Advantages and disadvantages of seniority

Advantagesand disadvantages of seniority

Senioritycan be described as a system used to determine the relative status ofa particular employee in relation to others in the same organizationto determine layoff, promotions, benefits, and recall orders.Seniority systems utilize the length of time one has worked in anorganization to determine the above mentioned decisions (Bolton &ampJeanne, 2009). Seniority systems in labor union agreements help torestrict the discretion of the management and any possible arbitrarydecisions affecting employees. These systems have been widely used inmass production industries where employees are paid based on theactual job performed. The seniority system is viewed by unions as afair and equitable option for the competition and aggressive behaviorby workers who compete to get certain jobs and promotions. For thisreason, seniority can be termed as beneficial, since ultimately itprovides the maximum award and security to employees who have workedfor the longest time in a particular company. This paper will analyzeseniority critical issues, some of the advantages and disadvantagesof seniority and reason for using seniority systems in layoff andrecall actions.

Seniorityconsiderations are critical issues that lead to guaranteed employmentas management determine which workers are laid off and those who willkeep the job. Seniority issues include eligibility, especially afterprobation period. Most employees are placed on seniority lists aftercompletion of the agreed probation period. However, in some cases,the probation period may be extended, but there should be mutualconsent between the union and the employer. Another issue ofseniority is the fact that the system is only limited by a collectiveagreement and does not have an independent legal status (Buchinsky,Fougèreoshe, Kramarz &amp Tchernis, 2010).

Payand benefits

Theprinciple of seniority has its many advantages that include pay andbenefit. Pay and benefits are advantageous to employees sinceseniority is a more formalized structure, which enhances consistencyin how things are done in the company. For instance, to unionemployees it can determine their salary, benefits as well as jobduties and responsibilities of workers (Conrad, 2010). The pay scalefor unionized workers may be subjects to scales based on seniority.For example, a new employee in an organization may be remunerated acertain base pay rate, while another employee with three years ofseniority receiving the basic pay and an additional amount calculatedbased on the years of service. Other benefits such as vacation may beaffected by seniority where a senior worker may be given four weeksof paid vacation while a new employee may be given a two-weekvacation (David, 2005).

Promotions

Seniorityhas another benefit in promotion of employees and helps guaranteepromotion of all members on a neutral basis: where one needs to waitfor their turn to rise to the highest position. Through seniorityprinciple, a union worker can be able to receive a promotion and takeon the new role in an organization. A union may call for the mostsenior workers to be given promotion to desirable positions ahead ofworkers with less seniority, job performance notwithstanding.Clearly, with seniority systems in place, employees on the other handobviously understand how they can be promoted. It is for this reasonthat labor unions consider seniority guard employees from favoritismin their personnel decision (David, 2005).

Jobsecurity

Formost employees, seniority means job security. Therefore, job securityis another benefit of seniority, especially to unionized workers inthat it may be used to determine which employees continue beingemployed and which one to retain their union membership in case oflayoffs. For example, union rules may force an organization thatrequires laying off its workers to start with new employees beforethose with more seniority. For this reason, one can conclude that ina usual labor contract the risk of certain employees losing their jobis usually based on seniority (Dustmann and Meghir, 2005).

Employee’sloyalty

Senioritysystems help to develop an environment of loyalty in an organizationwhere both newly hired employees and veterans become more loyal sincethey know they belong to a company that values its employee’s timeand effort. Utilization of the seniority system in an organizationwill ensure that all works have an opportunity to grow in term oftheir roles and also to gain the relevant experience. This is becausewhen the time for promotion reaches, the employee is already familiarwith company’s ethics and policies and the dynamic of theenvironment as well as expectations of assigned role (Dustmann andMeghir, 2005).

Retainingexperience

Senioritysystems can be used to retain the experience in an organization. Thisis because the most experienced workers have vast knowledge andpossess the required skills compared to the newly hired employees.However, young employees may bring new skills, ideas and innovationin the company, and this will help to remain competitive thusmanagers should strike a balance between experience and new skills.

Rewardingperformance

Onedisadvantage of promoting employees using seniority systems is thatit is not a guarantee of quality. This is because the system helps topromote the long serving employee, regardless of their talent,loyalty or diligence. Certainly, employees may have been part of theorganization for the longest period of time, but do not mean thatthey have qualified for the position. As a result, this may lead tofrustrations of the junior employees. Application of seniority rulesstrictly may be disadvantageous as it may rule out any managementconsideration of other relevant factors such as performanceevaluations (Dustmann and Meghir, 2005).

Slowcareer growth

Senioritysystems have a potential drawback where people are rewarded based ondate of hire thus, discouraging professional growth. This is becausemotivated, and the most talented employees may lose morale and thismay be a hindrance to innovation and creativity. On the contrary, theemployees that who have served an organization for the longest periodmay resist change (Dustmann and Meghir, 2005).

Weakenauthority of the of the management

Useof seniority may make the authority of the management weak where thesystem criterion threatens the merit principle that is overshadowedby biased performance appraisal, favoritism. The seniority system maymake recruitment managers lose focus when finding a suitable personfit for a position. Undeniable talent should not be sacrificed forthe sake of seniority. The main reason unions strictly adhere to theprinciples of seniority is because of verified challenges related tothe unchecked administration discretion (Lee, 2004).

Potentialthreat to equality

Senioritysystems use the principle of “last-hired, first-fired” and thushave an adverse effect on women and minorities owing to their pastexclusion from the lists of seniority. The principle of seniorityseriously clashes with the rights of women and minority groups toworkplace equality (Gibbons and Katz, 1991).

