Running Head: SITUATION AUDIT: THE DEPARTMENT OF DEFENSE 1

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SITUATION AUDIT: THE DEPARTMENT OF DEFENSE

Situation Audit: The Department of Defense

Anita Flack-Colón

February 7, 2017

University of Maryland University College

Executive Summary

The intent of this report is to evaluate the performance and environment of the U.S Department of Defense to provide recognition of strengths and recommendations of potential growth opportunities. Since the American Revolution, the Defense Department has been entrusted with the vital responsibility to protect the American people. Their mission is to “provide the military forces needed to deter war and to protect the security of the country” (U.S. Department of Defense, 2017, para. 9). The mission statement has been broadly crafted in order to encompass various contingency actions and guard the safety of the American citizens. The current structure of the department aligns with the proper way to complete the mission and each component receives direction on their role in achieving the unified mission. It is a vital responsibility to uphold the safety of the country, so it is imperative that talented personnel coincides in the department. The procedure that Congress distributes budget allocation to the DoD is explained, and this dictates the fiscal projection and initiatives for the fiscal year. A portion of investments is allocated to maintain a competitive advantage in a technology-advancing world. The agency accounts for a significant portion of the federal government’s assets; however, the precise representation of its physical resources has been compromised due to accountability issues. The DoD was established from the preexisting defense components and has subsequently adopted an autocratic leadership style. The Defense Department most significant strength is its personnel. In addition to the personnel, the department has significant strength is its financial security that has inadvertently contributed to the Department of Defense’s biggest weakness of properly conducting financial management. The bureaucratic approach has been detrimental to its capacity to implement reform within the department. Conclusions and suggestions for the DoD based on the findings are provided.

Introduction

The United States Department of Defense (DoD) is a federal organization that is abundantly familiar to most. The success of the department continues to impact the world in many ways. The intent of this report is to critically analyze the performance and environment of the department to provide insight to strengths and potential areas for growth. The DoD’s mission, values, and goals are stated and are utilized to evaluate its strategic objectives. The organizational size and structure is identified to provide understanding of its impact on performance. The Defense Department’s human capital, financial, technological, and physical assets are analyzed to optimize organizational success. The background of the autocratic leadership style is examined and recommendations for maintaining a competitive advantage are provided. The DoD’s adaptability to reform throughout the years is assessed and guidance for improvement is given. The situation audit produces an objectively examined overview of the Department of Defense, so that efficiency and prosperity continues.

Fact Sheet

The Department of Defense is entrusted with a vital responsibility that impacts all Americans, in addition to people in other countries around the world. Their mission is to “provide the military forces needed to deter war and to protect the security of the country” (U.S. Department of Defense, 2017, para. 9). The mission applies directly to the well being of the stakeholders—the American people. The Department’s scope of tasks “includes overseeing, directing, and controlling the planning for and employment of global or theater-level military forces and the programs and operations essential to the defense mission” (U.S. Department of Defense, 2015, p. 5). They are funded solely from U.S tax dollars; allocated through Congress. The Secretary of Defense, James Mattis, is the head of the Department. The department’s personnel consist of military and civilian employees; however, there is also work that is outsourced to contractors. The Department of Defense employs “1.4 million active duty military personnel, 1.3 million Guard and Reserve personnel, and 680,000 DoD civilians” (Office of the Under Secretary for Personnel and Readiness, n.d., para. 1). This makes the department the largest employer in the United States (U.S. Department of Defense, 2017, para. 3). The headquarters for the department is the Pentagon building, located in Arlington, Virginia (U.S. Department of Defense, 2017, para. 9).

The need for the Department of Defense was recognized since the beginning of the country’s establishment as the United States. The DoD’s website explains that, “The Army, Navy, and Marine Corps were established in 1775, in concurrence with the American Revolution” (U.S. Department of Defense, 2017, para. 12). Afterwards the War Department was established in 1789 under George Washington’s presidency, and was the first precursor to the Department of Defense. Subsequent to the War Department establishment, the National Military Establishment created by the National Security Act of 1847; and it was officially renamed the Department of Defense in 1949 (“Department of Defense “, n.d.). This makes the Department of Defense the oldest federal government agency (U.S. Department of Defense, 2017, para. 3).

Mission, Values, and Goals

The Department of Defense possesses a generic mission statement in order to obtain the flexibility required to engage in preventative action and guard the safety of the American citizens. The mission of the Department of Defense, regardless of the name of the department, has always been to “provide and support the military forces and capabilities needed to deter war and protect the security of our country” (U.S. Department of Defense, 2017, para. 9). The organization’s mission is simplistically and broadly stated in order to encompass all of the various activities that the department is involved with. Various agencies operate under the department and work in accordance to complete the overall mission as a unified command. The mission must be applicable for all agencies under the Department of Defense and it provides a unified strategic direction for operations; while simultaneously allowing the flexibility needed to perform national security operations. The information obtained from the DoD mission and goals are imperative in providing Congress and the President information to make key decisions that impact the country. Not only does the organization understand the mission of the department, but the American people do as well. The misunderstanding however, is in the transparency and interpretation from the general public on how the mission is accomplished. There are key decisions that are relayed and there are strategic plans that are withheld for national security reasons.

The core values for the department serve as foundational principles that the personnel are mandated to adhere by and are deemed necessary to fulfill the mission. According to the DoD’s website, “Leadership, professionalism, and technical know-how” are essential values needed to fulfill mission (U.S. Department of Defense, n.d.-b, para. 4). Additionally, military personnel are bestowed additional core values to live by: “duty, integrity, ethics, honor, courage, and loyalty” (U.S. Department of Defense, n.d.-b, para. 4). These values portray the essential characteristics of the type of personnel the Department of Defense aspires to acquire and provides a shared organizational identity. These values and expectations are understood throughout the organization and visibly displayed amongst the department’s websites and public documents. The foundational principles align directly to the mission of protecting the country.

The Department of Defense instituted a set of abiding goals to provide general information concerning the execution of the mission; in concurrence supplemental contingency plans to confront current threats. The unchanging mission of the department has resulted in the establishment of three constant goals. One of the goals is to “Support and defend the Constitution of the United States against all enemies, foreign and domestic” (U.S. Department of Defense, 2015, p. 5). Defending the Constitution directly correlates to the mission of protecting the security of the country. The country is founded on the principles stated in the Constitution and defending it protects the security of the American people. The next goal established is to, “Ensure, by timely and effective military action, the security of the United States, its possessions, and areas vital to its interest” (U.S. Department of Defense, 2015, p. 5). An effective military is required to deter war and engage in activity necessary to protect. To conclude the constant goals, is the DoD’s objective to, “Uphold and advance the national policies and interests of the United States” (U.S. Department of Defense, 2015, p. 5). The department advancing the national policies ensures that the country is current and can effectively defend itself in an ever-changing environment. These objectives encompass all of the department’s pursuits. However, in addition to these core goals the department composes strategic goals that specifically address the current national security concerns. The agency's strategic plan for the fiscal years of 2015-2018 state the following strategic goals: Goal 1: Defeat our Adversaries, Deter War, and Defend the Nation, Goal 2: Sustain a Ready Force to Meet Mission Needs, Goal 3: Strengthen and Enhance the Health and Effectiveness of the Total Workforce, Goal 4: Achieve Dominant Capabilities through Innovation and Technical Excellence, and Goal 5: Reform and Reshape the Defense Institution (U.S. Department of Defense, 2015). The strategic objectives to achieve these five goals are continuously evaluated to detect potential threats, and if necessary the contingency plan can alter the set initiatives.

