8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 1/27
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 2/27
y Taimoor baig
y Raja Usama Sami
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 3/27
A sequential equilibrium for the armys targeted
selective reenlistment bonus program
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 4/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 5/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 6/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 7/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 8/27
From personnel management perspectives can (TSRB)
boost reenlistment rates? This is the question.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 9/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 10/27
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).
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 11/27
From above discussion it is concluded that military
retention rates respond to changes in pay
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 12/27
Example:
Bonus paid to air force pilots were effective In increasing
retentions.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 13/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 14/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 15/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 16/27
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
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 17/27
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
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 18/27
Ben to be sent to FT Carson
3000-2000 = 1000
Desert3000-3000 = 0
.5*1000 = 500
.5*0 = 0
500
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 19/27
Lowest uniform rate at which they will both enlist is
2500
A ngie2500-1500 = 1000
2500-2000 = 500
500
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 20/27
Ben
2500-2000 = 500
2500-3000 = -5001000
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 21/27
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
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 22/27
Now soldiers have 3 options:
y Reenlist accept bonus
y Reenlist declining bonus
y Exit from army
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 23/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 24/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 25/27
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.
8/8/2019 Strategic Hrm Final Presentation
http://slidepdf.com/reader/full/strategic-hrm-final-presentation 26/27
Thus to increase reenlistment rate TSRB, reduced
opportunity cost will lead to increase
Long term reenlistment rate Better morale
Decrease the expense of army