Promotion based on seniority leads to a decrease in employees' motivation and initiative. 

-  Shelton (2009) defined that the seniority based promotional system is based on time as an employee, the average or poor performer promotes as fast as the outstanding performer. The system kills motivation and initiative. 

- Promotion based on seniority can gradually lead to employees' negative thoughts such as: "Why should I work harder since I only need to accomplish all my tasks and wait for my turn?" or "Why should I volunteer? Why should I step up? It does not help me." With those thoughts, employees are likely to complete only the assigned responsibility and they do not need to demonstrate their capability since they know that they will not get any other suitable 

rewards if they work harder. 

- Gibson (1982) stated: "While this method of promotion may select a person with a great deal of experience, it may also promote an individual who has just been marking time. Much can be said for experience, but a seniority system tends to discourage the young and often establishes a nonproductive attitude. Seniority alone does not adequately forecast a person's capabilities nor does it determine those best qualified for promotion (p.29)." 

- In addition, this type of system also does not allow for any incentives for being productive, which causes workload being done decreasing. Employees tend to not contribute any fresh ideas or new ways of working or even any frank criticism as their company will not favor them based on their ideas, which in turn can lead to a very conservative culture, where change comes extremely slowly and adaptation to new conditions can be very difficult and time-consuming.  

- According to Firkola (2006), Nissan Motors is a typical example of company which survived from 1990s' Japanese economic recession due to a strategic change in their promotion and wage system. In 1990s, Nissan kept a system of promotion based on seniority and they encountered a loss in market share, eight years of nonprofit and no new product development. Their new CEO under the partnership with Renault introduced a revival plan which stated a clear vision for the company and developed a fair appraisal system for promotions based on merit instead of seniority. After every effort, the managers got the acceptance of change from the union and eventually, Nissan Motors did survive from the economic crisis in Japan.