Promotion Tempo and Enlisted Retention

Abstract : Over the last decade, a variety of studies have examined the role of compensation in military retention.1 For the most part, the policy focus of these studies has been on the effects of military/civilian pay levels and reenlistment bonuses on retention behavior. Although promotion opportunities are another component of compensation policy, promotion has received surprisingly little attention. This oversight is unfortunate for two reasons. First, promotion tempo allows the services flexibility to encourage and reward individual performance by increasing the effective relative pay of high achievers. Holding constant the nominal pay level associated with a given paygrade, effective pay is higher for individuals with faster promotion tempo, so that individuals are more likely to stay (other things equal) if their expected promotion time to the next grade is relatively short than if it is long. Second, if promotion tempo does have an important effect on retention, then these retention studies may provide poor forecasts of future reenlistment behavior and misleading predictions of the policy effectiveness of other compensation measures such as pay levels and bonuses.