Take 5: What Business Leaders Can Learn from the Military

These are like the qualities of a well-run business. But they also describe, at its best, the U.S. military.

Since 2012, Kellogg has welcomed a new Army colonel to the school each year as part of its senior fellow program. And Kellogg Insight has made a point of talking with that fellow each year about what business leaders can learn from their counterparts in the military.

In our conversations with these fellows, they have stressed both the unique skills and perspectives that former soldiers can bring to their new civilian jobs, as well as procedures that the Army uses to make itself more organized, more informed, and more attractive as an employer. Here are some of the highlights of their lessons for businesses and leaders.

1. The Army Knows How to Recruit and Retain Millennials

Many offices are struggling to bridge generational divides among their employees, with Baby Boomers and Gen Xers often casting sideways glances at their younger peers, who are (often unfairly) labeled as entitled, self-absorbed millennials.

But the Army has no choice in mixing together generations. With the need to recruit 60,000 new people a year, it has learned to play to a diverse group of strengths in order to create the strongest organization possible.

With millennials, as with any group, you want to harness their unique talents, explains Col. Robert Carr. And this means allowing them to innovate without compromising the Army’s overall culture.

“It’s not always a bad thing to challenge the status quo,” Carr says. “The key is to give them enough latitude to shake things up a bit without upending core traditions or standard operating procedures.”

For example, when faced with a soldier who is ambitious but impatient about advancing into a leadership role, Carr suggests helping them channel that ambition while setting realistic expectations. In the military, this can mean reminding them about the valuable and transferable skills they’re learning while also encouraging them to reenlist so that they can move beyond initial, less exciting assignments.

“Like anyone, millennials will leave organizations unless they have good reasons to stay,” Carr says. “So you need to give them something to aspire to.”

2. Soldiers Understand the Needs of the Full Organization

Workers may think they have their company’s best interests in mind while making decisions. But without structural efforts to keep information flowing, employees may be undermining their organization without realizing it.

That’s why the Army uses a “Two Up/Two Down” model, explains Col. Brian Halloran. This means that each person is familiar with those who are two up and two down from them in the hierarchy. And, crucially, they’re also familiar with those people’s strategic goals.

“I not only have to understand my mission,” he says. “I’ve got to understand my boss’ mission—and my boss’s boss’s mission—and where my goals fit into that. What that does is it helps prevent me from doing something that works great at my level but ends up causing a bigger problem in the overall organization.”

This mindset translates perfectly to the private sector, Halloran says.

Imagine the production-line manager who is thrilled to be able to maximize production at 5,000 widgets a day. If the sales team can only sell half of that, though, then the manager has just cost the company a lot in extra storage fees.“

You’ve got to understand where you fit in and how you can optimize the whole organization,” Halloran says, “not just what I and my unit are doing.”

3. Don’t Just Give Orders

One of Col. Michael Musso’s lessons from his 25 years of service was to “circulate the battlefield without giving orders.”

This translated into visiting his troops to simply talk and listen, without giving them directives. He’d ask strategic questions, like what resources they need to be effective, but would also inquire about their families and work conditions.

He encourages executives to visit with employees in this way, as well.

“Routinely circulating among staff in their environment helps to shape your knowledge, provides situational understanding of the corporate climate, and ensures subordinates understand corporate priorities,” he says.

Executives should then share what they’ve learned during these conversations, though without attribution. That will build trust and encourage other employees to be equally forthcoming.

4. Soldiers Know How to Make Their Superiors Look Good

While many businesses are gravitating toward flatter, less regimented org charts, the military is still highly hierarchical. This means that passing constructive criticism up the food chain can be fraught.

So successful soldiers have mastered the subtle art of influencing their superiors without alienating them, explains Col. William “Chip” Horn. The end result of this is that the boss looks good and the soldier has become indispensable.

For example, if a boss wants to brainstorm a new idea, an employee should ask probing questions, such as “where does this fit into our priorities.” That will either help the boss see that her idea is too fanciful and should be jettisoned or help her hone it so that it becomes truly useful.

Another tip: set a good example.

Horn tells the story of moving into a new job where he was surrounded by senior officers who outranked him. Yet he could see that all of their presentation skills were pretty rusty. Instead of simply telling them that, Horn asked the officers to watch him rehearse a presentation. Critically, he asked them for their feedback. Once they saw how professionally Horn was presenting, they started asking him for feedback in return and upped their own game.

5. Why Hiring Veterans Makes Good Business Sense

Col. Dan Friend drew on his 26 years in service to make the case for why businesses should hire veterans. He highlighted four of their virtues, which any organization should be eager to see in a job candidate: veterans are trainable, they’re leaders, they’re selfless and they take constructive criticism well.

Take, for example, their leadership experience. Soldiers are often given leadership roles while they’re in their early 20s. That can include training subordinates and ensuring their well-being, and overseeing responsibility for millions of dollars in equipment.

“All the while they’re learning how to make decisions, plan, organize, execute, and provide clear guidance to their subordinates at an age much earlier than most of their peers on the outside,” Friend says.

Friend’s advice is consistent with research from Kellogg finance professors Efraim Benmelech and Carola Frydman, who have investigated whether veterans make better CEOs. And in many cases, they find, the answer is yes.

The researchers’ analysis showed three strong associations between CEOs who served in the military and corporate outcomes. First, veterans perform better as CEOs when they’re leading during a time of industry decline or distress. “They perform better under pressure,” Benmelech says.

Second, CEOs who served in the military are up to 70 percent less likely to engage in corporate fraud compared to their nonveteran peers. And third, veterans serving as CEOs are less likely to make bold investments in physical capital or research and development. Benmelech attributes this to “a deep conservative streak in military decision-making.”

Interestingly, these trends were significant despite the majority of the veteran CEOs in the study having spent just a few years in the military when they were quite young. “It’s consistent with some other evidence that the experiences that happen early in life can have very persistent effects later, in other contexts,” Frydman says.