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Reddit CEO Ellen Pao Bans Salary Negotiations To Equalize Pay For Men, Women
sabri points out that Reddit CEO Ellen Pao plans to ban salary negotiations in an attempt to equalize pay for men and women. "After losing a sex-discrimination lawsuit in Silicon Valley last week, Ellen Pao continues on her crusade to bring gender equality to the tech world, but this time with a focus on her home turf. As Reddit’s interim CEO, Pao said she wants to eliminate salary negotiations from the company’s hiring process. In her first interview since the lawsuit, Pao told with the Wall Street Journal Monday that the plan would help level the playing field. 'Men negotiate harder than women do and sometimes women get penalized when they do negotiate,' she said. 'So as part of our recruiting process we don’t negotiate with candidates. We come up with an offer that we think is fair. If you want more equity, we’ll let you swap a little bit of your cash salary for equity, but we aren’t going to reward people who are better negotiators with more compensation.'"
Penalising better negotiators is hardly a good thing regardless if it's trying to promote equality. Really all they're doing is saving money.
"Men negotiate harder than women do"
Let's punish people who are good at something! Diversity!
We come up with an offer that we think is fair.
That's a pretty poor negotiating strategy if you're trying to hire the talent you want rather than the gender you want.
Why wouldn't I spend the time to fly out and interview if there was a significant chance I wouldn't like whatever number it was that they considered 'fair' and I couldn't negotiate from there?
I should use this sig to advertise my book ISBN-13 : 978-1501515132.
Wouldn't the ability to negotiate be a useful skill for a Reddit salesperson?
Hulk SMASH Celiac Disease
"Men negotiate harder than women do"
So, she makes a sexist statement to defend not negotiating in order to eliminate sexism? Fail. Would she use the same claim to defend hiring men over women for positions which involve negotiating contracts?
"National Security is the chief cause of national insecurity." - Celine's First Law
I thought she was a little off, because of her battle with her previous employer. But this is ridiculous. According to the WSJ, she is personally vetting potential candidates for their attitudes on diversity, and if a candidate says "I am not concerned about diversity" or "I don't consider diversity important" then they don't get hired. And now this salary non-negotiation thing. No one of any value is going to interview there.
I suppose the ones who are already there are safe because if she starts firing, say, white men, she's going to eventually have a nasty lawsuit to deal with. But I know her type. She probably won't fire anyone; she'll just harass and hound them into quitting.
I can't believe Reddit wants this person as their CEO; she's going to destroy the company.
it's = "it is"; its = possessive. E.g., it's flapping its wings.
CEO feels they were wronged in a prior stint, makes knee-jerk reaction to claim the moral high ground against those who claimed the prior legal action was just for personal enrichment. CEO fails to recognize that the company wouldn't have been negotiating if it wasn't necessary for them to attract and keep the talent they believed was necessary to succeed; already planning future lawsuit when board ousts CEO due to lackluster performance in 3 years after the best contributors leave for other companies that will reward them for their skills.
Likely result: overpaying for talent after getting burned by multiple candidates, losing competitive edge due to loss of exceptional contributors, and not fixing a damn thing about all the people they've already hired.
This is a stupid policy, but irrespective of that it will be circumvented by the direct line managers before it is even put in place.
HR rule - All employees of a categorisation must be paid the same.
Hiring Manager - OK HR. Please create the new position Systems Engineer Class 7a please. This role is paid X.
HR - But you were hiring for a Systems Engineer Class 2.
Hiring Manager - Correct but we have had some scope change and require a Class 7a which is exactly the same as a Class 2 but paid $3,600 a year more and happens to look exactly like Joe Blogs here.
> I thought the mantra of the Democrat party was equality through mediocrity?
Some Democrats do this, yes. Some Republicans believe in ~~equality~~ fuck you, I got mine. I'm not sure which is worse.
You can't suddenly make mediocre people good at what they do, so the only way for the left to enforce equality is to make the good people mediocre.
I read an autobiography some years ago by a woman who was in the Chinese Army in the 70s or 80s, and one thing that particularly stood out was the part where she wrote about how she had to deliberately shoot badly on the shooting range, because anyone who could shoot well would be punished for making the others look bad.