Howseniority is determined

Seniorityplays a huge role in retaining the most experienced employees. Inmost organizations, employees with the least seniority will be firstto be laid off. However, if an employer attempt to retain a workerout of seniority order because of special skill, then they canconsult with labor relations. To calculate seniority points, eachemployee is assigned a point for every month they work on a full-timebasis, and partial points to a less-than-full-time basis. The totalof hours worked by the employees while on pay status and without abreak is added up.

Whyseniority is used in layoffs

Mostmanagers view layoffs decisions as difficult to make. Therefore,using an objective system to lay off workers can help save thesituation and provide a sense of fairness to employees. Seniorityrules are widely used in layoffs because they allow the organizationto keep the most experienced employees. As a result, the productivityof the organization is well maintained and also helps to alleviatedecreases in performance associated with a smaller workforce.Additionally, experienced employees require less supervision, andthis allow the top management to focus on other aspects such as, howto increase the company’s revenue.

Secondly,laying off workers based on the seniority system demonstrates to themhow the organization rewards employee who gives their service for thelongest period. As a result, this can boost the morale of the staffand make them feel valued. This in turn results into increasedproductivity, which is significant for the organization that is in amode of downsizing. Thirdly, using a seniority principle to lay offemployees helps to reduce conflicts possibilities, especially whereemployees may feel that the process is unfair since seniority rulesare procedural, objective and quantifiable. For instance, applicationof the seniority rule in public employment to determine shiftassignment, vacation, days off and vacation time is accepted widely,thus presenting little threat to the principle of merit. Senioritymay be used as an indicator of merit that is superior (Monks &ampRobinson, 2001).

Onthe other hand, layoffs based on seniority may be risky and makeworse poor productivity. This may happen if the organization layoffstrategy decline to consider individual performance. In a case wherenew employees do better than experience workers in terms ofproductivity, veteran knows that they don’t need to work hard toretain their job. Thus, getting rid of more productive employees maydamage the overall productivity level and may discourage newapplicants from searching for employment in the organization. Anotherdrawback is that if the an organization is laying off workers becauseof the budget crisis based on the principles of seniority, then thisstrategy may not assist in reducing costs by an amount that issignificant. This is for the main reason that experienced employeeare mostly paid higher wages compared to newer workers (Shepard,1984).

Insummary, since the use of the seniority principle has both advantagesand disadvantages, then it is crucial for every organization tostrike a balance in making promotional decisions. Due to increasedcompetition, managers should strategize on how to increase thequality, productivity and reduce costs, and the management shouldfind ways to increase performance and reward hardworking workers.Usually, employees with seniority are necessarily not the highproducer. As mentioned in this paper use of seniority may breedconflict and resentment in the workplace. Therefore, to preventworkplace seniority warfare it is wise for the management of anyorganization to adopt ways and find a balance between honoring themost productive employees and those who have dedicated to the companyfor an extended time (Theodossiou, 1996). Additionally, it isrecommended that seniority should not be rewarded for the sake of it.Rather, employees with seniority should add value, perform and alsomake a contribution to the growth and prosperity of the organization.In their article, Monks &amp Robinson (2001) states that seniorityshould be tied to performance (Monks &amp Robinson, 2001).

Conclusion

Inconclusion, seniority entails granting preferences to certainemployee’s actions in accordance with their length of service inthe firm. Use of seniority criteria in the private sectors does notreduce efficiency as well as the effective of the staff. On the otherhand, the public sector seniority criterion may be included in thecollective bargaining contract or regularly implemented through civilservice rules. Seniority gives various special benefits to membersemployees such as promotion and to determine decisions such as alayoff and recall actions. Simply seniority systems encouragelongevity and employee loyalty in addition to neutralizing favoritismissues. Obviously, seniority systems create expectations in employeesabout their future. Most companies feel that the seniority principleis significant and protect them from discrimination grievances.However, as mentioned in this paper, using an objective system to layoff workers can help create a sense of fairness to all employees.

References

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Buchinsky,M., Fougèreoshe, D., Kramarz, F., &amp Tchernis, R. (2010)Interfirm Mobility, Wages and the Returns to Seniority and Experiencein the United States. TheReview of Economic Studies.77 (3):972-1001.

Conrad,H. (2010). From Seniority to Performance Principle: The Evolution ofPay Practices in Japanese Firms since the 1990s. SocialScience Japan Journal.13(1): 115-135.

DavidS. (2005). Estimating Seniority Effects in Faculty Salary Studies:Measurement and Model Specification. PublicPersonnel Management.34,(4).

Dustmann,C. and C. Meghir (2005). “Wages, Experience and Seniority,”Reviewof Economic Studies,72, 77—108.

Gibbons,R. and L. Katz (1991): “Layoffs and Lemons.” Journalof Labor Economics, 9,351-380.

Lee,S. (2004). Seniority as an employment norm: the case of layoffs andpromotion in the US employment relationship. Socioecon Rev. 2 (1):65-86.

Monks,J., &amp Robinson, M. (2001). The returns to seniority in academiclabor markets. Journal of Labor Research, 22 (2): 415-426.

Shepard,C. (1984). &quotAffirmative Action in Times of Recession: TheDilemma of Seniority-based Layoffs&quot. Universityof Toronto Faculty Law Review, 42(1).

Theodossiou,I. (1996). Promotions, Job seniority, and Product demand effects onearnings. Oxf.Econ. Pap.48(3): 456-472.

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