Investing in Human Capital for the #FutureOfWar

The Price of Adaptation and Victory

The trajectory of military adaptation and progress frequently diverges along a nonessential, redundant, or contradictory path that impedes the adaptation imperative to achieve a modern, nimble, forward-looking force. Missteps include relying on procurement and acquisition for a technological panacea, entrusting members of the civilian bureaucracy with force structure decisions, succumbing to complacency by believing in the supremacy of American military doctrine and battlefield prowess, or assigning unqualified personnel to influential billets who will are responsible for service-wide decisions based on experiences they do not have. These pitfalls continually threaten to handicap efforts to remain the most advanced force in the world, yet progress and adaptation persist throughout the services, where insightful thinkers seek problems to solve, brainstorm revolutions in military tactics and technology, and quietly carry the banner of Earl “Pete” Ellis, Billy Mitchell, and others into the future of warfare. This movement is powered by human capital, not the adoption of new technology or faddish systems, and demonstrates that the kernel of military adaptability in the 21st century and beyond is people, not hardware or software.

If the capacity to innovate and think beyond the realm of tradition is lost, then we will lose the capacity to adapt and win in the future.

History is replete with examples of technologies that failed to adapt to contemporary challenges of war, or to survive the tactical innovations of adaptive battlefield leaders: the open-order revolution, blitz tactics, the amphibious assault, insurgent tactics, and hybrid warfare each, in a moment, rendered obsolete advanced armaments that were years in development.[1] Moreover, none of successes were anticipated in doctrine or trained in the schoolhouse, but instead were imagined by ambitious, intelligent, creative leaders, who often drew from non-military experience to shape their innovations. It is here, beyond the extent to which the military can develop or buy new technologies, or inculcate its personnel with doctrine, where the American military’s competitive advantage can be found. If the capacity to innovate and think beyond the realm of tradition is lost, then we will lose the capacity to adapt and win in the future. In a lecture last July at Stanford University, visiting fellow James Mattis admonished: “You can overcome wrong technology. Your people have the initiative, they see the problem, no big deal . . . you can’t overcome bad culture. You’ve gotta change whoever is in charge.”[2] The American military, unfortunately, has not embraced this precept, and continues to chase technology so fervently that it has become ingrained in our culture to value it over our human resources. Thus, if we are to secure the human element with which we win wars, we must consider seriously the second of Mattis’ axioms: before we can adapt to the future of war, we must change our culture to value and promote the contributions of the individual.

Inasmuch as our military depends upon innovation and adaptation to succeed, our leadership, military and political, continues to trade salary and benefit cuts, or reductions in force structure, to pay for expensive procurement and acquisition projects. Although the Marine Corps and Army may be able to churn out basic riflemen in a few months, the time required to train skilled pilots, navigators, analysts, and operational planners is measured in years; the time to develop capable organizational managers even longer. These middle- and upper-level managers are essential to the organization, and whereas private enterprise has adapted to reward its leaders appropriately and retain them, there is little accommodation within the military’s personnel management system and compensation scheme to do so. Thus, with hardly a second thought, too many of our best-trained and most-skilled managers leave the military for a second career that is more challenging and rewarding, and as a result the Department of Defense loses its most critical and valuable asset at the moment of its peak potential return on investment. An organization keen to adapt to future warfare more quickly and creatively than its near-peer competitors should be fighting to retain its most experienced, intelligent, and ambitious leaders at the expense of a new armored truck — not the obverse.

To staunch the outflow of talent, the military must pay market-competitive wages to its employees, thereby decreasing the allure of civilian employment and the opportunity cost of continued service in the military. Yet, as Foreign Policy’s Kate Brannan summarized in the January 2015 edition, the trend is in the opposite direction: there has been no significant change to the military’s TRICARE premiums since 1994, the annual cost-of-living adjustments for retirees was cut in 2013, and this year’s budget includes reductions in annual cost-of-living adjustments to base pay.[3] Furthermore, the military egregiously refuses to provide matching contributions to members’ Independent Retirement Accounts through the Thrift Savings Program, only recently considering it as a viable option in future budgets because it offers a cheaper alternative to pensions, rather than offered as part of a competitive pay package to augment pensions.[4] In contrast, private sector leaders have, upon identifying the preeminent role of human capital in competing and succeeding, reinvented employee compensation and benefit packages to pay their employees according to the value they provide to the organization. Firms pay their employees according to novel factors such as specific experience, education, and performance; they provide incentives to continued self-development and additional education; and they share responsibility for future costs by contributing to retirement accounts. As a result, private business continues to regularly attract, reward, and retain the best employees; in contrast, the Department of Defense — which employs more people than Wal-Mart, the nation’s largest private employer — has failed to keep apace, and continues to hemorrhage, rather than retain, talent.[5]

The military’s flat, grade-specific pay structure creates paradoxes on multiple levels, from inequalities between performance and pay to the institutionalization of perverse incentives that reward mediocrity and discourage exceptionalism. An example is easily found at most battalions and squadrons throughout the services: a meritoriously-promoted E-7 preparing to reenlist a third time, with a college degree and a service record filled with commendations, is compensated the same as is an E-6 who has reached sanctuary at 18 years despite being passed over for promotion twice, failing to pursue additional education or development, and earning but a single deployment ribbon. The underpaid E-7 adds value to his unit and the organization daily, and has the necessary qualities to innovate and win on the battlefield; the strap-hanging E-6 is dead-weight, in garrison and overseas. Unfortunately, both are, in terms of the price the military is willing to pay for their efforts, of equivalent value to the organization, a case of economic inefficiency and wage inequality. Furthermore, each is aware of the discrepancy between his productivity and wage (and likely that of the other’s), so the E-6 glibly carries on as he always has, secure in the knowledge he can soon retire with a pension, while the E-7 feels undervalued and begins considering leaving the service for better pay and treatment in the private sector.

