should be the functional area specific portion of

ILE qualification for FA 45 officers?

The concept for ILE currently under discussion calls for completion of a core curriculum

and a branch/functional area portion of training

for all officers.

The core curriculum is intended to be common for all officers, last no more than four

months, replace the current CGSC requirement,

and be taught at Fort Leavenworth and at

extended campus learning sites. Currently, Syracuse is one of the proposed extended campus

sites.

The newly formed Army Comptroller Course

(ACC), which is offered at Syracuse University

as a qualification course for majors, will serve as

the functional area portion of the ILE requirement for FA 45 to earn military education level

(MEL) 4 qualification under OPMS XXI.

Assuming that the final ILE approved con-
1 8 First Quarter 2001

cept resembles the current concept description,

the primary advantage of using ACC to fulfill the

functional area portion of ILE training is flexibility. With ACC designed, resourced and offered

at Syracuse, this four-week course is easy to

synchronize with an approved ILE core curriculum implementation plan.

Additionally, the total duration of both phases

of ILE training (core plus ACC) would likely be

five months, which is much less than the current

10-month curriculum taught at resident CGSC.

The only significant disadvantage of this

plan is that the onus would still rest on non-CEL

2 [civilian education level 2, masterís degree]

qualified FA 45 officers to complete graduate

education.

This situation compares unfavorably to officers of the operations career field and other

functional areas who will be attending ILE

instruction at Ft. Leavenworth, Kan. and are

likely to graduate with a Master of Military Arts

and Sciences (MMAS) degree, thereby simultaneously completing their ILE and CEL 2 requirements.

Another option (recommended) is for FA 45

officers to complete the 14-month ACP as the

functional area portion of ILE training for majors. Newly designated FA 45 officers would

come to Syracuse for both the four-month core

curriculum and the ACP. Acceptance into the ACP would

still require meeting all of the

selection criteria.

Officers who could not

attend ACP due to problems

in meeting selection requirements or tight career progression time-lines would attend ACC to meet the minimum ILE qualification standards.

The chart in Figure 1

shows the most current concept for FA 45 ILE under

discussion at TRADOCís

Combined Arms Center.Formally establishing ACP as

the preferred option for ILE

training would build on the

previous recommendation to

favor newly designated comptrollers for ACP

selection. Advantages include setting the highest quality education opportunity as the standard

for FA 45 intermediate-level professional development. Offering FA 45 officers the opportunity

to earn an MBA as a part of required ILE allows

simultaneous completion of both MEL 4 and

CEL 2 requirements.

Officers who would otherwise be distracted

by the demands of pursuing an advanced degree

during their spare time would be free to focus on

their duties at work and enjoy a higher quality of

life at home.

Finally, sending officers for the required 18

months to complete ILE enables a permanent

change of station (PCS) to Syracuse in lieu of

costly temporary duty (TDY) for five months.

This final advantage assumes that the training time for ILE consisting of core curriculum

plus ACC would not exceed six months, which

is the PCS threshold.

While the cost difference in financial terms

is unclear, TDY means family separation for up

to six months, while PCS means greater stability

with no family separation.

One significant disadvantage of this option is

the loss of flexibility that comes with having to

synchronize a 14-month program with an approved ILE core curriculum.

Functional Area 45

Comptroller

ILE Core +

Curriculum

CF/BR/FA Education

ï Extended campus site Extended campus site Extended campus site 

ï Correspondence Course Correspondence Course

ï TASS

ï Resource management officer

ï Program budget officer

ï DoD/joint/DA staff officer

ï Division comptroller

 DA Pam 600-3

ï Army Comptrollership Course Army Comptrollership Course

ï Advanced Civil Schooling Advanced Civil Schooling

Figure 1

U.

Budget

S. Army
First Quarter 2001 1 9

It is safe to assume that major ACP schedule changes involve great difficulty, as this program carefully synchronizes the DA-specific

curriculum with the Syracuse School of

Managementís mainstream MBA curriculum.

Synchronization would most likely involve

scheduling the required four-month core ILE

training around the much longer ACP.

Another challenge is that an 18-month ILE

program puts increased pressure on FA 45

officers to gain the required 24 months of comptroller experience prior to promotion to lieutenant colonel.

This concern is greatly diminished for officers who gained comptroller experience as captains.

However, this group only represents at most,

20 percent of FA 45 officers. Because this

option meets MEL 4 and CEL 2 requirements

with the highest possible education standard, and

most majors have four yearsí time in grade to

gain the required 24 months of comptroller

experience, the benefits seem worth the price of

decreased flexibility.

Another major disadvantage of using ACP

instead of ACC to fulfill required intermediate

level education for majors is the added cost of

additional ACP slots.

According to the FA 45 assignment officer,

between 22 and 26 officers per year group are

career field designated as comptrollers.For this

analysis, Iíll assume an average of 24 officers

per year.

According to the Comptroller Professional

Development Guide, ACP class size ìof 25 to 30

includes half to two-thirds Active and Reserve

officers, the others civilian members of the

comptroller profession from the Army, Defense

agencies and other services.î

Assuming that half of all slots are funded for

active duty military comptrollers, current funding levels support 12 to 15 slots annually. Assuming that 20 out of 24 officers per year group

would qualify for acceptance and be available to

attend the full 18-month ILE program, a potential

funding shortfall needed to support 5 to 8 additional slots exists.

At approximately $30,000 per ACP slot

versus $5,000 per ACC slot, this shortfall would

require an additional $125,000 to $200,000 to

cover the incremental cost of the additional 5 to

8 slots.

Despite the pressure on career progression

time lines and the possible added cost, my

recommendation is that the Comptroller

Proponency Office formally establish ACP as

the preferred option for ILE training of newly

designated FA 45 officers.

This recommendation builds on the idea of

increasing the ACP return on investment by

establishing the highest quality education opportunity available as the standard.

Comptroller Functional Area Management

What policies or practices can the Comptroller Proponency Office adopt that would improve the management of military comptrollers?

With the tremendous changes in military

personnel management system being brought on

by OPMS XXI initiatives, I wanted to look at

neighboring functional areas in the institutional

support career field to identify good ideas worth

exploring as management techniques or tools for

Comptroller Proponency to incorporate.

Both FA 43 Human Resource (HR) Management and FA 49 Operations Research/Systems Analysis (ORSA) proved interesting studies that yield unique approaches to similar challenges facing FA 45 proponency.

As with FA 45, the FA 43 proponency office

felt the need to develop a qualification course for

their newly designated officers. The most interesting aspect of FA 43ís 80-hour instructional

module was the delivery technique.

Instead of the standard instructional approach, the HR proponency office elected to

provide this instruction to all regular Army,

Reserve and National Guard HR managers via

interactive CD using the distance learning model.

I see the value of this model more as an

alternative for providing entry-level comptroller

training (PPBES and RMBC) than for conducting intermediate-level training, such as ACC.

The Financial Management Operations Department of the U.S. Army Finance School

taught 744 students either PPBES or RMBC in

the 1999 training year and expected to teach

1,234 students in 2000.Converting this instruction to either interactive CD or web-based instruction could potentially free up two resource

management instructors. I recommend that the
2 0 First Quarter 2001

Comptroller Proponency Office direct an analysis of the potential savings of converting both the

PPBES course and RMBC to interactive CD or

web-based distance learning models.

The FA 49 ORSA Proponency Office had

two interesting approaches yielding good ideas

worth consideration by the Comptroller

Proponency Office. First, the ORSA proponency

office is located at the TRADOC

Analysis Center (TRAC), which is more or

less the ORSA community center. As with FA

45, FA 49 has a DA-level office, the deputy

under- secretary for operations research, serving as the overall proponent for FA 49.

While the Comptroller Proponency Office

has similar responsibilities for managing the life

cycle functions of its military officers, the officeís

proximity to issues and actions affecting policy

and doctrine constitutes a significant advantage.

My recommendation is that the Comptroller

Proponency Office consider establishing a small

RM proponency office at Syracuse University

to manage training and doctrine development

issues. For FA 45 officers, Syracuse University

is emerging as a center of gravity for training and

doctrine.

Using the FA 49 example, it makes sense to

locate an extension of the Proponency Office to

handle doctrinal and policy input affecting RM

training for military comptrollers.

Building on the previous recommendation,

shifting FA 45 instructors currently assigned to

the U.S. Army Finance School to staff this office

would put a full-time RM staff on location at the

one place to which all military comptrollers must

come for intermediate level training.

With the students coming to Syracuse to

attend ACP, PRMC or ACC, instructors/staff

would have access to valuable RM experience

from military and civilians to collect as doctrinal

and policy input.

Additionally, the well-developed link between the university and private industry would

prove invaluable in establishing training with

industry opportunities for FA 45 officers in the

future.

The second interesting FA 49 managerial

approach worth considering is the use of an

advisory committee. Each year, the ORSA community holds an annual conference to discuss

major internal professional issues and make

decisions affecting the career management of

both the FA 49 and CP 16 segments of the

ORSA community.

The advisory committee comprises key

Army ORSA leaders. The ORSA proponency

office collects input from committee members

and from the field and makes recommendations

to the board for consideration and decision at the

annual conferences. For the past three years,

the advisory committee has focused on personnel issues associated with OPMS XXI initiatives

and required changes.

I recommend that the Comptroller Proponency Office propose to the ASA(FM&C)

formation of an FA 45 military comptroller

advisory committee of key military RM leaders

to meet annually to discuss issues affecting the

FA 45 community.

The Comptroller Proponency Office has the

responsibility to support such advisory boards

and does so with two CP 11 advisory boards.

With tremendous changes like the possible merger

of the Finance Corps (BR 44) with FA 45

currently under study, forming an FA 45 advisory committee makes sense.

This advisory committee could be established with the goal of ensuring that the different

opinions, good ideas, best practices and parochial concerns within the FA 45 community get

heard by the ASA(FM&C) decision-makers.

Using the case of this possible merger

(known as the FIRM concept) as an example,

many non-Finance comptrollers view this concept as more of an attempt by the Finance Corps

to remain relevant to the Army than a measure

designed to improve FA 45 capabilities and

quality of service.

The fact that the initial FIRM concept called

for the Finance Corps, which is only a small part

of the RM community at 18 percent and shrinking each year, to absorb the comptroller functional area heightened early suspicion.Despite

the fact that the Finance School formed an

advisory board for this study, use of a standard

and representative advisory committee right

from the start might have helped to allay suspicion and maintain credibility.

Conclusions and Recommendations

The 1990s have been a decade of tremen-
First Quarter 2001 2 1

About the Author: Maj. Shawn Murray, a

1986 U.S. Military Academy graduate, is a

budget analyst in the office of the deputy

chief of staff for RM with U.S. Army Pacific

headquarters at Ft. Shafter, Hawaii. He

wrote this article as his student paper in the

Army Comptrollership Program class of 2000

at Syracuse University.

dous change for the Army. Changes in threats,

missions and force structure have led to major

initiatives to improve the way the Army fields,

trains and fights its forces. OPMS XXI fundamentally restructured the officer corps by forming career fields of highly specialized functional

areas.

This new structure recognized the need for

officers to develop specialized skills to help

better manage the Army. Functional Area 45

officers represent the Armyís resource management experts, whose jobs it is to advise

commanders on the efficient and effective use

of allocated resources.

To develop these competent resource managers, the FA 45 Proponency Office of the

ASA(FM&C) has the responsibility for life cycle

management functions for military comptrollers.

I have developed and presented several recommendations for doing that better:

1. Change the eligibility preferences and provide guidance to the FA 45 assignment officer to

favor ACP applications from fully qualified officers who have been career field designated

within the institutional career field as FA 45

officers.

2. Establish ACP as the preferred option for

intermediate level education or ILE training of

newly designated FA 45 officers.

3. Direct an analysis of the potential savings of

converting the PPBES course and the RMBC to

interactive CD or web-based distance-learning

models.

4. Consider establishing a small RM proponency

office at Syracuse University to manage training

and doctrine development issues.

5. Propose to the ASA(FM&C) formation of a

FA 45 military comptroller advisory committee

of key military RM leaders to meet annually to

discuss issues affecting the FA 45 community.

