Efficiency report inflation has been a significant problem in the U.S. Army for more than 40 years. In 1945, 99 per cent of the officer corps was receiving one of the two top ratings on the evaluative scale. Inflation has been partially responsible for the frequent changes in officer efficiency report (OER) format in recent years. Since the inflationary phenomenon hampers accurate identification of future leaders from the standpoint of comparative value and impinges on efficient management of officer assets, any easement of inflationary pressure can serve to improve personnel management within the U.S. Army. To gain an appreciation of the inflation problem, isolate causal factors, and develop possible means of combating the problem, research was conducted in two broad areas. First, the history of the U.S. Army OER system was studied, including a survey of contemporary thought on the subject. A large segment of the Class of 1971 of the U.S Army Command and General Staff College was asked to complete a questionnaire as part of the contemporary survey. Historical review revealed that inflation has not always been associated with the OER system of the U.S. Army. It also indicated that measures adopted to control inflation have been largely ineffective. The second approach to research centered on evaluation of the OER systems currently in use by eight foreign military establishments. Research in this area proceeded from the premise that the military environment acts to shape the performance appraisal process. For this reason, investigation included analysis of the military framework associated with each OER system. The systems of the Canadian Forces, the French Army, the British Army, and the West German Armed Forces were singled out for primary analysis. The other four systems, covered in less detail, were those of the Australian Army, the Israeli Armed Forces, the Japanese Ground Self-Defense Forces, and the Yugoslav Armed Forces. In-depth interview of senior foreign officers served as a key source of information in pursuing this portion of the research effort. By comparison, efficiency report inflation was found to be much less pronounced in most of the foreign systems studied than in the U.S. Army's system. Almost all of the systems were found to employ measures specifically designed to control inflation. In addition to methodology calculated to reduce inflation, some less tangible factors, such as an officer corps conditioned by tradition to accept realistic ratings, appear to influence the level of inflation. A total of 15 basic techniques for controlling inflation were identified through review of foreign systems, most of them as yet untried by the U.S. Army. The French Army is free of an OER inflation problem because of the forced ranking and forced distribution techniques being used. Canadian Forces have achieved control over inflation through application of firm centralized monitorship of the OER system. All eight: foreign systems surveyed tie rating authority to command authority. In addition, five of the systems limit rating authority to field grade officers as a means of insuring that only experienced officers are entrusted with this responsibility. Three basic conclusions of the research are that inflation can be controlled, the administrative environment within which the efficiency report operates is at least as important as performance appraisal techniques used, and certain foreign military OER techniques should be considered for adoption by the U.S. Army. The more critical of several specific recommendations are (1) limit rating authority to officers occupying field grade positions, (2) design OER format and processing to make maximum use of automatic data processing, (3) impose administrative discipline through establishment of a central monitoring office at Department of the Army level, (4) provide for adjustment of ratings at Department of the Army level based on knowledge of rating trends and rater standards, (5) require commanders to monitor all reports initiated within their immediate commands, and (6) emphasize objectivity and integrity of reporting. If any overall lesson can be gleaned from this study, it would probably be that the key to inflation control lies primarily in the administrative sector. Rather than becoming ensconced in performance appraisal methodology, greater stress needs to be given to how an OER system is administered.

AD 0733385 Approved for public release; Distribution is unlimited. The opinions and conclusions expressed herein are those of the student-authors and do not necessarily represent the views of the U.S. Army Command and General Staff College or any other governmental agency. (References to these studies should include the foregoing statement.)