Comment
I'll repeat what I said on another thread:
While I don't deny that it makes sense to reward exceptional performers, for the average associate (and, on a grading curve, there will obviously always be "average" associates), this smacks of stealth salary cuts to me.
Many of us think we work hard, but while merit has something to do with that, it's not always the case that partners can judge these things fairly. If a partner brings in fewer deals, and associates get less challenging work, partners can just keep salaries low and their profitability stays the same. They would have no incentive to pay for their salary costs (which their hiring policies are directly responsible for) by trying harder to bring in work and run the firm more efficiently.
Merit is already taken into account in appraisal systems at many firms, and feeds directly into bonuses. Surely that is how (hard work x competence) should be rewarded? The issue some firms seem to be ignoring is that there is often both a fixed and variable component to salaries. Merit is taken into account in the variable (bonus) element. The firms moving away from lockstep are merely trying to lower the amount they pay for the fixed component, which is likely to become a to move to a rate that is lower than market as a starting point for base salaries. There is nothing wrong with this if you think associates are paid too much; but these firms are being cynical and dishonest about things - they are in effect trying to give the impression that they are paying comparable to market rates, but in reality are reducing certainty about an associate's basic salary. I say again - I feel this may be verging on the dishonest. A better way to put it would be "We want to give you a lower base salary, and you'll have to earn the rest - though note your ability to control the quality, quantity and nature of the work you get, as well as the partnership's judgment on what you deserve for putting up with this, may be highly arbitrary and subjective".
If you think an associate isn't worth the basic salary that the "lockstep" firms pay, then the only way to compete with those firms would be to convince everyone that the "average" associate on a merit curve (who, in many respects, will have no certainty on where on the curve s/he will fall) would earn as much under non-lockstep as under lockstep. Otherwise, they'll go where they get a better guaranteed salary, with a variable merit bonus. As we will no doubt see, I believe the average salary will fall at non-lockstep firms (as Pinsent's Jonathan Bond appears to be admitting in the earlier article), and with it, the overall quality, collegiality and team-spirit that we all hope to work with, as people compete to be seen to be better and harder-working, rather than supporting each other in what can be a difficult and challenging environment.
