Don Blohowiak has a new post on his “Leadership. Now.” blog titled “Endurance Reward” where he discusses the ‘old-timer, high salary’ issue within organizations. The main question of the article is:
If you exclude assessments of merit and value from determining the worth of longevity, why pay a premium for tenure?
I used to see this issue quite often within organizations, but haven’t run across a lot of the old-timers who are getting paid high salaries mainly because of their tenure….most of the highly paid, long-tenured employees have been sent into early retirement (or fired or let go in a lay off) in cost cutting measures.
I wonder, though, how organizations did (and still do?) justify paying someone a much higher salary just because they have more ‘time in the saddle’ than other similar employees. Anyone know the reasons behind this?
Technorati Tags: Human Resources, Compensation, Management
{ 2 comments… read them below or add one }
Erik 12.14.06 at 2:49 pm
Hi Eric. I was formerly the managing partner of a law firm. We had a strong entrepreneurial bent and did not pay people much higher salaries only for time in the saddle. In several cases, folks with higher longevity also were able to create more value (and thus warrant higher salaries), but that is kind of ducking your question.
If I were to hazard a guess though, I would think that one could make a compelling argument that longevity pay of some sort is offset by reducing the hidden cost of turnover.
Eric Brown 12.14.06 at 4:30 pm
Erik - You have a good point. The cost of hiring and training a new employee may well be more than the incremental costs of keeping long-time employees…as long as those employees where doing their job and providing value to the company.