1. At first look, Sullivan & Cromwell’s pay structure looks very attractive and is sufficient to attract any law school graduate person. It seems that Sullivan & Cromwell pay employee on dept of their knowledge, however how they evaluate graduate person is not cleared. As per employee who withdraw salary from the firm will agree that pay structure is appropriate (who don’t like to withdraw half million or million dollar per annum!) where as market point of view, the firm’s pay structure is high.
When in downturn competitors reducing pay and / cutting jobs, Sullivan & Cromwell’s pay may attract new graduates or freshly unemployed lawyers.
To give high bonus to employee is in the practice at Sullivan & Cromwell, when it going to reduce the bonus, it may indicate that the firm is facing downturn and the market reputation of the firm may go down.
The firm instead providing high base pay should motivate employee to get their 25% of salary through consultancy or from the clients. This will reduce the burden on firm and will create competitiveness internal to the firm. The firm should lean more towards pay for performance bases structure.
2. At Sullivan & Cromwell, the distribution and increase in salary is not in uniform manner. First, the firm increased its base salary by 10.34% (increased $ 15,000 in base salary $ 145,000) and later the increase level is not maintained. for instance the 3rd to 4th year experience jump results in about 13% in base wage where as from 4th to 5th year jump is around 9% increase in base wage. Base pay should increase from smaller amount to larger amount; instead the base pay is not uniform.
Second, the 3rd to 4th year associates achieve highest pay jump, which may create bias environment for senior associates. And last, the pay level should be controlled by seniority and performance base.
For instance following table suggests new salary range for associates at Sullivan & Cromwell.
Table: Base pay at Sullivan & Cromwell
Year | Associate’s Base Salary ($) | Increased By (%) |
1 | 150,000 | |
2 | 157,500 | 5 |
3 | 168,525 | 7 |
4 | 185,377.5 | 10 |
5 | 213,184.12 | 15 |
6 | 225,820.94 | 20 |
7 | 282,276.17 | 25 |
8 | 381,072.82 | 35 |
By slowly increasing base pay, at 8th year, associate make about $ 41,072 more than the previous designed pay system where associates make it with bonus. Bonus should be performance base and as per new pay structure associates have chance to make more. As we see that new entered graduates (1-4 year experience) should be paid more bonus than 7 or 8 year associates as their base pay is low.
3. Stracher C. (2006) wrote in WSJ about high compensation by Sullivan & Cromwell under the heading of Cut My Salary, Please! The author questioned about high salary range for newly graduated law firm students and how much stress will they face! High pay scale increases billable hours which disturb work-life balance. Furthermore the author expressed possible outcomes if the firm reduces its base pay and reduce bonus, then the firm may face difficulty to recruit new employees or fail to retain existing employees. Overall the author showed pros and cons of high-law base pay and how it may affect the employees and their work environment.
4. The base pay at Sullivan & Cromwell is already high, so no need to pay bonus at all. The firm may pay bonus in form of other compensation like more challenging task, recognition and rewards etc. The bonus should be performance base where employees should get paid on the base of billable hours, numbers of cases won / solved and effective contribution to firm’s internal structure.
If firm reduce the bonus or remove the bonus system, many employees would not like to work at half bonus or package or if they work, they may not focus on completion of target.
The firm’s target is to complete 2200 billable hours / annum which is overburden for newly graduates. In achieving target, the young lawyers lose work-life balance. If the firm wants to reduce bonus, the target should be less and should provide employees (lawyers) work life balance so they enjoy the work.
As we know, Sullivan & Cromwell’s market reputation is, highly paid employers could be fall in dilemma when firm decided to reduce bonus, it may indicates that firm is not generating good revenue and this may affect the firm to hire new employees.
Reference
Gerhart B., Newman J. M., Milkovich G. T., (2011). Climb the Legal Ladder: Your Turn. Person Based Structure (p. 187-188). Compensation 10th e. Mc Graw Hill, USA.
Stracher C. (2006, April 1). Cut My Salary, Please! Rule of Law. The Wall Street Journal. (p. A7). Retrieved on April 17, 2011 from http://online.wsj.com/article /SB114384471634713946.html
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