Editing Performance appraisal (section)

===Seniority and Labor Contracts===

Labor union contracts often include seniority provisions, specifying that promotions, layoffs, and benefits are determined based on the length of service rather than performance. Historically, these provisions aimed to prevent favoritism, cronyism, and corruption, promoting a sense of solidarity among workers. Seniority serves as job security, protecting long-serving employees from arbitrary layoffs or demotions. It is commonly seen in sectors like manufacturing, education, and public services, offering employees a predictable path to career advancement and rewards.

====The Last-In, First-Out (LIFO) Rule====
A common application of seniority is the Last-In, First-Out (LIFO) rule, which dictates that employees with the shortest tenure are laid off first during downsizing. This system provides stability for longer-serving employees and is considered fair in workforce reductions. However, critics argue that LIFO can hinder productivity by retaining employees based solely on tenure, regardless of their current performance or skills. For example, in technology-driven industries, newer employees may possess valuable skills or innovative approaches that senior workers might lack. As such, organizations sometimes face difficulties maintaining a competitive edge when LIFO rules limit their ability to retain high-performing but less-tenured staff. Nevertheless, the LIFO rule remains a vital aspect of many union agreements, particularly in traditional industries where seniority is highly valued.<ref name="Sampson 1990 Efficient union labour contracts">{{cite journal |last1=Sampson |first1=Anthony A. |title=Efficient union labour contracts under seniority employment rules |journal=Economics Letters |date=March 1990 |volume=32 |issue=3 |pages=299–305 |doi=10.1016/0165-1765(90)90116-I }}</ref><ref name="Fairweather 1952 Seniority Provisions">{{cite journal |last1=Fairweather |first1=Owen |title=Seniority Provisions in Labor Contracts Social and Economic Consequences |journal=DePaul Law Review |date=April 1952 |volume=1 |issue=2 |pages=191 |url=https://via.library.depaul.edu/law-review/vol1/iss2/2/ }}</ref>

====Seniority's Impact on Wages and Promotions====
Seniority significantly influences wage structures and promotions, often resulting in a wage premium for employees with longer tenures. Union-negotiated contracts may include regular wage increases based solely on years of service. This approach can enhance job satisfaction and loyalty, as employees feel rewarded for their long-term commitment. However, this system may also lead to inefficiencies if individual performance and skills are overlooked. High-performing employees with shorter tenures might feel demotivated if they see senior colleagues receiving higher wages and opportunities simply due to their length of service. This structure can also impose financial burdens on organizations during economic downturns, as they must continue paying higher wages to senior employees regardless of business performance. To address these issues, some companies have implemented hybrid wage systems that combine seniority with performance-based incentives, allowing them to recognize both experience and merit.<ref>{{cite journal |last1=Dustmann |first1=Christian |last2=Meghir |first2=Costas |title=Wages, Experience and Seniority |journal=The Review of Economic Studies |date=January 2005 |volume=72 |issue=1 |pages=77–108 |doi=10.1111/0034-6527.00325 |url=http://discovery.ucl.ac.uk/3908/1/3908.pdf }}</ref><ref name="Shy Stenbacka 2018 Dynamic labor market competition">{{cite journal |last1=Shy |first1=Oz |last2=Stenbacka |first2=Rune |title=Dynamic labor market competition and wage seniority |journal=International Journal of Industrial Organization |date=November 2018 |volume=61 |pages=130–154 |doi=10.1016/j.ijindorg.2018.08.009 }}</ref><ref>{{cite journal |last1=Böckerman |first1=Petri |last2=Skedinger |first2=Per |last3=Uusitalo |first3=Roope |title=Seniority rules, worker mobility and wages: Evidence from multi-country linked employer-employee data |journal=Labour Economics |date=April 2018 |volume=51 |pages=48–62 |doi=10.1016/j.labeco.2017.11.006 |hdl=10419/129663 |hdl-access=free }}</ref>

====Balancing Seniority and Performance====
While seniority offers job security and a sense of fairness, it also presents challenges in modern workplaces. To address this, many labor contracts have adopted flexible seniority systems, where an employee’s abilities, skills, and job performance are also considered alongside their tenure. For example, companies might use performance reviews to guide decisions related to promotions, salary increases, and even layoffs. This approach allows employers to respect seniority while ensuring that productivity and contributions to the organization are fairly acknowledged.

Union rules may also include probationary periods and warnings as mechanisms to balance seniority with performance. Employers are often required to warn poorly performing employees and give them a probationary period to improve before considering dismissal. During disputes, records from performance reviews and probation periods often play a crucial role in arbitration, helping to determine whether a firing was justified. This structured process ensures that performance issues are managed fairly without undermining the seniority system's core principles.<ref name="Sampson 1990 Efficient union labour contracts"/><ref name="Fairweather 1952 Seniority Provisions"/>

====Recent Trends and Debates====
In recent years, some organizations have increasingly questioned traditional seniority-based approaches, arguing that they can stifle innovation and adaptability, especially in fast-paced markets like technology and healthcare. This has led to a push for more performance-oriented contracts that still incorporate elements of seniority to ensure a balanced approach. Mixed evaluation systems, combining seniority with performance metrics, [[human resource metrics]], skills assessments, and peer feedback, are becoming more popular. These systems aim to balance the stability provided by seniority with the need for a dynamic, merit-based workforce. The ongoing debate reflects the complexities of modern labor relations and the need for adaptive strategies that can meet diverse business needs.<ref>{{cite report |last1=Aumayr-Pintar |first1=Christine |last2=Bechter |first2=Barbara |title=Seniority-based entitlements: Extent, policy debates and research |url=https://www.eurofound.europa.eu/en/publications/2019/seniority-based-entitlements-extent-policy-debates-and-research |work=Eurofound |date=17 April 2019 }}</ref><ref name="Shy Stenbacka 2018 Dynamic labor market competition"/>

====Finding the Balance in Seniority Systems====
Seniority in labor contracts remains a complex issue. It offers job security and guards against favoritism but also poses challenges in balancing merit and productivity. Modern labor contracts increasingly seek a middle ground, integrating seniority provisions with performance-based assessments to create a fair and efficient work environment. By valuing both experience and performance, organizations can foster a culture that recognizes long-term loyalty while also rewarding high achievers. This balanced approach is key to building a workforce that is both stable and dynamic, capable of meeting the demands of a rapidly changing economy. The evolving nature of workplaces makes finding this balance more important than ever.<ref name="Fairweather 1952 Seniority Provisions"/><ref name="Sampson 1990 Efficient union labour contracts"/>