proportions at any one time as to excite question. All the people may be obviously busy, and it is therefore often assumed that the department is functioning efficiently. In many cases legitimate increases in the volume of business mask the fact that activities of questionable justification have been undertaken by a department. There is also a tendency for forms, reports, functions, and methods to be continued after they have outlived their usefulness. As a result many companies find that from time to time it is necessary to inspect and analyze the work actually being done in order to effect proper control over functions, methods and manpower.29 [Italics supplied.] While in our survey departments and agencies were not specifically asked for an expression of their philosophy as to how best a management improvement program should be administered, several made such expressions in their reports to the subcommittee. Based on these expressions, it is apparent that departments and agencies pursue a diversity of management improvement program philosophies almost equal to the extent of their organizational deviations. For example, within the Department of Defense, there is a considerable difference in the approach to management improvement as sought by the staffs so engaged in the three subordinate departments. Certainly such a fact testifies to lack of central direction in the past as well as to the historical independence of the armed services. Management engineering in the Department of the Army is considered a staff service with the various commanders responsible for the management programs under their jurisdiction. In addition, organization and methods staffs within the Secretary of the Army and Chief of Staff areas initiate projects affecting the whole Army Establishment and conduct surveys of constituent units and functions throughout the Department. An important element in staff-level direction comes from management audits and management appraisals. This approach is predicated on the notion that "the knowledge that periodic appraisals of management will be made tends to encourage commanders, supervisors, and employees to improve their management and effect economies in advance of a survey. 99 30 On the contrary, the Department of the Air Force has very little of the survey-type operation coming from the top organizational level. According to this Department: Existing organizational units are capable of operating the program. This contrasts with superimposing large staffs of management people outside and away from the operating units.31 The Navy is much closer to the Army than to the Air Force in its concept of the best way to accomplish management improvements. The Department of the Navy believes in strong central direction and inspection. Considerable effort is expended by the bureau management staffs in recurring inspections and audits of organizations and methods, to assure that improvements and economies previously authorized and directed by operating managers are being or have been effected.32 The attitudes of the military departments toward centralized direction of management improvements is reflected in the ratio of civilian organization and methods employees in the headquarters units as contrasted with the number in line units. 29 Holden, Fish, and Smith, Top Management Organization and Control (1948), p. 162. 30 Department of the Army Report on Organization and Methods (Management Engineering) Services (April 1952), p. 3. 31 The Air Force Management Improvement Program (March 1952), p. 1. For example, the Army and the Navy are very similar in this respect, the former having a ratio of 1 headquarters 33 man to 16 in line functions, while the latter has a ratio 34 of 1 to 12. The Air Force on the other hand has 42 organization and methods workers in line duties to every 1 in the headquarters unit.35 Further exemplification of varying philosophy is found in four of the larger nondefense departments, namely, the Departments of Interior, Agriculture, Commerce, and Treasury. Of these four, Interior pursues a course of administration which discourages surveys of its operations and stresses throwing the burden of program improvement on the operating supervisors. For example, the following is a quotation from the Department of Interior's letter transmitting its report to our subcommittee: * * * management improvement is one of the prime responsibilities of all line supervisors, one that they cannot and should not be permitted to shift to any staff group such as an organization and methods unit. *** the best of surveys, having the soundest recommendations will get nowhere unless line supervisors are "sold" on the value of management improvement and are sure of the validity of the recommendations stemming from the survey. Beyond doubt you are aware that numerous surveys and projects designed to improve organization and methods have been made throughout the Federal service, many of them very well done, which are gathering dust, unacted on, in the files of administrators. Contrary to this expression of philosophy, the Department of Interior utilized $178,500 under the special million-dollar allotment to the President for fiscal year 1950 36 for the conduct of three surveys by groups outside the Government. This was the greatest number of contracts for surveys by any one agency under that authorization.87 Also, the Department of Interior reported eight contracts with private management groups at a cost of $187,185.13 for the period July 1, 1950, to January 1, 1952.38 While the Department of Agriculture's report was not so specific on the method of program administration, it