Strategy and Objectives

The department established four key objectives to uphold the ability to complete strategic goal one. The U.S. Department of Defense (2016) identified the objectives are to: refocus counterterrorism efforts, maintain sufficient missile defense capability, enhance support to civil authorities and remain vigilant to known and emergent military threats, respectively. A preliminary evaluation of these strategic objectives cannot be made due to the status of these objectives being classified information. However, it is safe to presume that the department is making the appropriate procedures to “Defeat our Adversaries, Deter War, and Defend the Nation” based on the status of the country’s wellbeing (U.S. Department of Defense, 2016).

The department identified two objectives to successfully complete the second strategic goal. The first objective is to, “Rebalance the Joint Force for a broad spectrum of conflict” (U.S. Department of Defense, 2016, p. 23). The Department of Defense recognizes that the military forces preparation to effectively execute missions can be improved. The DoD’s solution to improve the readiness of department is to seamlessly integrate the Active and Reserve military force. A collective group of measuring systems, known as the C/S/As, is utilized to assess readiness and the military’s ability to execute missions as a joint force. The results of the C/S/As are measured and reported in the Quarterly Readiness Report to Congress, “which is classified to safeguard sensitive matters” (U.S. Department of Defense, 2016, p. 24). The second key objective is to, “Deliver, position, and sustain forces from any point of origin to any point of employment” (U.S. Department of Defense, 2016, p. 25). The department set an average customer wait time (CWT) goal for the logistics team to deliver to the customers of the Army, Navy, and Air Force. Based on the results from the Office of the Assistant Secretary of Defense for Logistic and Material Readiness annual review reports, the department met the CWT goal for the Air Force. The logistic team will be implementing a new inventory management system for the Army and Navy to ensure next time they met the CWT annual target goals.

Three strategic objectives were created to achieve the third strategic goal to elevate the department’s employee incentives. First to “Service members separating from Active Duty are prepared for the transition to civilian life” (U.S. Department of Defense, 2016, p. 29). To improve the transition three programs have been initiated: Separation VOW Compliance, Separation Career Readiness Standards, and WII Assigned Recovery Care Coordinator. These programs are taking the appropriate steps to be successful in achieving the objective. By “Foster and encourage workforce initiatives that ensure employees are trained, engaged, and benefitting from a quality work life” the department is able to obtain a high advantage (U.S. Department of Defense, 2016, p. 33). Skillful personnel are necessary for an organization’s success, so if the department does not strive to attract and retain talent it could result in the mission being compromised. In concurrence with objective two, the department wants to “Ensure that [they] maintain a highly-skilled military and civilian workforce shaped for today’s and tomorrow’s needs” (U.S. Department of Defense, 2016, p. 36). Better compensation and health care opportunities are mandatory in order for the federal entity to compete with private industry for talent. These reforms are meant to provide as incentives to current and prospective employees of the department.

The department established four key objectives to achieve strategic goal four. The first key objective is to, “Preserve investments to maintain our decisive technological superiority” (U.S. Department of Defense, 2016, p. 43). Based on the U.S Department of Defense progress reporting (2016), 82% of the Department’s Science and Technology funded demonstration programs transitioned, exceeding the goal of 40%. However, a challenge with potential budget constraints can cause this objective to not be met in the future. The second key objective is, “Seek innovative approaches to improve cyber capability against growing threats” (U.S. Department of Defense, 2016, p. 45). The Department is creating 133 Cyber Mission Force (CMF) teams, composed of highly trained personnel, to defend the United States against cyber attacks by the end of 2018. The third key objective is, “Improve acquisition processes from requirements definition to execution phase and through lifecycle enhancements, to acquire and sustain military-unique and commercial items” (U.S. Department of Defense, 2016, p. 48). The Better Buying Power (BBP) initiative was revamped to direct the department’s acquisition professionals to better utilize taxpayer’s money and conduct better business procedures. BBP concepts have been integrated into acquisition programs. The fourth key objective is, “Expand core capabilities in support of military interest” (U.S. Department of Defense, 2016, p. 51). Beginning fiscal year 2017 the Joint Force will create an implementation plan for the Joint Concept for Robotic and Autonomous Systems. These four objectives will allow the department to achieve a competitive advantage through innovation and technical excellence.

To achieve the fifth goal the Defense Department created three strategic objectives. The first key objective, “Achieve efficiencies and effectiveness to redirect resources to direct support of combat, combat support, and combat service support elements of the DoD” (U.S. Department of Defense, 2016, p. 55). The department is executing energy conservation projects and newly constructed buildings must exceed American Society of Heating, Refrigerating and Air Conditioners Engineers’ established standards. The second objective is, “Improve financial processes, controls, and information via audit readiness” (U.S. Department of Defense, 2016, p. 59). By collaborating with the Independent Public Accountants and Federal Accounting Standards Advisory Board, the DoD plans to implement policies to provide corrective action to the financial process errors. The third objective is to, “Establish an enterprise framework for valuation and accountability of results, outcomes, cost, and risk” (U.S. Department of Defense, 2016, p. 63). With the innovation of the enterprise the department will be able to effectively and efficiently evaluate data to improve procedures.

After analyzing the Department of Defense’s strategy goals and objectives, it is presumed the corporate-level strategy is being utilized by the agency. The strategic objectives demonstrate that the ideology of the department is to attain a competitive advantage. The United States wishes to have the best defense strategies, so that adversaries can be defeated and discouraged from inflicting danger on the country. The DoD takes several precautions to protect classified information to retain a competitive advantage. The agency has several resources that serve as a competitive advantage; however, it is explained, “ It’s not tanks, planes or ships, it’s... People” (U.S. Department of Defense, n.d.-b, para. 13). The department recognizes that the employees dictate its success and allows the United States to maintain an advantage.

