That's the question that occurred to me as I read Douglas Allen's fine essay on how the Royal Navy managed its skippers -- and provided incentives for aggressive approaches -- during the age of fighting sail. I was struck by his passing observation that in the mid-18th century, 8.5 percent of its captains were dismissed or court-martialed.
That's not far from the rate of relief of 16 out of 155 U.S. Army generals who commanded divisions in combat in World War II -- the point of departure in my latest book. So I wondered: In organizations determined to enforce standards and insist on aggressive competence, is there a natural rate of relief of roughly 9 or 10 percent? Business is not the same as military operations, but I also remember that three decades ago, when I was a Wall Street Journal reporter based in Florida, one of the better banks in the state, Barnett, had an annual branch manager relief rate of 10 percent. A couple of people also have reminded me that GE, under Jack Lynch, had a policy of easing out the bottom 10 percent of its managers every year.
But the piece on the Royal Navy is much more far-ranging. It essentially is a study of how the Navy leadership of the 18th century addressed the important question of how to run a large organization with global reach but iffy communications. (The person who sent it to me was thinking about how one might organize command and control of a future U.S. space fleet.) It was also a successful organization, in which, despite being "constantly outnumbered in terms of ships or guns,...still managed to win most of the time." Professor Allen outlines what he calls "the critical rules of the captains and admirals" that ensured that commanders would operate more or less in the interest of the nation rather than in their own. "The entire governance structure encouraged British captains to fight rather than run" -- and so also to have crews trained to fight.
Prize money was especially important. Some senior officers grew rich off the capture of enemy ships. "At a time when an admiral of the fleet might earn 3,000 pounds a year, some admirals amassed 300,000 pounds of prize money." The awards also trickled down: In 1799, when three frigates captured two Spanish ships, each seaman in the three crews received 182 pounds -- the equivalent of 13 years of annual pay.