July 16, 2019

A Looming Retention Crisis

By LtCol Colin Smith

Some of the most significant retention challenges the military faces are choices related to military families and how cultural shifts in family dynamics shape the decisions of military members. New provisions in the FY2019 National Defense Authorization Act (NDAA), the implementation of the Blended Retirement System (BRS), and changes to the Defense Officer Personal Management Act (DOPMA) represent efforts to improve retention and transform personnel management. However, anecdotal evidence suggests that despite good intentions, these measures may contribute to, rather than solve, an emerging retention challenge as it relates to service members with families.

Most retention discussions are focused on first-term service members or those approaching their mid-career mark, yet rarely is there a focus on more senior military members. Senior field-grade officers represent the bulk of the “corporate knowledge” in their respective specialties and are critical to the success of the Department of Defense (DoD). Examining why some of the best and brightest O-5s and O-6s leave the military before being evaluated for command or promotion to general/flag (GO/FO) rank, many of whom by their records of performance are all but guaranteed to be selected, should be of equal importance. Senior field grade officers are not far removed from significant operational and tactical issues, but are senior enough to have seen behind the curtains of the “executive” side of DoD, gaining insight into how acquisition, personnel, and strategic decisions are made. They are arguably at the pinnacle of their respective military occupational specialty (MOS) and the most valuable personnel for the military to retain by corporate standards. Yet, these leaders are increasingly more vulnerable to factors driving them from the service, including lucrative financial opportunities, stabilizing family situations, or both. Factors related to the retention of senior field grade officers are by no means limited to the officer ranks and impact senior enlisted service members as well.

Family dynamics and financial incentives must be considered when studying the future retention of more senior officers and enlisted leaders.

This paper offers perspective on the decisionmaking process of service members leaving at a more senior level and the degree to which disincentives of remaining in the military may outweigh the benefits of extended careers. This paper also examines several new challenges that have not been addressed in recent studies, such as disincentives for an E-6 or O-4 to continue serving to the 20-year mark, at which point they become eligible for the full retirement benefit package. The paper concludes with a recommendation centered on slowing, not increasing, the timelines for promotions while still retaining a competitive pay structure, which admittedly will require a tectonic mindset shift for the services.

Generational Shift of Military Leaders

The basic dynamics of being a military leader have not significantly changed over the years, but the timing and considerations of family dynamics has. Leaders want to play a bigger role in day- to-day family life, posing challenges to the current work-life balance senior leaders face. In American society, individuals are getting married and having children later in life than previous generations. This trend appears to have crossed over to the military. Although junior service members still tend to marry earlier than civilian counterparts, increased cost-of-living expenses at the junior level and continuous combat deployments over the past 17 years have played a role in decisions to delay or minimize family growth, particularly in dual military couples.

In 1980, the time frame many of our most senior military leaders today began their career, the average age of marriage was 22–23 years old. Based on my own experience in the 90s, that trend continued, where it was practically encouraged to get married as a junior officer in order to be part of the “inner circle.” The benefits to being married were that you lived on base in cul-de-sacs with peers and were invited to impromptu gatherings by superiors. On-base officer clubs were the hub of activity, and living on base meant the bonus of being able to walk home or catch an easy ride back to housing. Those living off base or who were single were not “in the know” or part of the team in the same way. Family life and base life at that time were synonymous.

Times have certainly changed. The military club system is all but gone, investing in a home early in a career instead of living on base is deemed financially prudent, and the average age of marriage has jumped to 27–28. Individuals are more inclined to finish their education, advance in their careers, or just enjoy early adulthood. This delay in marriage has a direct correlation to when service members start having children. The average age of having a first child in the 80s was 22–23 and today is 28 and climbing. It is no longer uncommon to meet a senior major, lieutenant colonel, or master sergeant having their first child. Two decades ago, that would have been extremely rare. It is also more common for senior military members’ kids to be entering middle school, at which point frequent moves can be more stressful for children—all while this group of leaders is hitting the 20-year career mark.