Organizational Size and Structure

As previously mentioned, the Department of Defense is the largest employer in the United States. Currently according to the Office of the Under Secretary for Personnel and Readiness (n.d.), the department employs 682,000 civilian employees. The amount of employees has significantly dropped based on the historical data of the agencies reported civilian employees. In August of 2015, the U.S Department of Defense (n.d.) public website reported 742,000 civilian employees. This represents a decrease of approximately 60,000 civilian personnel over the course of a year. This significant downsizing of civilian personnel is due to Section 955 of the National Defense Authorization Act (NDAA) for fiscal year 2013. The NDAA “required the Secretary of Defense to, among other things, develop and implement an efficiencies plan to achieve savings in the total funding for civilian and contractor workforces…from fiscal years 2012 through 2017” (U.S. Government Accountability Office, 2015b, p. 2). The Congress utilized this act to mandate workforce cuts. According to the U.S. Office of Personnel Management (n.d.-a), the historical data show that in 2014 there were 723,000 civilian employees, in 2013 there were 729,000 civilian employees, and in 2012 there were 730,000 civilian employees. Despite the raise in employees from 2014 to 2015, over the last 5 years the amount of civilian employees has been consistently declining. While the large size of the department can result in challenges, the drastic decrease of civilian personnel can result in an even bigger challenge—execution of the mission. This is a challenge due to the workload of the Department not being altered in conjunction with the obligatory regulations to reduce the organizational size.

The organization structure of the massive department can be challenging to comprehend. “The President, in the constitutional role as commander-in-chief of the armed forces, is the senior military authority in the nation and as such is ultimately responsible for the protection of the United States from all enemies, foreign and domestic” (U.S. Department of Defense, n.d.-b, para. 5). Following in ranking, is the Secretary of Defense who is the “the principal defense policy advisor to the President” and the “Deputy Secretary, the second-highest ranking official in the DoD” (U.S. Department of Defense, n.d.-b, para. 5). These executive leaders oversee several components. The Department of Defense 1994 (n.d.) states the following:

The Department of Defense is composed of the Office of the Secretary of Defense; the military departments and the military services within those departments; the Chairman of the Joint Chiefs of Staff and the Joint Staff; the unified and specified combatant commands; the Defense agencies; (and) DOD field activities. (para. 6)

The current structure of the DoD aligns with the proper way to complete the mission and set goals. Each DoD component receives direction on their role in achieving the unified mission from the Secretary of Defense. This allows for the work to be divvied amongst the constituents, for a more efficient and effective process.

Critical Resources: Human Resources

The DoD has various hiring authorities to acquire the talent necessary to achieve its mission, goals, and strategic objectives. The Office of Personnel Management (OPM) explains that, “the Federal Government consists of three types of services, the Competitive Services, the Excepted Service, and the Senior Executive Service” (U.S. Personnel Management, n.d.-c, para. 1). The Competitive Service is utilized for all civil service positions in the executive branch, with few limitations. With the Competitive Service, individuals undergo on a competitive hiring process. The OPM website explains that “This process may consist of a written test, an evaluation of the individual’s education and experience, and/or an evaluation of other attributes necessary for successful performance” (U.S. Office of Personnel Management, n.d.-c, para. 2). The Excepted Service differs because these are civilian service positions that are appointed. The Senior Executive Service is comprised of the managerial government personnel, and the hiring process can vary for this type of personnel. Civilian employees are placed according to the job announcement that they were selected for; however each employee composes a development plan. The OPM describes the individual development plan (IDP) as “a tool to assist employees in career and personal development. Its primary purpose is to help employees reach short and long-term career goals, as well as improve current job performance” (U.S. Office of Personnel Management, 2013, para. 12). The DoD provides its employees with a career advancement tool, so that planning can be done to achieve optimal performance.

The Defense Department recognizes the importance of acquiring superior personnel to obtain an advantage and accomplish the set mission. “The Department of Defense mission is accomplished seeking out our nation’s best and brightest” (U.S. Department of Defense, n.d.-b, para. 3). The Department of Defense talents are essential to executing the mission. This is reflected by, “the Defense Performance Management and Appraisal Program, a Department of Defense enterprise-wide program that links individual performance to DOD values and organizational mission” (Prince, 2016, para. 1). It is an important mission to uphold the safety of the country, so it is imperative that talented personnel coincides in the department. A competitive advantage has been earned by the department by employing the best, implementing proper developmental training, and providing retention incentives to its personnel.

The Performance Management Cycle utilized by the organization consists of five continuous stages: planning, monitoring, developing, rating, and rewarding. The planning stage expects the employee to “work in advance so that expectations and goals can be set” (U.S. Office of Personnel Management, n.d.-b, para. 1). It is imperative that leadership is “monitoring progress and performance continually” (U.S. Office of Personnel Management, n.d.-b, para. 1). The next stage is “developing the employee's ability to perform through training and work assignments” (U.S. Office of Personnel Management, n.d.-b, para. 1). Afterwards “Rating periodically to summarize performance and, rewarding good performance” occurs (U.S. Office of Personnel Management, n.d.-b, para. 1). The DoD utilizes this cycle with all of its employees to fairly evaluate performance.

Critical Resources: Financial Resources

The process that the Department of Defense acquires funds is significantly unique in comparison to the private industry. The funding for the Federal Government entities come from the American citizen’s taxes and it is allocated annually. “A brief guide to the federal budget and appropriations process” (n.d.) explains that the process is initiated with the submission of the President’s annual budget request to Congress. Afterwards Congress then responds to the President’s request and subsequently the creation of a concurrent congressional budget resolution occurs. Once the total discretionary funding amount for the fiscal year is determined from the budget resolution, the 12 appropriations bills are generated. A specific subcommittee creates the bills for the individual or groupings of federal agencies that are assigned to complete allocations for. Afterwards the 12 appropriations bills are voted on by all the committees of Congress and the President signs each bill making the budget a law. This funding procedure can be unpredictable and requires dependency on Congress to financially support the organization.

The Congress is essentially in control of the Department of Defense’s financial management. The DoD has a subsidiary agency, Under Secretary of Defense (Comptroller) that monitors the financial management. The Congress has established the U.S. Government Accountability Office (GAO) that operates as an auditor of the federal government. The audit report results claim “DOD financial management has been on GAO’s High-Risk List since 1995 because of long-standing deficiencies with its financial management systems, reporting practices, and management of its finances” (U.S. Government Accountability Office, n.d.-b, para. 1). This reveals that the Department of Defense has had continuous complications with financial management. The GAO explains that, “These deficiencies not only impact DOD’s ability to have auditable financial statements, they also impact its ability to make sound decisions on missions and operations” (U.S. Government Accountability Office, n.d.-b, para. 1). By compromising the success of the mission, the American people can potentially be at stake. The GAO has indicated key components that have negatively impacted the department’s financial success. GAO reveals the “DOD’s financial management improvement efforts have been hindered by its decentralized environment; cultural resistance to change; lack of skilled financial management staff; lack of effective processes, systems, and controls; incomplete corrective action plans; and ineffective monitoring and reporting” (U.S. Government Accountability Office, n.d.-b, para. 6). It is vital that the department rectifies the financial challenges to effectively and efficiently achieve the mission.

