1950 an appropriation of $1 million was made available to the President for use in retaining private management firms on a contract basis to survey operational functions and areas in the executive branch. The custody of the fund was placed in the Administrative Management Division of the Bureau of the Budget. It is interesting to note that only $668,000 of the fund was expended, the balance being returned to the Treasury.20 While it is commendable as a general rule to reduce Government expenditures whenever possible, in this instance the failure to utilize the appropriation for the purpose intended could be construed to mean that the administrative management of the executive branch was near perfection, and, therefore, the views of the Congress in appropriating the money were largely unjustified. Or it could be inferred that the Bureau of the Budget was not sufficiently familiar with inadequacies in the administrative management practices in the executive branch to use the funds to the best advantage. Of these two inferences the facts found by our study indicate the latter to be more credible. For example, during the period in question agencies were spending thousands of dollars on surveys by outside management firms, thus indicating the need for management improvement. It seems reasonable to assume that the Bureau should have known where surveys were needed most, and what type surveys would have the greatest governmentwide significance and value. In fact, such a valuable objective was apparently partially sought as is indicated by the following quotation taken from a report of the Bureau of the Budget prepared as of January 1, 1951, accounting for the use of the President's fund for management surveys. It indicated that a study made of the organization and operations of the Bureau of Indian Affairs by a well-known private management firm 21 would be used in that way:

As a means of providing more effective guidance to all agencies in developing sound management systems, the Bureau of the Budget is planning to issue the information in the Management Review and Appraisal System on a governmentwide basis.22

Although a copy of the study was referred to the Bureau of the Budget, the report was never used as it was indicated it would be. Here, again, was a potentially valuable undertaking in terms of improving management practices and the ultimate utilization of manpower throughout the Government that was not carried through to a conclusion.

REORGANIZATION OF THE BUREAU OF THE BUDGET

The staff of the Bureau of the Budget for some time has been aware of the difficulties involved in providing the direction and leadership in the Government management program as outlined by the President's Committee on Administrative Management. As has been indicated before, several unsuccessful attempts were made to adjust administrative responsibilities to maintain the program.

The latest effort of the Bureau to meet its responsibility has been a major reorganization of the entire Bureau effective April 1, 1952the first agencywide reorganization since 1939.23 Under the new

20 Attached as exhibit IX of the appendix is a statement prepared by the Bureau of the Budget, as of January 1, 1951, showing how the money was spent.

21 By the management firm of Booz, Allen & Hamilton.

22 See item 3B of exhibit IX of appendix.

23 See exhibit II of appendix for current organizational structure of the Bureau of the Budget.

system the budget examiners, who are overburdened with the primary function of processing the dollars-and-cents aspect of estimates work, will now attempt to shoulder a major share of the Bureau's responsibility in the management improvement program. Because of their preoccupation with the complex details of reviewing budget estimates, it is difficult to see how the examiners can devote sufficient time to studying management problems to offer more than token service to departments and agencies in the matter of program leadership.

Repeated efforts have been made by our staff to determine what improvement, if any, has occurred in the ability of the Bureau of the Budget to reorient the management program and to exercise the positive leadership needed to make it a real force in the attainment of maximum utilization of the men, money, material, and methods required in Government operations.

The officials of the Bureau themselves state that sufficient time has not yet elapsed to accurately determine what the result of the reorganization will be.

Our staff held a discussion with the consultant who assisted in the reorganization of the Bureau. In his opinion the reorganization alone will not solve the basic problems involved. He believes the success of the new grouping depends substantially upon the allowance of an adequate staff to meet the functional responsibilities of the Bureau as laid down by congressional and Presidential directives. Contrary to these views, the staff of the agency has been reduced by 13 since the reorganization was effected on April 1, 1952, and further reductions are contemplated because of budgetary limitations for the current fiscal year.

PRESIDENT'S ADVISORY COMMITTEE ON MANAGEMENT IMPROVEMENT

In 1949 the President appointed an Advisory Committee on Management Improvement consisting of outstanding individuals. from industry, education, and Government to assist him in his efforts to improve management within the Government. There is no question that the appointment of such a committee created an atmosphere conducive to management improvement consciousness at the top level of Federal administration. However, the Korean situation has required its attention to the management problems of defense mobilization.24 While the work of the Committee has undoubtedly been beneficial in a general way, the simultaneous diminution of the staff in the Bureau of the Budget responsible for the continued leadership in organizational and methods improvement within the executive branch narrows the natural channel between the Chief Executive and departments and agencies in the implementation of any program plans the President may have determined from the recommendations of his Committee. Since this Committee was appointed by the present Chief Executive, its life ceases with the expiration of President Truman's term of office. Its final report is to be released at the end of 1952.

