Lockstep compensation is a pay structure where employees are compensated based strictly on seniority rather than individual performance. Everyone who joined the organization in the same year earns the same salary, and pay advances on a fixed schedule as tenure increases.
It is most common in law firms and professional services, though some other industries have used it as well.
How does lockstep compensation work?
Pay is tied to a fixed progression scale. Employees move up the scale automatically each year based on how long they have been with the organization, not on performance reviews, billable hours, or business brought in.
In law firms, this is often expressed through a points or units system where partners accumulate points each year until they reach a ceiling.
Years with firm | Compensation level |
Year 1 | Base starting level |
Year 2 | Automatic step increase |
Year 3 | Another step increase |
Year 10+ | Senior level or ceiling reached |
The schedule is predictable and transparent. Everyone at the same level knows exactly what their peers earn.
What are the advantages of lockstep compensation?
The main appeal is simplicity and team cohesion. When pay is not tied to individual metrics, employees are less likely to compete internally or hoard work.
Key advantages include:
Promotes collaboration by removing incentives to compete for credit
Reduces internal politics around compensation decisions
Easy to administer since pay is predetermined
Builds loyalty by rewarding tenure reliably
Reduces time spent on performance-based pay negotiations
What are the disadvantages of lockstep compensation?
The biggest criticism is that it does not differentiate between high and low performers. An employee who consistently goes above and beyond earns the same as one who does the minimum, as long as they share the same start year.
Common drawbacks:
Top performers may feel underpaid and leave for merit-based environments
Low performers have little financial incentive to improve
Firms cannot use pay to reward exceptional results
Can create resentment when contributions vary widely across the same cohort
Which industries use lockstep compensation?
Lockstep compensation is most closely associated with large law firms, especially those following the Cravath system, a pay structure originating from the firm Cravath, Swaine and Moore that became a benchmark across BigLaw.
It has also been used in consulting, accounting, and academic institutions, though its use has declined significantly in recent decades as firms shift toward performance-based models.
How does lockstep compensation compare to merit-based pay?
The two systems sit at opposite ends of the spectrum.
Feature | Lockstep | Merit-based |
Pay basis | Seniority and tenure | Individual performance |
Transparency | High, everyone knows the scale | Lower, often case by case |
Collaboration | Encouraged | Can create competition |
Top performer retention | Harder | Easier |
Administrative complexity | Low | Higher |
Many organizations today use a hybrid approach that layers performance bonuses on top of a base lockstep structure.
Key Takeaways
Description | |
Definition | A pay structure where compensation is based on seniority, not performance |
How it works | Employees move up a fixed pay scale automatically each year |
Main advantage | Promotes collaboration and reduces internal competition |
Main disadvantage | Does not reward high performance or differentiate between contributors |
Common in | Large law firms, consulting, and some professional services |
Frequently Asked Questions
Is lockstep compensation still common?
It is less common than it used to be. Most BigLaw firms have moved away from strict lockstep in favor of hybrid models that include performance-based bonuses on top of a seniority-based base.
Can lockstep compensation hurt retention?
Yes, particularly for high performers. Employees who generate outsized results may leave for firms where compensation reflects their individual contribution.
Does lockstep mean everyone earns the same salary forever?
No. Pay still increases each year as seniority grows. The key is that all employees at the same seniority level earn the same amount, not that salaries never change.
What is the Cravath scale?
The Cravath scale is a standardized salary structure used by many large law firms. It sets base salaries for associates by class year and is updated periodically when one firm raises its rates and others follow.