Editor's note: These are one individual officer's

views about FA 45 proponency, training and

development. We welcome others from our

readers. E-mail your comments to Maj. Sean

Hannah: hannahst@hqda.army.mil.

The Army Comptroller Course is a recently-added four-week comprehensive training experience for officers newly designated

into the institutional support career field in

functional area (FA) 45.

It is also for journey-level Army civilian

careerists and second-year CP 11 Comptroller interns. The first of three fiscal year 2001

classes finished in February and gave 12

officers, six interns and nine other civilians

from 12 commands and agencies a taste of

what itís like to be a ìrealî field comptroller.

The course, taught at Syracuse University in upstate New York, focuses on federal

budget challenges, strategic planning, the planning-programming-budgeting-execution system or PPBES, accounting, fiscal law, activity- and service-based costing, manpower

Comprehensive training experience added to course

management, contracting, management controls, competitive sourcing, financial operations, the legislative process, and installation

and major command resource management.

ACC is especially well suited for Comptroller interns in the second year of their

Department of the Army internship. If you

are a second-year CP 11 DA intern, or you

work with one, or you supervise one, consider

proposing or including ACC as part of the

internís second-year training plan. Tuition for

interns is funded by intern applicantsí commands. The $5,100.00 fee covers four weeksí

lodging, weekday meals and the cost of the

instruction.

More information is available at:

proponency@hqda.army.mil




2 2 First Quarter 2001

The Armyís Annual Financial Report

Its intended audience and impact

(Part II of a series)

by Captain Anthony Gautier and Phyllis Korcz

Editorís Note: In the last issue, the authors

evaluated the narrative or non-financial

portion of the Armyís 1999 Annual Financial

Report and those of selected publicly traded

corporations. They looked at the reportsí

purpose, intended audiences and other key

influences on the organizations, and they

assessed the reportsí content, format, style

and messages, comparing the corporate examples to the Army. They

analyzed each reportís

intent and evaluated the

reportsí effectiveness in

communicating their messages.

In this concluding

segment, the authors recommend several ways to

improve the Armyís annual financial report in

terms of format, content,

tailoring the report to intended audiences and

possibly expanding the range of those audiences.

The four corporations selected for this

research effort were Ford Motor Company,

Merck & Company, Deere & Company and

Fluor Corporation. All of these companies have

international operations and are major contenders in their specialties.

We selected Ford Motor Company for

many reasons. Similar to the Army, Ford carries

a large property, plant, and equipment balance

on its balance sheet. Ford Motor Company has

a long and prosperous tradition as a business

venture dating back to 1903. Lastly, Ford Motor

Company was selected because of its global

presence, receiving 30 percent of its annual

revenues from abroad.

Merck and Company was included also

because of its large Property, Plant, and Equipment balance on its balance sheet. Additionally,

the politically sensitive nature of prescription

drug costs can give us insight on how the private

sector works the legislature to its advantage.

Lastly, like the Army, comparisons can be derived between the Armyís research and development efforts and the pharmaceutical research

and development efforts.

We selected Deere & Company primarily

for its similarities to the Army in reputation and

longevity. Deere & Company also resembles

the Army in that they both are global enterprises,

they share a significant interest in asset management and they have in common an increasing

requirement for technological demands and declining resources.

In Fluor Corporation, we find similarities

with the Army in breadth of operations. Fluor

provides an array of services from contracting to

coal mining. The Army has a wide scope of

operations as well. Additionally, Fluorís focus

on logistics, specifically with construction fleet

management, makes it a good candidate for

comparison with the Army and its asset management issues. Fluor, like the Army, is facing

issues of management of real property and

elimination of assets whose values do not support the cost of capital.

Deere & Company

Corporate Vision: Achieving Genuine Value

for Customers Worldwide

ìAs a global enterprise with its roots in the

practical processes of caring for and utilizing the

land, John Deere has grown and prospered

through a long-standing partnership with the

worldís most productive farmers and other customer groups. As a result, Deere has developed

closely related interdependent operations, which

involve the manufacturing and marketing of

equipment, plus various support operations, and

financial services. All of Deereís businesses are

committed to providing Genuine Value to our

stakeholdersócustomers, dealers, shareholders, employees and communities. In support of

that commitment, the company seeks to achieve

profitable growth on a global scale, enhance

efficiency through continuous improvement and

Deere & Company,

best known for its line

of John Deere brand

farm equipment, has

been in existence for

more than 160 years

since it revolutionized

farming with its steel

plow.
First Quarter 2001 2 3

provide products and services of distinction,

through business innovation.î

In its 1999 annual report, Deere & Company describes itself as ìone of the worldís

oldest and most respected enterprisesî . Deere

& Company, best known for its line of John

Deere brand farm equipment, has been in existence for more than 160 years since it revolutionized farming with its steel plow. In addition to the

farm equipment line, Deere & Company also

produces construction and forestry equipment,

commercial and consumer equipment, supply

repair parts and engines, and other technological

products and services. Deere & Company has

also branched off into credit services and managed health-care programs.

As is the case with most corporations,

Deere & Company makes its annual report

available online at the companyís web site. The

narrative or non-financial portion of the report is

26 pages long and contains many colorful graphics and photos. It opens with a few graphs

depicting the overall financial condition of the

company followed by a 3-page message from

the chairman. Following this are an overview of

the past decade and brief introductions of the

corporationís divisions. The rest of the annual

reportís non-financial portion has detailed accounts of the corporate divisionsí initiatives and

performance.

We chose Deere & Company for its maturity, international presence and involvement with

specialized, expensive equipmentófactors that

largely replicate the Army environment. Additionally, recent technological influences on farming and farm equipment track well with Army

modernization initiatives. Deere & Company

also has faced declining revenues over the past

years, during which time the Army has been

experienced drawdowns and budget reductions.

Chairmanís Message. Chairman and chief

executive officer Hans W. Becherer puts a

positive spin on the yearís depressing sales

figures. He highlights the new products, production facilities, international ventures and assetmanagement techniques that enabled Deere to

achieve a profitability in spite of what he describes as one of the worst years on record for

the farm economy. He maintains that the

measures taken to achieve this success during a

year of depressed sales will result in vigorous

growth when the agricultural economy begins to

grow again. Unlike Army secretary Caldera,

Becherer, in his second decade as CEO, had

insight into the changes at the company and the

environment during this time period. Caldera

describes the changes to the environment, but as

a political appointee cannot expect to enjoy the

same length of tenure as Becherer.

Similar to Calderaís message, Becherer

describes the significant transformations the

company has undergone. Large farm equipment, the division for which Deere & Company

is best known, experienced a 35 to 40 percent

decline in sales. The successful management of

cash flow, achieved by field inventory reductions, was critical to the companyís financial

success. Underproduction of major end item

equipment is part of Bechererís strategy to

position the company to move toward individual

customer orders.

Becherer describes several significant

achievements that he asserts will position Deere

& Company for future consistent growth. These

include the introduction of new combine harvesters that take advantage of the latest technology. The construction equipment division

achieved process improvements in order fulfillment and increased its customer base by targeting large contractor customers. The commercial and consumer equipment division grew sales

by 21 percent and increased market share. John

Deere Credit expanded international and agribusiness offerings.

Deere & Companyís vision of genuine value is carried

throughout the chairmanís

message. Value initiatives are

focused on customer and investor satisfaction. Becherer

lists process-based initiatives

targeting six-sigma levels of

performance and customer satisfaction. Growth in the various divisions is addressed in

terms of the markets to be

targeted and a brief mention of acquisitions and

mergers. Investment in infrastructure and research and development, especially in the areas

Deereís safety concerns apply to both its

employees and its

customers. The report

describes the safety

achievements at Deere

facilities and also

product safety initiatives.
2 4 First Quarter 2001

of software, electronics and communications

represent the companyís vision for future growth.

Becherer describes the link between the

agriculture economy and Deere & Company.

His emphasis on international business leads us

to believe he finds the U.S. market mature or

even declining. He anticipates global dominance

based on an international trend toward the increased need for farm mechanization. Similar to

the Army, Deere & Company is also focusing on

information technology. While the Army describes the need for information technology to

support national military strategy, Deere believes it is necessary for preservation of market

share and for future growth. Their main focus

is on internet applications for sales and promotion.

Becherer discusses the improvements in

asset management at Deere & Company. Inventories are the primary assets he is concerned

with, and aligning production to demand has

been a significant improvement to the company.

The Army is also concerned with asset management, as this is the primary barrier toward

obtaining an unqualified audit opinion for its

financial statements. Caldera is concerned with

this issue and discusses it in his statement.

Becherer and Caldera discuss similar topics including declining resources, global concentration, logistics and the focus on information

technology. As the Army is focusing on its

revolution in logistics, Deere & Company are

opening new supply channels for the distribution

of their products. Global positioning, a product of

military research and key to Army asset management, is employed by Deere & Company in

some of its newest agriculture ìsmart-machinesî.

Becherer provides an emphasis on genuine value

through continuous improvement. Caldera also

mentions improvement initiatives but focuses

more on specific goals such as meeting the

requirements of the CFO Act.

Agricultural Equipment Division. In the section of the annual report dedicated to the Agricultural Equipment division, division president

Robert Lane assures stakeholders that the 1999

operating losses of $51 million are mitigated by

management initiatives such as a major reduction in inventory in North America, growth of

global market share and the introduction of a

new line of combines. Lane sites global trends

of increased mechanical harvesting as a key

factor for Deere & Companyís continued growth

in the international market. Deere & Company

has opened factories in China, India and Brazil.

It is pursuing further expansion into eastern

Europe and western Asia. To address declining

sales in North America, Deere is working on

technological advancements and critical process improvements to improve efficiency and

customer satisfaction.

Construction Equipment Division. Although

sales declined in 1999, division president Pierre

Leroy promises future growth. The divisionís

new sales strategy focuses on larger customers

and a new channel for equipment rental. Deereís

dealers supply repair parts for all makes of

equipment in order to differentiate themselves

from their competitors in this market. Leroy

highlights process improvements in a program

called Estimate To Cash, which builds products

in response to customer orders and has reduced

production time and inventory levels. Deere &

Company formed an alliance with a South African manufacturer of articulated dump trucks to

distribute this equipment in North America.

Commercial and Consumer Equipment Division. While most of Deere & Companyís

divisions experienced declining sales in 1999,

this division grew by 21 percent. Profitability

remained the same as in the prior year, but no

explanation of that appears in this section of the

report. Sales growth is attributed to the expansion of the riding mower market, a private-label

relationship with Home Depot, increased market share in golf course and turf maintenance

and the use of mass channels of distribution as

opposed to Deere dealers only. Facility expansion is planned for the southeastern U.S., and the

Horicon, Wisconsin riding lawn equipment plant

plans to compete for the Malcolm Baldrige

National Quality Award in 2000.

John Deere Credit. Growth in international

business allowed John Deere Credit to achieve

increases in net income in this division. Additionally, expansion of the division into more overseas

markets allowed the growth in international

sales of agricultural equipment. Increased leasing of equipment, particularly for golf and turf

maintenance, offered additional revenue streams.
First Quarter 2001 2 5

Other Operations. This section of the report

addresses the companyís newest divisions and

its support operations. Deere & Company

formed the John Deere Special Technologies

Group in 1999. The groupís focus is on integrating the latest technology into Deere products and

providing customer solutions. Its agriculture

applications to communication and internet technologies provide information management, global positioning and other services to Deere

customers. The report also briefly describes the

results of John Deere Health managed care

plans.

People and Citizenship. This last section of the

non-financial portion of Deere & Companyís

annual report focuses on environmental and

safety issues. Deere describes changes to its

agricultural equipment in response to concerns

for the levels of contaminants from fertilizer or

pesticide applications. The report also describes

initiatives to incorporate recycled materials into

Deere products and improvements to energy

efficiency. Deereís safety concerns apply to

both its employees and its customers. The report

describes the safety achievements at Deere

facilities and also product safety initiatives.

