Introduction to Defence Management

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Management in defence

Management
Deciding what to do and getting it done through the effective use of resources.
(Armstrong & Stephens, 2005)

To produce military capability through careful planning and the efficient and effective use of resources.
(McConville, 2006)

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Management in defence

Management?
(Armstrong & Stephens, 2005)

(McConville, 2006)

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Bureaucracy

Definition

Tangible

Assets

Intangible

Resources

Principles

Management
Ethics
Science or Art?
Management in defence

People Equipment Money Information Time

Technology K

Systems
Leadership
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Situational Context
4

Management

People Equipment Money Information Time

Technology K

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Management in defence

Managing Resources to meet Strategic Needs

RESOURCES - tangible & intangible
Finance PEOPLE - Plant/M/c - Technology

CAPABILITIES to deploy resources to meet CAPACITY sufficient social capital to meet - COMPETENCIES (CORE)
- Capacity Building

objectives

requirements

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Management in defence

Managing Resources to meet Strategic Needs

RESOURCES - tangible & intangible

CAPABILITIES

CAPACITY - COMPETENCIES (CORE)

- Capacity Building

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Management in defence

What are Resources?

Tangible resources are physical assets of an organisation such as plant, labour, and finance. Intangible resources are non-physical assets such as information, reputation, and knowledge.

What are Resources?

Tangible resources are

Intangible resources are

Resource Categories
Physical resources Financial resources

Human resources

Intellectual capital

Every Action Plan should identify the following:

The people resources needed to succeed The time resources needed to succeed The money resources needed to succeed

Resource Categories
P F

Every Action Plan should identify the following: The people resources needed to succeed The time resources needed to succeed The money resources needed to succeed The physical resources ( facilities, technology, logistics, etc.) needed

to succeed

The Challenges
Affordability Defence budget pressures Maximise efficient use of resources Compete for resources successfully Complexity People issues are multi-faceted Cannot address issues in isolation Maintain momentum across all activities Adaptability Responsive to operational environment Responsive to social and legislative change Research is key Foster innovation and imagination
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The Challenges
Affordability

Complexity

Adaptability

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13

The Defence Machine (Inputs Outputs)

$$$ Organisation $$$ People Processes $$$ Equipment T r a i n i n g
Non-Military purposes

Military Capability

Doctrine
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Military purposes
14

The Defence Machine (Inputs Outputs)

$$$ $$$ T r a i n i n g
Non-Military purposes

Military Capability

$$$

Military purposes
15

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Management in defence

INDONESIAS DEVELOPMENT PLAN 2005-2025: DEFENSE SECTOR

MEF
Terrorism, Separatism, Borders & Outermost islands, Natural Disasters, Wide range of Illegal Activities, Standby Force, Striking Force, Peace Keeping Operation, High Deterrence

PHASE

DEFENCE CAPABILITY

OVER-PLANNING METHODS

RPJMN 1 (2005-2009) Eliminate Insurgencies Threat Based RPJMN 2 (200102014) MEF (phase I) Threat Based to Capability Based - building R&D and Defense Industries Capability Based - Capable Defense Industries and Advance R&D Capability Based - Reliable Defense Industries and

RPJMN 3 (2015-2019) MEF (phase II)

RPJMN 4 (2020-2025) MEF (phase III)

INDONESIAS DEVELOPMENT PLAN 2005-2025: DEFENSE SECTOR

\
PHASE DEFENCE CAPABILITY OVER-PLANNING METHODS

Eliminate redundancy among personnel in the defence sector, Promote multi-tasking among departments of defence especially among the personnel involved, Cut Spending in areas that can afford to lose (?)
Promote networking among personnel within the defence sector, not only within the business space but also across to the battle space Management of Resources must be more thorough, in human resources to include Human Capital Management

Robert Gates

Robert Gates

The Subject of Management

Management knowledge derived from the military and developed as a subject in a business context Management relevant to all organisations, each with their particular characteristics The defence sector comprises: the military, the civil service, agencies and industry - directed by political leadership
Cyber space

Civil Military Relations

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Battlespace versus Business Space

22

The Subject of Management

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23

Management and the military

Business management can draw upon the ancient cultural heritage including ideas of military science, and in our times military science can absorb ideas of business management. Hence we have a blood relationship between the two.
Li Shijun, Yang Xianju & Qin Jiarui, Sun Wus Art of War and the Art of Business Management, (1990), p.7
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Management and the military

Li Shijun, Yang Xianju & Qin Jiarui, Sun Wus Art of War and the Art of Business Management, (1990), p.7
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Fayols 14 Principles of Management

