The Eighth Quadrennial Review of Military Compensation's (QRMC's) presidential charter called for designing a military compensation system suitable for the needs of the Department of Defense in the twenty-first century. The QRMC reviewed military human resource management (HRM) theory and practice and concluded that no one HRM system would meet the varying needs of the diverse elements within DoD, and it recommended a contingency approach based on a process of matching HRM systems to strategic organizational objectives. In support of the Eighth QRMC's overall objectives, RAND undertook a body of research to examine the potential benefits of greater (or, in some cases, lesser) differentiation. This report provides the results of that research. It describes and assesses the current military HRM system, identifies and evaluates alternatives to that system, recommends approaches for testing or implementing the most-promising alternatives (reduce weight of human capital development in promotions, reduce weight of occupational differences in promotions, increase special pay/bonuses, relax lateral-entry rules), and presents conclusions.