Reddit CEO eliminates salary negotiations for new employees

http://mashable.com/2015/04/06/ellen-pao-reddit-salary/

by yuribit • 11 years ago

39 59 11 years ago

How is this not a win for Reddit and a loss for new hires? I have often heard, and seen first hand, that you can easy take home 20k+ more, just by ask for it during the hiring process. It is in the employers best interest, to low ball you, and lock you into making less money. Is this just a negotiation tactic, saying that they do not negotiate, maybe...

marssaxman5• 11 years ago

This is a win for new hires who wouldn't have negotiated anyway, because now the playing field is a little more level.

dcole2929• 11 years ago

I think in this case they mean new to the new company, not new in the sense of Jr employees. The best time to negotiate your salary is probably when you are first being hired.

rhino369• 11 years ago

It's a win for those who wouldn't negotiate because Reddit will have to estimate fair market value if they want to hire someone.

Instead of talking the first low ball offer, they'll get what reddit thinks they are really worth. Which is still probably lower than what they could have negotiated.

spcoll2• 11 years ago

I see it more as leveling the playing field. Women are less aggressive and ruthless in negotiations, and that contributes to the staggering pay gap we see in tech and elsewhere. This gap needs to end, and such a measure might well prove effective.

Such a measure will also mean that aggressive salary negotiators will go elsewhere after their attempts at negotiation are rejected by Reddit HR. Since these people are almost always male, that's a win. It will result in a workplace with less men : )

2xlbuds4• 11 years ago

Would you rather have a world when the pay gap is lessened by making men make less money, or by making women make more money? Because this is the former, and it's not good for anyone except for Reddit's bottom line.

RexRollman• 11 years ago

The goal should not be to hire more of any particular gender. The goal should be to hire the best, most qualified people (although I believe it is okay to use diversity as a factor if one has to choose between two identically qualified applicants).

Eliminating salary negoiation just because woman are not good at is stupid. It baby's them.

nsxwolf4• 11 years ago

Why don't women learn how to be better negotiators? I resisted the urge to say "Why don't we teach women to be better negotiators", because that sounds pretty sexist. But this whole thing sounds pretty sexist to me anyway.

2xlbuds4• 11 years ago

This is absolutely true, in my very first job out of college I turned down the initial offer and asked for more money, they gave me 7500 more base salary, and by my first eligible performance review I got a 7.5% raise on my base salary. Always negotiate, it can only help you.

serve_yay3• 11 years ago

If they're really, really doing this, hats off to them. But you know... there's usually a way. Like maybe they can't budge on the salary number, but maybe a hiring bonus gets a little larger, stock grants/options a little bigger...

Like I said, if they're really doing this, that's great. But are they really committed enough to this to let a great candidate go when the non-negotiable number is too low? Is this just for peon-level employees, or executives too? That's the real test.

MetaCosm• 11 years ago

Reddit might be a unique case because of "passion hires" -- like gaming studios. People will take far less than market rate if they are working on a project they are passionate about.

That said, I suspect "outside signaling" will become a huge thing. You tell your recruiter you need $X, your recruiter tells Reddit that you need $X, you get offered $X, how convenient for both you and Reddit! On the executive side, over dinner you discuss what it would take you to leave your current company -- of course, not negotiating, just two people talking -- and low and behold, the offer will be exactly what was discussed, of course, no negotiating.

shayaknyc• 11 years ago

While I completely understand that by eliminating negotiations for new hires helps to level the playing field, this is just a short-term bandage on a much larger wound.

I would have much preferred she change their hiring policies to educate their hiring managers on how NOT to be biased against women and to NOT penalize women who negotiate for themselves. Treat women who aggressively negotiate their own salaries THE SAME WAY YOU WOULD IF IT WERE A MAN! Education, ultimately, is the answer to a long term solution. It would also help to make sure you have an equal balance of sexes that comprise your hiring team to truly level the playing field.

For a capitalist society, if you're a stronger negotiator, then you should absolutely reap those benefits, and if you're a weaker negotiator, then you have something to strive for and improve. By eliminating it altogether, I'm not sure how you can achieve sustainable, long term success. This decision also seems to undermine or belie the accolades thrown on her for being a Feminist icon in the tech/vc world. If you're trying to level the "playing field" then LEVEL it, don't eliminate it.

Retra2• 11 years ago

Unfortunately, you can't simply educate biases away. Oftentimes they are unaware of their biases, and if you make them aware, it is often only in a pedagogical setting; not one where they are actually trying to make relevant decisions.

This is especially true during an interview scenario, where people largely make decisions based upon intuition and "culture fit."

ForHackernews2• 11 years ago

Being a good negotiator is not well-correlated with being a good performer on the job for most jobs, perhaps least of all for software engineers (who tend to be conflict adverse and not particularly socially adept). It's absurd that playing hardball during hiring negotiations counts for more than anything I could possibly do once I'm actually working a job.

If anything, awarding massive rewards to stronger negotiators is a market failure in a capitalist society, in the same way that paying more to taller or more attractive people is.

nsxwolf4• 11 years ago

If that's true, that it's not well-correlated, why haven't companies figured this out yet? You'd think someone would be paying attention when there's money involved.