Source: Administration industrielle et generale (1917)

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26

Functions of Management
Analysing information; making predictions; setting objectives

Guiding the performance of others, towards objectives

Planning Organising Commanding

or leading, or directing

Structuring the organisation; resource allocation

Co-ordinating Controlling
Linking various activities to avoid conflicts; emphasises timing & communication 27

Setting standards; reliable measurement; early corrective action 11/27/2013

Management in defence

Functions of Management
Analysing information; making predictions; setting objectives

Guiding the performance of others, towards objectives

P O C C C

Structuring the organisation; resource allocation

Setting standards; reliable measurement; early corrective action 11/27/2013

Management in defence

Linking various activities to avoid conflicts; emphasises timing & communication 28

Soft and Hard management approaches

The range of management thought Soft management People centric: motivating and developing people as a central managerial role Organisation centric: different sorts of organisations and their features Hard management Investment appraisal Performance metrics (led by accounting) Projects: Gantt charts, critical path analysis, Earned Value Analysis
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Soft and Hard management approaches

The range of management thought Soft Hard

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30

Management and bureaucracy

Management in the public sector means many different things. First, there is a distinction between administration and management, the former involving the orderly arrangement of resources to follow previously defined procedures and rules, the latter involving discretion in the management of resources to achieve a set of objectives. In practice, both activities occur in public services: many activities require administration rather than management, and many managers are engaged in both.

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Management and bureaucracy

Management in the public sector means many different things. First, , the latter .. In practice, both activities occur in public services: ..

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Management and Leadership as Separate ?

Management
Produces order and consistency

Leadership
Produces change and movement

Planning/Budgeting Establish agenda Set time tables Allocate resources

Organising/Staffing Provide structure Make job placements Establish rules and procedures Controlling/Problem Solving Develop incentives Generate creative solutions Take corrective action

Establishing direction Create a vision Clarify big picture Set strategies

Aligning people Communicate goals Seek commitment Build teams and coalitions Motivating and inspiring Inspire and energise Empower subordinates Satisfy unmet needs

Kotter,J.P. (1990) A Force for change; how leadership differs from management pp3-8 New York: Free Press

Management and Leadership as Separate ?

Management
Produces order and consistency

Leadership
Produces change and movement

1,

1.

2. 2,

3. 3,

Kotter,J.P. (1990) A Force for change; how leadership differs from management pp3-8 New York: Free Press

The management challenge in defence

Optimising the military capability produced by the resources put into defence: and/or Optimising the support for government overall objectives generated from the resources put into defence

The creation of value in defence

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The management challenge in defence

Optimising the

Optimising the support for ..

The creation of value in defence

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The Battle Space and the Business Space

Business space Preparation of defence capability
Protracted time Resource constrained Assembling people, equipment, training etc

Battlespace Operational area

Short time for decisions Less resource constrained Using people and equipment, within the constraints of the preparations made

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You go to war with the army you have, not the army you would like to have Management in defence (Donald Rumsfeld 2004)

37

The Battle Space and the Business Space

Business space 1. 2. 3. Battlespace 1. 2. 3.

You go to war. (Donald Rumsfeld 2004)

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Resource-based management concerns:

Management of
Human Resource / Human Capital

Recruitment;Rewards;Relations;Development a fundamental managerial responsibility

Money: Financial Management Technology & Equipment:

Acquisition from requirements to support to final disposal

Information & Knowledge Tangible & Intangible assets
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Resource-based management concerns:

Management of
1. 2. 3 A. B. 4.

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New Challenges:

Human Resource Management

a fundamental managerial responsibility
Recruitment; Rewards; Relations; Development

human resources policies should

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be integrated with strategic business planning reinforce an appropriate organisational culture, be a source of competitive advantage (capability), promote commitment from personnel foster a willingness in people to act in the interests of the organisation
Principles of management 41

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41

New Challenges:

Human Resource Management

a fundamental managerial responsibility
1. 2. 3. 4.

human resources policies should

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1. 2. 3. 4. 5.
Principles of management 42

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42

Managing in the Wider Security Sector Environment

Information and Knowledge Management Dr Roger Darby Centre for Defence Management & Leadership Cranfield University, UK

New Challenges:

Information & Knowledge Management

Manage the KM Dynamic of creation, capture & transfer of knowledge.

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44

New Challenges:

Information & Knowledge Management

Manage the KM Dynamic of C.. C.. T.