Comparison to Army. Deereís executives

discuss many challenges and emphasize future

plans and initiatives toward continuous growth in

future years. The continuation of global trade is

critical to this growth. The Army annual report

also describes global changes such as the increased deployment of soldiers in support of

peacekeeping and peace enforcement missions.

Both organizations are addressing changes to

traditional roles and are focusing on international

positions. The Deere Agricultural Equipment

Division and the Army are responding to decreased fundingóin sales for Deere, in appropriations for the Army. Both are adjusting to this

by evaluating and improving processes, seeking

opportunities in technological improvements and

evaluating market or mission. There are differences in the way the two organizations choose to

deliver their message. The Army lists numerous

detailed goals and objectives, while Deere &

Company are less specific; and the Armyís

focus on personnel is not mirrored in the Deere

report.

Merck & Company

Merck & Co. is a global, research-driven

pharmaceutical company that discovers, develops, manufactures and markets a broad range

of human and animal health products, directly

and through joint ventures. It provides pharmaceutical benefit services through Merck-Medco

managed care. Merckís mission is to provide

society with superior products and servicesó

innovations and solutions that improve the quality of life and satisfy customersí needsóto

provide employees with meaningful work and

advancement opportunities and investors with

superior returns.

Format. The annual report is a 61-page professionally printed document made

available to shareholders by mail

and on the web. Merck effectively used its annual report to

express to shareholders its past

performance, current strategy and

outlook for the future. In reviewing the previous yearís performance, they highlighted their success stories in prescription medication sales and the introduction

of new medicines to market.

The report comes in four

basic parts. First, the chairmanís

message gives a review of the past yearís

performance, current situation and finally a

strategy for growth. Next, the annual report

discusses successful marketed products. Third

are details about major research the firm is

engaged in, to give readers an idea of future

product development. Lastly, the firm discusses its Merck-Medco initiative. It goes into

detail how the Merck-Medco internet pharmacy is a model for how prescription management should be conducted industry-wide.

The majority of the non-financial pages

discuss in detail the successes of Merckís

marketed products and their ongoing research

and development projects. Merck does a good

job of personalizing the report by including

success stories from patients who have used

Merck products. This gives the reader a good

feeling about the products. The feelings we got

when we read this report were that Merck has

an endless pipeline of new drugs waiting to get

FDA approval and that taking Merckís medicaMerck-Medco is

establishing

itself as the

model for improved and costconscious managed-care facilitation.
2 6 First Quarter 2001

tions is not only right, but that they are safe, cost

effective and reliable.

Chairmanís Message. Unlike the Armyís

financial report, where some of the major program directors addressed readers, in Merckís

annual report only Raymond V. Gilmartin,

Merckís chairman, president and CEO addresses its readers. In the chairmanís message,

Gilmartin gives a detailed overview of the past

yearís performance and articulates the firmís

future strategy. Similar to Caldera, he focuses

on critical issues facing the firm in the future.

Strategy. Merckís growth strategy is to discover important medicines using breakthrough

research and to demonstrate the value of their

medicines to patients, payers and providers.

Additionally, Merck has an overriding financial

goal to be a top-tier growth company by performing over the long term in the top quartile of

leading health care companies. Merck further

refines its strategy by identifying three operating

objectives for the year. They want to maximize

revenue growth through an unwavering commitment to research, effective introduction of new

products and the successful marketing of existing products. They want to achieve full potential

of managed pharmaceutical care and to preserve the profitability of their

core pharmaceutical business

through continuous improvement

in productivity and organizational

effectiveness.

Merck addresses three

major challenges in pursuing its

growth strategy and provides

detailed plans for overcoming

these challenges. First, the company specifies that many of its

top revenue-producing drugs will

go off patent between 2000 and

2001. Merck plans to offset

these losses by increased productivity of its research and development and

continued introduction of new medicines to market. Merck prefers to expand through internal

investment rather than through mergers and

acquisitions. The firm invested 1.7 billion dollars

in production capacity and research facilities to

support future growth. Secondly, the company

identifies increased competitive nature of the

pharmaceutical business. Their plan is to succeed regardless of the business climate by demonstrating that Merckís medicines are better

than the competitionís on price and effectiveness. Finally, Merck is concerned with cost

containment in the health care industry. Merck

is marketing its drugs as being more effective

and less costly than current drug treatments on

the market. They are working with policy

makers and legislators worldwide to create a

positive environment for innovated drug development. Merck-Medco is establishing itself as

the model for improved and cost-conscious

managed-care facilitation. Merck spends a lot

of time discussing cost containment. The firm

knows that research and development is the key

to continued future revenue streams. However,

if the federal government imposes cost control

measures on the pharmaceutical industry in an

attempt to make prescription drugs affordable to

all citizens, it can cripple the industry. Merckís

report does a good job in articulating its proactive

steps to keep costs low and identify possible

alternative pharmaceutical distribution networks.

Strategic Business Units. The marketed products section of the report discusses in detail how

each category of drugs performed in the past

year. Merckís revenues come from the sale of

drugs, broken down into nine different categories. These categories are based on specific

treatment of human disorders. It is here that we

see many patient testimonials. Even professional football coach Dan Reeves discusses how

by using Merckís drug Zocor he was able to

coach his team in the Super Bowl four weeks

after having quadruple bypass surgery. Every

category articulates its past-year success in this

portion of the report.

The research section of the report demonstrates how research and development expenditures are the cornerstone of the firmís growth

strategy. A large portion of this section is spent

on justifying to the reader the need to continually

increase funding to the firmís research and

development efforts. The firm is very proud of

having introduced 15 new drugs and vaccines in

the last five years. As in the marketed products

section, Merck adorns its annual report with

personalization. In this section, Merck uses its

researchers and developers to address past

Merckís growth

strategy is to discover important

medicines using

breakthrough research and to demonstrate the value

of their medicines

to patients, payers

and providers.
First Quarter 2001 2 7

Ford is the

worldís second

largest manufacturer of cars and

trucks, which are

sold in more than

200 markets.

successes and what they are bringing to market

in the future. Not all the R&D expenditures are

going toward new drug development. A portion

of the expenditures goes to finding new uses for

current medications, an example being use of the

firmís high blood pressure medication Cozaar to

treat diabetics and patients who have had heart

attacks.

Merckís values are centered on a core

body of ethical standards and benefiting humanity. Merckís values are:

1. Preserving and improving human life.

2. We are committed to the highest standards of ethics and integrity.

3. We are dedicated to the highest level of

scientific excellence and commit our research to

improving human and animal health and the

quality of life.

4. We expect profits, but only from that

which satisfies customer needs and benefits

humanity.

5. We recognize that the ability to exceló

to most competitively meet societyís and customersí needsódepends on the integrity, knowledge, imagination, skill, diversity and teamwork

of employees; and we value these qualities most

highly.

The values help focus the firm on its strategy. Although the values speak of taking care of

society, the bottom line is that values support the

firmís ëbottom lineí. The firmís values focus on

employee standards and mission support. The

firm wants to project that they are responsible to

consumers and their employees. This is important in the health care industry because they

must portray to consumers that their drugs will

make them feel better and that they do not have

to worry about getting ill from side effects or

drugs that just do not work.

The values help support the firmís product

life cycle. Through their commitment to ëscientific excellenceí and ëbenefiting humanityí, the

firm continually focuses employees on developing new products that work. Merck believes that

if they develop quality products, profits will

follow. To reinforce these values within the

organization, Merck employees take part in

interactive ethical training. The firmís goal is to

show how Merckís values apply to their employeesí day-to-day activities, so that they can adhere to the standards and model the values

whenever and wherever they conduct Merck

business. Similarly to the Army, the values are

to be upheld day in and day out, on and off duty.

CEO Gilmartin closes his letter by stating

that the plan is in place for success and that the

future is in the hands of Merck employees.

Through their talent and commitment,

Merck will continue to deliver growth

to investors and the best medicine to

society. Merckís report reassures

the audience that things are well in

hand at Merck. They have a plan for

the future and are executing a strategy that will continue to provide growth

for the firm and returns to its shareholders.

Ford Motor Company

Ford is the worldís second largest manufacturer of cars and trucks,

which are sold in more than 200 markets. It

employs about 345,000 people in plants, offices,

and production facilities in over 200 countries

and territories. FMC is also one of the largest

financial service providers worldwide through

Ford Credit and related businesses. The firm is

broken down into four operating segments: Automotive Operations, Ford Credit, The Hertz

Corporation and Visteon Corporation. The 1999

annual report comes in eight different covers.

This reflects a change in Fordís focus from

appealing to the masses to appealing to the

individuals directly. The eight different covers

portray families from around the world depicting

the brand of Ford vehicle they purchased. The

theme ì Connecting with Customersî is prevalent throughout the annual report.

Format. The non-financial portions of the report

come in four sections. First, there are two

messages, one from the chairman of the board

and the other from the CEO. Next, a section is

devoted exclusively to customer-focused strategy. Third, each operating segment has an

opportunity to discuss its past performance and

future. Lastly, in bullet form, the report contains

a summary of the yearís major operations. The

entire report is covered in a 78 page professionally packaged report, available on the internet for

download.

Chairmenís Messages. In board chairman
2 8 First Quarter 2001

William Clay Ford Jr.ís message, he addresses

shareholders, customers, employees and supply-chain partners. He briefly discusses Ford

Motor Company heritage and his great-grandfather being named Businessman of the Century.

However, the majority of his message focuses

on the firmís future and how the use of technology, specifically the internet, is revolutionizing

the business. The internet will connect the entire

automotive supply chain; from supplier to manufacturers to dealer to customers. His belief in

the internet is so strong that he announces in his

message that all Ford employees will be offered

a computer and internet service for a nominal

fee of five dollars per month. He also discusses

Fordís commitment to society. He has a strong

belief that to be economically successful a firm

must be socially and environmentally responsible. The Armyís annual report does a good job

discussing its five environment goals and the

results of its initiatives. All of the points he

makes in his message are geared to enhancing

value to the shareholder. His message is similar

to Calderaís, in that both discuss the future of the

organization in a visionary way. Caldera and

Ford both discuss how technology will revolutionize the 21st century and how important being

on the leading edge of technological breakthroughs will be. They both talk to the principal

stakeholders. For the Army these are soldiers,

their families and the American people. At

FMC, these are their employees, shareholders,

supply chain partners and society.

Unlike the Army, Fordís Chief Financial

Officer and Chief Personnel Officer did not

make an address in the annual report. More

commonly, the CEO addresses the shareholders. His or her message more specifically

addresses the firmís past performance and future strategy for the firm. The CEO report by

Jac Nasser is more specific, and he begins by

articulating the firmís overall strategy with the

theme of customers being first. The strategy

here is simple: employees satisfy the customers,

and satisfied customers reward shareholders.

Fordís focus is on quality by diagnosing root

causes of problems and finding better ways to

prevent errors. To reduce variability in their

products, they are adopting the ìsix sigmaî

standard of quality first introduced by Motorola.

Consumer-driven six sigma programs start with

the customer and work their way back into the

companyís processes. Ford has restructured its

organization to remove filters in communicating

with customers. Nasserís vision is, leverage the

internet to allow the firm to become the worldís

leading consumer company for automotive products and services. He discusses the firmís 5-

point internet strategy.

Strategy. First, the internet will be used to

revolutionize supply-chain operations. By eliminating waste, the firm can build and deliver

products in line with customersí specific needs.

Secondly, the internet will be used to attract and

communicate with customers. The communication will go beyond advertising. The goal is to

have an interactive dialog with customers. Third,

the report lists the retail experience and distribution of vehicles prompted by the internet. Customers will be able to design and order a vehicle

to meet their specifications. The fourth area is

to make ownership and vehicle operations easier

via the internet. The fifth strategy is to make

internet communication technology available and

affordable to customers, i.e., vehicle purchasers.

Nasser closes by praising the success of

past-year performance of its different operating

units and employees. Even with all the successes that Ford had with record-breaking years,

Nasser took time to explain its lagging stock

price performance. His pledge to shareholders

and employees is to have returns in the top

quartile of Standard & Poorís 500 companies.

