Lockstep compensation or seniority-based compensation is a system of

remuneration Remuneration is the pay or other financial compensation provided in exchange for an employee's ''services performed'' (not to be confused with giving (away), or donating, or the act of providing to). Remuneration is one component of reward managem ...

in which employees' salaries are based purely on their

seniority Seniority is the state of being older or placed in a higher position of status relative to another individual, group, or organization. For example, one employee may be senior to another either by role or rank (such as a CEO vice a manager), or by ...

within the organization. For example, in the

legal profession Legal profession is a profession in which legal professionals study, develop and apply law. Usually, there is a requirement for someone choosing a career in law to first pass a bar examination after obtaining a law degree or some other form of l ...

, where this system is most commonly found, all

law school A law school (also known as a law centre/center, college of law, or faculty of law) is an institution, professional school, or department of a college or university specializing in legal education, usually involved as part of a process for b ...

graduates hired by a

law firm A law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise consumer, clients (individuals or corporations) about their legal rights and Obligation, respon ...

who graduated in the same year receive the same base pay regardless of background, experience, or ability. These associates will also receive automatic annual pay raises, bonuses, and promotions. Alternatively, some law firms implement a lockstep compensation system starting with partners or partner-track associates. During the

Great Recession The Great Recession was a period of market decline in economies around the world that occurred from late 2007 to mid-2009.

, some law firms began replacing the lockstep system with "merit-based" systems. Proponents of the system have argued that lockstep compensation promotes loyalty, discourages intra-office competition, reduces the need for perpetual performance assessment, and provides for more flexible work structures. These benefits, however, are limited to situations where a business can predict with some certainty the future productivity of an employee. At the same time, however, the system has been criticized for being inefficient and reducing incentives for employees to improve performance. Because a lockstep system provides little to no accountability for employee productivity, there can be little assurance that employees will not take advantage by reducing their output or that extremely energetic employees will be under-compensated. Some law firms have modified their lockstep system to allow for performance-based bonus structures. These bonuses can partially cure the incentive-based issues that stem from lockstep compensation. Other law firms have moved toward adopting a purely merit-based compensation system for associates. Purely merit-based models have been criticized as too volatile, with the prominent failed example of Dewey & LeBoeuf failing under a merit-based partnership system. Seniority-based compensation has been described as

discrimination Discrimination is the process of making unfair or prejudicial distinctions between people based on the groups, classes, or other categories to which they belong or are perceived to belong, such as race, gender, age, class, religion, or sex ...

based on seniority, similar to

ageism Ageism, also called agism in American English, is a type of discrimination based on one's age, generally used to refer to age-based discrimination against Old age, elderly people. The term was coined in 1969 by Robert Neil Butler to describe this ...

References

Personnel economics Wages and salaries {{econ-term-stub

See also

References