Seniority & Longevity Pay by Dr. G C Mohanta

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Seniority & Longevity Pay

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Seniority & Longevity Pay by Dr. G C Mohanta

  1. 1. Seniority & Longevity Pay Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt) Professor Al-Qurmoshi Institute of Business Management Hyderabad
  2. 2. Seniority & Longevity Pay  Salary or wages based on seniority or length of service with an organization  The greater the length of service, the greater the longevity pay  It may also be used as a bonus for remaining on a job beyond a certain period  These systems reward employees with periodic additions to base pay according to employees’ length of service in performing their jobs 2
  3. 3. Design of Seniority Pay and Longevity Pay Plans Seniority Pay Longevity Pay  To reward job tenure or employees’ time as members of a company explicitly through permanent increases to base pay  To reward employees who have reached pay grade maximum and who are not likely to move into higher grades 3
  4. 4. Advantages of Seniority Pay To Employees To Employers  Perceive they are treated fairly because they earn pay increases according to seniority, which is an objective standard  It facilitates the administration of pay programs  Employers are less likely to offend employees by showing favouritism to others 4
  5. 5. Fitting Seniority Pay with Competitive Strategy  Seniority pay does not fit well with the imperatives of competitive strategies because employees can count on receiving same pay raises for average and exemplary performance 5

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