The financial budget allocated to the DoD has been decreasing, and this should be noted in order to establish a more accurate fiscal projection and contingency planning. “Enacted on August 1, 2011, the Budget Control Act (BCA) ... sets limits on defense spending between FY2012 and FY2021 that are playing a significant role in the debate about the appropriate level of defense spending” (Belasco, 2015, para. 1). According to the U.S. Department of Defense (n.d.-c) in FY 2012, the department was allocated $645 billion dollars, $614 billion in FY 2013, $581 billion in FY 2014, $560 billion in FY 2015, and $585 billion in FY 2016. Despite the increase in 2016, the budget has been diminishing and it makes the financial reform imperative for success.

Critical Resources: Technology Resources

The Department of Defense invests and engages in several strategic initiatives in order to maintain a competitive advantage in a technology-advancing world. The DoD discloses that, “Given today's globalized access to knowledge and the rapid pace of technology development, innovation, speed, and agility have taken on a greater importance” (U.S. Department of Defense, n.d.-a, para. 1). There is a demand for the department to constantly adjust and invent new resources. “The Defense Department serves as an innovative leader in developing technology to protect Americans and troops - on and off the battlefield” (U.S. Department of Defense, n.d.-a, para. 1). As a result, the department must continue to innovate to establish technology preeminence. The two new prominent responses to the technology advancement by the department are the Defense Innovation Initiative (DII) and the Better Buying Power 3.0 (BBP).

The DII is “an ambitious Department-wide effort to identify and invest in novel ways that sustain and advance the Department’s military superiority and improve business operations throughout the Department” (U.S. Senate, 2015, p.4). Underneath the DII are two operations, the Defense Innovation Unit-Experimental (DIUx) and the Long-Range Research and Development Plan (LRRDPP). Based on the Defense Innovation Marketplace, the DIUx “serves as a bridge between DoD components executing on some of our nation's toughest security challenges and companies operating at the cutting edge of technology” (The Defense Innovation Initiative (DII), n.d., para. 3). The department is collaborating with outside sources to utilize their technological advancements. The second effort, “LRRDPP was designed to help the Department better understand and prioritize new or unconventional application of technology in an effort to provide the U.S. with significant military technological advantage into the future” (The Defense Innovation Initiative (DII), n.d., para. 5). This will allow the DoD to strategically implement and identify innovative technology that can be suitable for military usage. “One shared aspect of DII and BBP 3.0 is the...(LRRDPP)” (U.S. Senate, 2015, p.5). The BBP 3.0 consists of “acquisition improvement initiatives...which [are] focused on innovation and technical excellence” U.S. Senate, 2015, p.5). The BBP 3.0 attempts to reform the procurement process, so that developing technology can be acquired. The department must be innovative in the technology field to retain the current competitive advantage against adversaries. Retaining an advantage is necessary for effectively completing the mission to protect the United States.

The Department of Defense understands the vital importance of information security management and continuously evaluates its procedures to ensure that unauthorized access does not occur. Unauthorized access to DoD information could endanger the national security of the country; therefore it is imperative that protective measures are implemented to secure the content stored and accessible through technology resources. The Inspector General, U.S Department of Defense (2016) explains that security practices have been enforced by the Cybersecurity Act of 2015, which requires reporting of policies and security procedures to Congress to ensure that all federal government entities comply with appropriate standards. The U.S. Department of Defense (n.d.-c) states that for the FY 2017, the DoD has allocated $6.7 billion dollars to enhancing cyber security. The Inspector General, U.S Department of Defense report explains that, “The DoD has policies, procedures, and practices related to logical access controls, including multifactor authentication; software and license inventories; monitoring and threat detection capabilities; and information security requirements for third-party service providers” (2016, p. iii). Cyber security has been recognized as a growing threat and strategic efforts to defend the Nation against attacks are important to the department’s mission.

Critical Resources: Physical Resources

The Department of Defense acquires a vast majority of the Federal Government’s tangible property; however, there are deficiencies in the reporting system prohibiting an accurate representation of its physical resources. The U.S. Government Accountability Office states that, “The Department of Defense (DOD), reporting about $630 billion total Property, Plant, and Equipment (PP&E) net of accumulated depreciation as of September 30, 2015, is responsible for over 70 percent of the U.S. government’s reported PP&E” (2016, para. 1). The agency accounts for a significant portion of the federal government’s assets, which is expected due to it being the largest department. Despite the department’s substantial amount of physical resources, the precise representation of its assets has been compromised due to accountability issues. The GAO explains that the, “DOD faces challenges in its efforts to provide reasonable assurance of accountability for its PP&E—knowing what it has, where it is located, what condition it is in, and its depreciated cost” (U.S. Government Accountability Office, 2016, p. 8). These challenges raise alarming concerns, because if the accountability for PP&E cannot be determined it risks the department ability to effectively and efficiently achieve the mission. The GAO does acknowledge that the “DOD has been working to address previously reported deficiencies...[however] a substantial amount of work remains before DOD can demonstrate that the full portfolio of PP&E assets is reliably reported” (U.S. Government Accountability Office, 2016, p. 8). The department is mandated by Congress to be audit ready by September 30, 2017, so the issue concerning lack of adequate reporting is being addressed.

The Department of Defense’s reported physical resources provide a generic insight to asset categories and its associated value. The physical assets have been aggregated into the following categorizes: equipment, land, buildings/facilities, internal-use software, and other. The Government Accountability Office has analyzed the DoD’s financial report for fiscal year 2015 and retrieved the calculations for the acquisition value and net book value for each of the classifications. The net book value represents the current value of the asset after depreciation is subtracted and the amounts are in millions of dollars. Equipment has a total acquisition value of $1,010,573 and a net book value of $426,533 (U.S. Government Accountability Office, 2016). The land was valued at $10,904 and there was no depreciation associated to this resource (U.S. Government Accountability Office, 2016). Buildings, Structures, and Facilities have a total acquisition value of $283,181 and a net book value of $146,263 (U.S. Government Accountability Office, 2016). The internal-use software has a total acquisition value of $12,022 and a net book value of $3,596 (U.S. Government Accountability Office, 2016). Physical assets categorized as other, which includes on going construction projects, have a total acquisition value of $43,149 and a net book value of $42,701 (U.S. Government Accountability Office, 2016). This GAO analysis reveals that from the physical resources accounted for in FY 2015, equipment has the fastest annual depreciation amongst the categories. The rapid reduction in value of the department’s equipment should be further investigated, so value of equipment can be maintained.

