Question

Traditionally, union contracts have called for pay and promotion systems that reward employees with higher pay and advancement as they achieve greater seniority; that is, more years on the job. In a company with a unionized work-force, employees with comparable amounts of experience would have comparable earnings. Employees with greater seniority would be promoted if they met the minimum requirements of the job opportunity Some people question whether tying pay and advancement to seniority is effective or even fair. For example, top-performing, recently hired employees with educational qualifications that exceed the requirements of a desired job may become frustrated when they are not even selected for an interview because many employees with greater seniority applied. However, many union leaders view the seniority clause as the means to ensure fairness in how employees are rewarded in an organization. This dilemma connects to balancing the needs of both older and younger workers to remain relevant. Younger workers tend to "have shorter tenure in organizations than older workers and are therefore less likely to benefit from seniority clauses" in a survey of Canadian organizations, consulting firm Watson Wyatt found that one of the top five reasons that employees quit their jobs is dissatisfaction with promotional opportunities. In addition to promotional decisions, seniority clauses also affect other aspects of employees' experience at work including who receives a pay increase, who is eligible for a transfer, and when vacations can be taken. For example, participants in a recent roundtable discussion said that" youger workers do not want to wait until they are more established in their careers to have occasional weekends off or be able to take time off in the summer".

A) Why do you think unions have traditionally favoured a system of linking pay and advancement to seniority? Who benefits?

B) Why do you think management might favour a system of linking pay and advancement to performance? Who benefits?

Answer 1

A) Linking pay and advancement to seniority leads to a work culture of mediocrity and non-performance. Typically employees who favor seniority based career advancement are the ones who tend to work less and depend just on tenure. Hardworking and performance oriented workers get frustrated and leave the organisation. Ultimately, only the average people remain and they advance in the hierarchy through seniority.

Unions might have favored seniority based advancememt system in order to avoid random decisions of management to handpick favored people and promote them over others. The seniority based system was aimed at protecting the interests of the common workers. However, only the low and average performers benefit from such a system.

B) Performance based system will lead to a culture of meritrocracy in an organisation. People will work harder and try to give their best in order to get faster advancement. In the process, the whole output of the organisation will also increase, hence management might favor such a system. In this system, management will benefit and also the hardworking workers who give above average performance.