Through consistent performance and through

customer-focused and internet initiatives, the

firm plans to attain its goals. [Editorís Note:

The Ford-Firestone sport-utility vehicle tire

controversy occurred subsequent to this annual report.] Neither the chairman nor the

CEO addressed compliance with the CFO Act

or any other legislative requirements in the nonfinancial pages of the annual report. Again,

publicly traded firms have been producing auditready financial documents from the time they

began trading. There is not such emphasis

placed on having to explain the non-compliance

with a regulatory requirement. Shareholders are

to assume everything is legitimate unless noncompliance occurs and the CEO, chairman or
First Quarter 2001 2 9

Fluor was selected

for this research

effort because of

its global enterprises, logistical

emphasis including asset management and its focus

on reinvention of

declining markets.

auditor will explain the firmís actions.

Unlike Fordís annual report, where both

the chairman the CEO addressed their readers,

the Armyís chief of staff did not directly make

an address in the report. There are the civilian

leadershipís opening messages at the beginning,

and the remainder is a collage of soldiers in

action. Yet only once is the chief of staff of the

Army quoted in the report. We believe he should

have made an official statement of his support

and commitment to executing the Army

secretaryís vision and that his soldiers are ready

to meet this challenge. The private sector

reports have addresses from both the chairman

and the CEO.

Fordís ìcustomer-focused strategyî is a 3-

page portion of the annual report reiterating the

firmís commitment to the customer. It discusses

the pervasiveness of this strategy in every element of the firmís operational structure. Ultimately, Ford believes that building in quality with

the customer in mind is the only way to operate.

Consumers reading Fordís report come away

with the feeling that Ford will produce for them

the very best product available because the

firmís efforts are designed to satisfy their needs.

The annual report does a terrific job selling this

theme to its readers. We did not get this same

feeling reading the Armyís annual financial

report. It was very cold in putting out its

performance results and objectives.

Strategic Business Units. The four operating

segments of the firm had an opportunity to boast

about their past successes and, more importantly, to articulate their operating priorities. In

the automotive division, their goals (not surprisingly) are customer satisfaction and internet

exploitation. At Ford Credit, its priorities are

establishing e-commerce channels to support

customer relationships and diversification of

income sources. Hertzís priorities are to maintain their number-one market share position and

to pursue worldwide growth. It should be noted

that this division does not have a direct internet/

e-commerce priority. Finally, Visteonís priorities are to grow non-Ford sales and to be on the

leading edge of automotive technology. For the

four operating units, these priorities are shortterm in nature and were to be achieved within

the year 2000.

Nowhere in the annual report does Ford

make mention of the firmís values. This is

surprising from a company rich in heritage. A

search of Fordís web site likewise yielded no

results. We believe it is important for a firm to

articulate to its audience its core values. It gives

the reader an understanding of what drives the

firm to succeed. More importantly, the lack of published values

takes away from the companyís

leadership any sense of trust that

shareholders place with them. At

least with the Army you know that

all its soldiers are maintaining or

are least being reminded of standards that are to be embraced by

all soldiers.

For its part, the Armyís annual report does not articulate next

yearís objectives. It does a great

job of identifying goals, objectives,

measurements and results of past

yearsí performance, but it falls

short in addressing operating priorities and goals

for the coming fiscal year. Next year, when we

read the Armyís 2000 financial statement, we

will again only know what they were successful

in doing, but not know if the Army succeeded in

meeting all its intended objectives. Ford made a

conscious effort to tell its shareholders what

performance objectives it had set for each division of the company. Next year when Ford

produces its annual report, its shareholders will

have the previous yearís annual report to compare Fordís successes and failures.

Fluor Corporation

Fluor is best known as an international

engineering, procurement and construction company with significant assets in coal. Fluor wants

to be known as a ìknowledge-based professional services and engineering, procurement

and construction company, with a significant

investment in low-sulfur coal.î Fluorís annual

report is specifically targeted toward shareholders as opposed to the Armyís which is targeted

toward Congress, its own employees and the

informed stakeholder. Fluor was selected for

this research effort because of its global enterprises, logistical emphasis including asset management and its focus on reinvention of declining
3 0 First Quarter 2001

markets. We found these similar to many of the

Armyís focuses and goals.

Format. The Fluor annual report is similar in

format to the Armyís and to other corporate

annual reports. Like the others, Fluorís report is

available on the internet as well as in hard copy

for shareholders, and it consists of the chairmanís

message and mini reports on each division,

followed by the financials and the auditorsí

statement.

Fluor incorporates a bit more financial data

into the non-financial portion of the report than

most of the others by including basic bar charts

on the table of contents page. The charts show

5-year trends for revenues, operating profit, net

earnings, closing stock price, debt

to capitalization ratio and dividends. As would be expected

from this initial focus, the

chairmanís message and other

narrative portions of the report

are also focused on financial

trends and economic data. Operating statistics and additional

color charts are located after the

Fluor Global Services section.

These provide data on revenues,

backlog, gross and operating margins and safety. Similar statistics and charts also appear at the end of the A.T.

Massey section.

Audience and Message. Fluor produced this

report for its shareholders. The intent is to

assure them that Fluor has plans to turn around

declining sales and profits and to provide future

dividends and growth.

Chairmanís Message. Philip J. Carroll, Jr.,

chairman and CEO of Fluor presents a 3-page

letter addressed to the shareholders. The caption at the head of the letter states, ìTo Our

Shareholders, Repositioning Fluor for enhanced

shareholder VALUE.î The chairman opens by

briefly explaining the declining revenues and

earnings for 1999. He then proceeds to discuss

the new strategic directions for Fluor, including

realigning the companyís several business units

into four principal units with specific performance accountability for each. Carroll introduces a new strategic business unit called Fluor

Signature Services, which serves as an administrative arm to the operating units. He very

briefly touches on the closure of non-strategic

offices and the reduction of 5,000 personnel, and

he highlights the importance of fiscal discipline

and use of business models. The CEO predicts

that use of new information technologies and

new brand architecture will lead to significant

improvements in work process and in brand

recognition. Carroll commits to the goal of

achieving earnings per share growth of at least

10 percent annually.

Chairman Carroll continues with more specific financial and division-level results and future projections. A change in dividend policies

now bases the payout on long-term operating

performance expectations as opposed to prior

yearís earnings. Carroll summarizes the conditions of the main Fluor divisions. According to

Carroll, the traditional focus of the corporation,

Fluor Daniel (engineering, procurement and contracting), suffered from weak global economic

conditions. The coal division, A.T. Massey

Coal, also suffered from global economic sluggishness and mild weather conditions. Fluor

Global Services and Signature Services are new

entities. In his closing, Carroll introduces some

management changes and spins a positive outlook for the companyís future earnings. He

concludes by extending his appreciation to the

board of directors and employees for their efforts in repositioning the company and to the

shareholders for their support.

Fluor Strategic Business Units. Following the

chairmanís message, Fluorís annual report provides detailed sections for each of the primary

divisions. Fluorís four principal divisions are

Fluor Daniel, Fluor Global Services, A.T. Massey

Coal and Fluor Signature Services. To introduce

the divisions, the annual report provides a onepage narrative with overviews for each and a

page of financial results and key strategies. We

found this section very beneficial to the reader,

in that it provides the heart of the divisionsí

messages in condensed form for readers who do

not want to read the remaining 16 pages of detail

and as a review sheet for future reference for

the readers who do continue.

Fluor Daniel provides engineering, procurement and construction services. Five strategic

business units focus on chemicals and life sciFluor Global

Services states its

goal is to become

ìthe dominant

provider of

outsourced asset

optimization

capabilities.î
First Quarter 2001 3 1

ences, oil, gas and power, mining, manufacturing

and infrastructure. In 1999 Fluor Daniel experienced declining revenues attributed to increased

client selectivity as well as slower economic

conditions. The division achieved increased

profitability, which it attributed to its narrower

market focus. In addition to client selectivity,

Fluor Daniel lists cost reductions and improved

accountability as key strategies. Fluor Daniel

sees future manufacturing opportunities in its

ability to handle large, complex and remote

mining projects and to supply services to the

global microelectronics market. It has been

awarded contracts under a $200+ billion federal

transportation bill (TEA 21) to build highways in

the southeastern U.S. and expand JFK international airport in New York, and it is involved in

several European public/private rail projects.

The duration of the rail projects and potential

future maintenance contracts offer attractive

long-term revenue streams. Fluor Constructors

International is one of the few construction and

maintenance contractors with ISO-9002 certification.

Fluor Global Services states its goal is to

become ìthe dominant provider of outsourced

asset optimization capabilities.î Its mission is

ìto assist every client in achieving a sustainable

competitive advantage and profit growth by

providing customized and integrated services

that optimize the total life-cycle of their assets

better than any competitor.î Fluor Global Services (FGS) separated from Fluor Daniel during

the 1999 reorganization. Changing client needs

necessitated the restructuring with increased

demand for the services FGS provides. FGS

achieved significant growth in profitability, unlike many of Fluorís other strategic business

units. FGS provides construction equipment and

fleet management services, tool leasing, global

staffing services, and Fluor Federal Services

(FFS), a division of FGS, provides project management, business management systems, architectural and engineering services, and construction and construction management services to

several U.S. federal agencies. FFS is contracted by the Department of Energy to remediate

former nuclear weapons plants. It sees this

specialty as a long-term strength and strategic

advantage with the potential for significant future contracts with predictable and level streams

of income. FFS was also under contract with

DoD (to help build installations in East Timor)

and with the Federal Emergency Management

Agency. FGSís telecommunications division

saw many new opportunities with the emerging

and incumbent markets adopting new technology.

A.T. Massey, a major force in the U.S. coal

industry, saw a decline in earnings in 1999 for the

first time in many years. The report blames a

variety of factors for the poor performance;

including global economic conditions, alternative

fuel sources and increased production capability

among competitors. Shifting demands for the

variety of coal products has forced A.T. Massey

to look for efficiencies in production and to try to

capture niche markets such as industrial coal

sales. Safety is a major concern for the coal

industry, and A.T. Massey reports a record well

above the industry average.

Fluorís newest strategic business unit, Fluor

Signature Services (FSS), was formed in 1999 to

provide business administrative and support services to the operating units of Fluor Corporation.

FSS has profit-and-loss accountability, and Fluor

Corp. hopes to expand its customer base to

external clients. Unlike the

rest of the Fluor unitsí narratives, FSS lists more specific goals for the next year.

As 1999 was a transitional

year, no specific operating

results were provided, but at

the top of the list for 2000ís

goals is to achieve breakeven performance.

Comparison to the Army.

In many ways the Fluor

Corporationís narrative portion of its annual report is

similar to that of the Army.

Both have similar formats

with subsections for major

divisions. Both have a global focus, with Fluor emphasizing growth opportunities and trying to position itself to ride out

poor global economic conditions. The Army

focuses on supporting U.S. interests globally and

maintaining alliances.

The Armyís Revolution in Logistics is

essential for its goal

of global

deployability, and it

focuses on the use of

information technology to provide complete visibility of

logistics requirements

and movements.
3 2 First Quarter 2001

Both reports contain significant mention of

the importance of logistics support. Fluorís

Global Services is concentrating on providing

such services as its core competency, with

emphasis on providing the best asset management possible. The Armyís Revolution in Logistics is essential for its goal of global deployability,

and it focuses on the use of information technology to provide complete visibility of logistics

requirements and movements. Returns on real

estate investments are of concern to FSS, just as

excess infrastructure, which depletes limited

resources, is a major issue for the Army. Fluor

Daniel provides construction services which are

comparable to Army civil works projects in that

they support major infrastructure.

The differences between Fluor

Corporationís and the Armyís reports stem

from basic differences in their missions. While

Fluor aims to reposition itself to provide shareholder value, the Army is assuring national

security and readiness for today and tomorrow.

Fluorís report is clearly written for the shareholders and spins positive tones on any negative

results or situations that arose in 1999. The

Armyís report is written for knowledgeable

stakeholders, particularly the Congress and

higher-ranking service members, and it focuses

on its programs and goals and how they support

readiness.

