Developing Cost-Effective Pay and Compensation Strategies

To achieve its mission, DOD must recruit, retain, develop, and motivate a high-quality, diverse, and sufficiently sized workforce that includes both military and civilian personnel. Moreover, compensation is an important recruiting and retention tool, particularly during a time of increased military operations, to maintain DOD's military and civilian workforce.

• DOD is one of the nation's largest employers — employing approximately 1.4 million active duty military personnel, 1.2 million reservists, and 700,000 civilians.

  Highlights of GAO-05-798 (PDF)

• DOD's military personnel outlays are large and growing, fueled in part by increases in basic pay, housing allowances, recruitment and retention bonuses, incentive pays and allowances, and other special pays. In addition, a large portion of DOD's compensation-related costs is in the form of benefits and deferred compensation, and DOD's costs to provide benefits such as health care have continued to spiral upward.

  Highlights of GAO-07-828 (PDF), Highlights of GAO-05-798 (PDF)

• Expanded health care to reservists, their families, and retirees has been the primary cost driver in growing benefits costs. In some cases, such benefits exceeded those offered by private-sector organizations.

  Highlights of GAO-05-798 (PDF)

• As the total and per capita cost to DOD for military pay and benefits grows, questions arise as to whether DOD has the right pay and compensation strategies to cost-effectively sustain its military active duty and reserve forces in the future.

  Highlights of GAO-07-828 (PDF), Highlights of GAO-05-798 (PDF)

• As a result, DOD is in a period of transition and faces an array of challenges and opportunities to enhance performance, ensure accountability, and position itself for the future. Specifically, GAO has noted in testimonies and reports that DOD and other federal agencies must ensure that performance management systems contain appropriate internal safeguards, such as assuring reasonable transparency in connection with the results of the performance management process.

  Highlights of GAO-08-773 (PDF), GAO-06-582R (PDF)

^ Back to topWhat Needs to Be Done

• DOD needs to assess the affordability and sustainability of its military compensation system, as well as the reasonableness and appropriateness of the allocation to cash and benefits, and whether changes in the allocation are needed to more efficiently achieve recruiting and retention goals in the 21st Century.

  Highlights of GAO-05-798 (PDF)

• DOD needs to establish a clear compensation strategy that includes performance measures to evaluate the efficiency of compensation in meeting recruiting and retention goals, and use the performance measures to monitor the effectiveness of compensation and assess what mix of compensation will be most efficient in the future.

  Highlights of GAO-07-828 (PDF)

• DOD also needs to compile the total costs of providing part-time, full-time, and mobilized reservists compensation and communicate these costs, as well as the allocation of these costs, among cash, noncash, and deferred compensation to decision makers within the administration and Congress.

  Highlights of GAO-07-828 (PDF)

^ Back to topKey Reports

Military Personnel

Military Personnel

Human Capital

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