…if the American military wants to retain the human capital it needs to innovate and succeed, it must revise the existing personnel management and compensation schema…

Whereas examples of inequality between ability and pay are tangible and quantifiable, the second-order effects of the military’s antiquated compensation regime and its inherent failings are theoretical and less easily measured. The existing paradigm views each service member as interchangeable with his or her peers within grade, with the explicit assumption that no individual possesses distinguishable skills or experience. Time-in-service and time-in-grade pay scales assume that each individual within a peer group has the same marginal productivity, and that an individual only becomes more valuable to the organization once promoted. This pay architecture has institutionalized a structural disincentive to perform at a higher level than the average member of a particular rank and peer-group, which curtails initiative and achievement, and reduces marginal productivity. Simultaneously, this compensation regime encourages others to work less diligently than they may otherwise do, because there is no cost to underperformance. In adapting to future warfare, if the American military wants to retain the human capital it needs to innovate and succeed, it must revise the existing personnel management and compensation schema so that its employees are equitably compensated, and the disincentives within the system are corrected.

While it is absolutely essential to continue investing in research and development, an area in which the American military continues to dominate even its nearest peer-competitors, America will only retain this relative advantage over its adversaries if it is prepared to pay for the best leaders and managers it has trained. To do so, there must be a paradigm shift on two levels: first, that service members are the most valuable and critically important weapon in our nation’s arsenal; second, that it is desirable to compensate members individually. While the military already pays extra for special skills, these bonuses and incentives offered to individuals who are skilled in handling explosives, shooting pistols, flying jets, or speaking a foreign language do not retain organizational managers and leaders, only the trigger-pullers. In contrast, individuals with MBAs, advanced degrees, and civilian job experience relevant to their field or organizational management generally are not rewarded for their unique skills. They, too, deserve a higher paycheck than their peers, but their paychecks remain unchanged because these skills are not considered critical in the current American military culture.

Transitioning from the military’s current archaic compensation regime to a more complex, competitive system does not require innovation, merely the adaptation of systems within existing Department of Defense protocols, such as Foreign Language Proficiency Pay. The next generation of compensation packages would include salary augments for: individuals with corporate management experience, advanced degrees, sustained performance in the top 20% of a peer group, operational deployment experience, and even relevant civilian job experience. In so doing, the military will signal its employees that it values its human resources, recognizes unique skills and contributions to the organization, and is committed to rewarding exceptional performance. These signals will contribute to greater loyalty to the organization, and a clearer sense of equity within the workplace, each of which contributes to improved retention efforts, higher productivity, and thus a greater capacity for innovation and adaptation. Similarly, salary reductions would be taken from marginal performers in other cases, creating tiered disincentives to under-performance. Together, a new compensation-based incentives paradigm will contribute to a change in military culture in which the contribution of the individual is encouraged, the adaptability of the organization strengthened, and overall quality of personnel is sustained, if not improved.

Additionally, correcting the perverse incentives of the existing compensation paradigm to one that encourages adaptation, initiative, and innovation, will create a culture in which the human element is truly recognized as the most lethal and essential weapon in America’s arsenal.

America’s current military leadership should take a cue from private firms that have been listening to former military leaders like James Mattis for years — and finding considerable success as a result. We may reasonably expect that by incorporating the competitive practices employed by private firms for decades, the American military could achieve similar results (or perhaps more exceptional results considering its monopoly on public defense). In so doing, the military will begin to transition toward a more malleable, adaptable, and mobile organization, akin to the giants of private industry like Apple and Microsoft, and away from the plodding, predictable bureaucracy it is. Additionally, correcting the perverse incentives of the existing compensation paradigm to one that encourages adaptation, initiative, and innovation, will create a culture in which the human element is truly recognized as the most lethal and essential weapon in America’s arsenal.

Without this first step towards transition, no degree of adaptation and innovation in training, education, promotion, or force restructuring will succeed, because the benefits of those investments will be lost when the individuals in whom we invest leave. It will further evolve military culture to focus organizational priorities on the value of the individual in the same way that mission command, the doctrinal foundation of our operational flexibility, emphasizes operational flexibility via decentralization.

Ted Ehlert is an armor officer in the U.S. Marine Corps, and is currently learning Japanese at the Defense Language Institute-Monterey as a Foreign Area Officer-in-training. The opinions expressed are his alone and do not reflect those of the U.S. Marine Corps, the Department of Defense, or the U.S. Government.

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[1] English, John A. and Gudmundsson, B. I. On Infantry: Revised Edition. Praeger Publishers (Westport, CT: 1994): 1.

[2] “4 Lessons Every Business Leader Can Learn From Legendary Marine General James ‘Mad Dog’ Mattis,” by Paul Szoldra, in Business Insider, 18 July 2014. Accessed 3 March 2015,

[3] “Report: Panel Recommends Overhauling Military Retirement Benefits,” by Kate Brannan, Foreign Policy, 30 January, 2015. Accessed 3 March 2015,

[4] The Final Report of the Military Compensation and Retirement Modernization Commission, 29 January 2015. Accessed 8 March 2015,

[5] “The 10 Largest Employers in America,” by Alexander E. M. Hess, USA Today, 13 August, 2013. Accessed 11 March 2015,