Retention Questions

Nov. 21, 2016


The military will never compete dollar-for-dollar on salaries with the private sector, and in many ways, comparing military to civilian work is an apples-to-oranges comparison. The perks that go along with military service, though—from training and educational opportunities to, more recently, paid maternity leave—do help the military overcome what might otherwise look like a no-win pay imbalance.

The goal is to offer a balanced compensation package, where salary and benefits make financial sense. If the Air Force can strike that balance, it stands a good chance of recruiting and retaining quality and skilled airmen.

The Air Force has regularly met its recruiting goals, a trend that is expected to continue through 2017. News on the retention front, especially in regard to enlisted personnel, has also been good.

One area of present concern centers on retaining midcareer officers—particularly in the aviation and remotely piloted aircraft communities. The biggest challenge is convincing those airmen with six to 16 years of experience to stay with the Air Force.

For the Air Force, perhaps the biggest and most effective financial incentive for retaining pilots is aviation bonuses. Bonuses have been capped for pilots of manned aircraft at $25,000 since 1999, however, and Brig. Gen. Brian T. Kelly, the Air Force’s director of military force management policy, notes the value of those dollars has declined over time. Not surprisingly, so has the “take rate” for that bonus.

The Air Force’s target take rate is 65 percent, but it missed that mark by 10 percentage points in Fiscal 2015, according to service statistics. The number for the first 10 months of Fiscal 2016 was only 42.9 percent. Every weapons system saw a drop. The take rate for bomber pilots, for instance, dropped from 57.1 percent in 2015 to 38.5 percent, while fighter pilots similarly declined from 47.8 percent to 34.4 percent.

The Air Force has been pushing Congress to provide some relief and allow officials to increase the amount of the bonus and position the service to better compete against commercial airlines, which can offer more lucrative salaries and more consistent schedules.

During a Pentagon press conference in August, Air Force Secretary Deborah Lee James appealed to Congress to raise the cap on those bonuses, stressing that an anticipated hiring surge within the airlines will only exacerbate the service’s pilot retention problem.

“We need this authority now specifically because we need to address a number of shortfalls, the most important of which at the moment is the 700 fighter pilot shortfall that we are facing by the end of this year,” James told reporters. That deficit, she added, will grow to 1,000 pilots in just a few years.

Air Force Chief of Staff Gen. David L. Goldfein views these bonuses as a way to boost the quality of life for airmen, particularly those whose specialties are most in demand.

Bonus Increase

“If we can remove some financial burdens and provide some incentive, our studies have shown that the force will respond,” Goldfein said. “But we do need to change the levels that we’re authorized to pay because we haven’t changed those in years. … We’ve got to make sure that we remain competitive.”

The Air Force is less constrained for remotely piloted aircraft operators. The bonus for RPA pilots is increasing from $25,000 to $35,000. All RPA pilots coming to the end of their Active Duty service commitment are eligible for the larger bonus, should they re-up with the Air Force, James said.

Meanwhile, the service has begun offering selected reenlistment bonuses to a wider range of career grades and fields, including special operations and cyber. More than 4,000 airmen have taken advantage of those bonuses, which can run as high as $90,000, depending on the specialty.

While the bonuses cost money up front, they protect the Air Force’s investment in its force, which can often be difficult to quantify in dollars. The Air Force can always produce more pilots or cyber operators, but it can’t easily replace or replicate their years of experience.

“You’re really exchanging that experience for new people,” Kelly said.

While compensation—particularly sizeable bonuses—is a big part of the story, it’s just the tip of the iceberg for the service’s recruiting and retention efforts. Benefits, many of which are unique to the military, remain a significant factor for new airmen and for those considering staying in the service.

Indeed, Col. Matthew L. Hughbanks, chief of the plans and resources division at the Air Force Recruiting Service, said potential recruits rarely even ask about salary. It’s not that they don’t care about the size of their paycheck, but most have already done at least a cursory Internet search and have some idea what to expect. What they do have questions about are other aspects of the package, especially education benefits. This is particularly true for airmen who expect to use their time in the service as a stepping stone, a time to gain skills, certification, and education that will help them when they return to the private sector.

At any given time, about a third of airmen are taking advantage of tuition assistance, making it a “key pillar” in Air Force readiness and critical programs for recruiting and retention, Goldfein said in a written response to questions from the Senate Armed Services Committee before his confirmation hearing in 2016. Enlisted airmen rank GI Bill and tuition assistance programs as among the top five reasons to stay in the Air Force, according to the Air Force’s 2015 retention survey.

For those airmen considering extending their service commitment, many have a family to think about, Kelly said. That means benefits such as health care and retirement often play a bigger role than they do in recruitment. But the military’s goal, particularly with the military’s Tricare health care system, is to make the benefit as cost-effective as possible.

The Pentagon’s cost-saving efforts to raise prescription co-pays and make other changes to Tricare have typically been met with stiff resistance on Capitol Hill, particularly within the House, where hawkish lawmakers want to preserve the benefit, largely as is. Air Force and other military officials however, have advocated for changes amid fears that health care costs are rising too rapidly.

“We must continue to remain cognizant of rising personnel costs and ensure efficiency, as well as look to new ideas and keep them manageable in order to provide for force structure and modernization that are also critical in defense of our nation,” Goldfein told the Senate Armed Services Committee in his written response, adding that the Air Force continues to make difficult, but fiscally responsible, decisions in personnel.

