A Performance Analysis of the Officer Lateral Transfer and Redesignation Process

This thesis analyzes the role of the Navy’s Lateral Transfer and Redesignation (LT&R) process in supporting officer flows across communities. Both surpluses and shortages of officers significantly impact the productivity and readiness of the Navy. Currently several methods exist to redistribute excess officer inventories in some communities to fill officer shortages in other communities. Current policies often adversely affect retention and may prevent the internal officer labor market from efficiently redistributing officers. The LT&R process is the primary process used by several Officer Community Managers to access officers at the junior and mid-grade levels. However, the Navy restricts the ability of officers to redesignate or transfer. Significant officer supply comes predominately from grades 0-2 and 0-3 in the Surface Warfare community. The demand comes from officer shortages, mostly in the Restricted Line and Staff Communities. The data analyzed for this research represent officer cohorts 1987 through 2003. The data shows sufficient officer inventories exist to meet requirements, but more flexible LT&R policies are required to ensure the inventory (supply) is efficiently distributed amongst communities with shortages. It also shows that officers who transfer after O-3 tend to stay to 0-4, whereas officers who transfer before O-3 tend to leave the service. The LT&R process should be seen as a force-shaping tool to redistribute qualified officers at the junior and mid-grade levels. It improves retention by allowing officers to transfer across communities. It also improves Navy force efficiencies by increasing return on training investments (ROI) by retaining proven performers. Additionally, officers who are allowed to transfer tend to have greater job satisfaction, which tends to improve retention.