The physical resources impact the prosperity of the department and are mission critical. The U.S. Department of Defense (n.d.-c) has publicized that some of the key force physical resources as of 2017 are: 96 operational bombers, 450 ICBMs, 55 Tactical fighter squadrons, 287 Navy ships, and 56 army brigade combat teams. These types of combat physical resources directly impact the military personnel’s ability to complete the mission. Without the proper equipment to protect the country the service members are not capable to successfully defend the United States against its adversaries. Since the protection of U.S citizens is dependent upon mission success, it is imperative that the department keeps adequate records of its resources. GAO expresses its concern by stating that “to the extent that current budget constraints and fiscal pressures continue, the reliability of DOD’s ...ability to maintain effective accountability for its resources will be increasingly important” (U.S. Government Accountability Office, 2016, p. 4). The financial reductions and lack of accountability for physical resources could endanger the national security of the country.

Leadership, Governance, and Management

The department of defense has adopted an autocratic leadership technique to govern its employees. Any organization’s leadership impacts its ability to effectively achieve its goals. The way an organization is led affects the personnel, strategy initiatives, and several other critical determinants that dictate its success. The department was established to unite the preexisting defense components and has subsequently adopted the leadership style of the military. It is imperative to recall, “military leader's authority to lead derives from the Constitution” (Yeakey, 2002, para. 5). This implies that incompliance with a leader’s authority may result in legal repercussions. In addition to the binding Constitution, it is vital to recognize that the President and Congress manage the Department of Defense. The President and Congress have the ability to create federal laws and can mandate regulations that impact the mission execution. The federal laws force the Department of Defense to comply with the decisions made by its overseers. The DoD’s “leadership is essentially autocratic...the flow of communication, or essential information, is between the leader and his subordinates rather than among[st] all the members of his group” (Yeakey, 2002, para. 5). The autocratic management of the department of defense “typically make choices based on their own ideas and judgments and rarely accept advice” (“Program management: Autocratic leadership style”, n.d., para. 1). Executive leadership informs the subordinate personnel information concerning matters that impact their duties. Authoritarian leadership may have disadvantages like the “group may dislike that they are unable to contribute ideas” or “resentment among group members” (“Program management: Autocratic leadership style”, n.d., para. 3). Major George Yeakey, a retired Army leader, states that, “In light of these considerations, military leadership has been effective” (2002, para. 6). The defense priority is to protect the country against adversaries and the authoritarian leadership has demonstrated to be effective thus far. However, with the changing workforce demographics this type of leadership may need to be reevaluated.

The Department of Defense utilizes management control systems to audit business processes and assist in improving efficiency. One way the department attempt to pursue management control is the Managers’ Internal Control Program (MICP). The MCIP objective is to “Identify, prioritize, report, and where necessary, mitigate operational, financial, and system related risk before it negatively impacts the mission, as opposed to after the fact” (Office of the Under Secretary of Defense (Comptroller), n.d., para. 1). This program intends to be a proactive initiative to correct issues within the department, so the mission is not compromised. In addition to the department’s internal control system, the GAO also acts as management system. The GAO mission “is to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people” (U.S. Government Accountability Office, n.d.-a, para. 2). This allows the GAO to evaluate the federal government agencies to provide the American people performance information on the departments their monetary contribution funds. The GAO is responsible for completing unbiased analysis to “advise Congress and the heads of executive agencies about ways to make government more efficient, effective, ethical, equitable and responsive” (U.S. Government Accountability Office, n.d.-a, para. 4). The reports from GAO can greatly impact the department and result in suggestions for improvements in procedures. The management control systems are valuable and essential to evaluate the overall status of the department.

Strengths and Weakness

The Defense Department most significant strength is its personnel. The DoD has continually emphasized that their most important resource is its people. The department claims, “We will never compromise on the quality of our most important resource: the people who have chosen to serve you and serve the nation” (U.S. Department of Defense, n.d.-b, para. 13). The Department of Defense would not be able to serve the nation without its employees, both military and civilian. The way the DoD describes them is, “These are the best of America” (U.S. Department of Defense, n.d.-b, para. 13). The military personnel risk their life in attempts to successful complete their organization’s mission—protect the security of the nation. The civilian personnel directly support the military and assist the department in being able to execute objectives. The DoD heavily depends on its employees to accomplish victory over adversaries.

Another significant strength is its availability of financial resources and financial security. Unlike private industry, the DoD does not depend on revenue to remain in business. The National Priorities Project reports, “By far, the biggest category of discretionary spending is spending on the Pentagon and related military programs” (“Federal Spending: Where Does the Money go”, n.d., para. 4). The department is fortunate to be a federal entity because the U.S President and Congress will not allow it to fail. The department of defense has always been deemed necessary since the U.S received its independence after the American Revolution. Despite if the federal government was to undergo financial hardship, the “Government has the power to tax” and can “finance budget deficits by borrowing in the financial markets” (“Fiscal policy and economic growth”, n.d., para. 2). In addition, “The federal government...can print money” (“Fiscal policy and economic growth”, n.d. para. 2). Those are extreme measures that the federal government can take to provide monetary resources if a shortage occurred. This financial security has inadvertently contributed to the Department of Defense’s biggest weakness.

The U.S Defense Department’s greatest weakness is its ability to properly conduct financial management. The lack of an accurate financial representation has the ability to severely impact every aspect of an organization. The GAO 2015 High Risk Report (2015a) explains the department’s financial weakness in the statement below:

Significant financial and related business management systems and control weaknesses have adversely affected DOD’s ability to control costs; ensure basic accountability; anticipate future costs and claims on the budget; measure performance; maintain funds control; prevent and detect fraud, waste, and abuse; address pressing management issues; and prepare auditable financial statements. (p. 172)

A brief guide to the federal budget and appropriations process. (n.d.). Retrieved from http://www.acenet.edu/news-room/Pages/A-Brief-Guide-to-the-Federal-Budget-and-Appropriations-Process.aspx

Belasco, A. (2015, July 22). Defense spending and the budget control act limits. (CRS Report 7-5700-R44039) Retrieved from https://fas.org/sgp/crs/natsec/R44039.pdf

Bumiller, E. (2011, July 22). Obama ends ‘Don’t Ask, Don’t Tell’ Policy. Retrieved from http://www.nytimes.com/2011/07/23/us/23military.html

Department of Defense. (n.d.). Retrieved from http://www.allgov.com/departments/department-of-defense?detailsDepartmentID=569

Department of Defense 1994. (n.d.). Retrieved from http://govinfo.library.unt.edu/npr/library/status/mission/mdod.htm

Department of Justice, Office of Public Affairs. (2016, May 6). Former Marine Corps Contracting Officer Sentenced To 37 Months For Conspiracy. [Press release]. Retrieved from https://www.justice.gov/usao-ednc/pr/former-marine-corps-contracting-officer-sentenced-37-months-conspiracy

