Attrition: The Success of the Signing Bonus


September 14, 2007: The U.S. Army paid bonuses of $660 million to soldiers who re-enlisted this year. The same amount is planned for next year. Each year, the army seeks to get over 110,000 veteran troops to sign on for another three or four years. Over 60 percent of troops who reenlist get a bonus, but the amount varies a lot. On the low end, it can be only $2,500. On the high end, for experienced Special Forces troops, it's $150,000. In addition, there are additional special payments, like combat and danger pay. There are also special programs that allow troops to transfer some of their G.I. Bill educational benefits to a spouse.

What the bonuses do is provide a way to pay scarce specialists more money, without modifying the rank structure or pay scales. A similar approach is used in many commercial enterprises. The army has a constantly changing list of critical skills, a rate of change brought about by rapid developments in technology, and changing demand for some of those skills in the civilian market place. Without the bonus program, the military would have to pay a lot more to bring in civilian contractors to do some jobs. This practice has been used for a long time, but it's cheaper and more efficient if your specialists are in uniform.


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