The Effect of Pay and Retention Bonuses on Quit Rates in th

The effects of pay and reenlistment bonuses on quit rates in the US Army are examined. An attempt is made to create a model that relates quit rates to bonuses and military pay in combat and noncombat occupations. It was hypothesized that soldiers in combat jobs acquire the equivalent of firm-specifi...

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Bibliographic Details
Published in:Industrial & labor relations review 1988-04, Vol.41 (3), p.430
Main Author: Lakhani, Hyder
Format: Article
Language:English
Subjects:
Bonuses
Effects
Implications
Mathematical analysis
Military personnel
Occupations
Regression analysis
Training
Turnover
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Summary:The effects of pay and reenlistment bonuses on quit rates in the US Army are examined. An attempt is made to create a model that relates quit rates to bonuses and military pay in combat and noncombat occupations. It was hypothesized that soldiers in combat jobs acquire the equivalent of firm-specific training during their time in the Army as compared to soldiers in noncombat jobs who are trained in general skills that are more readily transferable to the civilian sector. This would indicate that soldiers in combat occupations should respond more readily to monetary incentives to reenlist. Analysis of 1981 US Army data indicates that quit rates were negatively related to pay level and, even more so, to the size of the bonus offered. The effects on the quit rate were significantly greater, however, for those soldiers in combat occupations than for those in noncombat duties.
ISSN:0019-7939
2162-271X