For these officers with school-aged children, the likelihood of more frequent moves and continued 12–18 hour days (when counting the technological tethers), poses a significantly different dynamic to contend with when considering family quality of life and deciding to stay past the 20–24 year mark. To be a bigger part of their children’s lives and for the overall benefit of the family, these leaders are starting to choose to get out. This is a huge generational shift compared to the majority of today’s highest military leaders who made the choice to pursue the rank of general or admiral at a time when their children were already in high school, college, or beyond, thus their children’s quality of life was not a major deciding factor.

The basic dynamics of being a military leader have not significantly changed over the years, but the timing and considerations of family dynamics has.

Spousal pressures have also shifted. Some spouses are ready to resume careers they put on hold with an expectation they just had to make it to that 20-year retirement promised land their military spouse told them about. Others have been struggling to maintain careers all along, in an era when dual-income families are the norm, and would prefer additional geographic stability to enhance their own prospects. Spouses are aware of the unofficial obligations of being a senior officer’s spouse and do not relish those obligations, all while trying to balance children still at home. This is very different from previous generations of spouses—the majority of whom had been professional at-home parents—who were more amenable to consistent moves and could even enjoy the senior social scene as an empty nester.

Mental and physical wear and tear on today’s senior field grade leaders have increased as well. Nearly two decades of continuous combat operations resulting in multiple extended combat deployments on top of traditional time in the field for training has had a compounding effect. Long workdays, an endless deluge of emails, and 24/7 virtual connectivity has contributed to a weathering of officers. Simply put, senior leaders are tired. This generation, compared to their predecessors in the ’80s and ’90s, has spent considerable time away from their families in the form of longer commutes, unaccompanied tours, and increased operational tempo. Faced with the idea of missing out completely on their children’s most challenging times to serve an additional 10–15 years is becoming a tougher choice.

Economic Incentive Challenges

The economy continues to play a major factor in retention, but arguably with a different twist at the senior level. With the guarantee of a retirement check secured at the 20-year mark, the next objectives are determining how to pay for the kids’ education and maximizing earning potential to ensure there will be enough money stashed away to one day retire full-time. As there is no single method to best calculate a comparison between military and civilian pay, perceptions can play a large role when service members rate their compensation and consider continued service.

The current military pay system is not set up to incentivize continued service once a member is eligible for retirement. In lieu of financial drivers, the primary incentives to remain in service are command, resident senior-level schools such as the National War College, promotion to O-6, or additional assignments to better position oneself for a civilian career. As those goals are fulfilled, without a financial motivator the desire for selfless service and patriotism can have its limits. Targeted enlistment and reenlistment bonuses and specialty pay incentives—like flight pay—are no longer applicable because that money is reserved to target those earlier in their careers.

Business recruiters and former military routinely tell successful military leaders how much more they can make as civilians. This tugs at the heartstrings of service members who want to do best by their family and entices those with the drive to financially achieve to shoot for a bigger pay check. Civilian positions with performance bonuses and significant salaries are no longer fantasy, which also weighs heavily when thinking about staying in service.

The absence of modern incentives, such as performance bonuses or stock options, could cripple our military at the most critical levels. The recent switch to the blended retirement system (BRS) offers new incentives for recruits and those using the military as a springboard to future careers, but does nothing for the challenge of long-term retention. If anything, the addition of automatic enrollment and the possibility of matching funds up to 5 percent in a Thrift Savings Plan (TSP), the government version of a 401k, make leaving the service earlier easier from a perceived compensation point of view. Those that do not complete 20 years no longer walk away with nothing in the bank. Under the old system the hook of receiving a pension of 50 percent of their base pay plus a subsequent 2.5 percent increase for each additional year of service past the 20-year mark was something to strongly consider not only as incentive to reach that mark, but in staying beyond retirement eligibility. Matched with promotions timed to hit around the 11–12-year mark (O-4/E-6), one was faced with a significant dilemma whether to stay or get out because at the end was an attractive payoff—which provided the services a 10-year retention tool in itself.

The BRS offers other challenges to both mid- and long-term retention: a reduction in pensions to 40 percent for 20 years of service; an incremental increase of only 2 percent per year for additional service; and continuation pay (CP) bonus, which is currently too small. The CP bonus, designed as a mid-career incentive to stay in and compensate for the reduced pension, is currently set at a multiplier of only 2.5, the minimum set by Congress. In a recent report, RAND concluded that using the minimum multiplier for CP will not sustain the officer force, setting up retention challenges of even getting to the senior field grade rank.

