Lockstep 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). A number of complementary benefits in additio ...
in which employees'
salaries
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis.
F ...
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 obtain a law degree or some other form of legal education.
It is difficult ...
, where this system is most commonly found, all
law school
A law school (also known as a law centre or college of law) is an institution specializing in legal education, usually involved as part of a process for becoming a lawyer within a given jurisdiction.
Law degrees Argentina
In Argentina, ...
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 clients (individuals or corporations) about their legal rights and responsibilities, and to r ...
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
late-2000s financial crisis, 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.
See also
*
Cravath System
References
Personnel economics
Wages and salaries
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