Seniority and Longevity Pay
1 Describe seniority and longevity pay practices.
Seniority pay and longevity pay systems reward employees with periodic additions to base pay according to employees’ length of service in performing their jobs. These pay plans assume that employees become more valuable to companies with time and that valued employees will leave if they do not have a clear idea that their salaries will progress over time.1 This rationale comes from human capital theory,2 which states that employees’ knowledge and skills generate productive capital known as human capital. Employees can develop such knowledge and skills from formal education and training, including on-the-job experience. Over time, employees presumably refine existing ...
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