In addition to these major differences in

purpose and audience, the two reports differ in

readability and level of detail. Fluorís report is

much easier to read than the Armyís because of

the difficult section of the Army report dedicated

to Army goals and objectives. We feel the Army

provided a level of detail that confuses the

reader as to what is significant to the Armyís

stated task of supporting the Defense

Departmentís two simply stated goals.

Both Fluor Corporation (A.T. Massey) and

the Army are facing significant challenges in

meeting increasing environmental safety conditions, but Fluor does not describe the issues as

openly as the Army does. A.T. Masseyís report

does not make specific mention of the environmental issues involved in coal mining, but acid

rain and strip-mining concerns are issues that

directly affect that industry. The Army lists

several specific goals involving compliance, conservation, pollution prevention, restoration and

technology.

The Armyís asset management focus is on

the lack of financial accountability of its assets.

This is the main reason for the Armyís not yet

having received an ëunqualifiedí (no restrictions

or reservations) audit opinion. As this issue

receives considerable attention from Congress

and others, the Army is working toward solving

the problem. Fluor Corporation, since its inception as a publicly traded company, has been

required by the Securities and Exchange Commission to provide this level of accountability.

The Armyís requirement to achieve this financial accountability was only introduced in 1990.

Conclusions

Businesses are in business to make money.

The annual report justifies to shareholders the

steps taken by the firmsí management to produce profits. For private enterprises, annual

reports are a good thing to produce. The Army

is in the business of defending the nation, not

making a profit. Where the Armyís report gains

importance is in ascertaining resources. The

non-financial pages of the Army annual report

are geared to justify to Congress that the money

allocated to the Army is being spent wisely and

that the Armyís leadership is being a great

steward of public dollars. Additionally, these

pages are a cry to Congress for continued

support of Army initiatives.

The Armyís report lacks specific priorities

for the upcoming fiscal year. It does not address

issues beyond the year being reported on. The

Armyís report only discusses what it has just

done, with no short-term goals outlined for the

next fiscal year. In contrast, the private firms we

analyzed did good jobs of articulating to their

audience what can be expected from them in the

upcoming year. The corporate reports give

readers a sense of assurance each firm has a

plan with achievable short-term objectives.

Everyone is leveraging technology to make

their business better. Throughout all the five

annual reports, leveraging technology is a common theme. Clearly, the advantage goes to the

private firms in achieving their technological

objectives. For the private sector, the acquisition

of new technology is a simpler process than for

the public sector. They allocate the funds,
First Quarter 2001 3 3

usually based as a percentage of their revenues,

to either purchase or develop the necessary

technology. Congressional funding and the bureaucratic acquisition process, on the other hand,

burden the Army. The department has lofty

technological goals, but it seems to us that the

best the Army can do, because of resource

constraints and the acquisition process, is to

chase technology rather than lead it.

Recommendations

The Army chief of staff needs to make an

address in the annual report. As the Armyís top

soldier, he needs to make a statement that he

believes the Army secretaryís objectives are

executable and support the Armyís vision.

The Army needs to decide who is the

intended audience for the annual report. If it is

Congress, as we believe, then the Army needs to

tailor the report to them. More emphasis should

be placed on specific program funding, terms

that Congress can understand. The report talks

about new pieces of equipment like the Radio

Frequency Identification (RFID), but we are not

sure if every congressman understands the entire impact of their approval or disapproval of

program funding on such specific projects.



About the Authors Phyllis K. Korcz is a

financial analyst with the Army Audit

Agencyís installations management directorate. She has a B.S. in Hotel/Restaurant

Administration from Boston University and

ten yearsí RM experience, much of it in

nonappropriated funds in Korea. She and

Captain Gautier collaborated on this article

as their student research project at the Army

Comptrollership Program at Syracuse

University, from which they graduated last

August and won the class award for best

research paper. Anthony Gautier is a

certified Defense financial manager working

as a budget analyst at headquarters, Training

and Doctrine Command. His undergraduate

degree is in Business Administration from

Hofstra University in New York.

The Armyís report was rather difficult to

read and would benefit

from some brief overviews of its detailed sections on performance

goals and measures.

Ford Motor Companyís

annual report gave an

excellent one-page

snapshot of the firmís

past and current performance, as well as its

future priorities. That

assisted readers by giving them an overview of

what the report contained.

Finally, the Armyís

annual report should provide a message to the

service members. In this capacity, the annual

report would be better received if it included a

message from the Army Chief of Staff in addition to the messages from the civilian Secretaries.

Name Command

Maj. Richard K. Addo EUSA

Jessica L. Bird INSCOM

Cheryl A. Bowman INSCOM

Maj. Gregory J. Burke USAREUR

Capt. Rodney Connor USASOC

Capt. Curtis Crum USASOC

Maj. Kent D. Davis INSCOM

LaRahnda M. Flagg FORSCOM

Maj. Mark H. Hladky FORSCOM

Florencia C. Holbrook ARCENT

Maj. Richard D. Horsley TRADOC

Hwa-Ok Ko EUSA

Maj. William Lee Roy Koester, Jr. TRADOC

Carl G. McDowell TRADOC

Nina Murphy AAA

Maj. Gerald Nixon FORSCOM

Elizabeth L. Norris CIDC

Jean L. Peoples TRADOC

Linda B. Pettit MTMC

Andrea Powers FORSCOM

John Wayne Raines TRADOC

Lori Risner INSCOM

Capt. Mark E. Rosenstein USARPAC

David A. Smith FORSCOM

Maj. Lynn L. Snyder OCAR

Maj. D. Thomas Soli USAREUR

ACC O1-I Graduates (January 16-February 9, 2001) Web Sites

The following list of Pay and Finance web sites

were extracted from the web site list of the U.S.

Army Publications Agency. It is hoped that they

prove helpful in reducing time spent on web

searches.

Army Financial Operations:

http://www.asafm.army.mil/financial.htm

(Pay rates, drill pay, travel voucher information)

DFAS:

http://www.asafm.army.mil/DFAS

(Defense Finance and Accounting Service

Indianapolis)

OCAR Pay Support Center:

http://www.army.mil/usar/psc/ocarhp.htm

(Links to important USAR pay information)

Per diem rates:

http://www.dtic.mil/perdiem/pdrates.html

USAR Enlistment/Reenlistment Bonuses,

and Incentives:

http://www.army.mil/usar/benefits/benefts5.htm
3 4 First Quarter 2001

PERSPECTIVES

OFFICE, ASSISTANT SECRETARYOFTHE ARMY

(FINANCIAL MANAGEMENT & COMPTROLLER)

The following sections were written by different OASA(FM&C) deputies.

Not every deputy will provide input for this feature.

 Deputy ASA (Financial Operations)

by Ernest J. Gregory

On November 14, 2000, the Secretary of

the Army signed the annual statement of assurance on management controls for fiscal year

2000, which ended last September 30. The

statement reported 10 material weakness, all

identified in prior fiscal years. One weaknessó

the Y2K computer problemówas closed during

the 2000 fiscal year, and the other nine weaknesses were carried forward into this year as

uncorrected. Once again, most Army headquarters staff agencies and commands submitted solid feeder statements that raised substantive issues and provided well-written material

weaknesses. These made our job of building the

Secretaryís statement much easier.

In reviewing the feeder statements, however, we noted areas needing additional emphasis in some commands. To assist with that effort,

let me share these thoughts on areas that could

be improved:

 The description of a material weakness should

be concise, but it must include enough detail for

the Army functional proponent to understand the

problem and related issues. A good description

makes it easier for the proponent to assess the

problem as a policy matter, to determine whether

it could be more widespread, and to decide

whether the weakness merits reporting in their

headquarters feeder statement or possibly in the

Secretaryís statement.

 A material weakness must involve a problem

with management controls (i.e., management

controls are not in place, are in place but not

being used, or are in place and used but simply

inadequate). The material weakness and its

corrective actions should not have as a primary

focus the need for additional resources. Resources will often be inadequate, at least in

someoneís view, but the annual statement process is sometimes used as an ìend runî around

the normal Army process for identifying requirements and allocating resources. The weakness

and the associated plan for corrective action

should focus on practical measures to take using

existing resources.

 For each material weakness reported, the

effectiveness of corrective action must be validated before the weakness can be reported as

corrected. For weaknesses reported in headquarters and command feeder statements, validation can be completed by auditors or inspectors or by other review methods that a commander feels are appropriate. In all cases,

however, the validation effort should be shown

as the last corrective action.

Again, the overall quality of everyoneís

headquarters and command feeder statements

was very high; weíve made great strides since

the mid-1990s! We want to thank the hundreds

of action officers who provided support to their

commands and organizations during the fiscal

2000 annual statement cycle, and we look forward to your continued support in the future.


First Quarter 2001 3 5

 

FA45 Focus

by Robert W. Raynsford

Under Honorable Helen T. McCoyís leadership and guidance as assistant secretary of the

Army for financial management and comptroller, the Army pursued more innovative and

efficient ways of doing business. Thanks to her

leadership, the Army succeeded in promoting

sound business practices through entrepreneurship, reengineering and partnering efforts.

During her tenure, McCoy encouraged efforts to improve business practices that reduced

and avoided costs, generated and collected revenue, streamlined and consolidated operations

and used partnerships with the private sector to

reduce infrastructure requirements. As a result,

the Army accomplished numerous business practice initiatives that exemplify new and innovative

approaches to conducting its business. Several

examples are shown below:

Automated meal check

The OASA(FM&C) led a DoD effort to

reconfigure the antiquated meal ticket process

by using private-sector tools and state-of-the-art

technology. In July 2000, DoD implemented an

automated meal check process that replaces the

antiquated, manual process used to pay for

meals consumed by DoD recruits in transit to

their first duty station. Recruits use the meal

checks to eat in private sector restaurants when

government facilities are not available. Under

the new process, computer-generated checks

are provided to the recruits to purchase meals,

and a private sector bank pays the restaurants

electronically within 48 hours through the normal

banking process.

Integrating state-of-the-art technology and

private sector business practices reduces costs,

improves internal controls and provides a better

service to the recruit. This initiative won a

Government Executive 2000 Travel Manager of

the Year award and the American Society of

Military Comptrollers team award for fiscal

2000 as a creative solution that combined the

tenets of financial reform and travel

reengineering with industry best practices and

leading-edge technology.

New legislation

The OASA(FM&C) initiated legislation to

enhance DoDís legal authority to use its nonexcess real property (that wasnít fully utilized)

more efficiently and effectively. As a result of

Army efforts, a task force of military service

representatives led by the Defense deputy

undersecretary for industrial affairs refined and

submitted the legislation to Congress. Public

Law 106-398, the 2001 National Defense Authorization Act, approved the DoD request to

amend section 2667 of Title 10, U.S. Code,

Leases: Non-Excess Property of Military Departments.

The legislation (1) permits construction or

acquisition of new facilities with cash proceeds

earned from leasing DoD property, (2) clarifies

that in-kind consideration received from leases

can be used for construction of new facilities and

(3) allows the in-kind consideration to be accepted at any property or facility under the

control of the military service concerned.

The new law significantly benefits DoD as

an important incentive and useful tool for the

department and its installations. Several major

lease projects currently in process require the

authority the legislation provides. The ability to

use cash proceeds for construction and accept a

broader range of in-kind consideration, including

construction of new facilities, affords DoD added

flexibility to achieve its leasing objectives and

better realize the value of its real property.

The ASA(FM&C) initiated the Armyís

effort to explore opportunities to more effectively utilize under-performing real estate assets

at its installations through public/private partnerships. Taking advantage of the enhanced authority addressed above, the Army selected a

partner to explore, along with installation personnel, leasing opportunities at Ft. Sam Houston,

Texas. This installation has about half a million

square feet of under-performing but not excess

building spaceóthe old Brooke Army Medical

Center and beach pavilion. The Army doesnít

have sufficient funds to renovate this space to

fully and effectively utilize toward the serviceís

mission. The Armyís objective is to enter into a

Resource analysis and business practices
3 6 First Quarter 2001

mutually beneficial leasing arrangement whereby

private funds are used to develop the facilities for

joint public/private use.