That's 'equality' red in tooth and claw.
This reminds me of a policy that was caused the closure of Computer Science labs between 2AM and 6AM. The justification went something like this;
There are women who are afraid to be on campus late at night and therefore will not access the computer labs during that time. If men have access to the labs at that time they will have an unfair advantage in completing their work. Therefore to keep access equal the labs will be closed
It lasted about two months until they got security cameras in the labs. I think that was a face saving thing as many women on campus were upset about the closure too. This is the same faculty that shut off the phones in the labs because they could be used to make long distance calls (with some work). They forgot that those same phones could be used to call security if needed. This whole idea of making everyone equally bad is just stupid.
Gay scammer husband who also sued for "discrimination", and will possibly spend time in prison for fraud. Real bitch on wheels that nobody at work liked, and she felt entitled to raises/bonuses/etc... Sues company nice enough to hire her in the first place, and which bent over backwards acceding to her crazy demands prior and during the lawsuit.
She then gets a job as CEO at Reddit 'somehow' (some sort of shady nepotism), and proceeds to get revenge by basically turning the place into an SJW-only space.
If I was a white dude working at Reddit I'd be looking around for other work.
Oh, and she can't ban salary negotiation. She can only say Reddit won't budge on their first offer. The potential employee can just say "mm, OK, but X-Cotech just offered me 5% more - see ya."
... as long as they agree with my opinion.
Sent from my ENIAC
"...I told her..."
See, there's the problem. If it was a male cashier, he would have negotiated. I hear they're better at it.
"National Security is the chief cause of national insecurity." - Celine's First Law
"Negotiation" is very much part of what I am being paid for. Or what anyone is being paid for, who has to work with other people. Else, why the heck does the company send us to those Karrass seminars?
Moreover, I wonder how far Ellen Pao would have gotten without sharp negotiation skills.
This strikes me as one of those epiphanies that sounds good in your head but starts to fall apart when unintended consequences become apparent.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
It means that in order for Reddit to be competitive in hiring, they will need to make a first offer (the fixed salary+benefits) that is at or above the market average. As a jobseeker, I can just look at what they have to offer and take it or leave it. No haggling. No drama. That sounds good to me! I'm decent at negotiating, but I don't enjoy it.
For jobs where negotiating skill is NOT part of the job, the negotiation ban should make hiring decisions better correlate with merit. And generally, I want to be surrounded with people hired for relevant merits, and not just good self-promoters.
It's not that men are better negotiators, it's that they are more likely to try to negotiate in the first place, when an offer is not explicitly described as negotiable.*
I thought this was really well known. It is scientifically recorded -- one citation is here: http://www.nber.org/papers/w18...
It's actually often cited as a big reason for the gender pay gap, especially when you consider that negotiation isn't just about salary but also about position.
* There are also further possibilities, not fully proven, that can compound that. One you've already identified: perhaps women are just worse at it, either biologically or through socialization. Another is that people on the other end of the negotiating table might be better at negotiating against women, again either biologically or through socialization or other economic factors.
If the ability to negotiate aggressively is not a talent required for the job, there is no reason why someone who negotiates well should get a higher salary. The same skills that make for aggressive negotiation (affinity for conflict situations for example) may make a prospective employee perform less well in team situations.
An interview should give the employer a chance to describe the job and the prospective employee a chance to describe their relevant talents. Each side should then know the market value of the applicants skills with respect to the job. If the company's offer does not match the applicants pay requirement, them should part ways. What does a negotiation accomplish?
"He took a duck in the face at 250 knots." -- William Gibson, Pattern Recognition
"Reddit must suck already for women"
It does.
Oh! You meant the company, not the site! My bad!
It does.
A modest proposal for equal pay for title...
How about you allow them to negotiate from a base from which the position is set.
If they negotiate less high than everyone else who has negotiated, you give them the highest rate previously negotiated.
If the negotiate higher than the previous high, everyone gets a raise.
Solves the same problem, doesn't it?
Is this because woman are unable to negotiate as hard? Because they are unwilling to? Because they are too stupid to? What is her explanation? Is it hormonal? Does it have to do with having different body mass distribution? Inquiring minds want to know.
