Lockstep compensation is a system of remuneration in which the employees' salaries are based purely on their seniority within the organization. For example, in the legal profession, where this system is most commonly found, all law school graduates hired by a law firm who graduated in the same year receive the same base pay, regardless of the background, experience, or ability of each. During the late-2000s financial crisis, some law firms began replacing the lockstep system with "merit-based" systems.[1]
The lockstep system of compensation has the benefit of being easy to administer, reducing internal competition within firms, and maintaining a single company philosophy. At the same time, however, it has been criticized for being inefficient and reducing incentives for employees to improve performance.[2]