Military Personnel:

Army Needs to Focus on Cost-Effective Use of Financial Incentives and Quality Standards in Managing Force Growth

GAO-09-256: Published: May 4, 2009. Publicly Released: May 4, 2009.

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To ease the pace of overseas deployments, the President announced a plan in 2007 to grow the Army's end strength by about 7 percent by 2013. GAO was asked to evaluate the Army's management of this growth. Specifically, GAO determined the extent to which the Army has (1) made progress in growing the force, (2) awarded cost-effective bonuses to attract and retain enlistees, (3) maintained the quality of its enlisted force, and (4) directed growth in its officer force to areas of need and determined whether trade-offs it has made to alleviate shortages will have long-term effects. GAO reviewed the Army's growth plans, bonuses, waivers, and officer promotions, and interviewed Defense and Army officials.

Although the Army's Grow the Force plan originally called for growth to be completed by fiscal year 2013, the Army had met 99 percent of this growth goal by the end of fiscal year 2008. Since fiscal year 2005, when none of the Army components met recruiting goals, all have made steady progress. To achieve this growth, the Army substantially increased its number of recruiters and its funding of incentives. In addition, the active Army and Army Reserve exceeded their retention goals from fiscal years 2005 through 2008; the Army National Guard exceeded its goals in fiscal years 2006 and 2008 and achieved retention within the allowable margin in fiscal years 2005 and 2007. While the Army has increased its expenditures for bonuses by almost 75 percent since fiscal year 2005, it has not used available research to set bonuses at dollar amounts that are most cost-effective. Although a substantial body of research exists on how to cost-effectively use recruiting resources, the Army has not used this research to calculate bonus amounts. During GAO's review, Army officials stated that the main proof of success of the bonus program was that the Army had met its goals for accessions and retention. Also, because Defense guidance allows the Army to offer bonuses to enlistees in any occupation, the Army has been able to award and often has awarded bonuses to occupations that are not considered priority. Further, because each component makes decisions on bonuses independently, the amounts of bonuses awarded by different components vary widely. Since GAO completed its audit work, the Army states, however, that it has been reducing the numbers and amounts of bonuses offered enlistees. In fiscal years 2005 through 2008, the Army did not consistently meet quality goals for new recruits, as measured by the percentage who have high-school diplomas and who score in the upper half on the Armed Forces Qualification Test. The Army implemented some new programs to increase the market of eligible recruits, such as programs for overweight individuals or those without high-school diplomas. In addition, the Army has continued to use conduct waivers for candidates who fall short of entrance standards for reasons such as prior criminal misconduct. Existing analyses have shown that recruits with conduct waivers perform similarly to those without conduct waivers-- although they are more likely to be separated for adverse reasons; the Army lacks data on the cost of enlisting persons who require conduct waivers. The Army is experiencing shortages of captains, majors, and lieutenant colonels and projects that these shortages will continue. The Army has offered bonuses to captains; however, it has not offered incentives to majors or lieutenant colonels because those ranks are not considered to have retention problems. While the Army has research focused on incentive packages, this research has not been directed at calculating the most cost-effective bonus amounts. Also, the Army has no method of determining whether actions it has taken that deviate from congressional benchmarks will have any effect on the future Army officer corps.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: Should the Army decide to offer incentives to officers in the future, the Secretary of Defense should direct the Secretary of the Army to build on currently available analyses that will enable the Army, with the direction and assistance of the Secretary of Defense, to set cost-effective bonus amounts and other incentives.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD concurred with the recommendation. It stated that DOD's oversight of officer retention is rigorous and demands that the military services provide a detailed business case before the Office of the Secretary of Defense grants the requesting service the authority to employ a retention bonus. As of July 2012, the Army stated that it did not intend to offer any further incentives to officers.

    Recommendation: To enable the most efficient use of recruiting resources, the Secretary of Defense should direct the Secretary of the Army to collect data on the cost-effectiveness of the Army's conduct waiver polices--including costs associated with the waiver review and approval process and with future separations of soldiers with conduct waivers for adverse reasons--and use these data to inform the Army's waiver policies.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD concurred with this recommendation. It stated that on February 17, 2009, the Army Audit Agency had begun an audit of the Army recruiting waiver program that will, among other things, examine whether the active, Reserve, and National Guard components are using appropriate and uniform standards for granting and processing enlistment waivers. In its July 2012 DAMIS report, the Army states that on Jan. 14, 2010, it issued standard operating procedures on waivers in response to a report by the Army Audit Agency. While these operating procedures require that the numbers and types of waivers be reported, they do not address the deficiency cited by GAO: the lack of cost data on waivers that would allow the Army to determine the cost-effectiveness of its waiver policies.

    Recommendation: To enhance its existing processes to recruit and retain sufficient numbers of enlisted personnel and to avoid making excessive payments to achieve desired results, the Secretary of Defense should direct the Secretary of the Army to build on currently available analyses that will enable the Army to set cost-effective enlistment and reenlistment bonuses.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD concurred with this recommendation. It stated that in February 2009, it had contracted a DOD-wide research study entitled "Recruiting and Retention Effectiveness of Cash Incentives." DOD stated that the objective of this research is to assess the impact on enlistment and reenlistment propensity of military cash incentives used in the services. DOD expects to receive the first draft of this research in June 2009. As of July 2012, DOD's point of contact for this report (LTC Greg Brown) had told us that the services have made cuts to their bonuses for a number of reasons, including the fact that GAO made this recommendation. As a result, DOD was able to reduce $947.3 million from eight of the services' FY 2010 Military Personnel budgets. DOD's point of contact said that GAO's recommendations had forced OSD and the services to put more analytical rigor into how they determine amounts of bonuses that are cost-effective.

    Recommendation: To enable the Army to make informed decisions regarding the management of its officer corps over time, the Secretary of Defense should direct the Secretary of the Army to track--and if necessary correct--any effects that its actions to alleviate shortages may have on the officer corps, particularly in cases in which the Army has deviated from benchmarks established in the Defense Officer Personnel Management Act.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD partially concurred with this recommendation. It stated that DOPMA officer promotion benchmarks represent generalized guidelines but are not intended under present law and policy to serve as fixed mandates. It stated that OSD policy is already explicit in defining desired promotion timing and opportunity. As of July 2012, the Army stated that DOD has taken no further action in response to this recommendation. They said that data on officer promotions are tracked already, and promotion rates higher than the established benchmarks are acceptable.

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