Behind The Department Of Defense’s Major HR And Benefits Overhaul

Yuri Cortez/AFP/Getty

Anonymous Former Senior Military Officer
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A changing season lies directly ahead, despite the sultry late weeks of July in Washington. Soon the Department of Defense will usher in four new Service Chiefs, along with a new Chairman and Vice Chairman of the Joint Chiefs, pending this week’s quadrennial expression of the Senate’s advice and consent role named by our Constitution. Per usual, this offers a grand opportunity to view the world and our common defense through a lens both seasoned and new, just as prospective Joint Chiefs Chairman General Joe Dunford offered earlier with views on a revanchist Russia as our greatest threat to national security.

Of the many questions on the Member’s minds for the nominees, a vital one may involve their thoughts on Secretary of Defense Ash Carter’s “Force of the Future” initiative, which portends great promise to upend the Defense establishment’s hidebound approach to personnel management. Some significant changes have been discussed over the last few months as Carter’s acting deputy for personnel and readiness, Brad Carson, leads a department-wide effort to reinvent the means to answer the call to service.

One such change involves ending the services’ “up or out” promotion system, particularly for officers, in place since the end of World War II. Although it made great sense then for the Defense Department to ensure youth and vitality in the officer ranks if again tested to call up millions of citizens for peer-on-peer warfare on the middle plains of Europe, today’s environment presents a clearly different story. The advent of knowledge work, increased technical complexity of our weapons systems, deeper cultural knowledge, and niche skills proven so valuable in the last fourteen years of war underline the need to rethink the way we currently incentivize our best to leave after 20 years of service – meaning, only 38 years old for many enlisted service members, or 42 years of age for most officers.

At those relatively youthful ages many of those officers, educated at the military’s own graduate schools, or less often these days, at private and public institutions, are just arriving at the peak of their powers. The president’s recent Military Compensation and Retirement Modernization Commission offered a long-needed mobile retirement benefit to the Department, achieving vesting in the early years of a career; yet it still recommends the 20 year “cliff-vesting” as the primary mechanism of keeping and rewarding citizens for careers of service. If the armed services wish to cling to this remnant of personnel management policy, its future effectiveness should be thoroughly evaluated using a systems approach.

Another revision may be in store for the way we compensate our service members while actively serving. The Department and Congress have long worked hand-in-glove to provide across the board pay raises to rectify spates of competitiveness since the inception of the all-volunteer force in 1973. Monetary levers to sustain retention have normally punched late yet effectively to counter labor market forces affecting recruiting and retention; they also involve well-researched albeit weaker efforts in highly technical, more arduous careers such as those of Navy nuclear engineers on surface ships, Marine non-commissioned officers, or pilots who find new opportunity in the airlines, now that post-Vietnam era flight captains are reaching mandatory retirement age.

New ideas about how to arrange basic pay tables, long untouched in structure and considered sacrosanct, are emerging – especially concepts that emulate private industry’s almost 20-year evolution in talent management. The largest pay raises officers ever receive are at the very junior paygrades, O-2 and O-3, and well before they nominally reach their minimum service requirement of five years (after graduating from one of the service academies or completing a scholarship at one of the nation’s universities with a Reserve Officers Training Corps affiliation).

New pay tables which incentivize additional service with meaningful increases after serving minimal requirements may assist in retaining talent in the future, but more importantly, a rewritten compensation system which values individual performance and talents would make the military more like the marketplace in which it competes for necessary skills.  Instead of continuing the practice of politically risk-free, across the board pay raises, perhaps some of those raises could be held for even greater effect when applied to individual performance and career retention bonuses for critical skills, now only about 5 percent of the pay and compensation total.

Finally, speaking of markets, there is talk of creating digital talent-matching platforms (much like LinkedIn or Monster) for our military, enabled by social networks, to add transparency and efficiency to the service member assignment process.  Again taking a cue from the talent management movement in private industry, some service personnel leaders along with junior officers have called for new systems which incentivize people to build detailed profiles about themselves, and in turn, enabling unit commanders to build greater specification about the billets they require. Most information technology systems are far older than the average age of the service members they are built to serve, and certainly are not ready for the advanced analytics that corporate human resources departments find most advantageous.

The Department rightfully agonizes over responsible acquisition of next-generation platforms and weapons systems, but, according to some, does not apply the same precision in strategic management of its human capital. New Service Chiefs should be asked how their current personnel systems compare to the advantages of private firms, how well those systems know and apply their people’s skills and talents, and if we are maximizing both service member development and taxpayer return on investment. “People Before Strategy,” as a recent Harvard Business Review article maintains — and certainly our people also come before the instruments they must master.

With an economy poised to continue to improve, there is sure to be a talent drought, especially in niche and deeply specialized skills, which will once again which will affect our armed services’ means of retaining quality. Ensuring the Department has the right tools to continue the evolution of our successful all-volunteer force may mean retooling the labor-heavy, industrial-age personnel factory in which it is developed. The Secretary of Defense is right to demand that it be revamped with an eye towards the information age, with which our national security is now forever intertwined.