indicates that Agriculture pursues a philosophy similar to Interior. Spokesmen for one of the principal staff components which shares the responsibility for the program wrote: *** [the efforts of the staff] are directed toward developmental or improvement projects on the staff level distinguished from surveys and analysis of operaations *** Participation in efforts of "line" officials to introduce measures of increased efficiency or greater economy may be advisory in character or occasionally initiated on a joint bases.39 The Departments of Commerce and Treasury also acknowlege the part that supervisory and operating personnel should play in management improvement and point out that, wherever possible, credit for improvements should accrue to operating personnel. But these departments place more emphasis on a survey type of program administration. The views of both departments are aptly summarized in the following statement taken from the Department of Treasury report: *** our concept of the role of organization and methods people is that they are the supporting forces required by line officials in the conduct of their manage 83 In the Secretary of Army and Chief of Staff areas. 34 In the Executive Office of the Secretary. 35 In Headquarters, USAF. 36 Exhibit IX of appendix. The total number of contracts made was 10. 38 The total number of contracts reported by the 22 departments and agencies other than the Department of Defense was 22 at a cost of $983,489.69. 39 Taken from the Budget and Finance Section of Agriculture's report (March 1952). ment duties. Therefore, in carrying out this concept, line officials and employees in general are encouraged to contribute their maximum efforts in all matters susceptible to improvement with the understanding that services of the organization-and-methods groups will be provided as necessary to assist in attainment of the most appropriate objectives. We consider these activities as organizationand-methods services essential to the most effective conduct of the management program at all levels of the Department. While these statements on the surface do not appear to be too dissimilar, there is sufficient significant difference to indicate the absence of a central philosophy in the approach to the administration of the program. As in the case of the variations in staffing patterns previously discussed while the divergence in the philosophy of program administration is not in itself conclusive evidence of program incompetence, it is another indicator of weakness in the central leadership. Strong central leadership must exist for comprehensive program competence in terms of consistency of purpose, effort, and result. PROGRAM EFFECTIVENESS Attached as exhibit XIII of the appendix is a recapitulation of annual program costs and accomplishments for the period July 1, 1950, to April 1, 1952.40 In acknowledgment of the fact that all projects and efforts of organization-and-methods staffs are not measurable in dollars and cents nor in personnel savings, full consideration of that fact was given in our study. However, the fact that some departments and agencies do attempt to reduce program effort to an objective standard_of measurement while others do not is of significant interest. For example, in those departments and agencies wherein, by other standards, the better balanced, more effective programs are apparent, the more realistic attitude prevails toward attempting to determine program value in monetary and manpower terms. In this regard it will be noted that of the 22 departments and agencies reporting, 6 show no monetary savings and 6 show no reductions in personnel resulting from the program effort. It is also interesting to note that in some agencies the annual staffing cost of the program was not reached by the estimated savings reported for the approximate 21 months' period covered by our study. On the other hand, some departments and agencies show substantial monetary return from their staffing-cost investment. Within this area of analysis let us again consider the Departments of Interior, Agriculture, Commerce, and Treasury. Based on the reports of those 4 departments, the following comparison based on the 21 months' period from July 1, 1950, to April 1, 1952, is made: 1 The reports of the departments showed staffing cost on an annual basis. For this comparative analysis those costs were projected over the 21-month period. 40 Because of the size of the task, the Department of Defense requested and was granted relief from com. piling and submitting complete figures on program accomplishment. Therefore, that Department is excluded from this recapitulation. From this tabulation is apparent that in the Departments of Interior and Agriculture estimated savings did not equal the staffing cost of the program. On the other hand, the estimated savings of the Departments of Commerce and Treasury well exceeded the cost of their respective staffing strengths. It is again acknowledged that perhaps this comparison is not a complete representation of the accomplishments of the respective programs of those departments, but it does emphasize the difference in methods in measuring program value and accomplishment. The final objective method used to determine the effectiveness of the management program was to categorize the areas into which the project undertakings of the 22 departments and agencies surveyed fell. Exhibit XIV of the appendix is a chart showing such distribution. Particular attention is invited to the definitions of the categories used as shown in the footnotes of the chart. The categories total 18, with 1 category