The Army is pursuing similar partnership

arrangements at Picatinny Arsenal, N.J., Yuma

Proving Ground, Ariz. and other locations. By

successfully entering into lease agreements with

private-sector partners, the Army can use its

under-performing assets at military installations 

to improve readiness, achieve cost savings and

reduce installation operating costs. This approach offers installations another tool to deal

with underfunded base operations accounts in

the environment of constrained resources.

These and other business practices initiatives that began under Ms. McCoyís watch will

benefit installations and the Army as a whole.

Audience

Primarily professional resource managers

within the Department of the Army. Articles

target RM careerists at all levels.

Readers include generalists and specialists

(from battalion commanders to budget analysts,

as well as military and civilian staff working with

industry).

Content

All aspects of resource management that

influence the way the Army accomplishes its

mission and for which resource managers and

comptrollers have direct responsibility.

Articles should stimulate thinking about

matters of importance to managers and encourage participation in a forum for subjecting Army

doctrine to continuous critical analysis, leading to

better understanding and improvement.

New ideas and techniques are of particular

interest. RM covers a variety of topics, including

fiscal policies relating to management of manpower, facilities, information, time and materiel.

Any currently significant subject related to resource management is appropriate.

Historical articles must draw a parallel or

illustrate a lesson for current and future use. If

you intend your article to coincide with an

anniversary or event, it must be submitted no less

than four months in advance. We attempt to

work 90 days in advance of publication - if you

have an article for the 1st quarter (spring) issue,

we should have it before January.

Articles of general interest and features

such as book reviews are not normally published.

Resource Management Guidelines for Authors

Style

We prefer concise, direct language; in other

words, write clearly and precisely. Address the

specific rather than the general. Use the active

voice; avoid passive verbs and construction.

 In accordance to DoD and Army guidance

and regulations, RM style is drawn from the

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some variation for local style.

Articles should have a beginning (a lead)

written to catch the readerís interest and introduce the main thought of the piece. After the

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Write with enthusiasm! Be natural. Write as

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Readers want to see your article presented

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Ensure that you properly attribute all references, paraphrases or quotes. Take care that

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Use full names (first, middle initial and last),

full ranks, job titles and location for the first

reference within the article. Afterward, use only

the last name unless there might be a conflict

with a similar name.

Generally speaking, avoid using acronyms

Professional Development
First Quarter 2001 3 7

Tom Druzgal, U.S. Army Audit Agencyís deputy

auditor general for acquisition and materiel management, recently won the Association of Government Accountantsí Elmer Staats award at its

12th annual federal leadership conference in

Washington, D.C. The award, named for former

comptroller General Elmer B. Staats, General

Accounting Office head in the 1970s, honors

federal professionals who exemplify and promote excellence in government by demonstrating outstanding leadership, high ethical standards and innovative management procedures.

Druzgal earned the recognition for diligent personal effort in providing Army managers with

audit services in areas that expertly filled their

decision-making needs. He was also cited for

creating a work environment that fostered leadership, accountability and teamwork among his

subordinates.

or jargon. Write plainly and directly. Remember

that many of your readers may not understand

the alphabet soup you feel comfortable with and

take for granted.

If you use acronyms, explain them. If necessary, add a glossary at the end of your article

to identify the acronyms and jargon you use.

Likewise, if you use foreign terms, explain them.

We must edit any manuscript submitted as

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a certain amount of rewriting, mostly to conform

to style. Substantive changes, however, will be

made only with the authorís consent.

We retain the right to make final determination on appropriateness and applicability.

Manuscripts

Articles of five to 10 pages of doublespaced copy are most suitable. Longer or shorter

articles may be published if appropriate.

The best guidance is to treat the subject

adequately, develop your thoughts to conclusion

and stop.

Artwork

Send any illustrations or graphics that complement your work.

High quality artwork, photos, maps, charts

or graphs can increase understanding and enhance reader interest. Electronic submission of

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graphics format or in MS Powerpoint.

We can prepare finished work from sugges

Stions or rough sketches. We can work with

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would prevent our using it.

About the Author

We require a brief biography from each

author. Include present position, previous experience (that relates to the article) and any other

information that strengthens your credibility.

Acceptance

We accept or reject manuscripts after careful consideration and review. We assume that all

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 ethel.mccane@dfas.mil

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year.

For more information, call the managing

editor at DSN 227-2729 or commercial (703)

697-2729.

You may contact the editor at DSN 699-

1136 or commercial (317) 510-1136.

Druzgal wins

Staats Award


3 8 First Quarter 2001

by John Rogers and Maj. Danno Svaranowic

In October 1999, Army chief of staff General Eric Shinseki proclaimed The Army Vision:

ìSoldiers on Point for the Nation . . . Persuasive

in Peace, Invincible in War.î The vision contained three key elements, people, readiness and

transformation. The Armyís transformation

objective included a force that is strategically

responsive and dominant at every point on the

spectrum of operations. This force embodies

the decisive war-fighting capabilities of todayís

mechanized forces and the strategic responsiveness of todayís light forces.

The Army recognized that science and

technology do not provide this combination at the

combat platform level today; however, the imperative is not only for the future Army, but it is

also an imperative today. This is a success story

about how we in the Armyís Training and

Doctrine Command, TRADOC, brought together the ìrightî people to successfully execute

a complex resourcing project on a compressed

schedule.

The first transformation thrust was the

stand-up of the two initial brigade combat teams

or IBCTs at Ft. Lewis, Wash., which began in

earnest just weeks after General Shinsekiís

announcement. The parallel thrust was the

testing and selection of new vehicle and weapons platforms, as well as designing the operational requirements, doctrine and training for the

IBCTs and follow-on interim and objective

forces.

As part of the transformation initiative,

funding quickly arose as the most critical challenge. None of the transformation requirements

had ever been ìPOMídî (submitted into the

program objective memorandum), and since the

directive was not issued until after fiscal year

1999 had begun, no current-year funding had

been identified. Here we discuss the process we

used to address the funding issue and the lessons

we learned in doing so.

The Funding Process

The Army directed TRADOC to serve as

the executive agent for identifying and submitting all funding requirements. However, DA

also stated that each major command would be

given its share of funding directly, not via

TRADOC. That was a change in procedure, as

prior similar efforts were funded through

TRADOC and then distributed to the other

commands.

In January 2000, TRADOC formed a transformation directorate within its deputy chief of

staff for combat developments (DCSCD) office. The organization was to have operational

oversight of TRADOC transformation initiatives as well as coordinating transformation

funding requirements. Because there was no

staffing document for the new directorate, the

TRADOC staff task-organized and took personnel ìout of hideî in order to form it.

The transformation directorate held a series of functional integrated process team or

FIPT meetings to bring together the senior

military functional experts in training, doctrine,

analytics, operational and systems architecture

for intelligence, test and evaluation, infrastructure and combined arms. Representatives from

the Armyís materiel, forces and test and evaluation commands (AMC, ATEC, FORSCOM)

also attended. The resulting council of colonels

briefed a series of ìquad chartsî [Figure 1],

which showed the impact of not funding the

requirements by assigning each one a tier to

show its relative urgency toward supporting the

initial brigade combat team.

Tier I (War-Stopper): Mission will fail if requirement is not funded or completed. This

requirement should be in direct support of the

Army chief of staffís or TRADOC commanderís

guidance for transformation.

Tier II (Critical): Mission will be successful

without this requirement; however, the value it

adds will outweigh the resources required to

fund it by such a great margin that prudent

Funding transformation

The challenge and lessons learned
First Quarter 2001 3 9

Professional Development management dictates it should be funded.

Tier III (Enhancement): Mission will be successful without this requirement, and lesser or

minimal value would be added.

Functional proponents also had to link every quad chart to one or more of these four

documents: the operational requirements document or ORD, the organizational and operational

or O&O concept, the table of organization and

equipment or TOE and the training plan. These

documents were the approved blueprint for the

organization, concept and operational requirements of the new brigades, so an approved

funding requirement needed to support the elements of these critical documents.

Quad charts had to show the paragraph,

line item or exact sentence from the appropriate

document, so that the council of colonels could

accurately determine each requirementís urgency. Items not linked to at least one of the four

documents had limited chance of being approved. Some proponents also had to coordinate

and gain approval from either the TRADOC

system manager or the directorate of combat

development from the associated TRADOC

functional school.

Figure 1 is a sample quad chart. Information was required in each of the four quadrants:

 Description and Tier Level

 Breakdown of dollar requirements

 Impact if not funded

 Impact if partially funded

The transformation directorate held FIPT

meetings in December 1999 and January 2000,

which culminated in a 2-day FIPT/general

officer in-progress review in late February

2000. The first day of the February FIPT

resulted in a thorough refinement of all functional requirements. Day 2 was a briefing to

general officers on the TRADOC staff and

others from AMC, ATEC and FORSCOM.

Two weeks later after further scrubbing and

analysis, the funding requirements were briefed

to the transformation senior program resource

advisory committee, and further scrubbing,

validation and refinement followed.

A week later, a critical materiel FIPT met

at headquarters AMC in Alexandria, Va. The

TRADOC colonels met with the AMC logistics

counterparts to review every line item in painstaking detail and thus ensure the accuracy and

validity of each materiel funding requirement.

Materiel funding was slated to go directly from

DA to AMC, but it was imperative that

TRADOC, as the executive agent for transformation, scrub and validate the materiel requirements.

In March 2000 the transformation directorate, along with the deputy chief of staff for

RM, briefed Army leaders on the overall fundTitle of Funding Requirement

$ _ _, FYXX,OMA Tier _ _

Proponent: Impact if Not Funded:

Description:

Requirement breakdown ($): Impact of Partial Funding $:

Travel $_K

Equipment $_K

Supplies $_K

_______________

Total $_K Coordination w/Proponent RM

6 Feb 00 POC:
4 0 First Quarter 2001

ing requirements. DCSRM then submitted transformation funding requirements for fiscal years

2000, 2001 and the POM years.

Outcomes

 TRADOC and the other commands received 100 percent of requested tier-1 funding

for year 2000

 Final numbers for the POM submission

were transmitted in time to adequately influence

the POM.

 Credibility between TRADOC and Army

headquarters was maintained with the submission of a cogent, well-developed and fully justified funding package.

 Both macro- and micro-level details of the

funding requirements were compiled and reported, which greatly enhanced the presentation

and understanding of the requirements.

Lessons Learned

Transformation is an Integrated Effort. The

rapid speed and enormous scope of this funding

project required a truly integrated process across

all functional areas. Had this integration not

taken place, the result would have been a disjointed effort that would have failed to adequately capture and justify all necessary funding requirements. The transformation directorate, with its embedded plans cell that carried out

the nuts and bolts of the funding process, integrated all requirements for training, simulations,

doctrine, analysis, combat development, intelligence architechture and

combined arms, as well as

the requirements from

FORSCOM, AMC, and

ATEC.

Early on, the combat

developments office recognized the need for a financial manager, and acquiring co-author Danno

Svaranowic [then a captain] from the RM staff for

a 6-month detail allowed

them to aggressively work

on what proved its most

critical challenge in the spring of 2000. This

proved to be extremely beneficial for the

TRADOC staff and especially the RM. It

established one focal point of contact for transformation funding, and because Svaranowic

was also part of the transformation directorate,

he was able to integrate funding requirements

across all the lanes of expertise.

The transformation directorate provided

the staff supervision and oversight of the administration and implementation of decisions in direct support of Army transformation, to include

operations, resources, planning, synchronization

and coordination. The staff RM served as

overall resourcing lead, with co-author John

Rogers, a senior management analyst, in the role

of RM transformation point-of-contact. In this

role, Rogers developed resourcing strategy to

stand up initial brigades and synchronize funding

requirements.

Any critical mission that requires a large

scope and compressed time frame must have a

central cell that plans, manages, coordinates,

collects and disseminates funding requirements.

To do otherwise would be to assure an end

product that fails to identify and convey the warstopper-type funding requirements.