Incentives for senior leaders are few and far between. For example, while the Post-9/11 GI Bill is hailed as a retention tool for its education benefits, recent changes limit its applicability to senior leaders. A tremendous education benefit to military members early in their careers, it applies much less to an officer who has multiple degrees achieved during their career. The ability to transfer this benefit to family members is a powerful incentive, but now the declaration to transfer these benefits must be made prior to the 16-year mark of service. With military members starting families later, some may not have married until the 15–16-year mark or do not yet have children, leaving no one to transfer the benefits to.

The Wrong Solutions

Promotions themselves can be a motivator and incentive to continue serving, but for how long? Recent changes in the FY2019 NDAA allow for accelerated promotion of the top performers and the ability to re-“rack and stack” (prioritize) selectees’ lineal numbers on a given board. Some services internally accelerate promotions through below-zone and two-below zone selections to incentivize top performers. This timing becomes problematic as it accelerates the climb up the ladder and can move a service member’s decision on whether or not to stay on active duty to a time when these leaders may have competing family priorities. Moreover, opportunities for a second career look brighter joining corporate America at age 42 or 43 rather than at 47 or 50.

A side effect to the accelerated promotions is that the more a service member rises, the larger their practical experience deficit grows compared to contemporaries on a more traditional trajectory. As they approach the GO/FO ranks, they will be competing against performing equals, but with 3–5 years less practical experience. This presents new retention challenges because the current promotion system still has statutory requirements after failing for promotion twice. This demands questions of whether the services will cut those who were accelerated in promotion if they are subsequently passed over or will those individuals even elect to stay in the service? If retained, O-6s can serve 30 years of commissioned service, which could translate to 11–12 years as an O-6 for an accelerated individual. This poses new challenges as there are few incentives or opportunities for more junior officers (O-5s) to move up in a field of O-6s log jammed with accelerated performers and traditional selectees. This would have a ripple effect, where a generation of captains and majors already question a system that is more timeline based than merit based.

DoD recognized the need to fix a pay chart that did not account for extended service and expanded the existing chart out to 40 years in 2007, but in doing so they left out any benefit for those it was trying to retain prior to promotion to GO/FO—in addition to those at the senior E-9 level. The last time-in-service incremental pay bump for an O-4 is at the 18-year mark ($89 a month for an O-4 in 2018). For an O-5 it is at the 22-year mark. Those same pay caps hit much earlier for prior enlisted service officers (mustangs). Any mustang with six or more years of prior enlisted service will hit that top tier of pay the day they pin on O-4 and again the day are promoted to O-5, leaving no financial incentive to continue serving other than the prospect of another promotion. On the enlisted side, albeit with relatively small incremental bumps, one does not max out on the pay scale as an E-7 until the 26-year mark, as an E-8 at the 30-year mark, and E-9 at the 34-year mark. In the future, this will leave matching contributions to the TSP under BRS as the only remaining financial incentive. Combined with only a 2 percent annual increase in retirement pay per year under BRS, that is likely not to be enough to retain quality officers.

Solution: A New Promotion Model

Senior field grade leaders are facing different challenges than their predecessors when it comes to weighing the benefits of continuing their career until or through O-6, or even trying for that exclusive first star (or the enlisted senior advisor equivalent of command sergeant major/command master chief working for generals/admirals). For those at or past retirement-eligibility, the desire for family stability and the prospect of no additional moves is increasingly powerful. Knowing they have a retirement check as a safety net and starting point for a second career is helpful in making the leap to civilian life. Even for officers who have had the premium O-6 command assignment and mentors assuring them they are the future, the pull to get out can be tremendous.

Newly promoted one-stars or their senior enlisted advisors, especially those on staffs, can look forward to 12-hour days as a norm, frequent one-year unaccompanied assignments, and little to no potential for staying geo-located for a standard three-year tour. It seems likely that the best and brightest of our military also engage in intensive parenting—being actively involved in their children’s lives so that they too will become the best and brightest. All these factors weigh heavily when considering continued service against being present for events in their children’s lives, such as sporting events, music recitals, and high school dances.