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Managing Resources to meet Strategic Needs

RESOURCES - tangible & intangible

Finance PEOPLE -

- Plant/M/c - Technology

CAPABILITIES to deploy resources to meet objectives CAPACITY sufficient social capital to meet requirements - COMPETENCIES (CORE)
- CAPACITY BUIDLING.

Managing Resources to meet Strategic Needs

Intellectual Capital
The sum of everything that everybody in a org. knows that gives it a competitive advantage
Human Capital Structural Capital Relational / Customer/Supplier Capital

Why Manage Knowledge?

Knowledge has become the most important factor of production and service and knowledge assets the most powerful produces of wealth. The leaders and organisations that take command of their knowledge will occupy competitions high ground

Intellectual Capital
What is intellectual capital? The intellectual capital is the sum of
1. 2. 3.

Why Manage Knowledge?

Knowledge has become ..

 Tacit knowledge we know more than we can tell

- describes the personal capacity to act or think without being able to explain how we act as we act or think what we think - (i.e. We might be able to ride a bicycle, but we cannot explain why we do not fall off)
- (i.e. When you think of a witty thing to say albeit a day or too late you might not be able to say what caused the delay. If you now know what you should have said , why didnt you know then? )

The Power of Intuition the hunches, impulses, insights, gut feelings, anticipations, and judgements which draw on personal experiences in ways that defy explicit explanation. Therefore, intangible knowledge inside peoples heads becomes a tangible asset.

- Potential WEALTH of tacit knowledge resides in organisations.

 WHAT IS Tacit knowledge

- - (i.e. )
- (i.e. .? )

Therefore, intangible knowledge inside peoples heads becomes a

- Potential WEALTH of tacit knowledge resides in organisations.

Defining Knowledge Management

emerging set of organizational and operational principles, processes,
Knowledge Management is an

organizational structures, applications and technologies that

helps knowledge workers

Military Knowledge Management is:

dramatically leverage their creativity and ability to deliver service / business value.

a strategic approach to achieving defence objectives by leveraging the value of collective knowledge through the processes of creating, gathering, organizing, sharing and transferring knowledge into action. It requires processes that are robust and reliable within operational contexts, content and intellectual assets that are focussed, precise, reliable with suitable levels of recall, and knowledge creation and conversion processes that match the pace of operation.
(Robustness Content Speed)
Lee, C.C. and Yang, J. Knowledge value chain. Journal of Management Development, 2000. Vol.19. No. 9.

Defining Knowledge Management

Knowledge Management is an .

Military Knowledge Management is:

.
(Robustness Content Speed)

Lee, C.C. and Yang, J. Knowledge value chain. Journal of Management Development, 2000. Vol.19. No. 9.

21st Century Organisation

Flatter Teams of Knowledge Specialists Information Driven

21st Century Organisation

1. 2. 3.

SUMMARY & CONCLUSIONS (1)

Orgs. should have a clear knowledge strategylinked to overall Org. strategy
Orgs. should bundle their KM & HRM practices to consistently support the same goals as the org. Orgs. should align their HRM practices with their future knowledge strategy Their should be internal consistency throughout the org. The orgs. HRM practices and KS should fit well with (a) the orgs. size, structure and culture (b) the external environment

SUMMARY & CONCLUSIONS (1)

Orgs. should

Orgs. should Orgs. should Their should be fit well with? (a) (b)

SUMMARY & CONCLUSIONS (2)

Knowledge is highly contextual & situated distinguishing it from information Different types of K exist tacit/explicit, individual/collective

Process perspective suggests K is rooted in action and social practice thus knowing is as important as knowledge
An industrial shift has occurred at the turn of 21st C to Information or Knowledge Age Organisational structures are shifting flatter, decentralized, virtual..

Shift towards knowledge production as wealth creation increasingly relies on innovation - Management of K workers is of strategic importance

SUMMARY & CONCLUSIONS (2)

Knowledge is Different types

Process perspective suggest..

An industrial shift ..

Organisational structures are

Shift towards knowledge production as . Relies on - Management of K ..

Defence Spending a Question of Finance ?

How Much is Enough?
No Strategic Plan will be successful without been adequately resourced through the budgetary process.

Dr Roger Darby Centre for Defence Management & Leadership Cranfield Defence and Security Cranfield University, UK
College of Defence & Security

Public Finance Management

1Budget Credibility: The budget is realistic and is implemented as intended. 2Comprehensiveness and Transparency: The budget and fiscal risk oversight are complete and fiscal and budget information is accessible to the budget. 3Policy-based Budgeting: The budget is prepared with due regard to government policy. 4Predictability and Control in Budget Execution: The budget is executed in an orderly and predictable manner and there are arrangements for the exercise of control and stewardship in the use of public funds. 5Accounting, Recording and Reporting: Adequate records and information are produced, maintained and disseminated to meet decision-making control, management and reporting purposes. 6Effective scrutiny and Audit: Arrangements for scrutiny of public finances and follow up by executive are operating.