24 See exhibit X of the appendix for the Committee's second annual report. (Copy of the Committee's Arst report no longer available.)

METHODS MANAGEMENT PROGRAMS AT DEPARTMENT AND AGENCY LEVELS

In determining the methods management program's true effectiveness in terms of governmentwide consistency our staff examined the program in certain departments and agencies. Our study focused upon the work within departments and agencies generally performed by staffs known in Government as organization and methods units.25 While the nomenclature of these units may vary, their work is substantially identified with that which was performed by the old administrative Management Division 26 of the Bureau of the Budget and can well be considered as counterparts of that office.

The following passage from the subcommittee's letter to the heads of departments and agencies included in our survey defines the nature of our inquiry into this phase of our study:

We shall appreciate information from you as to the number of persons employed (not on a contract basis) in activities under your jurisdiction engaged half time or more in functions generally identified as organization and methods work. It is realized that the definition of such a function will vary among the departments and agencies of the Federal Government. Consequently, in the interest of uniformity of understanding, the following definition is given which is one that has been used by the Bureau of the Budget in its work with Federal departments and agencies:

"Organization and methods services (management engineering)—the activities. of organization and methods staff units or assistants concerned with the development and evaluation of new or improved organization, procedures and methods for the management and control of operations; the conduct of programs aimed at improved work planning, work scheduling, work measurement, work simplification, This definition excludes activities of employees engaged in developing organization and procedures for the offices in which they work or for which their offices are primarily responsible (for example, the development of personnel procedures by employees of personnel offices shall be classed as personnel services, not as organization and methods services." 27

etc.

Our survey embodied the Defense Department and its 3 constituent departments and 22 departments and agencies other than Defense. It revealed (1) a great variety of organizational and staffing patterns, (2) diverse philosophies as to program purpose and operation, and (3) inconsistent methods of measuring program accomplishment.

Of course, considering the marked difference in size and the wide variety of missions of the numerous segments of our governmental structure differences in the management programs should be expected to exist. It would be inconceivable and unrealistic to expect the organizational and staffing patterns of small nondefense agencies to duplicate those of the largest defense agencies. However, it seems reasonable and objective to expect some degree of similarity within departments and agencies whose mission, general organizational structure, and overall strength are similar. We found surprisingly little similarity to exist.

25 "Such top-management planning staffs as have been established are known by a wide variety of names: 'Planning and Research,' 'Business Research,' 'Organization,' 'Organization Planning,' 'Organization and Methods,' 'Coordination,' 'Management Engineering,' 'Administrative Management,' 'Control,' 'Economic Controls Administration,' and just plain 'Planning'." From Why Short-Change the Chief Executive on Staff Assistance? by E. W. Reilly, Partner, McKinsey & Co. in Personnel, September 1947.

26 Now known as Office of Management and Organization. (See exhibit II of appendix.)

27 See exhibit XI for the full text of the committee's letter requesting information concerning organization and methods work.

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ORGANIZATION FOR METHODS MANAGEMENT

While there is similarity of organizational location in the management staffs of the 3 components of the Department of Defense, the subcommittee found a great variance in the staffing strengths of those 3 segments. Exhibit XII shows the comparative breakdown of personnel assigned to organization and methods work half time or more in the departmental and field activities of the three departments.

Note the great difference that exists between the headquarters' staffs (departmental) of the Department of the Air Force and the other two departments.

In the Navy Department the ratio of headquarters personnel to field personnel is 1 to 2.5, in the Department of the Army 1 to 5, but in the Department of the Air Force the ratio is 1 to 29.7.

The ratio of civilian to military personnel in the armed services organization and methods staffs also shows tremendous disparity. In the Naval arm the ratio is 1 military to 13.6 civilians, in the Army 1 to 5.4 civilians, but in the Air Force the ratio is about 1 to 1.

