Pay to Stay: The Impact of the Navy Retention Incentive Payment in the Royal Australian Navy

Abstract

The Australian Defence Force is currently facing serious workforce issues, necessitating deliberate action to address its retention problems. The Navy Retention Incentive Payment (NRIP), an AUD$20,000 payment for completion of seven, eight, and twelve years of effective service, is one retention policy currently being implemented. This study investigates the impact of the NRIP on retention in the RAN. Using linear probability models and cox proportional hazards models to analyze data of permanent RAN personnel, this study reveals a NRIP that is positively correlated with decreased likelihoods of separation and increased periods of service. The NRIP appears to be most effective at seven years of service however its effectiveness appears to be diminishing over time. A further focus on the NRIP’s effect size when controlling for individual-level characteristics such as age, rank, gender and workgroup reveal mixed results, making any claims regarding the bonus’s uneven effects across these cohorts inconclusive. A defendable claim can be made that the NRIP is correlated with a net positive effect on retention based on the findings of this study, however further work is needed prior to making any causal claims. The RAN should look to continue its use of both financial and non-financial incentives to retain its personnel. The RAN should also seek to implement a more rigorous and objective framework to support the continued analysis of its manpower policy decisions.