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I think that from the very beginning associates would believe Sullivan & Cromwell’s pay structure to be fair and very attractive because it seems that the payment depends on one’s knowledge. Still, it is not clearly stated how they will assess a professional. The employees are expected to like the pay structure, but it is too high in the market’s perspective. As the competitors downsize and cut payments, the workers are likely to be attracted by the opportunity to earn millions. It would be better to reduce high bonuses, but it may indicate that the company is experiencing a downturn, which may influence the size of the market adversely. The company should motivate the workers to receive one-fourth of their payment from consultancy or clients. As a result, the organization will experience less pressure and create internal competitiveness.
The distribution of payment at Sullivan & Cromwell is not equal. The base salary was increased once, but then it was not maintained. The increase levels alter each year. In this way, professionals who started to work 4 years ago also faced the situation when the payment was not increased, which was likely to demotivate them. The 3rd to 4th-year professionals face the highest increase, and then the bonuses reduce, which influences the environment adversely, making it biased (Milkovich, Newman, & Gerhart, 2014). It would be better if the pay level was controlled by senior managers. The payment may be increased by 3% during the first 4 years and then by 5%. In this way, the base salary will be increased bit by bit so that the professionals will earn more in the 8th year even without the bonuses. Still, new associates should have an opportunity to make more, as their base salary is much lower than the 7th or 8th-year associates have.
In his article published in the Wall Street Journal, Stracher (2006) described Sullivan & Cromwell as a pyramid because of the way the wages are paid. It was underlined that new associates have low income but suffer much stress and work long hours. Still, the author did not discuss the differences in the work and its value. Just like in Merrill Lynch, the partners of Sullivan & Cromwell receive more appreciation as they have a wide range of duties and need to deal with more vital and complicated tasks (Zaleski, 2011).
If the company reduces the bonuses, current, and possible future employees maybe not willing to work and be focused on the firm’s goal (Zinn, 2009). New associates would agree to stay if the targets were simplified so that they have enough time for private lives (Moore, 2007). Except for that, the employees may consider that the company faces financial problems and is not generating decent revenue. In this way, Sullivan & Cromwell are likely to face problems with recruitment and retention if the organization reduces the bonuses or removes this system at all.
Sullivan & Cromwell and Dewey & LeBoeuf seem to have similar approaches but Sullivan & Cromwell pay more attention to skills the workers have while Dewey & LeBoeuf are focused on people. The second organization is paying the employees for being talented individuals but not for the advantageous things they do for the company. Thus, the disadvantage is an unjustified commitment to loyalty only. In this way, the advantage of the approach used by Sullivan & Cromwell is the emphasis on the motivation to do one’s best and constantly improve performance (Stringer, Didham, & Theivananthampillai, 2011).
References
Milkovich, G., Newman, J., & Gerhart, B. (2014). Compensation (11th ed.). New York: McGraw-Hill Education.
Moore, F. (2007). Work-life balance: contrasting managers and workers in an MNC. Employee Relations, 29(4), 385-399.
Stracher, C. (2006).Cut My Salary, Please!Web.
Stringer, C., Didham, J., & Theivananthampillai, P. (2011). Motivation, pay satisfaction, and job satisfaction of front-line employees. Qualitative Research in Accounting and Management, 8(2), 161-179.
Zaleski, K. (2011). Merrill Lynch gave top earners $209 million in 2008. Web.
Zinn, M. (2009). Salary and bonus caps: their impact on the battle for high-level executive talent. Corporate Finance Review, 13(5), 22-26.
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