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Designing a Better Navy Aviation Retention Bonus

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Naval Postgraduate School Monterey United States

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As personnel costs in the military spiral higher and higher, so does the level of scrutiny of military bonus programs. Each service and each community is faced with the challenge of retaining the quantity and quality of personnel it needs while not breaking faith with a force that has endured longer deployments, increased operational tempo OPTEMPO, and a state of perpetual war since 2001. The services also value an egalitarian pay structure and must be ever vigilant of good order and discipline and morale. The current system is cumbersome and inefficient, offering the same bonus to both high performers and low performers within categories of PilotNaval Flight Officer NFO and TypeModelSeries TMS. The primary alternative that has been offered is an auction system. However, each version of the auction method has distinct drawbacks and implementation challenges. In this paper, I propose a menu-of-contracts system whereby aviators can choose between a plan that offers guaranteed payouts at a medium rate or a plan that offers low payouts initially and then high payouts when certain performance milestones are met. This will induce aviators to self-select according to their own ability levels and effectively targets high performers with high bonus levels while maintaining a sense of fairness due to the personal choice.

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