The annual cost of 587 persons engaged at the headquarters level (departmental) for the 3 constitutent units of the Defense Department is $3,500,389. The comparable figure for 2,716 persons employed in the field is $13,113,743. Thus the annual cost for 3,303 headquarters and field personnel total $16,614,133.

Of the 22 departments and agencies other than the Department of Defense, 16 employ a total of 313 persons at what is considered the staff (headquarters) level in organization and methods work at an annual salary cost of $1,904,012 a year. A different combination of 16 agencies employs 608 persons in these functions in "line" activities. at a cost of $3,438,008 a year. In line and staff activities, a total of 921 persons are employed at an annual salary cost of $5,342,020. These figures coupled with the Department of Defense form a grand total of 4,224 employees at a cost of $21,956,153 annually. Again these figures do not include persons engaged in organization and methods work in what might be termed specialized services. For instance, in the Veterans' Administration there are a number of persons engaged in such specialized activities as the Assistant Administrator for Personnel, the Assistant Administrator for Insurance, the Chief Medical Director, and others.

A more refined analysis of the organizational and staffing patterns existing in the departments and agencies other than Defense reveals other interesting inconsistencies. In the Departments of Interior, Commerce, and Treasury top management staffs are located in the immediate offices of the administrative Assistant Secretaries. However, in the Department of Agriculture, this staff is dispersed among the Office of Budget and Finance, Office of Personnel, and Office of Plant Operations. The Department of Agriculture relies heavily on a Management Policy Committee which "exists to establish overall policies and adopt plans on all phases of the Department's management program.28 In the Departments of Agriculture, Interior, and Commerce, we find 15, 7, and 16 persons engaged at the staff level, and 24, 68, and 103, at the subordinate bureau level in organization and methods work. Therefore, the Department of Agriculture has

28 Assignment of Responsibility for Management Improvement, Department of Agriculture (January 1952), p. 1.

a ratio pattern of 1 staff employee to 1.6 at the lower echelons while the Departments of Interior and Commerce have ratios of 1 to 9.7 and 1 to 6.4, respectively. The Department of the Treasury's report indicates that agency has 16 staff employees and 113 persons at lower echelons, the ratio being 1 to 7.

At variance with the organizational structures and staffing of those departments, the Department of Justice has no staff group at the top echelon but there are 18 organization and methods employees engaged in the Federal Bureau of Investigation and in the Immigration and Naturalization Service, 2 of the several subordinate agencies comprising the Department. A like condition exists in the Economic Stabilization Agency which has no one performing such a staff function although there are 57 persons engaged in organization and methods work at subordinate agency levels.

In contrast to those agencies, the Department of State reported 47 organization and methods personnel at the top staff level with no employees at the subordinate levels engaged within the scope of our definition. Through personal contact, however, it was revealed that, as in the case of the Veterans' Administration, there are a number of organization and methods employees located in specialized activities. In the United States Civil Service Commission and the Post Office Department there is a high degree of centralization and staff at the top administrative level. The Civil Service Commission reported 10 persons so engaged, while the Post Office Department advised that there are 18 persons at the staff level and only 1 at a subordinate echelon.

Another interesting aspect of this analysis of the organization and methods staffing structure is found in a comparison of these elements between the Civil Service Commission and the General Services Administration. While both of these agencies have somewhat similar overall organizational structures in that they have decentralized a substantial part of their operating functions to regional offices, they do not pursue a similar pattern insofar as their functional and staffing alinements for conducting their management programs are concerned. Specifically, as indicated above, the Civil Service Commission has its organization and methods staff of 10 persons in its Washington central office with no such personnel in 14 regional offices. Opposed to this, the General Services Administration has 26 persons engaged in these functions in its central office in Washington and 32 so engaged among its 10 regional offices.

While this great variety of organizational concepts in itself is not conclusive evidence of program incompetence, it is an indicator of weakness in the central leadership required for comprehensive program competence in terms of consistency of effort and result.

METHODS MANAGEMENT PHILOSOPHY

The term "philosophy" as applied to management covers a broad expanse of methods and techniques. For our own narrow purpose here, the following statement aptly summarizes our viewpoint:

CONTROL OVER METHODS AND MANPOWER

Experience indicates that there is a constant tendency to expand the functions and personnel of any department in response to the many demands placed upon it. This expansion is ordinarily a slow and gradual process. It is seldom of such