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A New Approach to Managing the Army Selective Reenlistment Bonus. Technical Report 634.

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Bibliographic Details
Title: A New Approach to Managing the Army Selective Reenlistment Bonus. Technical Report 634.
Language: English
Authors: Haber, Sheldon E., George Washington Univ., Washington, DC.
Peer Reviewed: N
Page Count: 100
Publication Date: 1984
Sponsoring Agency: Army Research Inst. for the Behavioral and Social Sciences, Alexandria, VA.
Document Type: Reports - Research
Descriptors: Adults, Clerical Occupations, Labor Turnover, Military Personnel, Military Service, Military Training, Models, Personnel Policy, Premium Pay, Program Effectiveness, Recruitment, Service Occupations, Technical Occupations, Wages
Abstract: In this study, a theoretical model of profit maximization was developed in which the Selective Reenlistment Bonus (SRB) is treated as a wage premium payable to military personnel who are more productive, more costly to recruit and train, and less likely to continue in the Army in the absence of the SRB. Empirical estimation of the model is based on measuring the productivity of service personnel (in terms of their civilian counterparts' occupational wage), recruitment and training costs, and separation rates. Multiple regression equations are used to estimate civilian wages (a proxy for productivity) as a function of civilian occupation, education, and age of the worker. The empirical model groups Military Occupational Specialties (MOS) into three categories--combat arms, technical, and support services. The results for military personnel in grade E-4 reveal that the average SRB calculated by the model ($5,247) should be about the same as the actual payments ($5,297) for service personnel in combat arms, but should be higher ($7,308) compared to the actual ($5,312) for technical occupations, and lower ($1,942) compared to the actual ($3,757) payments in the support services. The research shows that retention rates in technical MOS can be raised by increasing the SRB. The required increase in SRB expenditures can be funded by reducing SRB payments in the support services. (Author/KC)
Entry Date: 1986
Accession Number: ED267281
Database: ERIC
Description
Abstract:In this study, a theoretical model of profit maximization was developed in which the Selective Reenlistment Bonus (SRB) is treated as a wage premium payable to military personnel who are more productive, more costly to recruit and train, and less likely to continue in the Army in the absence of the SRB. Empirical estimation of the model is based on measuring the productivity of service personnel (in terms of their civilian counterparts' occupational wage), recruitment and training costs, and separation rates. Multiple regression equations are used to estimate civilian wages (a proxy for productivity) as a function of civilian occupation, education, and age of the worker. The empirical model groups Military Occupational Specialties (MOS) into three categories--combat arms, technical, and support services. The results for military personnel in grade E-4 reveal that the average SRB calculated by the model ($5,247) should be about the same as the actual payments ($5,297) for service personnel in combat arms, but should be higher ($7,308) compared to the actual ($5,312) for technical occupations, and lower ($1,942) compared to the actual ($3,757) payments in the support services. The research shows that retention rates in technical MOS can be raised by increasing the SRB. The required increase in SRB expenditures can be funded by reducing SRB payments in the support services. (Author/KC)