Money matters in the military

The armed forces are used to teamwork and handling pressure. But how are they at balancing budgets?

Tired of trying to motivate colleagues? Frustrated by your ability to rouse your team to action? Weary managers can only envy the discipline of the armed forces, where troops are obliged to obey the boss - and teamwork is not only encouraged but enforced. Now, though, the tables are being turned. Senior officers are being initiated into the dark arts of commercial management, as part of their training for a world of defence budgets and military cutbacks.

The Masters in Defence Administration, run by Cranfield University at the Royal Military College of Science in Shrivenham, follows the same pattern as the university's traditional MBA. The emphasis shifts, mid-course, to defence issues, allowing students to work through the kind of problems they might face in their next posting.

Although the majority of the full-time students are seconded from the forces, they rub shoulders with civil servants and mangers from defence industries, who sign up because the MDA is so tightly focused on their issues. Dr Ron Matthews, who leads the academic programme at the Shrivenham site, sees both groups benefiting from contact with each other.

"The defence industry is increasingly about getting value for money," he says. "Budgets have fallen, and managerial control is being devolved down to regimental level in many cases."

Military managers will need much more insight in future into the problems faced by their counterparts in industry, according to Dr Matthews. Guiding individuals through the maze of defence procurement means giving them financial and managerial skills they didn't need before. "There has been a quiet revolution in defence, and increasingly it is about understanding money," he says. "The MDA is all about applying commercial management to defence resources."

The first stage of the full-time course covers everything from financial principles to marketing. Visits from companies such as Rolls Royce or BAe Systems are designed to give the course a commercial edge, using case studies like the Eurofighter plane project to guide students through the maze of defence management and procurement.

A business challenge exercise turns officers, who are more at home commanding a regiment, into a board of directors. As part of the role-playing they have to make commercially sensitive decisions, researching and marketing a defence product and increasing profit margins on the deal.

"We are quite cloistered in the services, so we crave exposure to the civilian sector and commercial life," says Lieutenant Commander Louis Notley, who returned from a naval posting in Italy to join the full-time course.

The pitfalls and costs involved in manufacturing the Eurofighter plane might be enough to give anyone second thoughts about entering the world of defence procurement, but for military personnel the nuts and bolts of the business are an eye opener.

Cranfield and the Royal Military College are hoping to increase the number of civilian students on the course next year, pointing to the recent accreditation by the Association of MBAs as evidence of its academic rigour. A smattering of civil servants and managers from firms such as BAE and Westland have already graduated, and this year's group includes a Chinese student called Chen Qi sponsored by GEC Marconi in China.

The course enables her to make contacts within military personnel and gain valuable insights into how defence procurement is being managed in the UK. In fact, the number of international students on the full-time and executive part-time courses is on the increase. An Argentinean colonel and a Swiss army major are among the alumni. Britain's desire to change the culture of the armed forces is, it seems, being mirrored elsewhere.

An executive course for part-time students runs alongside the one-year MDA, giving senior mangers or military personnel a chance to study while in their current jobs. Colonel Ian Pretsell, an army dentist, signed up for the executive course after being appointed to a new job managing primary dental care for service personnel. "I have had the scales lifted from my eyes by doing this course," he says. "People may not realise, but when we order supplies they don't come with a NATO stock number. We have to understand the financial principles involved."

Industrial relations and equal opportunities issues are also covered, as is the media. "Everything these people do will be in the eye of the media, especially if it goes wrong," says Dr Chris Bellamy, who teaches this part of the course.

At the end of the MDA, he says, students are expected to have a sophisticated understanding of how defence priorities and policy are changing at international level. These graduates will be in charge of a distinct product. "I think if the public knew the kind of training people got here they would be surprised and impressed."

Military students at Shrivenham are open to new ideas from the world of commercial management. At the same time they maintain a healthy scepticism about the jargon. "We aren't baffled any longer by the management language," says Major Richard Woodward, who has served in Northern Ireland and Germany.

For those who leave the armed forces for a life on civvy street, the MDA is concrete evidence that they understand the real world of business. One former student from the RAF is now employed as a human resources consultant with PricewaterhouseCoopers. But exposure to commercial management has left some in little doubt about the value of military expertise. "In future," says one of this year's intake, "I think I'll stick to my core competencies - shooting the management consultants."