Improving the Signal for U.S. Navy Officer Productivity

The U.S. Navy's answer for many future manpower and financial policy questions rests on the ability of the individual performance appraisal system to optimally signal officer productivity. This paper utilizes the economics literature on individual performance appraisals and promotion systems as the lens through which to conduct a comparative analysis between the Navy and Marine performance appraisal systems. Rating accuracy, differentiation of talent, and performance comparison methods comprise the bulk of the analysis. The results show a Marine system that exceeds the Navy s in signal officer productivity. The Navy's system provides limited assurance for rating accuracy and the differentiation of talent. Once insight is gained through analysis, a metric is developed to further improve the measurement of individual productivity. This paper recommends the Navy improve rating accuracy through leadership messaging, policy change, and rater training. Second, relative comparison methods should be required to force differentiation of talent and align with the Navy's tournament theory incentive structure. Third, to reduce costs and improve human capital management an individual productivity metric should be developed that is based on the output of the performance appraisal.