Transformation is Not Solely a Budget/RM

Mission. Many organizations embark on a

project of this nature, and when it comes to

identifying funding, they turn to the RMíers and

say, ìWe need fundingÖgo get it.î To be sure,

RMíers should take the lead in assisting in

dealing with fund managers at higher headquarters or The Pentagon, as well as assisting in

providing fiscal oversight and budgetary expertise. However, functional requirements must be

developed, forecast and validated by functional

experts, not budgeteers.

RMs and Functional Experts Need to Work

Hand in Hand. Throughout this funding process, the installation directors of RM were not

lashed up well with the functional leads. DRMs

and functional leads must find a way where they

are working in unison, especially because a

project of this nature is not part of the normal

budgeting process.

Itís Not Experimentation. Previously, for the

Army experimentation effort, TRADOC received all funding and then distributed it to other

commands. The transformation effort departed

from that stovepipe schema, with Army funds

instead distributed directly to each of the con-

 About the Authors: John Rogers

and Maj. Danno Svaranowic both work

in the office of the deputy chief of staff

for RM in headquarters U.S. Army

Training and Doctrine Command at

Ft. Monroe, Va. Rogers with a

political science degree from the

University of Richmond, enters the

Army War College this summer.

Svaranowic is a Finance Corps officer

with bachelorís and masterís degrees

in business administration from

Duquesne and Pittsburgh Universities.

See Funding, page 43
First Quarter 2001 4 1

by Sue Goodyear

Have you wondered how you were going to

get a college degree while working full-time and

maintaining a family and personal life? With the

increased emphasis on enhancing the CP 11

workforce and ensuring we are well educated

and well rounded, more and more of us are

looking for ways to obtain a degree that meets

our current lifestyle. I was faced with the same

dilemma. I was traveling a great deal on the job

and working long hours at my duty station. I had

put off completing my degree for many years,

always coming up with a good excuse not to go

back to school.

Then I found an ideal program that allowed

me to complete the last 2 1⁄2 years toward

a bachelorís degree in a year. I

enrolled in what was then

Regents College, now renamed Excelsior College. It is located in

Albany, N.Y. and is

considered a ìvirtualî

university. The school

does not teach a single

class but it does maintain a transcript for you

as you work on your degree through a number of

alternative ways. It is an accredited school and

its four-year degree is accepted by most other

institutionsí masterís programs. I was able to

use a combination of government schools, tests

by various agencies, and other college courses

taken (as far back as 18 years) to earn the

needed credits for a bachelor of general business degree.

The collegeís web site, www.excelsior.edu,

provides a great deal of information about their

programs. The school has two payment plansó

the first option is to pay a one-time tuition that

covers a program for three years, and the

second is to pay a registration fee, an annual fee

and a graduation fee. Either plan is relatively

inexpensiveó$1,900.00 for the business program ($1,495.00 if on active duty), which includes one free exam fee; or, an $800.00 enrollment fee, a $350.00 annual maintenance fee and

$440.00 to graduate. Neither of these two

options includes the costs of any classes or

examinations that you may need to take to earn

college credit.

My advisors at Excelsior were great in

helping me get credits from various sources and

making sure I stayed on track. They were also

great cheerleaders when it looked like I would

have trouble finishing. The following are descriptions of options available for getting college

credits:

Other college attendance

I had attended college classes at two other

U.S. schools. Excelsior College accepted official transcripts from both schools, reviewed the

courses for applicability to their criteria for a

Business degree and granted credit for

all but one semester

hour. They do restrict courses taken

over 20 years ago if

directly related to the

major field of study.

Transcripts have to be official

and mailed directly from the school

in a sealed envelope.

Testing

Although I had taken previous college

courses, I had skipped over basics like freshman

composition and history in favor of accounting

and data processingósubjects I felt I needed

early in a federal career. I explored all options

that Excelsior would accept and charted a path

to meet basic requirements in humanities, social

science and business. These three testing agencies helped in meeting my requirements.

College Level Examination Program. CLEP

offers nearly 30 different examinations in areas

such as humanities, social sciences/history, natural sciences/mathematics and business. Excelsior College grants the recommended credits for

successfully completing the examinations and

assigns a grade based on the studentís test

score. I took Analyzing & Interpreting Literature, American Government, History of the

United States, Business Law, Management and

Marketing exams by CLEP. They were mostly

Another path to a bachelorís degree
4 2 First Quarter 2001

testing were relatively easy and definitely better

than sitting through a 15-week class. I looked

at each of the tests as a final exam without the

class timeóa definite advantage for any overworked, overstressed person in todayís world.

Military Schools Credit. A great number of

the courses many of us readers have takenóas

we worked up the RM and leadership laddersó

have been reviewed for transferable college

credit. Getting credit for some courses can be

as simple as contacting the school and asking

for an official transcript to be sent to the college.

As an example, the Manpower and Force

Management class at Fort Lee is worth two

semester hours, and after faxing my personal

information I got a transcript for it. The Army

Finance School normally awards three semester hours for the Planning, Programming and

Budgeting Execution System or PPBES course

and four hours for its Military Accounting course.

Those courses should have also been easy to

document, but my records had been lost at the

Records Center. However, the school was

very cooperative and prepared a letter of attestation after I produced my graduation certificates. The American Council on Education,

known as ACE, publishes credit recommendations for military courses. Specifics are available in the Guide to the Evaluation of Educational Experiences in the Armed Services, usually available at your local library.

Another way to get credit for both military

and civilian courses is through ACE itself. They

review courses and make recommendations on

how much credit should be awarded for attendance at particular government courses. Many

courses offered by the Office of Personnel

Managementís management development centers and the Army Management Staff College

are creditable. Different portions of AMSCís

Sustaining Base Leadership and Management

Course earn up to nine undergraduate semester

hoursí and 15 graduate hoursí worth of transferable credit.

These programs do not provide transcripts

to colleges, but ACE will build you a transcript

for them for $25 plus $5 per copy sent to each

chosen college. As an aside, getting OPM and

AMSC credits took a lot of personal research

on school websites and in libraries and many

multiple-choice tests, offered once a month at

one of our local colleges for $54.00 apiece. I

prepared by using CLEP study guides available

in the local bookstores. After the tests, my

scores were sent to Excelsior very quickly.

Defense Activity for Non-Traditional Education Support. DANTES offers over 40 subject

standardized tests given to military and civilians

at military education offices. Like CLEP tests,

they covered a wide range of general topics.

Study guides and sample questions are available

on the DANTES website. I took the Corporate

Finance and Civil War & Reconstruction exams

for around $30 each. DANTES maintains a

transcript of your scores and upon request, will

send it to the college of your choice.

Excelsior College. The school itself offers an

excellent battery of tests, given at any Sylvan

Prometric learning center in your area. Unlike

the DANTES and CLEP tests, these tests are

automated; most are multiple-choice, and all

give instantaneous results. I took the English

Composition test (three hours) and got six semester hours toward the entire English requirement. I was also able to knock out remaining

business requirements by passing their Business

Policy & Strategy, Production/Operations Management and Statistics tests.

Excelsiorís tests, averaging $90.00 for the

multiple-choice ones, are more expensive than

CLEP and DANTES. Grades again are based

on test scores and are quickly posted to the

studentís transcript. Excelsior has study guides

available and has now started on-line study

groups to help students focus. They also maintain on-line chats with fellow test-takers to work

through issues.

Devoting weekends to studying and reviewing guides for most subjects, I did just over

one a month, completing 12 tests for 42 credit

hours in 11 months. It was hard to keep at it, but

each test put me closer to my goal and gave me

a sense of accomplishment. I also found that

many tests for core college courses seemed

easier now that I was older and had been

exposed to the workplace and the world. For

example, American Government was definitely

easier than it would have been for me at age 19.

Management and Business Strategy were topics I dealt with daily on the job, so studying and
First Quarter 2001 4 3



About the Author: Sue Goodyear is an

RM supervisor in the budget division of

Forces Commandís office of deputy chief

of staff for RM at Ft. McPherson, Ga.

Previous job experience includes programming and budget policy and systems

work at FORSCOM headquarters and

budget analysis at the McPherson post

garrison. She earned her Bachelor of

General Business degree from Excelsior

College, as described in the article.

Goodyear is also president of the Greater

Atlanta chapter of the American Society

of Military Comptrollers.

hours of phone calls to find the right person and

the right process; but for a few hours of work,

I added 27 credit hours to my transcript.

Excelsior College awards degrees once a

month following formal panel review of candidatesí transcripts approval by the registrar.

Every June the college holds a formal graduation ceremony in Albany for the last 12 monthsí

graduates; so if you want to wear the cap and

gown, you can do so. The June 2000 ìclassî

included more than 4,500 students worldwide.

If you are considering options for your college

education and you have a lot of disconnected

pieces of education, I urge you to check out

Excelsior College. They will help you get a

quality education at your pace for relatively little

monetary investment.

Iím now beginning graduate work and

have enrolled in an executive masters of public

administration program that is a joint effort

between the University of Colorado and OPMís

Western Management Development Center.

The program is a combination of on-line courses

through the university and attendance at OPM

courses. Iím looking forward to this new

adventure in higher education. Nothing in this

life is easy, but one thing I can say is that virtual

colleges ó among them Excelsior ó are certainly not your motherís or your grandmotherís

college. Your ìdegree in lifeî may be just

waiting to be documented through persistence,

perseverance and weekend study. Iím living

proof of that.

Funding

continued from page 40

cerned commandsóin this case TRADOC,

FORSCOM, AMC and ATEC.

Avoid Hanging Hats on a Priority Buzzword.

Itís common for people to attempt to tie in to the

latest ìfadî by trying to hang their funding

requests on the latest buzzword. Transformation could have been a convenient bandwagon

to ìjump on with new funding requirements,î

but TRADOC maintained credibility by ensuring that each funding requirement was validated

by a functional proponent and the senior advisory committee.

Intense Review and Scrubbing are a Must.

Each requirement must be validated to ensure it

is caused by a new mission under transformation, not by one that previously existed. Furthermore, a subject-matter expert must serve as the

honest broker and determine the worth of the

mission, then run it through the gauntlet of

functional and senior review.

We havenít seen the end of transformation; the new brigades and their equipment at Ft.

Lewis are just the first of many steps toward

realizing The Vision. We wanted to share this bit

of good news with the rest of the Army RM

readership, because the same or similar challenges will face us in the transformation stages

still to come. From resourcing and functional

points of view, weíre off to a good start.
4 4 First Quarter 2001

by John Di Genio

ìNothing can drain the life-force out of

your employees as much as a few. . . who seem

to exist for the sole purpose of making life

hard for others. . . . If youíre making your coworkers unhappy, then youíre incompetent.

. . . Itís okay to be ëtoughí and itís okay to be

ëaggressiveí and itís okay to disagreeóeven

shout. . . . Some conflict is healthy. . . But if

you do it with disrespect, or you seem to be

enjoying it, or if you do it in every situation,

guess what. . . Youíre gone.î

Everyone has a theory on how to effectively supervise and manage the activities of

subordinates. Some supervisors believe that

being a buddy as well as the boss nurtures an

office environment receptive to cooperation,

teamwork and enhanced productivity. Still others adhere to the guiding principle that ìsamenessî

is ìfairness.î Other supervisors strongly proclaim ìAll you need is praise.î While each of

these management philosophies is quite different on the surface, there is one common thread

that connects them: Evading the managerial

responsibility of confronting subordinates to correct either a performance or a disciplinary problem.

Successful managers will need to confront

employees from time to time to correct a shortcoming. Naturally, there are some basic guidelines that managers should follow to effectively

confront employees. Here, I discuss some of the

fallacies of the above mentioned management

philosophies, and I also address the golden rules

of confronting employees with either behavioral

or performance problemsókey of which is to

counsel professionally, immediately and respectfully.

The ìBuddyî Boss

Managers need to avoid this trap. The

managerís responsibility is to be the manager in

the employeeís office positionóand nothing

more. Yet, there are some bosses who want to

be a buddy as well as a boss to avoid unpleasant

confrontations with employees. Unfortunately,

ìbuddy bossesî never succeed. You are either

a manager or a buddy, but you canít be both.