If it's to their advantage to negotiate hard and men and women are indistinguishable professionally, women obviously are just as able to negotiate hard (and, given negotiations I've been in, I have no reason to doubt they are not just as capable at this art).
Pao is really insulting women by saying this.
This really opens a Pandora's box. If she thinks women, by virtue of being female, are not as good at this important aspect of professional life, one wonders what other parts of their professional lives women are not as good at. She should give us a complete list - who knows what might be on it.
I wonder what would happen if she ran a purchasing organization or a sales organization. Usually the willingness and capability to negotiate effectively (and, therefore, hard) are basic job requirements for these positions. Would she refuse to hire women because, as she has stated, they are not as good at negotiating hard (ouch, there's a sexual discrimination lawsuit waiting to happen)? Would she refuse to negotiate salary and lose the very people who would negotiate effectively on behalf of her company? In reality, negotiation is always a part of almost any senior job -- you have to negotiate for headcount, resources, approval for projects, even convincing a customer that they don't need something is "negotiating".
Perhaps she has realized that she (the individual, not the gender) is not good at negotiating and this is a convenient way to avoid acknowledging this reality.
Perhaps she doesn't realize that no party to a successful negotiation goes away unhappy - does she lack confidence in herself and her own staff being able to negotiate successfully?
If Reddit has a candidate they really want and offers them $180K and they get an offer from another company for $200K (assuming similar fringe benefits and option valuations), how is it good for the company to walk away from the candidate instead of negotiate? Both $180K and $200K may be "fair" offers. Just because her company didn't happen to guess precisely what the FMV was for the person will she really stubbornly refuse to negotiate and start over from ground zero in trying to fill the position (which will likely cost tens of thousands of dollars in staff time and more tens of thousands of dollars in delay in filling the opening)?
I also assume that if the board offers, unwisely, to keep her on as permanent CEO and she wants a better offer than they gave her, she will understand when she when the board says "sorry, we don't negotiate and since you don't appear happy with our offer and we want a CEO who is happy with their situation, we retract the offer -- don't let the door hit your ass on the way out".
Why is there an "insightful" mod and why isn't it "-1"? If I wanted insight, I wouldn't be reading
How does this work? Does Reddit give the same offer to all employees for a given job title? If so, and they make a single offer better than the market initial offer, they'll be paying non-negotiators more than they have to, and losing the best negotiators. This is likely to be costly.
If they make the same offers they made before this policy, they'll lose negotiators to other companies. If negotiation is correlated with skill this is a loss; otherwise, it could be a loss or a win.
If they make an individualized offer to each employee, negotiation will happen anyway; it'll just happen without explicit haggling. Candidates will try to signal that they'd require a lot to accept, in order to get a higher offer. I'd bet that candidates who would negotiate are probably better at that kind of signaling.
Since this is a bit buried and you seem genuinely inquisitive I repost -
paper title -
Social incentives for gender dfferences in the propensity to initiate negotiations: Sometimes it does hurt to ask
Abstract -
Four experiments show that gender differences in the propensity to initiate negotiations may be explained by differential treat-ment of men and women when they attempt to negotiate. In Experiments 1 and 2, participants evaluated written accounts of candidates who did or did not initiate negotiations for higher compensation. Evaluators penalized female candidates more than male candidates for initiating negotiations. In Experiment 3, participants evaluated videotapes of candidates who accepted compensation offers or initiated negotiations. Male evaluators penalized female candidates more than male candidates for initiating negotiations; female evaluators penalized all candidates for initiating negotiations. Perceptions of niceness and demandingness explained reistance to female negotiators. In Experiment 4, participants adopted the candidate’s perspective and assessed whether to initiate negotiations in same scenario used in Experiment 3. With male evaluators, women were less inclined than men to negotiate, and nervousness explained this effect. There was no gender difference when evaluator was female.
link
https://www.cfa.harvard.edu/cfawis/bowles.pdf
One of the big problems with salary negotiations is that inevitably everyone knows everyone else's paycheque. So if you find out that the guy sitting beside you doing the same job is earning way more then you just look at your paycheque as a biweekly insult.
I worked for one company that paid its programmers a perfectly round number and everyone went up at the same time. But bonuses were far more complicated with a huge factor being voting among the employees. The company literally had a rule that if anyone discussed who they were voting for then it was an instant firing. This way the outstanding employees got massive bonuses.
