The US military’s personnel shortage is now so severe that a few academics, lawmakers, and military commanders are suggesting it may be time to revive the draft. This would not only fill out the crews of aircraft carriers, they say, but also re-instill a sense of national public service.

Unfortunately, the staffing challenge facing the military cannot be addressed simply by rotating millions of entry-level recruits through a year or two of national service. Like most large organizations, the military faces a war for talent—that is, a battle to recruit and retain officers and enlisted personnel who have the intellectual flexibility, technical abilities, and communications skills needed today. If it does not fundamentally rethink the way it attracts, develops, and retains people, it will lose this war.

As with many businesses, the problem is retaining talented midlevel people—something the draft would not address. But the military’s challenge is tougher than that of most companies. Why? First, military leaders uniquely lack the latitude to hire, promote, or fire their "employees." The development of talent is centralized and gets short shrift, since officers and enlisted personnel alike rotate every few years.

Second, the "fundamental value proposition"—what employees get for what they give—is badly out of whack. Pay, housing, medical benefits, and access to tax-deferred savings plans must be improved. But that is just the tip of the iceberg.

The military’s sweeping downsizing from 1989 to 1996 was more traumatic than any corporate experience because senior-level military skills are not transferable. An important part of the appeal of the armed forces used to be the tacit understanding that they would look after their own. But that has now been utterly corroded, severely damaging morale. Meanwhile, compounding the problem, junior officers are attractive to private companies.

There is also the fact that the military is handcuffed in hiring. When companies lose talent, it is not a serious crisis: they can hire people at any level. The military cannot. All of its senior people must be developed from boot camp up. Thus the military must be world-class at "people development." It is not.

Take the army. Its officer personnel management system emphasizes the preparation of battle commanders through set assignments, although just a small fraction of the officer corps will actually proceed to such commands. It enshrines a belief in the ability of "generalist" commanders to hold any position, as if a successful division commander were also qualified to manage logistics or politico-military affairs. And its most fundamental principles—"up or out," by which people are either promoted or forced to leave, and mandatory early retirement—are designed to maintain an army exclusively of the young and vigorous, an idea that made sense in World War II but is increasingly irrelevant today.

At present, there is only one path to the top, which means too many officers competing for too few command opportunities. Quickly, a vicious circle that discourages cooperation and initiative develops. Reports suggest that the officer corps of other services are in a similar shape or worse. What is to be done?

First, all of the services must proceed in the direction in which the army is at last moving: toward a broader definition of professionalism and success, with multiple career tracks. Second, policymakers should modify the up-or-out and early-retirement policies by adopting a carefully monitored up-and-stay approach—that is, allowing people to stay at their natural level if they are not deemed promotion material. The current system’s benefits (regular new blood and advancement for the winners) are entirely outweighed by the expense of discharging highly trained officers and the damage that forced attrition does to commitment. Third, the military should pay for performance: merit-based pay everywhere would do much to keep the best on board.

These are long-term changes that will be hard to implement. But what is the alternative? The draft will not help. The US military must move now. To lose the war for talent is to accept a second-rate military in which the most capable men and women in the United States do not choose to serve.