Compensation changes come with decades of after-effects as they affect which airmen are gained, lost, retained, or sent looking for private-sector work. Annual pay changes also bring a lasting effect to military personnel costs. Military pay became a “third rail” in US politics in the years following the Sept. 11, 2001, terrorist attacks, when the White House requested annual pay hikes in excess of the rate of inflation.

Not to be outdone, lawmakers would often heap another half-percent on top of that, without any significant pushback from their colleagues or the administration, or any concerns about long-term consequences.

No one wanted to be seen as cutting troop pay or even simply holding it flat in wartime when many remembered the recruiting and retention challenges the military faced in the past when a so-called “pay gap” existed between military and civilian pay.

That all changed in 2011—and so did the size of the military pay raise, which dropped suddenly to a much more modest 1.4 percent. It has mostly hovered around that point since then.

The largesse in the decade following 2001 brought military salaries much more in line with the private sector—a comparison particularly important within the Air Force, which regularly competes with commercial airlines and technology firms for skilled personnel. However, it also set up a growth curve in pay that the Pentagon, grappling with stringent budget caps since 2012, simply can’t sustain.

It might not have to.

Those involved in recruiting and retaining airmen say smaller raises haven’t really affected their efforts. Rather, it’s the entire package of benefits—from tangible things like quality health care, to the intangible, such as desire to serve—that matters most in building and maintaining the force.

Each half-percent uniformed pay raise costs the military about $330 million, but that doesn’t produce a big difference in most paychecks. A service member at a grade of E-4, for instance, would receive only $11 additional each month, Rep. Susan A. Davis (Calif.), the top Democrat on the House Armed Services military personnel subcommittee, estimated this spring. While bigger raises seemed like a no-brainer when the budget was growing steadily, Davis and others argue there may be better ways for USAF and the other services to spend today’s limited defense dollars.

Goodwill goes a long way

“We closed that gap down pretty good throughout the 2000s, especially after 9/11,” said Kelly.

Not all benefits come with a big price tag. Some, like the military’s new maternity leave offering and efforts to station married personnel together, cost little and go a long way toward building goodwill with service members.

“We’re not trying to be futuristic, we’re not trying to be progressive,” Defense Secretary Ashton B. Carter said in 2016 in announcing new, more family friendly policies for military personnel. “We’re trying to make sure that we continue to attract and retain the very best.”

The Air Force has yet to measure how these new policies will affect recruiting and retention, but officials are optimistic that they will appeal to airmen, particularly women who would otherwise make a choice between family and service.

All these noncompensation measures are particularly important to recruiting and retention as an improving national economy makes it easier for prospective airmen to find jobs in the private sector.

“When the economy was down, it wasn’t uncommon for people with law degrees, master’s, and Ph.D.s wanting to go to [Officer Training School],” Hughbanks said. “Now, it’s the normal thrash of kids late in college or just coming out of college.”

The Air Force nonetheless continues to meet its targets in terms of quality and numbers, said Kelly, who pointed to the 31,500 enlisted recruits and 4,500 new officers in the ranks.

“I think the most important thing—and this is going to sound easier than it is—is giving somebody a quality experience,” Kelly said. That includes job satisfaction, allowing members to learn and maintain skills aligned with their personal preferences, and having an overall positive experience within the Air Force.

Pay, bonuses, and other benefits certainly matter in recruiting and retention, but aren’t enough. If the Air Force doesn’t get the quality of service right, if the airmen don’t enjoy their service and aren’t proud of their work, nothing else really matters.

It’s not an exact science. The military “counts a little bit on the goodness of people’s desire to serve,” Kelly said.

While the policies that promote quality of life help with recruiting and retention, Hughbanks asserted that the Air Force needs a bigger marketing budget to get out its message.

Fewer potential recruits have parents or extended families who have served in the military than just a generation ago, and some can’t even name all of the services. That’s a problem for recruiters, particularly those in regions where the Air Force doesn’t have a strong local presence.

“They think the Air Force logo is a Lockheed Martin logo,” observed Hughbanks, who bemoaned the service’s shortage of marketing dollars compared to the Army and Navy. The Air Force simply doesn’t have the money for widespread outreach, such as commercials during major sporting events, he added.

Hughbanks would like to see the Air Force roughly double its marketing dollars, to about $85 million annually. That would allow it to work on a long-term plan that includes advertising and other tactics aimed at attracting new personnel.

“Without the marketing and additional manning, it’ll be a very, very difficult road,” Hughbanks warned.

After more than a decade of heavy deployments, the Air Force—and, really, the entire military—also must overcome the impression that all personnel go from recruiting station to the war zone. Hollywood’s depiction of the military leads many recruits and parents alike to worry about the dangers of a life in the military. Many, Hughbanks said, ask whether they are going straight to the desert.

The Air Force is also working on removing other barriers to service, many of which are policies left over from the 1970s. Those include everything from prohibitive medical conditions to how many tattoos an airman can have. Another issue the service is struggling with is marijuana use, particularly as some states legalize recreational use.

Meanwhile, the service wants to mobilize retired airmen to get its message out to diverse communities, many of which don’t have regular contact with the Air Force. They also want minorities to be able to see themselves in the force.

“For me, as a new Chief, it’s about a balance between quality of service and quality of life,” Goldfein said. “I’m confident we’ll be successful.”

In the end, it comes down to Kelly’s ledger. If the Air Force can provide a high quality of service—a total package of compensation and intangible benefits—USAF will continue to be able to recruit and retain quality airmen. If the Air Force is not able to do this, high-quality people will go elsewhere.