Research for Cost Visibility

Congressional mandate requires DoD to review its forces, resources, and programs every 4 years. As part of this Quadrennial Defense Review (QDR), the Office of the Under Secretary of Defense, Personnel & Readiness requested an overview paper on how DoD can improve military manpower management. Given increasing personnel costs and budgetary pressures to control spending, cost-effective manpower management has taken on additional importance. We conclude that the military compensation package could be better aligned with what Servicemembers value. In particular, the value of the military retirement package to personnel is not commensurate with its significant cost to DoD. Furthermore, current rotation policies can significantly detract from military service; programs that allow personnel choice in their assignments would lower cost and improve the value of the overall compensation package. On the demand side, we conclude that current processes increase requirements. Rotation policies increase turnover and directly reduce performance. Furthermore, units and commands do not have visibility into the compensation or full cost of military personnel. Finally, DoD faces several constraints that result in decisions unrelated to the military mission. More discretion in using military personnel funds and relaxing the endstrength constraint would improve the cost-effectiveness of military manpower management.