What was interesting was that when some people came to the end of their interviews they would begin negotiating their salary after being repeatedly told that it was not negotiable. The ones who pushed this harder and harder tended to be douchebags and this pretty much always resulted in no job offer or a withdrawn offer. They genuinely seemed pissed.
One douche summed it up as "When I heard that everyone was earning X, I just had to earn X+1 so that I could prove I was better." This was even after he was told how the bonuses worked.
The cool benefit of bonuses was that it really weeded out the crappy programmers. Bonus time would come along. The results would be published and a few guys had literally zero votes and usually they were gone in a month or less. The only programmer ever fired for talking about bonuses went around with a sob story how he needed the bonus. Literally the next day he no longer worked for the company. This is the same company that didn't fire people after one threw a laptop through a window with the intent of hitting another worker. (they worked out their issues).
There was a Planet Money story about this.
A company decided to make everyone's salary open knowledge, posted on the wall for everyone to see.
This would better solve gender pay equity than Pao's no-negotiation strategy. It puts more pressure on management to limit pay decisions to something defensable, prevents employees from pitting against each other for pay and minimizes management's ability to overpay or underpay. Employees know where they stand relative to other employees (and what they may need to do to make more). It motivates better paid employees to show they're worth it and makes it harder for well-paid employees to goldbrick.
The problem with no-negotiation is that for any given hire there are a finite number of employees available to take the job and the best candidate is likely to either be a little better or a little worse than average. Without the ability to negotiate, the better candidates will be less inclined to take the job because it only offers average pay and the below average ones will be more likely to take the job because it pays above what they're worth. You'll end up trending towards below average talent for more than they're worth.
Transparency allows for positioned to be negotiated for and if a given hire has an above average skillset and experience, you can agree to pay them more and won't have to worry about justifying it. The same is true the other way around -- it's justifiable to pay below average, too when you have legitimate reasons of skill or experience.
Pao's strategy is right out of the socialist playbook -- arbitrary price controls, and it destroys the free market's ability to seek efficient pricing. This isn't a political complaint, but an economic one. Most current job markets with "secret" pay agreements now are also bad because they create an imbalance between seller and buyer by eliminating pricing information.
It's also pretty sexist because it attributes a behavioral attribute to gender. I'm pretty sure Carly Fiorina, Meg Whitman, and other Fortune 500 CEOs don't have a negotiating weakness.
"What she just did is claimed that everyone magically has the same abilities, experiences, and knowledge to draw from."
Actually, what she's doing is saying that even if there are differences, they shouldn't be allowed to matter. I don't think she should be allowed to discriminate on any basis (including education, knowledge, ability, etc.), so suggest that Reddit should simply hire for all positions by simply drawing names from a hat, so any difference between applicants doesn't effect the outcome.
"National Security is the chief cause of national insecurity." - Celine's First Law
Negotiation is not about collaboration nor finding the best solution, it's about finding the best deal. Good negotiation skill is always detrimental to the person you negotiate with. In a team, a good negotiator is detrimental to the team.
Sociopaths are almost always excellent negotiator. Think about it.
Pro tip: never accept the first offer......companies can always offer more.
Even better tip: While you are still in college take the negotiations class. A good negotiations class that covers the art (psychology, etc) and science (game theory, etc) over a quarter/semester timeframe (readings, homework, in-class negotiation practice emphasizing recent reading/lecture topics -- i.e. applying different negotiating strategies) is incredibly valuable and a hell of a lot of fun when done right.
It may work out for candidates, though. Right now the company tends to start low and let the candidate name a higher figure, then go back and forth ending up somewhere in the middle. If their initial offer's too low the candidate will just name something higher, and unless the candidate's really cocky the company stands a good chance of getting them for less than they were willing to offer. With no negotiation the company knows there may well be competing offers out there so if they make their offer too low the candidate, knowing they can't negotiate, will probably walk away. Where before the company had an incentive to low-ball the offer and negotiate up, now they have an incentive to offer the most they'd be willing to pay this candidate to minimize the chance of losing the candidate to a competing offer.