A counter intuitive solution to alter the current retention conundrum is to move promotions in the opposite direction: slow promotions down rather than speed them up. In most of our NATO allied countries, is perfectly acceptable to retire from the military, with pride, after 30 or more years of service as an E-5 or O-4. Yet for some reason, if you don’t make E-5 in your first term enlisted in the U.S. military you are viewed as an under-performer. There is nothing written in law that states promotions to O-2 is automatic at two years—by law one is eligible at 18 months—yet that is what we have done for decades. Similarly, on the enlisted side an E-1 promotes to E-2 six to nine months. Let lieutenants be lieutenants for a longer period to gain critical leadership experience, make mistakes, and have more time to complete ever longer and more complex MOS schools.

The best and most enjoyable rank I had as an officer was captain (O-3). There is nothing like commanding a company of invincible Marines; but on average, officers only get one shot at company command, and it’s 12–18 months at best. At that point, the next captain needs their opportunity, and/or you need career-level professional military education (PME) and a B-billet (assignments outside of one’s primary MOS) before coming in zone for O-4. There would be nothing wrong with being a captain in the Marine Corps for six to seven years. By stretching out time in service, with the bonus of time for schools and/or B-billets, the result would be a larger pool of captains for command and company staff billets. Many captains would love to have more time in company command, the potential for a second company, and the opportunity to serve in a second operational battalion. A pilot too would love to have a break from the cockpit without damaging their career. The same logic applies for majors.

Overlay this longer promotion cycle with the current up-and-out model (a key element to retaining only the best) and you will find a much more cohesive system. O-3s and O-4s should be looked at for promotion at the 11–13- and 18–19-year marks respectively. This eliminates the conundrum of what to do with a passed over O-3 for an extra three years (service limitation is 13 years), assuming they stayed around for the involuntary separation pay, or a passed-over O-4 who is hanging on until eligible for a pension at the 16-20-year mark. Exceptions can still be made for excelled performance, but you effectively eliminate the disgruntled years and the stigma of being a non-performer. A major or lieutenant commander could now retire with pride and respect, having achieved that rank and time in service.

There is also an associated cost savings from not having to pay for the accelerated promotions or longer durations at the O-5 and O-6 level before statutory retirement limits. Correspondingly, in zone look for O-6 would occur anywhere between 24–27 years, depending on how quickly an individual moved up based on performance. Those who want to retire at O-6 after only three years are looking at about 30 total years, but those staying for O-6 command and other opportunities would potentially serve 35 years or more. The only major change would be to extend service limitations for O-6 appropriately. To compensate for slower promotion rates, incremental pay raises based on time in service (longevity increases) must be increased to ensure they remain a strong financial incentive and are applicable to all ranks. Adjusting to a 30-month or three-year cycle, compared to the current two-year increments, may be necessary to defray increased costs.

Family dynamics and financial incentives must be considered when studying the future retention of more senior officers and enlisted leaders. The desire to see one’s kids grow up, participate in school milestones, and a willingness to sacrifice future promotions for family stability are becoming more prevalent. Extending time in service at given ranks achieves the longevity of expertise and retains valuable corporate knowledge, without sacrificing the traditional military structure or the desire to be promoted. This new promotion-timing model helps mitigate the generational shift in family dynamics, putting decision points for the more senior ranks at a time when children are more likely to be older, thus decreasing the binary choice of continued service or quality family time. This will retain more of our best and brightest senior leaders. This model, although requiring a huge cultural change in transition, has the added benefit of reducing many disincentives for leaving, such as limited command opportunity at the company level, lack of opportunity to attend schools for low-density specialties, and no increased pay for O-4s and O-5s at the critical time you want to retain their expertise, even if just for an extra three-year tour. No retention tool is foolproof, but it’s time to think out of the box on how to ensure the longevity and integrity of our professional military in a changing society.

Lieutenant Colonel Colin Smith is an engineer and Eurasia foreign area officer currently serving as the Commandant of the Marine Corps Senior Military Fellow to the Center for a New American Security (CNAS).

Read more in the CNAS Military, Veterans and Society Program's "Supporting the Military Community" commentary series.

Image Credit: Samuel King/Department of Defense

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