Seniority & Longevity Pay

1. Seniority & Longevity Pay
Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt)
Professor
Al-Qurmoshi Institute of Business Management
Hyderabad

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. 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. 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. 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