Posted: May 25th, 2022

Cost Efficiency and Management Structure

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AFMC Case Study: Cost Efficiency and Management Structure

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The scenario presented by Case Study Part A dictates that the horizontal command structure present in AFMC is itself a cause for much of the difficult in terms of achieving greater process efficiency. At its center, this article relays the difficulties relating to the achievement of quality maintenance while applying tighter cost controls. The article details the observations made by the incoming leadership under General Babbitt, who recognized that process inefficiency was present throughout an organization with 13 major installations across 10 different states. Finding that there existed a lack of motivation to reign in cost excesses, Babbitt concluded that this was a problem relating to the leadership structure at AFMC.

Though within installations, military hierarchy would function to provide a basic chain of command, little accountability seemed to be dictated by a central management structure descending from the Ohio headquarters where Babbitt was about to assume command. This meant, according to Babbitt’s experience, that efficiency failures were driven by a general lack of clarity in terms of cost assessments. Entering into projects and contracts, those working on the field level for the Command seemed to encounter costs which would routinely run well beyond the budgetary allowances allocated for said project or contract.

In frank terms, Babbitt helps to provide our discussion with an assessment for Part A, which centers on the recognition of a culture-wide shortcoming on the part of the Air Force corporate structure. Namely, an attitude which does not account for costs promotes a sense of removal from personal responsibilities for budgetary excesses has translated in this case into a broad and costly efficiency lag. Babbitt would comment with full candor that “aometimes in the Air Force we have trained ourselves not to be responsible for the resources; that becomes somebody else’s problem. You didn’t have to look very far to see things that could be done just as well or better in terms of performance and for a lot less money if we took certain steps to change people’s attitude and to motivate them differently.” (CTR, 1)

This assessment helps to provide a foundation for the recommendations which proceed from the Diagnosis segment of the case study. Namely, Babbitt makes the case that the two most significant obstacles to changing the disregard at all levels for cost efficiency are the absence of a centralized management structure overseeing the managerial activities at each installation and the absence of a centralized accountancy authority overseeing the accounting operations at each installation. This promotes the recommendation for the creation and staffing of both. Babbitt refers with positive reflection on a prior role during his professional ascension, remarking on the efficiency of the Defense Logistics Agency (DLA) where he was a deputy director. Here, Babbitt referenced the positive orientation produced by a managerial attention to resource availability, cost limitations and the evaluation of efficiency according to the capacity to work within the context of these limitations. Recommendations proceeding from the Diagnosis segment of the case study, subsequent to the establishment of centralizing structural changes, would follow this accountability model.

These recommendations give way to the action intervention as it is described in Part B of the case study. Here, the bureaucratic conflicts which Babbitt identified would be addressed by a multipart strategy that does not follow the recommendations produced by this account. Indeed, entering into the intervention, Babbitt pointedly eschewed his own observations by determining to bypass reorganization in favor of simply expanding the roles of those already in central leadership positions. The Intervention segment of the case study remarks that “In doing so, he described these office-holders as having responsibility for specific business areas.i The business areas included supply, maintenance, scientific and technological research, testing and evaluation, product support, and installations and support.” (CTR1, 1)

This is an important point to remember as much of the case study in the intervention section concerns the relative success Babbitt would experience in pursuing his immediate agenda of altering the broader culture at AFMC. Instituting a rhetoric centered on cost-based resource use rather than budget-based resource use, Babbitt would take the aggressive stance that different units of the operation and the newly appointed Chief Operating Officers to whom they were beholden would now no longer manage budgets. Instead, they would define resource-based costs and work within the scope of these projections. And this would be further underscored the impetus for all COOs to pursue clear reductions in base-line cost. Babbitt was particularly praised by his superiors in the Air Force and the Department of Defense for creating this impetus and voluntarily ceded some level of AFMC budgetary authority to the Air Force.

The assessment available to use though only reaches the 6-month point, at which juncture success is reported in changing the terminology and cultural perspective regarding budget vs. cost management. However, at this juncture, Babbitt appears still to be grappling with resistance to cultural change by his closes support in the newly expanded roles of the COOs. Uncomfortable with the implications of defining costs, imposed upon with archetypal roles not previously modeled by the military corporate structure and explicitly offered no avenue for conflict management, the core group of leaders represents a challenge to Babbitt’s plans which is centered on his unwillingness to promote reorganization.

Particularly, the recommendation is reiterated following the intervention that evaluation must be conducted at this 1 year juncture in order to determine the level of cultural resistance still present in his new leadership core. Where this remains the case, it may be time for due consideration of a new leadership department primarily responsible for reporting to Babbitt, thus allowing those newly promoting commanders to return to more conventional military corporate roles.

Works Cited:

Case Teaching Resources (CTR). (?). Air Force Commands: Diagnosing the Situation Case A. The Electronic Hallway: Evans School of Public Affairs.

Case Teaching Resources (CTR1). (?). Air Force Commands: The Intervention Case B. The Electronic Hallway: Evans School of Public Affairs.

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