NB: this is also why companies try to get the candidate to give an expected salary first, knowing that that sets an upper limit and the candidate is caught between asking for as much as possible and keeping the salary down so the company doesn't decide it's more than they'll consider.
I'd rather vendors worked the same way, give me their best price and I'll tell them whether it's within my budget or not. But then I'm a tech, not a salesman, I prefer to minimize the rigamarole so I can get back to doing productive work.
Negotiation is not about collaboration nor finding the best solution, it's about finding the best deal. Good negotiation skill is always detrimental to the person you negotiate with. In a team, a good negotiator is detrimental to the team.
I don't think that's true at all. Good negotiators make good team members because they are able to compromise. They know how to view a situation from somebody else's point of view and create solutions that are beneficial to all parties. It's the people who are unable to negotiate that suck at teamwork. They get focused on only their point of view and refuse to concede any points, when dealing with poor negotiators it is often "My way or the highway!".
Enigma
The hiring salaries are non-negotiable. Nothing was said about raises. This sounds reasonable. You get a raise if you prove yourself at the company, but not before you even start the job.
If I did negotiate and get a much larger salary than someone with the same skills as me, isn't that unfair and selfish?
No... what's unfair and selfish is that the employer is taking unfair advantage of the other person by accepting their work and not paying nearly as much as they are willing to pay for that kind of work.
In other words, the company is exploiting them for more than the company's fair share of the profit from their work.
And you with your negotiation stood up to them and avoided that level of injustice.
It's selfishness and unfairness; sure, but not on your part... on the employer's part.
Men negotiate harder than women do
You see, that's the problem right there: Stereotypes.
Some people negotiate harder than other people. Maybe statistically speaking, men fall more often into group 1 and women more often into group 2. You're trying to tell me that's the only factor? I'm quite sure introverts fall more often into group 2 while extroverts fall more often into group 1. Maybe redheads fall more often into group 1, or people born in August. Maybe tall people. Probably younger people fall more often into group 2. People shortly after a divorce, people with pets, people growing up with older siblings...
It's so crazy that we focus on the sex thing when there are one thousand differences between person A and person B, most of which were not theirs choice, many of which are equally genetic.
Assorted stuff I do sometimes: Lemuria.org
i've found that most employers do ask you what you expect as salary, knowing that most people will under-value themselves.
i'm terrible at negotiations (coz i'm not an extroverted sales-arsehole) but even i know to reflect that question back by asking what's being offered.
about the only thing i am consistently good at in negotiations is gettring rid of any clauses that say that whatever i do (whether in my time or theirs, on my equipment or theirs) belongs to them. I have my own projects and i contribute to various open source projects and i bring my own personal toolbox of tricks and techniques (that i've developed in my own time over many years) in to benefit my workplace - there's no way in hell i'm going to let them own that for any price. i have any clauses like that replaced with clauses that say, in short, that what i do on their time on their equipment is theirs and anything else i do is mine. if they're not willing to agree to that, then they're not the kind of employer i want to work for.
If you read the summary carefully, they are not stating a salary value for a job in advance of making a offer to someone.
They are interviewing and then making an offer they feel is appropriate for that interviewee, that means that they can still adjust the offer based on the person in front of them (and who is to say the hiring managers don't offer less to women?). All thats changed is that the offer is set in stone, the interviewee either takes it or leaves it.
This scheme will live or die on how well they predict the job market for the roles they are hiring for but I don't see how it really addresses the stated goal of equalizing pay ranges between genders.
This scheme doesn't work too well anyway - I won't go for the interview without an upfront statement wrt the salary. I don't think I've ever gone for an interview which did not have a salary range stated upfront. As recently as Monday I've told a slave-trader that the job-spec he sent me neglected to mention a salary range. He came back with "They offer competitive market rates" and I replied with "I don't interview for people who cannot afford me". I will not be going on any interview soon (mostly 'cos I'm happy where I am, but regardless).
It's actually quite simple - if they cannot afford me then they should waste my time. If I'm unable to adjust my expectations downwards then I won't waste theirs. There is no "Well, we'll offer you competitive market rates for your skills after we interview you," there is only "don't enter the fitting room if you can't afford to buy!"
I'm a minority race. Save your vitriol for white people.