Department of Justice, Office of Public Affairs. (2016, May 27). Three Navy officers charged in expanding bribery and fraud scheme. [Press release]. Retrieved from https://www.justice.gov/opa/pr/three-navy-officers-charged-expanding-bribery-and-fraud-scheme

Federal spending: Where does the money go. (n.d.). Retrieved from https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/

Fiscal policy and economic growth. (n.d.). Retrieved from http://www.infoplease.com/cig/economics/government-unique-situation.html

Inspector General, U.S Department of Defense. (2016, August 15). DoD’s policies, procedures, and practices for information security management of covered systems. Retrieved from http://www.dodig.mil/pubs/documents/DODIG-2016-123.pdf

Office of the Under Secretary of Defense (Comptroller). (n.d.). Financial improvement and audit readiness. Retrieved from http://comptroller.defense.gov/fiar/micp.aspx#MICPOverview

Office of the Under Secretary for Personnel and Readiness. (n.d.). About. Retrieved from http://prhome.defense.gov/about/

Parrish, S. (2012, December 12). What the government can learn about adaptability from the private sector. Forbes. Retrieved from http://www.forbes.com/sites/steveparrish/2012/12/12/what-the-government-can-learn-about-adaptability-from-the-private-sector/#1d404b20610f

Prince, P. (2016, May 25). Army civilians transition to new DOD-wide appraisal program. Retrieved from https://www.army.mil/article/168631

Program management: Autocratic leadership style. (n.d.). Retrieved from http://www.acqnotes.com/acqnote/careerfields/autocratic-leadership-style

Repeal of “Don’t Ask, Don’t Tell”. (n.d.). Retrieved from http://www.hrc.org/resources/the-repeal-of-dont-ask-dont-tell

Syeed, N. (2016, September 11). Pentagon’s new “rebel alliance” chief is fighting bureaucracy from the inside. Bloomberg News. Retrieved from http://www.denverpost.com/2016/09/11/pentagon-chief-fights-bureaucracy-from-inside/

The Defense Innovation Initiative (DII). (n.d.). Retrieved from http://www.defenseinnovationmarketplace.mil/DII_Defense_Innovation_Initiative.html

U. S. Department of Defense. (2015, July 31). Agency strategic plan fiscal years 2015-2018 (Version 1.0). Retrieved from http://dcmo.defense.gov/Portals/47/Documents/Publications/ASP/FY2016_2018ASP.pdf

U. S. Department of Defense. (2016, January 13). Annual performance report FY 2015. (RefID 5-5A5BF7F). Retrieved from http://dcmo.defense.gov/Portals/47/Documents/Publications/Annual%20Performance%20Plan/FY_2015_Annual_Performance_Report.pdf

U. S. Department of Defense. (2017, January 27). About the Department Of Defense (DOD). Retrieved from https://www.defense.gov/About-DoD

U. S. Department of Defense. (n.d.-a). Defense Department: Science and technology. Retrieved from https://www.defense.gov/News/Special-Reports/0715_science-tech

U. S. Department of Defense. (n.d.-b). DOD 101 introductory overview of the Department of Defense. Retrieved from https://www.defense.gov/About-DoD/DoD-101

U. S. Department of Defense. (n.d.-c). FY 2017 budget proposal. Retrieved from https://www.defense.gov/News/Special-Reports/0217_budget

U. S. Government Accountability Office. (2015a, February). High-risk series an update. (Report GAO-15-290). Retrieved from http://www.gao.gov/assets/670/668415.pdf

U. S. Government Accountability Office. (2015b, December). Civilian and contractor workforces complete information needed to assess DOD’s progress for reductions and associated savings. (Report GAO-16-172). Retrieved from http://www.gao.gov/assets/680/674420.pdf

U. S. Government Accountability Office. (2016, May). DOD financial management greater visibility needed to better assess audit readiness for property, plant, and equipment (Report GAO-16-383). Retrieved from http://gao.gov/assets/680/677471.pdf

U. S. Government Accountability Office. (n.d.-a). About GAO. Retrieved from http://www.gao.gov/about/index.html

U. S. Government Accountability Office. (n.d.-b). DOD financial management- high risk issue. Retrieved from http://www.gao.gov/key_issues/dod_financial_management/issue_summary

U. S. Office of Personnel Management. (2013, September 13). Training and development policy wiki. Retrieved from https://www.opm.gov/WIKI/training/Individual-Development-Plans.ashx

U. S. Office of Personnel Management. (n.d.-a). Historical federal workforce tables executive branch civilian employment since 1940. Retrieved from https://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/historical-tables/executive-branch-civilian-employment-since-1940/

U. S. Office of Personnel Management. (n.d.-b). Performance management. Retrieved from https://www.opm.gov/policy-data-oversight/performance-management/performance-management-cycle/#url=Overview

U. S. Office of Personnel Management. (n.d.-c). Hiring information. Retrieved from https://www.opm.gov/policy-data-oversight/hiring-information/competitive-hiring/

U.S. Senate. Subcommittee on Defense. FY 2016 budget request for Defense Innovation and Research Hearing, 22 Apr. 2015. 114th Cong. Retrieved from http://www.defenseinnovationmarketplace.mil/resources/042215DoDInnovationResearch-JointTestimony-SAC-D.pdf

Whitlock, C. & Woodward, B. (2016, December 5). Pentagon buries evidence of $125 billion in bureaucratic waste. Washington Post. Retrieved from https://www.washingtonpost.com/investigations/pentagon-buries-evidence-of-125-billion-in-bureaucratic-waste/2016/12/05/e0668c76-9af6-11e6-a0ed-ab0774c1eaa5_story.html?utm_term=.1d587133e181

Yeakey, G.W. (2002, February). 72 Situational leadership. Retrieved from http://www.au.af.mil/au/awc/awcgate/milreview/yeakey.htm

Finding Mindy

Students often wonder if information privacy is really as much of a problem as the media tries to convey. In order to start looking into an answer for this question, let us see how information privacy can affect the lives of individuals. Please read the following story.

After a long week of school, Mindy was eager to get home, grab a snack, and relax in front of the computer. Signing on with her screen name SftBallGr116, she noticed Jimmyg114 was online, whom she met a month ago in a sports chat room.

SftBallGr116:

Hey you! I think I’m being stalked LOL!

Jimmyg114:

LOL really, why?

SftBallGr116:

Well I thought this car was following me on my walk home today. But I think it was just my imagination LOL

Jimmyg114:

Haha someone’s paranoid! Better stop giving out your info online

SftBallGr116:

No way. I don’t do that. I’ve heard the terrible stories.

Jimmyg114:

Anyway didn’t you have a game today?