divided into 6 subcategories. Within the scope of these categories consider the variety of project patterns that exist. For instance, the 224 projects of the Department of Commerce fall into 17 of the 18 general categories with a number of projects in the 6 subcategories. The Department of the Treasury shows projects in 13 of the 18 categories and also a number in the 6 subcategories. The Department of Agriculture reports 11 categories with projects and 5 of the 6 subcategories utilized. The Department of the Interior reports projects in 10 categories and in only 2 subcategories. As between the Department of Commerce and the Department of the Interior, there is a difference of 70 percent in the categorical dispersion of the project undertakings. Beyond these four departments the pattern, of course, is equally varied. Generally, those agencies with fewer projects reported are confined to but few categories and those agencies with numerous projects report a greater dispersion. However, with the exception of the Federal Security Agency with their 109 projects distributed throughout 11 of the 18 categories, none of the remaining reporting agencies shows a broad variety in distribution of projects. Obviously, within any given department or agency, some bureaus are apt to have stronger organization and methods programs than others. For example, the Department of Interior and Agriculture depend primarily upon the strength of bureau programs to assure the virtual total success of management improvements. On the other hand, the Departments of Commerce and Treasury often probe from the staff level to ascertain how well the bureau organization and methods staffs are conducting their programs and often prod subordinate units to enliven their efforts. This type of approach seems to stir the bureaus to greater efforts. Under the prodding and probing technique, that is, the method used in Commerce and Treasury, the following facts appear pertinent. Treasury reported 8 constituent units at the bureau level with organization and methods staffs; 6 of these 8 reported monetary savings. Commerce reported 10 line units with organization and methods staffs; 7 of these recorded dollar savings. Contrast these results with the reports of Agriculture and Interior whose subordinate organization and methods people operate more independently. Agriculture reported seven constituent units with organization and methods staffs. Of these 7, only 2 units reported monetary savings. Interior reported 5 line activities with organization and methods programs; only 2 of these showed dollar savings. The subcommittee draws the following conclusions from the above comparative data: (1) It is possible for a bureau to have a fairly strong organization and methods program with little or no direction or stimulation from above. (2) A strong organization and methods program is much more probable when a top-level staff group coordinates, directs, stimulates, encourages, and participates in bureau organization and methods activities. (3) Except in a few instances, the programs and efforts of organization and methods staffs in departments and agencies fall far short of those required to fulfill the needs of the Federal service in attaining maximum utilization of manpower. (4) The large sums of moneys being spent on the organization and methods program are not at this time providing the return expected, and the staffs assigned, as well as projects undertaken, deserve closer scrutiny by the agencies themselves and by the Appropriations Committees of Congress. NEED FOR ASSISTANCE In our contacts with the various departments and agencies, we sought to learn how they view the position of the Bureau of the Budget in the matter of management leadership. The common attitude is that the Bureau's management leadership at one time was rather effective and fairly well designed. Some department and agency officials stated that at one time they could take their management problems to the Bureau and receive real assistance. But these officials indicated that this service has been diminishing during the past several years. Currently, the departments and agencies no longer think in terms of seeking a great deal of assistance from the Bureau. Invariably those same officials express the opinion that there is a real need in the Government structure for a centralized management service. Examples of this need take different forms-some are internal in nature while others are matters of interagency or interdepartmental concern. An example of the first is found in a major operating activity of a large department. In 1942 an Executive order was issued directing organizational changes and the streamlining of administrative processes and procedures to provide more autonomy within the agency and to simplify administrative coordination and control of its many functions. The provisions of the Executive order have been implemented in form but not in spirit. The administrative staff of the agency have been endeavoring to effect the full intent of the order, but operating officials are unwilling to comply. The Department head and his management staff have not injected themselves into the problems sufficiently to resolve it. Consequently, the efficiencies and economies that were intended by and could have resulted from the full implementation of the Executive order have not been realized. While the management staff of the agency is of the opinion that the assistance of the Bureau of the Budget would be of real value in carrying out the order, they do not feel that the Bureau is currently in a position to deal with this internal management problem. |