strategic hrm final presentation

8/8/2019 Strategic Hrm Final Presentation

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y Taimoor baig

y Raja Usama Sami



A sequential equilibrium for the armys targeted

selective reenlistment bonus program



The article focuses on bonus program in which A rmy offers

bonus to:

y Soldier with low cost of serving in undesirable location

accept the bonus and are sent to an undesirable location.

y Soldier with high cost of serving in undesirable location

reenlist but declines the bonus.



This program benefits both the

y A rmy and Soldiers

y Increase extension

y Increase number of people who serve in undesirable

location

y Matches better soldiers to assignments.



Throughout century many members by U.S have been

sent to undesirable locations in the world. Because of

this reason the charm of choosing military service is

low, being sent to such undesirable location led a great

impact and thus effect the recruitment of new

members and relation of existing one.



Since 1999 U.S A rmy is offering bonus called (Target

selective reenlistment bonus) to those soldiers who

volunteer to be sent on less desirable location.



From personnel management perspectives can (TSRB)

boost reenlistment rates? This is the question.



y First thing we need to do is to provide background of army and study literature.

y

Then we will focus on the problem identified above

with narrative approach.

y Lastly we use game theoretic modeling method.



y Someone who enters the army a new world awaits. Once the soldier

completes training, he incurs obligation to serve army for 2-6 years.

Once commitment expires, obligation is over unless stop loss is declared.

y Stop Loss = situation in which shortage exists and soldiers are not permitted to

leave, and if the soldier wants to remain in the army, he must first be approvedfor reenlistment (enlist again). The soldier can enlist for 2-6 years.

y Once the soldier reenlists they can request to go to a specific location but army

is under no obligation to honor it. A rmy will sign soldiers according to its

needs.

y A ll branches of military offers single nationwide base salary that varies by rankand years to service. Members also receive house allowance. On other sidecivilians receive salary on basis of experience and skill.

To solve this discrepancy army offered (TSRB).



From above discussion it is concluded that military

retention rates respond to changes in pay



Example:

Bonus paid to air force pilots were effective In increasing

retentions.



Numerous studies in economic literature find military

retention rates responsible for pay, then numerous

studies by another discussed rule - based system i-e,

those who are promoted faster are more likely to leave

faster.



Human resource literature discussed that group based pay

plan are beneficial as wages are linked to performance. So it

can be said that to increase reenlistment rates military

leaders must increase wages, preserve uniformity in it or

increase wages in area where wages are low.



y Navy use program called A ssignment Incentive Pay

( A IP) in which sailor can bid amount of additional

compensation based on assignment.

y A rmy use program called targeted selection

reenlistment bonus (TSRB) in which pay is determinedby army and soldiers choose to accept or reject offersand pay bonus to soldiers who volunteer to go to

undesirable location.



So voluntary system and non voluntary system, location

by location minimize opportunity cost.

Minimizing opportunity cost of soldiers/sailors lead tobetter sorting of

y Personnel

y Increase production efficiency

y Increase retention level



Ft Carson Deserty A ngie 1500 2000y Ben 2000 3000

A ngie to be sent to FT Carson could receive 3000, but she

accepted 1500.

The surplus is, 3000-1500 = 1500

A t desert, 3000-2000 = 1000.5*1500 = 750.5*1000 = 500

1250



Ben to be sent to FT Carson

3000-2000 = 1000

Desert3000-3000 = 0

.5*1000 = 500

.5*0 = 0

500



Lowest uniform rate at which they will both enlist is

2500

A ngie2500-1500 = 1000

2500-2000 = 500

500



Ben

2500-2000 = 500

2500-3000 = -5001000



S1 and S2

S1 < S2

Represent disutility to serve in undesired location

A

ngie will pay 500 to serve = low disutility

Ben will pay 1000 to serve = high disutility



Now soldiers have 3 options:

y Reenlist accept bonus

y Reenlist declining bonus

y Exit from army



If they reenlist and accept the bonus, they serve at anundesirable location and receive a payoff, M + BS i.

If they reenlist and decline the bonus, then withprobability they serve in a desirable location andreceive a payoff, M, and with probability they serve inan undesirable location and receive a payoff, M S i.

If they decide they exit the A rmy, then they receive a

payoff of C from the civilian labor market.



y A bonus that is universally accepted is too large andneeds to be reduced.

y Soldier who declines the bonus must perceive thattheir probability of being sent to an undesirableslocation has been reduced by TSRB.

y Basic army pay must exceed the alternative civilians wage by at least that it covers risk of being sent toundesirable location.



y Soldier with lowest opportunity cost for serving inundesirable location accept bonus.

y Soldier with high opportunity cost for serving inundesirable location reenlists as their probability isminimized.



Thus to increase reenlistment rate TSRB, reduced

opportunity cost will lead to increase

Long term reenlistment rate Better morale

Decrease the expense of army



y Thus TSRB program as sequential game shows that the

program increases the number of soldiers who reenlist

and the numbers of soldiers who serve in undesirable

location

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