SftBallGr116:

Yeah and we won again. 3 in a row!

Jimmyg114:

Nice, who did you guys play?

SftBallGr116:

The Warriors. They were pretty good.

Jimmyg114:

What is your team called?

SftBallGr116:

We are the Newtown Hawks. We just got new uniforms. I love them,

Jimmyg114:

Really what do they look like?

SftBallGr116:

They are blue and white with an awesome hawk logo on the front.

Jimmyg114:

Nice, what position do you play?

SftBallGr116:

Third base. We play them again for our homecoming in 2 weeks. My parents and friends are all coming. It is a big game. Well I have to get going. My parents will be home any minute and I was supposed to do the dishes. LOL

Jimmyg114:

LOL ok catch you later.

Later, Jimmyg114 went to the member’s menu to search for her profile. He began to write everything down he knew about SftBallGr116 so far.

Name: Mindy

Birthday: July 19,1996

Age: 13

Location: Maryland

Hobbies: softball, jogging, skiing, hanging out at the mall

Besides this information, he knew she lived in Newtown because she had just told him. He knew she stayed by herself until 6:00 p.m. every evening until her parents came home from work. He knew she played softball on Thursday evenings on the school team, and the team was named the Newtown Hawks. Her favorite number, 19, was printed on her jersey. He knew she was in the eighth grade at Newtown High School. This information had been gathered over the past couple weeks.

By Tuesday, Mindy forgot about the car following her.

Her game was well under way when she noticed a man she had never seen before staring at her. This startled her at first. Occasionally she would glance over at him, and he would smile. He seemed harmless. When the game finished, he wandered around, watching Mindy as she talked with her coach. Mindy began to walk home and the man followed quietly behind her. Keeping a safe distance, the man watched Mindy walk into her house. He now knew her exact location.

Questions:

1. How much of the information provided by Mindy to Jimmyg114 would you consider private?

2. How much of that information would be available online if Mindy did not interact with Jimmyg114?

3. What types of personal information do you as a student care about protecting normally? Are you going to be more careful?

4. What potential risks do Mindy and her family now face?

Step 9: Training and Technology Needs

After reading up on how to make decisions as a group, your next step will be to identify training opportunities. To identify those opportunities, complete the following tasks:

· Identify optimal information and communication technology (ICT) (team communication/collaborations) to facilitate communication, collaboration, and decision-making.

· Identify necessary training for virtual teams and consider the pros and cons of the CEO’s preference to conduct the team training online rather than with a preliminary face-to-face meeting.

· Include a cost-benefit analysis that helps the CEO understand the pros and cons of her preference for virtual teams. Refer to the Michel and Oliverio (2007) article on cost-benefit analysis you read when working on Project 2.

Team Communication

Virtual teams—such as the ones that are the focus of your project—require technology solutions to help them communicate, form effective working relationships, and make good decisions. Broadly defined, information and communication technology (ICT) is the transmission of ideas using technologies and systems to create, store, retrieve, and share information. Considering and planning for the integration of telecommunications (wireless networks, multimedia, telephony), hardware, software, and storage, as well as infrastructure systems, will give your teams the tools they need to access, store, and transmit information. Keep in mind that the methods and approaches you will use for ICT will evolve as technologies evolve and advance. Your task is to try to figure out the optimal solutions for your particular virtual teams.

As you prepare to do your research you might want to consider drafting a plan to cover topics such as these:

· goals for your use of ICT;

· what you think you will need to execute your plan (hardware, software, human and financial resources);

· vendors and procurement process;

· proposed budget and timeline;

· list of any potential risks; and

· overall schedule, roles, and steps for implementing the plan.

The Resources section below contains two articles to get you started with your research for this topic. You will find more information in the journal literature

Team Training

As you undoubtedly realize, when planning to create and use teams in general and virtual teams in particular, it is important to do what you can to ensure the team and its members are well-prepared for their work together. More often than not, teams are created quickly, with the only (or primary) focus being on ensuring members have the technical knowledge and skills to complete the assigned work. The underlying assumption is that members will figure out how to work together or, in some cases, that they come well-equipped with team knowledge and skills. Little or no attention is paid to whether there should be support or training to help the team with communication, conflict resolution and management, decision making, weak or noncontributing members (social loafers or free riders), external relationship management, project planning, and so on.

When the decision is made to create and use geographically distributed multicultural virtual teams, further potential challenges are added. As you already may have discovered in your research for this project, this type of team is increasingly found, especially in large companies (Germain, 2011; Rosen, Furst, & Blackburn, 2006). One problem is figuring out how to manage times for synchronous meetings so those in one time zone are not always at a disadvantage. Then there are the various problems that can arise because of differences in language (Klitmøller & Lauring, 2013), cultural values (Goodman, 2012), appreciation of diversity and commitment to inclusion (Derven 2016), standard business practices, and individual preferences. Another problem that can arise with a virtual team is that it can be easier for a member or members who are not happy with the way things are going to seem to disappear (stop participating) even when in a synchronous meeting. The absence of nonverbal cues can increase the potential for misunderstandings, conflict, and misperceptions (Germain, 2011).

One thing you will read about when conducting research on this topic is that trust is likely to be a major issue for virtual teams. Germain (2011) discusses some of the reasons for assuming this will be the case. An implicit assumption is that trust is possible in onsite teams because nonverbal communication cues are more readily available. The ability to see and hear members using web meeting software may be sufficient to alleviate this concern. Of course, we should also question the assumption that face-to-face interactions increase trust between individuals.

Training may not be the best way to help teams address the problems they will encounter, but It is one that should at least be considered (Martinez-Moreno, Zornoza, Orengo, & Thompson, 2014; Rosen, Furst, & Blackburn, 2006; Salas, DiazGranados, Klein, Burke, Stagl, Goodwin, & Halpin, 2008). However, just giving the team extensive upfront training may not be an optimal approach. Sometimes training combined with coaching—or even coaching alone—is a preferable solution. Just trusting that the team will figure it out is usually not advisable, especially when the stakes are high and the consequences of failure are grave.

Your task is to agree on the best approach to training for this project scenario. Both the cost and benefits of training and/or coaching certainly need to be considered. Speaking of costs, travel and accommodation for an onsite meeting may be prohibitive, so it is important to examine this option critically. You will read in some work on this topic that it is important for virtual teams to be able to spend some preliminary onsite time together. Typically these articles were written years before geographically distributed multicultural and multi-organizational teams were commonplace and before the development of WebEx and other technologies that support real-time audio, video, and text-based communication. Quite often, a review of the so-called experts’ backgrounds reveal little or no personal experience working in a virtual team. Thus, it is important to approach all prescriptions critically. Those members who have worked in virtual teams may bring important insights to this task.

In addition to the earlier work you have read, and the work cited here, your team will want to explore the literature to find the current thinking about the best practices in preparing a virtual team to work together effectively.

