Effect of the Variable Reenlistment Bonus on Reenlistment Rates: Empirical Results for FY 1971

The Rand Corporation do not necessarily reflect the opinions or policies of the sponsors of Rand research. manpower issues assuming even greater importance than heretofore in defense planning and budgeting, it is the purpose of this research program to develop broad strategies and specific solutions for dealing with present and future military manpower problems. The goals include the development of new research methods for examining broad classes of manpower problems, as well as specific problemroriented research. In addition to providing analysis of current and future manpower issues, it is hoped that this research program will contribute to a better general understanding of the manpower problems confronting the Department of Defense. This report presents results of a study of the variable reenlist-ment bonus (VRB) and its effect on first-term retention. The findings must be regarded as tentative, however, since they are based on an analysis of reenlistment data for only one year, FY 1971. In the next phase of the study, we will be analyzing additional data for FY 1972-73. Upon completion of that work, we will be better prepared to assess the trend in and the overall effect of the VRB on first-term retention. This study has been developed and coordinated with the Compensation Directorate, OSD/Manpower and Reserve Affairs. The results are intended to be useful for military manpower planners and others responsible for administering the new Selective Reenlistment Bonus (SRB) program. For those concerned with bonus management issues, a recently completed study concerning the Navy's NTPO continuation bonus will alsoSUMMARY This report attempts to determine the effectiveness of the variable reenlistment bonus (VRB) as an inducement for highly skilled specialists to reenlist in the armed services. The problems of training and retaining such personnel perennially confront the services. Because their principal source of trained personnel is the pool of eligible reenlistees, the reenlistment decisions made at completion of the first term are particularly important. The services have offered a number of inducements in the past to promote retention, among them being proficiency pay, regular reenlist-ment bonuses, and, since 1966, the VRB. The VRB is paid only in designated specialties troubled by retention problems. Eligible specialties are assigned multiples from one to four; the total VRB award is then calculated as the product of the multiple and the regular reen-listment bonus. It can run as high as $8000 in award level 4 specialties. Although some information is available concerning the …