Relationship between timing of multiple retention bonuses and the quality of officers retained on the cost savings for the Navy

Abstract

The surface warfare community has recently increased bonus amounts in an attempt to reward quality performance and retain superior officers. Simultaneously, the community has started to offer alternative programs and incentives that might appeal to those officers who desire a flexible career. We used survey information to determine which of these were the most appealing to the community in a way that might provide cost savings to the military when provided in conjunction with an auction bonus system. Using the standard bonus system compared to the uniform price auction, the Quality Adjusted Discount (QUAD) auction, and Combinatorial Retention Auction Mechanism (CRAM), we determined which would be most effective for maintaining quality officers in the community while meeting retention objectives and providing cost savings. We found that a quality auction system could provide cost savings as much as $1,850,000 or could increase costs by as much as $2,081,250, depending on community retention levels, even with increased individual bonus amounts. Additionally, from survey responses we were able to discern additional non-monetary incentives that surface warfare officers desire, which could be used to improve retention of quality officers in the future.