Public Finance Management

1. 2. 3. 4.

5.
6. 7.

Defence Spending: How Much is Enough? Defence is like an umbrella Defence sector can have power as a single customer, but It has the capacity to absorb infinite resources Defence industries might have a monopoly Defence & security spending should not damage the society it is supposed to protect. IMF and the 2% of GDP norm/ceiling 63 final answer No

Defence Spending: How Much is Enough?

64

Making Financial Decisions

FINANCIAL MANAGEMENT : the system by which the financial aspects of a public bodys business are directed and controlled to support the delivery of the organisations goals. (CIPFA 2008)
Escalating Commitment

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Capbility-focused mgt - finance

65

Making Financial Decisions

FINANCIAL MANAGEMENT ?? the

(CIPFA 2008)
Escalating Commitment

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CRITICAL ELEMENTS TO MANAGING PUBLIC SPENDING Key components:

Financial Strategy & Planning Budget Planning & Management Allocating Resources Responsibly across all Sectors Effective & Efficient Use of Resources to meet Public Goals Monitoring & Oversight of the Implementation of Security Policies Good Governance & Leadership from the top-levels of Government

Key Challenges for Public Finance Mgt. (PFM) in SSM: Achievement of fiscal discipline Allocation of resources within the Security Sector Capacity for civilian oversight to occur in PFM of the Security Sector

CRITICAL ELEMENTS TO MANAGING PUBLIC SPENDING Key components:

1. 2. 3. 4. 5. 6.

Key Challenges for Public Finance Mgt. (PFM) in SSM: 1. 2. 3.

How to measure the defence effort?

Defence spending per head of population Total defence spending Defence spending as share of GDP Armed forces as a percentage of the population

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How to measure the defence effort?

1. 2. 3. 4.

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Basic principles of public expenditure management

Responsibility Accountability Transparency Oversight Comprehensiveness Predictability (Stability) Efficiency?
What am I responsible for producing (outputs)? Am I managing the finances/other resources (inputs) involved in responsible manner? efficiently and effectively?

6. Basic principles of public expenditure management

Responsibility 1. 2. 3. 4. 5. 6.

Exercise: Key Questions on Defence and PFM in Indonesia

Which PFM principles are being applied to the Defence Sector in Indonesia? 1Budget Credibility 2Comprehensiveness and Transparency 3Policy-based Budgeting

4Predictability and Control in Budget Execution

5Accounting, Recording and Reporting 6Effective scrutiny and Audit What about fiscal discipline and allocative and operational efficiency issues?

Exercise: Key Questions on Defence and PFM in Indonesia

Which PFM principles are being applied to the Defence Sector in Indonesia? 1. 2. 3. 4. 5. 6. What about fiscal discipline and allocative and operational efficiency issues?

Public Finance Management

Solid legal framework in place to improve budget accountability and transparency Weak linkage between policy development, planning and budgeting
Major Characteristics and Structural Weaknesses

Line-item budgets too detailed and not defence policy focused Urgent need to move from Input to Performance Based Budgeting (PBB) Need to develop a Medium Term Fiscal and Expenditure Framework Weak Legislature Oversight of the defence budget Slow disbursement with skewed end of year spending

Defence procurement process is slow and possibly cost inefficient (i.e. value for money)
Internal and external audit functions need to be strengthened Government subsidies being reduced but still a major burden Decentralisation adds complexity to PFM System but not for defence which is

Public Finance Management

Major Characteristics and Structural Weaknesses

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Principles of Defence Management and Leadership

New Public Management

Dr Roger Darby Centre for Defence Management & Leadership Cranfield University, UK

New Public Management (NPM)

What is NPM? - NPM tends to reject the image of government as a machine bureaucracy.
OLD PUBLIC MGT. - rigid hierarchies.focus on compliance with processes rather than results. In addition professional rather than corporate or managerial orientations, and an insulation of public from private management with an absence of business values and techniques in public routines NPM to make federal govt. less expensive and more efficient and to change the culture of our national bureaucracy away from complacency and entitlement towards initiative and empowerment. (Pres. Clinton ) - Asserting a set of principles empowerring public employees to acquire & manage resources, cutting red-tape & using common sense & leaving it to front-line employees to apply the principles how they see fit in their orgs..

