Agrupación de puntos de interés por medio del algoritmo de k-means

According to the Efficiency Wage Theory, employers in internal labor markets use “efficiency wage strategies, where employers raise wages above competitive market rates in order to promote productivity or deter shirking” (Doeringer, 1986, p. 48). For the Navy, an officer’s pay is dictated by the military’s tiered basic pay table, in which pay grade (rank) and time-in-service (seniority) are used to calculate basic pay (DACMC, 2006). This compensation is fairly competitive for junior managers, but loses its edge for more senior talent. Due to the lack of lateral-entry and “home grown” senior officers, the Navy must offer competitive wages to attract a talented entry pool that has the potential to perform the entry-level jobs of today and the higher-level jobs of tomorrow (Asch & Warner, 2001, p. 551). If the Navy had perfect information about officers’ productivity, then labor economic theory would deduce that the Navy should pay wages (W) equal to an officer’s marginal product of labor (MPL) (Ehrenberg & Smith, 2006). However, to recruit high-ability officers, the military pay system was designed to set initial wages above their MPL, especially since most officers spend the majority of their first years in training. This situation creates an economic deficit for the organization, resulting from salaries paid at the junior officer ranks. Conversely, senior officers’ wages are well below their MPL, creating an economic surplus in the upper ranks (Asch & Warner, 2001). According to Asch and Warner (2001), the economic surplus at the higher ranks funds the overpayments (deficit) in the lower ranks.

To achieve equilibrium so that ∑W = ∑MP_L across all pay grades, the Navy’s pay scale exhibits a lack of “skewness,” in which pay at lower levels is close to pay at higher levels, when compared to civilian compensation schemes (Asch & Warner, 2001, p. 524). For example, “The typical O-6 [Captain] receives about three times the pay of an O-1 [Ensign] ... By contrast, Baker, Gibbs, and Holmstrom (1994b) report that level 6 managers in the firm they studied earned about five times the amount earned by level 1 managers” (as cited in Asch & Warner, 2001, p. 524).

With such a disparity between the relative pay in civilian firms and the military, an officer’s decision to retain is significantly influenced by the military pay structure and

in-kind benefits (Asch & Warner, 2001). Holding all other factors equal, and based solely on relative pay, an officer with perfect information about the labor market would choose to resign and seek employment in the civilian sector. However, officers consider more than basic pay when making informed retention decisions. Since the basic pay table recognizes seniority in addition to rank, it provides an incentive to remain on active duty longer. Nonetheless, seniority only has a marginal impact, since high-performing and high-ability officers also expect to move up on the pay grade (rank) axis of the pay table.

Under the military pay structure, naval officer pay is significantly influenced by individual performance as it affects promotion status. According to Baker, Gibbs, and Holmstrom (1994a), workers are placed on the “fast track” when assigned jobs in which their productivity is highest, which in turn yields faster promotions (p. 901). For the Navy, officers are considered on the fast track when they outperform their peers, resulting in earlier promotion to the next rank and more challenging job assignments. Baker et al. (1994a) argue that “those promoted quickly once should be promoted quickly again” (p. 901). Likewise, naval officers on the fast track generally stay on the fast track since the Navy continues to recognize high performance and successful completion of challenging job assignments during the promotion process.

However, the speed of promotion on the fast track is limited by Navy policy, which regulates the required time-in-grade before promotion to the next rank.1

Furthermore, since the years-of-service component of the pay table recognizes seniority, the reward for early promotion for officers on the fast track has a reduced effect (Rosen, 1992, p. 235). As Rosen (1992) states:

If a person works hard to get on the fast track, the gain is temporary and small because others are soon promoted anyway and receive the same pay. The person on the faster track gains only a temporary advantage often not worth the extra effort (p. 235).

Additionally, the presence of a fast track creates increased competition among officers. This competition can be healthy if kept under control, but can become a burden if there is proven discrimination against officers not on the “fast track.”

Due to the lack of skewness in the military pay table, basic pay alone is insufficient to attract and retain talent in the surface warfare community. At this point, the military retirement pension plan becomes an influencing factor. After 20 years of service, a Sailor is vested in the pension plan that provides an immediate, inflation- protected annuity (Asch & Warner, 2001).2 _{According to Rosen (1992), the retirement}

pension may be the prevailing force for retention after completing a second “tour,” or obligation period—possibly around nine to eleven years of commissioned service for the SWO community (p. 232). Officers with higher probabilities of retention place larger weights on long-term rather than short-term compensation (Asch & Warner, 2001). They value the long-term benefits of receiving a regular retirement paycheck each month throughout their retirement years, compared to a potentially higher immediate salary in the civilian sector. Arguably, officers who place more emphasis on long-term payoffs will be more loyal, in terms of retention, to the Navy. They are willing to forgo the immediate rewards of higher-paying civilian jobs for the opportunity to eventually recapture their economic rents (from the lower military pay collected while on active duty) in retirement.