References

Derven, M. (2016). Four drivers to enhance global virtual teams. Industrial and Commercial Training,48 (1), 1-8. http://www.emeraldinsight.com/action/showCitFormats?doi=10.1108%2FICT-08-2015-0056

Germain, M. (2011). Developing trust in virtual teams. Performance Improvement Quarterly, 24(3), 29-54. doi:10.1002/piq.20119 http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=66793697&site=ehost-live&scope=site

Goodman, N. (2012). Training for cultural competence. Industrial and Commercial Training, 44(1), 47-50. 

COST-BENEFIT ANALYSIS

Cost-benefit analysis is used for determining which alternative is likely to provide the greatest return for a proposed investment. Sometimes referred to as cost-effectiveness analysis, it is relevant to businesses as well as to not-for-profit entities and governmental units.

A business might find it helpful to use cost-benefit analysis to determine if additional funds should be invested in a facility in the home country or in another country. A community not-for-profit organization that provides a variety of programs for children might use cost-benefit analysis to assist management in determining which activities will provide the most services for the costs specified. A federal governmental agency might use cost-benefit analysis to determine which of several projects planned for the national parks is likely to be most used by interested citizens, given the costs.

Because resources such as money and time are limited, an organization usually cannot undertake every project proposed. To decide whether to undertake a project, decision makers weigh the benefits from the project against the cost of the resources it requires, normally approving a project when its benefits exceed its costs. Cost-benefit analysis provides the structure and support for making such decisions.

Benefits increase the welfare of the organization. Some benefits are monetary benefits, such as the dollar amount of cash inflows from additional sales of a product or the saving in cash outflows that a project enables. Other benefits are important but harder to quantify. For example, a project may increase customer satisfaction; increased customer satisfaction may increase future sales, but the exact relationship between sales and satisfaction is often hard to specify.

Costs are the outlays or expenditures made in order to obtain a benefit. Many costs are measured monetarily, such as the cost of buying a new machine or of hiring an additional employee.

COST-BENEFIT ANALYSIS IN BUSINESS

A cost-benefit analysis is straightforward when all costs and benefits are measurable in monetary terms. Assume that Company A must decide whether to rent an ice cream machine for the summer for $900. The ice cream machine will produce additional cash inflows of $1,000 during the summer. The benefit of additional cash inflows ($1,000) exceeds the additional cost ($900), so the project should be undertaken. Not all cost-benefit analyses are this simple, however. If the benefits and costs occur in different time periods, it may be necessary to discount the future cash flows to their current equivalent worth.

In another example, cost savings is a benefit. Assume that Company B makes about 100,000 photocopies a year. Company B does not have its own copy machine and currently pays 4 cents per copy, or $4,000 a year, to Copy-cat Copiers. Company B can lease a copy machine for $2,500 a year. It must also pay 2 cents per page for paper for the leased machine, or $2,000. In this example, the cost of leasing the machine and buying paper ($2,500+$2,000=$4,500) exceeds the benefit of saving the $4,000 normally paid to Copycat Copiers. Company B should continue to use Copycat Copiers for its photo-copies. However, Company B must have a pretty good estimate of the number of copies it needs to be comfortable with its decision. If Company B needs 150,000 copies this year instead of 100,000, the cost of the leasing the machine and buying paper ($2,500+$3,000=$5,500) is cheaper than the $6,000 (150,000×$0.04) savings in fees to Copycat Copiers.

A third example involves a project with benefits that are difficult to quantify. Assume that Company C is deciding whether to give a picnic costing $50,000 for its employees. Company C would receive the benefit of increased employee morale from the picnic. Better employee morale might cause employees to work harder, increasing profits. However, the link between increased morale and increased monetary profits is tenuous. The decision maker must use his or her judgment to compare the nonmonetary benefit to the monetary cost, possibly deciding that increased employee morale is worth the $50,000 cost but would not be worth a $100,000 cost.

In the preceding examples, cost-benefit analysis provided a framework for decision making. The range of objectivity related to measurement of the factors is typical. Techniques used in business as a basis for determining costs and benefits, such as return on investment, are generallyPage 168  |   Top of Article quantifiable and thus appear to be objective. However, it is not uncommon for qualitative factors to enter into the decision-making process. For example, providing a product that individuals with limited incomes will be able to purchase may not provide the highest monetary return on investment in the short run, but might prove to be a successful long-term investment. Careful decision makers attempt to deal with a difficult-to-quantify factor in as objective a manner as possible. However, cost-benefit analysis in most situations continues to introduce measurement problems.

COST-BENEFIT ANALYSIS IN NONBUSINESS ENTITIES

Cost-benefit analyses are also common in nonbusiness entities. Boards of not-for-profit organizations establish priorities for their programs, and such priorities often specify desired program outputs. For example, assume a not-for-profit organization is interested in reducing the level of illiteracy among the citizens of a rural community in a state that has one of the lowest per-capita incomes in the United States. As alternative programs for those who need to learn to read are considered, there will be cost-benefit analyses that focus on a number of factors, including the extent to which a particular program can attract those who are illiterate. A program in the downtown area of a small town might be considered because a facility is available there at low cost, and that low cost is appealing. Focus on cost is not sufficient, however. When benefits are considered, it might become clear that those who are eager for such a program do not have cars and that there is no public transportation from where they reside to the center of the small town. Further consideration of relevant factors and of alternatives, undertaken in good faith, should result in cost-benefit analyses that provide valuable information as the agency makes decisions.

At all levels of government in the United States, cost-benefit analyses are used as a basis for allocating resources for the public good to those programs, projects, and services that will meet the expectations of citizens. For example, decision makers at the federal level who have policy responsibility for environmental standards, air-quality rules, or services to the elderly often find information from cost-benefit analyses to be critical to the decisionmaking task.

CONTINUING EFFORTS TO QUANTIFY COST-BENEFIT FACTORS

As possibilities for the use of funds increase, there is motivation for better measurement of both costs and benefits as well as for speedier ways of accomplishing analyses for alternatives that are appealing. All types of entities, including businesses, not-for-profit organizations, and governmental units, strive to improve the measurements used in cost-benefit analyses. The capabilities of electronic equipment provide promising assistance in accumulating data relevant for analyses. Wise use of resources is an important goal in every organization; cost-benefit analyses make a key contribution to this goal. Therefore, attention is given to improving both the effectiveness and efficiency of such analyses.

Step 10: Team Management

Finally, after completing all the previous steps, you should have some recommendations for team management, one of the most important elements of any work team.

· Identify and analyze the options for managing these geographically dispersed multinational and multicultural virtual teams.

· Prepare recommendations that will help the CEO make the best decision about how to do this.

Step 11: Other Advantages and Challenges