New Public Management (NPM)

What is NPM? - .

OLD PUBLIC MGT. - NPM . - ..

(

Pres. Clinton )

NPM issues for defence

Relationship with Government How to structure and manage the Armed Services to optimise public value Relationship with the defence supply industry Absence of an external customer as individual for defence outputs

NPM issues for defence

1. 2. 3. 4.

Public Sector Strategies . . .

Competitive advantage is replaced by political advantage by achieving public value

National Interest

Re-election

Public Sector Strategies . . .

Competitive advantage is replaced by.

The 6 broad definitions of governance capturing the key elements of this definition:
Voice and Accountability: the extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media Political Stability and Absence of Violence: the likelihood that the government will be destabilized by unconstitutional or violent means, including terrorism. Government Effectiveness: the quality of public services, the capacity of the civil service and its independence from political pressures; the quality of policy formulation Regulatory Quality: the ability of the government to provide sound policies and regulations that enable and promote private sector development Rule of Law: the extent to which agents have confidence in and abide by the rules of society, including the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence Control of Corruption: the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests

The 6 broad definitions of governance capturing the key elements of this definition:
1. 2. 3. 4. 5. 6.

Performance Management: The key issues and its relevance in a Security Sector Environment
Dr. Roger Darby Centre for Defence Management & Leadership Cranfield University, UK
Defence Academy of the United Kingdom

Issues in the Public Sector

What we do is not measurable Results will be used to punish What is the mission/vision? The public wont understand negative results Why invest/use something which will only last the current administration? Culture of not trusting business solutions No burning platform for change Technical constraints Lack of staff skills Developing appropriate innovative measures

Issues in the Public Sector?

Definition
How would you define performance measurement? Performance measurement is evaluating how well organizations are managed and their value they deliver for customers and other stakeholders.
Max Moulin

The process of quantifying the efficiency and effectiveness of past action

Adams, Kennerley & Neely

Why Measure?

3 distinctive roles of measurement: -Comply -Check -Challenge

Definition
How would you define performance measurement? .
Max Moulin

Adams, Kennerley & Neely

Why Measure?

3 (three) distinctive roles of measurement: 1. 2. 3.

Neely - 4 CPs of Measurement

Check Position Communicate Position Confirm Priorities Compel Progress

ACCORDING TO Neely - 4 CPs of Measurement

1. 2. 3. 4.

Performance Management
Review of Performance Measurement Tools

Performance Management e.g. UK Government -

Capability Reviews (Health Checks)

Launched in 2005 - UK Government Initiative led by Cabinet Office Aim: to assess and improve government departments ability to achieve their objectives

What is a Capability Review? Focus on leadership, strategy and delivery Short, sharp evaluation of capability to deliver by independent external team Drawn from across public/private sector Two weeks of intensive fieldwork A report and departments response/action plan is published Departments held to account for progress against plan

Performance Management e.g. UK Government -

Capability Reviews (Health Checks)

Launched in 2005 - UK Government Initiative led by Cabinet Office Aim??

What is a Capability Review? 1. 2. 3. 4. 5. 6.

Balanced Scorecard
Financial Perspective
How do we look to our shareholders?

Customer Perspective
How do our customers see us?

Internal Business Perspective

What must we excel at?

Innovation & Learning Perspective

How can we continue to improve?

Balanced Scorecard

Balanced Scorecard -Benefits

To clarify the Vision throughout the organisation To gain consensus & ownership by the management team To provide a framework to align the organisation To integrate strategic planning To drive the capital & resource allocation process To help become more customer focused To understand how knowledge enables business

processes

Balanced Scorecard -Benefits

1 2 3 4 5 6 7.

Strategy Maps & SSM

OECD Guidelines - SSR Objectives
Developing a clear institutional framework for providing security that integrates security and development policy Strengthening the governance and oversight of security institutions Building capable and professional security forces accountable to civil authorities and open to dialogue with civil society organizations

OECD-DAC Principles to Support SSR Work People-centred locally owned initiatives based on democratic norms and human rights principles Integrated security and development policies greater civilian involvement and oversight Multi-sectoral strategies based on broad assessment of the security needs of the people and the state Transparency and accountability Implementation through clear processes and policies that aim to enhance the institutional and human capacity needed for security policy to function effectively.

Strategy Maps & SSM

OECD Guidelines - SSR Objectives
1. 2. 3.

OECD-DAC Principles to Support SSR Work 1.

2.
3. 4.