Evaluating an Air Force Pilot Retention Bonus

Abstract : The Air Force Human Resources Laboratory initiated research into the application of human resource accounting (HRA) methodologies to value an individual's experiences in the Air Force. This paper details the development and application of three HRA models, previously developed and applied to selected enlisted jobs and to Air Force pilots to help determine the economic viability of a pilot retention bonus. The full investment cost (FIC) model determined value by estimating investment cost (such as training or separation costs) while the stochastic rewards valuation (SRV) model used future returns to the Air Force of an individual choosing to remain in service. The expected net present value (ENPV) model combined the two approaches of FIC and SRV. This paper provides an in-depth description of each model, concluding that all three, although each offers different insights, show a bonus to be an economically sound policy initiative. Keywords: Human resource accounting; Retention bonus; Pilot bonus; Value of experience.