What is seniority? Definition and meaning

Seniority in business and finance can have a number of different meanings. The term could refer to the order in which creditors will be repaid if the debtor has gone bankrupt – the more ‘senior’ ones will be paid first. When a person, company, organization or any entity is bankrupt, senior debts need to be settled before junior debts can be paid off.

Junior debts, which carry a higher risk, generally pay greater yields than senior debts.

In general English, ‘seniority’ means to be senior because you are older, have been around longer, or have a higher rank. In the workplace, the term refers to employees who have been in the company the longest.

A person who wins by seniority has a higher rank than his or her colleagues. The word with this meaning may be used in business, the military, or schools and colleges.

Seniority - who should be promotedIf Sue and Tom worked in your company, and you needed a new Sales Director, who would you promote?  Do you think that seniority should depend on years of service, or how effective that employee is?

Under a seniority system, senior people may be granted control either due to their length of service or work performance.

The Financial Times’ glossary of business terms – ft.com/lexicon – says that seniority is:

1. The fact of being older or higher in rank than someone else. 2. The official advantage someone has because they have worked for an organization for a long time. 3.The situation in which particular loans etc are paid before other loans, etc. if a company is in financial difficulty.”

Seniority in employment

In many companies, especially those with a unionized workforce, the more ‘senior’ employees – those with more years of service – typically enjoy greater work privileges, such as:

  • More favorable shift-work times.
  • Work that is considered nicer and easier.
  • More convenient working hours.
  • The first to pick when to take their vacations.
  • They are last ones to be laid off; last-in first out (LIFO).

In commercial aviation there is a pilot seniority list. The more senior pilots generally earn more. How senior they are also influences which routes are flown, the types of aircraft, and work schedules.

Seniority is a major factor when deciding which pilots to promote, for example from First Officer to Captain.

In an article published by Aviation Schools Online, Michael Moore, an A-320 captain, wrote:

“If you were to ask an airline pilot what one factor affects his or her daily life the most, they would most likely say “seniority”. This is because where you fall on a pilot seniority list dictates what aircraft you fly, your pay rate, and even when you are able to take vacation.”

When two airlines merge, pilots become extremely concerned with what seniority will be like in the new commercial entity. Experts say that no one event has a greater impact on the seniority of pilots than a merger between two commercial airliners.

In 2005, America West Airlines acquired the bankrupt US Airways. For several years, the two pilot groups were locked in what seemed like an eternal battle over seniority, which saw numerous court cases and millions of dollars in legal fees.

US Airways was effectively made up of two airlines – the West and East pilots – who operated under very different labor contracts.

Video – Seniority is meaningless

In this Rant with Trigger Strategies video, the speaker explains why he believes it is not how long you have been doing something that matters, but how well you know how to do it and how effective you currently are.

“Being in the business since 1872 does not mean anything anymore,” the speaker insists. He says it is vital to get out there and learn new skills.