Think about it! How can you expect to have a

professional, businesslike relationship with those

subordinates who are also your drinking buddies

or sports pals? It simply canít happen.

There is nothing more pernicious to a professional office than to have a boss who is also

a buddy. Instead of better performance, the

office becomes a model of inefficiency and

ineffectiveness. Rather than encouraging and

motivating subordinate pals to perform to standard, most of the ìbuddy bossísî available time

is spent helping them accomplish their assignments. This creates lengthy, noticeable backlog

in workload. Soon, the boss will find that his/her

credibility has been tarnished, integrity compromised. The office gets a reputation of being a

ìgood oleí boy (or girl) organization.î Eventually, the organization will experience lengthy

periods of hire lag as the bossís cronies move on

to other positions.

I am not saying that bosses should shy

away from being friendly with their subordinates. Nor do I suggest that managers avoid

participating in office social events and functions

with those they supervise. Just the opposite!

Successful managers make the time to get to

know their subordinates. However, by the same

token, successful managers also maintain a

professional atmosphere. Any relationship the

boss has with subordinates is strictly professional. A professional manager will not let any

type of improper, inappropriate relationship with

a subordinate ruin the managerís credibility with

the staff and upper management, nor capability

of effectively directing subordinatesí work effort to achieve desired results.

ìSamenessî is not ìfairnessî

The Parable of the HorseóA farmer had

three animals to help him work in the fields, a

mule, an ox and a horse. At the end of the day,

the farmer would give each of his animals a

treat. To the mule, he said: ìYou are really

ó-Scott Adams,

The Dilbert Principle, 1996

Confronting employee deficiencies
First Quarter 2001 4 5

stubborn. Whenever I want you to do something

that you donít want to do, you stop working. You

really donít help me all that much. As a matter

of fact, you are one of my biggest headaches.

But, you have been with me for seven years, so

here are two carrots for you.î After giving the

mule his treat, he went to the ox and said: ìYou

are really very lazy for an ox. All you do is lie in

the shade and complain whenever I give you

some work to do. But, no matter, youíre still one

of my beasts, so here are two carrots for you.

Finally, the farmer went to the horse and

said: ìAh, my faithful work horse! Youíre

always the first one out of the stable in the

morningóalways eager to get the job done. I

often have to use you to do the work that the

mule and the ox canít finish. For all your hard

work, here are two carrots.î The next day, the

farmer went to the stable to get his animals ready

for a day in the fields. To his chagrin and woeful

disbelief, the horse had run away.

ìSamenessî is not ìfairness.î As a matter

of fact, supervisors who use this

method of management as a

way of evading

confrontation

with subordinates

will often find

themselves in the

middle of the conflict that they had

hoped to avoid.

Consequently, those managers who believe that

sameness is fairness will experience lengthy

periods of position vacancies. Employees wantó

and expectóto be treated as individuals, not as

part of a collective. While one management

style may work well for one employee, it may not

necessarily work well with another. In the

above story, the horse no longer felt that the

usual ìtwo carrotsî was sufficient compensation for the hard work that he was doing. So, he

ran to greener pastures. The manager who can

learn the different personalities of his peopleó

what motivates them, their future aspirations,

and achieving desired outcomes by optimizing

each employeeís strengthsóhas truly mastered

the art of management. Anyone can master this

art. All it takes is a bit of time and a willingness

to get to know each employee.

Successful managers get to know their

employees because they know that management is a one-on-one proposition. Managing

employees as individualsóone-on-one managementómeans being available for the employees

to discuss issues with you and being aware of

what is going on in the office. An open-door

policy makes it easy for employees to discuss

issues with a manager. On the other hand, if you

are the type of manager who likes to hide behind

closed doors during the day or simply give ìlip

service,î then donít be surprised when your

ìwork horsesî run away for better grazing

lands. If managers take the time to get to know

their employees, then theyíll be tuned-in to the

characteristics, personality traits and strengths

and weaknesses of each member of the staff.

This is very important! Getting to know the

employees will help managers read the warning

signs that trouble is brewing on the horizon,

thereby allowing the tunedin managers opportunities to

nip any problem in the bud.

ìAll You Need Is Praiseî

Some managers adhere to

the idea that praise is all you

need to be successful and

that criticism is always

wrong. However, a quick

look at some of the more

successful managers in history disproves this theory.

Football legend Knute Rockne didnít tolerate

incompetence on the gridiron. General Patton

frowned on soldiers who shirked their responsibilities. Colonel Rollet, ìFather of the French

Foreign Legion,î had no time for legionnaires

who let down a fellow legionnaire. Henry Ford

demanded productivity from his assembly lines.

Look at the successful managers in your own

organizations. Wouldnít you agree that these

successful managers refuse to accept mediocrity from their employees?

Of course, good managers praise their

employees for jobs well done. Praise that is

merited boosts morale, and it also helps to assure

that the excellent performance is repeated.

However, if a manager condones, or, worse yet,
4 6 First Quarter 2001

praises poor performance, then this manager is

merely reinforcing the deficiency. In actuality,

condoning incompetence is rewarding incompetence.

Managers fall into this ìpraise trapî because they want to be liked by their subordinates,

are afraid of confronting employees, or simply

hope that the problem will go away by itself.

Unfortunately, when managers fall into this

ìpraise trap,î they find that their subordinates

neither like nor respect them. Subordinates are

clever enough to figure out when a supervisor

wants to avoid confronting them. Therefore,

some subordinates will use the managerís fear

of confrontation against the manageróenabling

them to get away with improper behavior or poor

performance. Regrettably, these managers come

to the realization that instead of the problem

going away, it only gets worse and poisons the

rest of the organization.

As managers, we should never tolerate

improper conduct or incompetence from subordinates. Needless to say, there are those [hopefully infrequent] times when criticism and confrontation are needed to correct either a behavioral or performance problem (an example of

Scott Adamsís ìhealthy conflictî). What follows are the golden rules of confrontation. These

golden rules assure that the reprimand is done

professionally and respectfully.

Rules of confrontation

The first two golden rules of confronting an

employee on performance or discipline are to

confront immediately and to confront professionally. Never confront an employee while angry or upset. Other

guidelines include:

Confront privately. Indeed, confront an employee for inadequate

performance or a discipline problem. However, do so behind closed

doors to assure that you have the full

attention of the employee and there

are no outside distractions. Embarrassing an employee in front of peers

could potentially open the door to

grievances and litigation. Furthermore, other

employees in the office will become concerned

that the same type of public humiliation might

happen to them. This may cause loyal, gifted and

talented employees to search for employment

elsewhere. To summarize, a public reprimand

does more harm than good. And who needs

that?

Confront the problem, not the employee. Be

specific in your counseling. Focus on correcting

the problem. Avoid attacking the individual. For

example, if a budget report is late, say: ìThe

weekly budget report is a day late.î Donít say:

ìYouíre a goof-off!î As professionals, we can

relate to work requirements, and change our

routines accordingly. However, our self-esteem

and sense of worth make it difficult to handle

personal attacks. Vague denunciations questioning an employeeís character, intelligence,

ethics, and personality will only feed the bitter

flames of resentment and cause the managerís

relationship with that employee to become antagonistic. This is a lose-lose situation.

ìJust the facts.î Documentation is essential in

confronting an employee about a disciplinary or

performance problem. Supporting documentation makes ìthe numbersî work for the supervisor. Furthermore, the supporting data will help

the supervisor and the employee focus on the

problem. Without supporting documentation,

the counseling session could easily turn into a nowin personality clash, and that accomplishes

nothing.

Be clear. Be explicit when counseling an

employee about a behavioral or performance

problem. The manager should convey concerns,

feelings and frustrations as they relate to the

problem. However, many times supervisors

tend to soften the blow by complimenting the

employee during the counseling session. This

does more harm then good. For openers, simultaneously giving a compliment while delivering a

reprimand confuses the employee. Worse yet,

complimenting an employee while admonishing

could actually reinforce the bad conduct or poor

performance. Yes, supervisors should give their

employees positive feedback. But, the time and

place for these compliments is not during a

dressing-down session.

Refocus efforts. Confronting an employee

about shortcomings is only half the battle. A

successful supervisor also redirects the

employeeís efforts to reinforce the desired conduct or performance standard. To accomplish

About the Author:

John Di Genio is a Management Analyst with

the Eighth U.S. Army

Assistant Chief of Staff,

Resource Management

in Seoul, Korea. He is

a frequent contributor

to RM.
First Quarter 2001 4 7

this redirection, specifically let the employee

know what behavior or performance standard is

desired, and propose ways of achieving it. Get

a firm commitment from the employee, outlining

the actions that will be taken to achieve the

desired standard, and specifying a time frame in

which it will be accomplished.

Positive reinforcement. The successful supervisor will never mention the confrontation session again, except in cases where the employee

needs a gentle reminder. If the employee is

making conscientious efforts to make the desired improvements, then the supervisor should

immediately recognize and reward the employee.

Positive reinforcement will make the employee

feel good about work accomplishments and will

keep him or her on the proper path.

Supervisors should avoid the pitfalls of

being a ìbuddyî as well as a boss; treating all

employees as if they had the same characteristics, talents and traits; and, always praising

without criticizing as ways to avoid confronting

employees about disciplinary or performance

problems. These management styles never

work. Instead, they lead to an inefficient and

ineffective work environment. ìBuddy Bossesî

often find themselves in a situation where they

have lost the essential professional relationship

between manager and subordinate needed to

effectively supervise and direct the staff. Managers who believe that sameness is fairness will

always find that their ìwork horsesî have left for

more verdant fields, and they are constantly

recruiting to fill vacancies. Managers who

always praise and never criticize will always find

themselves in charge of the organizational element with the worst discipline and performance

records.

Employees want to be treated as individuals. For this reason, management is a one-onone art. As such, successful managers always

get to know their employees. This includes

getting to know what motivates them, their

wants and needs, strengths and weakness, aspirations and other personality traits and characteristics essential to performing to established

standards. As managers, we should never

tolerate improper behavior or incompetence.

Although we may be uncomfortable with it,

there are times when criticism and a reprimand

are warranted. During counseling sessions, a

supervisor must keep the golden rules of confrontation in mind: Confront the employee immediately, never confront while angry or upset,

confront privately, focus on the specific problem

that needs to be corrected, have supporting

documentation readily available, be clear and

specific, provide some recommendations on how

the employee can redirect efforts to achieve the

desired standard, and follow up as required.

Managers should recognize employees for making sincere, conscientious efforts to make the

necessary improvements to achieve set standards, objectives or goals.

AMSC SBLM Class 00-3

The Army Management Staff Collegeís Sustaining Base Leadership and Management Program

Class 00-3 graduated this past December. The

Comptroller Civilian Career Program had 18 students, from six commands or agencies and the

Headquarters. During the intense course, students

worked on creative unconventional solutions to

familiar problems. They focused on ìbig-pictureî

issues such as why we have an Army; how we

design, staff, equip, sustain, support, and station the

Army; and issues in leadership, management, decision-making and stewardship that Army civilian

leaders have to deal with.

Name Command

Alice S. Arielly HQDA, USAAA

Carrie M. Brunson MEDCOM

Maurice W. Chau AMC

Cheryl D. Chrisman HQDA, SA(M&RA)

Jean M. Danckaert HQDA, USAAA

Arletha Fields HQDA, USAAA

Holly J. Guzowski HQDA

Richard L. Hawotte AMC

Ronald E. Ingram HQDA, USAAA

Minerva D. Lettsome USAREUR

Peter J. McGourty HQDA/USAAA

Eustace S. Messiah HQDA/ASA(M&RA)

Connie J. Moore AMC

Christine I. Morrison TRADOC

Nettie J. Pennington HQDA/ASA(M&RA)

Ruby M. Price AMC

Caroline K. Rice FORSCOM

Nina J. Willey FORSCOM
4 8 First Quarter 2001

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PIN: 078897 000

DFAS- Indianapolis

Corporate Communications

Resource Management

Professional development bulletin

(ISSN 0893-1828)

Attn: DFAS-IN/DDC

8899 E. 56th St.

Indianapolis, IN 46249-0150

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