The Cost of a Military Person-Year
A Method for Computing Savings from Force Reductions
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The Department of Defense strives to only use military personnel for military-essential tasks and has consistently recommended the civilianization of ever-more military functions and positions. This guidance also stems from the belief that military personnel cost more than comparable civilians. As a policy, civilianization can only be properly applied when it is an integral element of a broader personnel-management strategy. This work presents a new method of estimating the cost of a military person-year that focuses on the actual cost of the retirement benefits that the federal government must provide to military personal. It provides a better foundation for the development of a broad, force-shaping strategy than previously available measures that focused only on annual retirement-fund accrual costs. A major implication of this alternative calculus is that truly effective force management — using strategic human-resources principles to identify the proper mix of age and experience in the personnel inventory — requires an increased focus on the cost of personnel.
Table of Contents
Chapter One
Introduction
Chapter Two
Personnel Costs and DoD-Regulated Conversion Rates
Chapter Three
The Cost of Deferred Compensation
Chapter Four
Calculating the Correct Cost of Eliminating a Military Person-Year
Chapter Five
Applying the Calculus
Chapter Six
Final Issues, Conclusions, and Recommendations
Appendix
Grades and Titles for Military Officers and Enlisted Personnel
The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted in the RAND National Defense Research Institute, a federally funded research and development center sponsored by the OSD, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.
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