Introduction of performance-related pay in many organizations is difficult, as it directly conflicts with the structured pay systems. In many organizations, it is also observed that the violation of principle of seniority-based compensation leads to the stagnation of many senior level employees, who get demotivated for stagnation in their pay scales. Such de-motivation lowers their level of performance and many such employees gradually leave the organization. Steel Authority of India (SAIL) lost many of their senior level employees when they launched their voluntary retirement scheme (VRS), for not getting the seniority protection in pay scales. The same thing happened in case of the State Bank of India. In both the cases, the private steel plants ...
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