The lockstep model of compensation is a seniority-based system of remuneration where employees are paid according to their rank. No other factors, such as merit, performance background or university, affect remuneration.
The lockstep model has been traditionally favoured by law firms and has remained popular for so long due to its ease of administration and because the organisation does not need to dedicate time and resources in working out yearly remuneration packages for all employees. Proponents also say that it fosters feelings of unity and collaboration in law firms because there is no remuneration disparity to undermine these feelings.
However, the lockstep model is falling out of favour due to increased competition and the difficulties in attracting top talent with such a rigid compensation structure. Top performers can be more easily poached if their salaries are not perceived as commensurate with their performance.
Law firms are increasingly adopting either a hybrid model that combines lockstep with merit-based remuneration – such as introducing performance-based bonuses – or a pure merit-based system.
Disadvantages of lockstep systems include a lack of incentive as employees do not need to meet targets or remain as productive as colleagues in order to be paid well. The established structure of bonuses and annual increases also means that employees do not need to analyse their own activities to improve performance.
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Shared by - Maneesh MS, Sr. Executive HR, Appollo Tyres Ltd.
