Return on Investment on Naval Education & Research

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Mun, Johnathan
Date of Issue
September 20, 2020
The United States Navy and other military services send a large number of their officers to various military universities to obtain graduate degrees or perform academic research. These graduate education programs provide the officers with technical skills and nontechnical competencies highly valued in their respective billets. The cost of sending a Navy officer to a 1.5- to 2-year program for a master's degree may be upwards of $250,000 plus the opportunity cost of his or her lost services. In addition, a doctoral program may cost upwards of $500,000 per officer, plus their respective soft opportunity costs for being away for 3-4 years. The U.S. military's human resource environment is unique in that it is a closed internal hierarchical structure. For instance, an officer's pay is based on his or her rank and years of service, regardless of educational background. It can be argued that higher education may result in higher efficiency and productivity, thereby increasing the speed of promotions, but these are fairly difficult to quantify. Further, we see that 2 years after graduation, the retention rates are relatively high, ranging from 99.31% to 95.78% on average. This high rate of retention the first few years is to be expected as officers sent to graduate programs typically are required to "pay back" their education costs with guaranteed service for several years. The question is whether the benefits of such education and research are indeed greater than the cost incurred by the Navy. Another consideration is that naval research and education are not separate tasks but tend to coexist alongside the innovation engines of the country. The current research looks at various novel ways to value the monetary return on investment (ROI) of military education and research. The proposed methodologies apply theoretical constructs by using a systems approach to utilization; convolution methods to determine the frequency and quantity of use; and an analytical framework, empirical impact analysis, and work lifecycle approach, combined with integrated risk management and knowledge value added methodologies to determine and run Monte Carlo simulations of the model inputs, as well as to provide guidance and information to decision makers with respect to the optimal portfolio allocation of resources to educational activities. The research also includes an examination of three short case studies: one on the value of military research in the Naval Acquisitions Research Program, a second case study on the value of a naval university such as the Naval Postgraduate School (NPS) in Monterey, California, and a third case on the Defense Acquisition University. The research findings indicate that there is a statistically significant positive impact on retention of graduating officers, lower attendance cost, and greater DoD control of the courses covered. In fact, the ROI for military-based academic research ranges between 240% and 600%, while graduate education at a military university such as NPS yields an ROI between 469% and 673%. The courses at the DAU have an average ROI between 411% and 477%, and the probability that, on average, any given course taken at the DAU has at least a 93% probability that the ROI is positive for an organization. The global average ROI for various military education is estimated to be about 485%, which means that for every $1 spent on education, the benefit gained by the government is $5.85. These ROI are above and beyond the significant intangible value of military officers studying a military-specific curriculum and learning from each other as well as from retired military faculty. Finally, we also conclude that military organizations tend to value the ROI to an employee's personal career growth as being the same as the ROI to the entire organization, where the ROI of a training initiative goes well beyond its sole impact on an employee's job performance where the value add might be intrinsic, unmeasurable, and subjective, rather than simple applications of specific knowledge or learned skill set on the job.
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170 p.
Mun, Johnathan. "Return on Investment on Naval Education & Research." Naval Research Program Report (2021).
Distribution Statement
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.