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Is banning salary negotiations a good idea?

Ellen Pao recently announced that reddit had done away with salary negotiations in an effort to equalize pay between men and women - as men often negotiate (harder). This doesn't feel like the right answer though - isn't that just attracting the wrong people? Furthermore, if an existing employee is getting an offer from another company will Reddit just not counter offer ever? If they will negotiate at any point then this is sort of null and void. Does anything think this is really a good idea?

50 Replies

Zachary McClung
7
1
Zachary McClung Entrepreneur
Chief Customer Officer | Cloud Servers | Disaster Recovery | CDN | Dedicated Servers
Rachel -

I truly believe this was a bad idea. It goes back to the saying if you give someone a fish they'll eat for a day, if you teach them how to fish they'll eat for a lifetime. Men's ability to neg. harder isn't the issue. They have developed a skill. We need to empower woman and develop the same skill in them. Anything less than that, is simply putting them down because it is saying you aren't capable of getting more so we have to restrict someone else to help you.
David Crooke
2
0
David Crooke Entrepreneur
Serial entrepreneur and CTO
I am always very skeptical of such programs, it seems to me like it's a move to keep salary down across the board, and you're right, the driven people will move on. I don't know if you have the chain CarMAX near you, but this is their business model. They claim fair fixed pricing for those who don't know cars and don't feel comfortable haggling, but actually they just rip people off. I once took a used car there for a lark to get a bid, they offered me $5k which was well below auction value, I sold it on CraigsList for $10k and apparently underpriced it judging by my inbox.
Andrew Lockley
1
3
Andrew Lockley Advisor
Investor and strategy consultant
Netflix did a great deck on this. It also includes loads of details on their other HR policies. It's online so Google it.
Tom Maiaroto
0
1
Tom Maiaroto Entrepreneur • Advisor
Full Stack Consultant
I actually like the idea of a "market rate" for this industry. I'm not saying we should do away with negotiations, but this industry has one of the wildest salary ranges ever. You could literally hire a programmer for $60k/yr or $120k/yr for the SAME exact job and get the same exact output.

When I think of negotiating a salary I think of businesses paying an extra 5k or 10k or even 20k/y to keep better talent if they so choose. I don't expect a 50k or 60k difference. Especially when there's the possibility that both workers are of equal experience and skill.

There's a parallel here to startup valuations too.

Of course this also means we need to be better at defining job roles. Job posts are also misrepresentative too. So we have a lot of work to do before we could even consider tightening up on salary ranges and having less of a negotiation.

Without better clarity and understanding, I think we're just going to wind up in a situation that's far too difficult to plan a business and it's far too unstable for employees. Hey, who knows...this may lead to the failure of many startups.

It's unfortunate though because salary disparity is a huge problem in our industry. I don't feel like this has anything to do with gender equality though. Plus, it'd be far too hard to prove right now given how things are. If we could establish a tighter range, I think we could put better data around that issue though. It could totally be a possible issue as it has been for so many other industries.

Take a look at Glassdoor. It's really interesting to see the huge jumps.
Joe Emison
10
0
Joe Emison Advisor
Chief Information Officer at Xceligent
I think banning negotiations is an extremely lazy way to handle the problem. It implies that Reddit frequently has a lot of salary negotiations, which is an indication of a larger HR problem. A much better model, at least for current employees, is to be proactive and firm with salary adjustments, so you aren't forced into out-of-cycle raises that you can't budget for. You should be budgeting for salary adjustments, and applying them based upon particular criteria, and if you have employees that want more, you let them go elsewhere. (This means that you need to spend the money proactively to keep your best employees; you don't wait for them to demand money).

For new hires, you have to expect a level of negotiation. In my experience, salary is only one component of new-hire negotiation (other common pieces: start date, vacation/leave). I think as long as you make equal offers to people who are equally situated, you will maximize employee happiness by allowing negotiation for new hires, but not for ongoing HR, since you don't want to get caught with out-of-cycle raises.

Ben Horowitz writes really well on this in The Hard Things About Hard Things.
Shingai Samudzi
3
1
Shingai Samudzi Entrepreneur
Founder & CEO at ProjectVision
Given her recent history, I can understand where she is coming from (whether or not this is a move truly motivated by social justice intentions). That said, I agree with Zachary's point - this seems like equality by reduction rather than equality through empowerment. To Tom's point around reducing salary variance for the same job/output I can see how a CFO would love this as it will help optimize labor costs. This also won't be a disincentive for anyone but the top 0.1% of talent who could literally walk into any company and demand their salary. For the rest, the salary will likely be set close enough to some median market rate to not be a huge deal unless you're the type of employee focused only on salary maximization.

In short, I can definitely see this becoming an operational cost optimizing trend for larger, more established companies in the SV/Bay Area.
Louis Alley
1
0
Louis Alley Entrepreneur
Senior Software Engineer at Grokker, Inc.
Extend the idea beyond salary negotiation -- remove all parts of any job where men and women don't perform equally. Is this a good idea? What exactly are we accomplishing by doing this? What are the other impacts?
Michael Baker
3
0
Michael Baker Entrepreneur
Director at Look Media
"Banning negotiation" is actually a negotiating position (albeit a rather rigid 'take-it-or-leave-it' stance). Everybody lives in the market. Negotiation is just part of life.
Gil Allouche
0
0
Gil Allouche Entrepreneur
Founder @ Metadata
Agreed to salary negotiation sounds like a government job to me. Gil | metadata.io
Cheyenne Jones
0
0
Cheyenne Jones Entrepreneur
CEO/Founder
Part of qualifing for a job is having the guts to negotiate, I'd never hire someone who didn't at least try to negotiate pay or benefits, to not do so shows me a candidate won'ttake the initiativein other situations . I don't think Ellen is going to last atReddit
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