Expectations About Civilian Labor Markets and Army Officer Retention

Despite relatively high levels of officer retention overall, U.S. Army personnel management officials have noted that junior officer retention is lowest for the individuals in whom the Army has made the largest investment. These officials are concerned that these officers might not have a full and accurate picture of the socioeconomic environment that they will face if they leave active-duty service. If these personnel currently underestimate the additional costs of civilian employment, a more complete picture of the socioeconomic environment could raise retention and assist the Army in its competition with civilian employers. This monograph develops a comprehensive picture of the socioeconomic environment officers will encounter if they leave active-duty service and analyzes the potential impact of these factors on Army retention. Ultimately, officers' expectations about civilian employment affect their retention decisions. Therefore, the monograph also considers how major differences between military and civilian employment can be effectively communicated to officers making stay/leave decisions. It reports results from projects that aimed to help the U.S. Army optimize the return on investment from retention policies by evaluating economic trends in the private sector and the perceived merit of civilian versus military employment. The projects also evaluated different measures of potential and performance and identified areas in which the U.S. Army has been least successful in retaining its highest-performing officers. The authors present and discuss the results of a review of the existing literature concerning these topics; analyses of military personnel data, as well as civilian employment and earnings data; and incorporation of these results into existing theoretical models of retention.