One Size Does Not Fit All: Personalized Incentives in Military Compensation
Technical rept. Mar 2012-Mar 2013
NAVAL POSTGRADUATE SCHOOL MONTEREY CA GRADUATE SCHOOL OF BUSINESS AND PUBLIC POLICY
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A critical element in implementing a compensation scheme including non-monetary incentives NMIs is recognizing that preferences vary widely across service members. There are at least three sources of variability variability across population classes e.g., preferences vary across Services, professional communities, rankpay grade, etc. variability across individuals within a population class e.g., preferences vary across people in similar circumstances and variability across NMI packages for a particular individual e.g., values for an individual NMI may depend on the package of NMIs offered. Surveys across different military communities, ranks, and years of service, show the difficulty of identifying any NMI that has significant value for even 50 of the active duty force. At the same time, approximately 80 of the surveyed service members expressed a significant positive value for at least one NMI. As a result, one-size-fits-all incentive packages will not be nearly as effective as more individually tailored incentive packages. This paper discusses variability in service member NMI preferences and outlines an approach to implementing personalized NMI packages in military compensation through a sealed-bid reverse auction, where service members select individual NMIs from a cafeteria-style menu of options.
- Economics and Cost Analysis