Dylan168072• 11 years ago

Treating everyone exactly the same still doesn't fix being socialized to negotiate less hard.

Is it actually better for capitalism to pay people based on negotiation rather than job performance? Is that a settled discussion in economics? (Obviously negotiation skill plays some role in overall skill, but that's not an answer to the question.)

cracell2• 11 years ago

How could you pay someone by job performance?

Anything you use to measure their job performance then becomes the metric that is optimized for. And the things you can easily measure are almost never the important things that you need out of an employee.

2xlbuds4• 11 years ago

Reddit CEO Ellen Pao, feminist hero,

What?

spcoll2• 11 years ago

She is.

She had the courage to stand up against sexism and bullying, and take on a stronger adversary (KPCB), when many would have just given up. She fights for what she thinks is right, and her fight is empowering all women in tech. If that's not heroism, then I don't know what you need.

rub• 11 years ago

Lol.

2xlbuds4• 11 years ago

She sued and lost to help her husband pay off his Ponzi scheme. My hero.

Retra2• 11 years ago

Have you thought about how many vile, insane people in human history match your description of heroism?

calbear81• 11 years ago

I believe you're being downvoted not because people don't believe that what she did was right and needed in our industry but because they don't agree with the "hero" characterization. "Hero" in my book requires some sort of self sacrifice that is squarely against one's own interests (throwing yourself on a grenade to save your comrades, running into a burning building, blowing the whistle on a corporate polluter with no personal gain). In this case, there was $16M at stake in personal gain were she to have won her case and the fact that the jury found in favor of the defense suggests that gender bias was only one aspect of why she was passed over for promotion.

thelicx• 11 years ago

That is a way to say that women are inferior to men at negotiating. Isn't that sexist?

BTW best negotiators I've ever met in my life were all women..

EliRivers• 11 years ago

BTW best negotiators I've ever met in my life were all women..

Are you sure? I suspect your data set might be missing some; the best negotiators I've ever seen were basically invisible. The people they were negotiating with didn't even realise it was a negotiation.

bmm6o2• 11 years ago

I wonder how they expect it to work out in practice. Are they increasing the amount of their offers to compensate for this, or are they just planning to accept that better negotiators will go elsewhere (for more money).

serve_yay3• 11 years ago

That's certainly one way to address gender-bias issues. What issues will crop up as a result? Only time will tell. (Maybe none, but honestly I doubt it.) I respect that they're trying this.

nsxwolf4• 11 years ago

"I want more money, so I'm not going to apply at Reddit" is one of the issues that comes to mind. Only time will tell if it works out for them.

cLeEOGPw• 11 years ago

So in other words reddit now will only take those who will agree to lower pay. Hardly a strategy to strengthen developer team.

marssaxman5• 11 years ago

Or they will simply have to offer the higher pay up front, to everyone, instead of reserving it only for people who ask specially for it instead of taking their offer literally. This is a step toward improved transparency in the hiring process.

eonw3• 11 years ago

seems like a bad idea to me and i struggle to understand how not negotiating salaries makes it a more fair workplace.

dragonwriter4• 11 years ago

seems like a bad idea to me and i struggle to understand how not negotiating salaries makes it a more fair workplace.

Paying people for the work they are being asked to do rather than for that adjusted by their negotiating ability is more fair (unless the work they are being asked to do is something closely relating to negotiating, in which case paying for negotiating ability could reasonably be interpreted as paying for job-related skills.)

As for why it might be a good idea, if they set the non-negotiation offers at a level that pays what the average employee would end up with with negotiation, it suddenly becomes a more attractive place to apply for people whose skills are more in the area of the work of the job than in negotiating (and, until other firms adopt similar approaches, may produce a particularly strong retention advantage for those people.)

nsxwolf4• 11 years ago

If this catches on, I wonder how long it will take the federal government to decide it's such a good idea everyone needs to do it. I can imagine a database of approved salaries that map to job titles, geographic metadata, and whatever else - and that's what you'll get paid.

serve_yay3• 11 years ago

No problem, if you need to pay someone more, give them a fancier title!

(Ever wonder why Salary.com-type sites show Software Engineers making $80k but Software Developers making $70k?)

robgibbons2• 11 years ago

If this catches on, I wonder how long it will take for a class action lawsuit against the companies involved. A widespread "take it or leave it" policy across an entire industry would basically be akin to wage fixing. If nobody in an entire job market will negotiate with employees on salary, they could effectively lock out truly competitive wages.

smsm423• 11 years ago

Doesn't federal government already have pay scale something like that? Never worked for them but I'd imagine that what they have to do just to keep costs predictable.

yellowapple• 11 years ago

The arguments in favor of such an elimination seem... contrived. Hell, I'd even figure them to be sexist with their implications of "oh gee, well women are bad negotiators, so we won't even give them the chance to negotiate in a very-visibly-male-dominated environment".

robgibbons2• 11 years ago

This may be an unpopular opinion, so forgive me in advance, but this new trend of non-negotiable salary is about one step away from Apple's anti-competitive employment agreements that became public after Jobs' death. In fact, that's exactly what it is: anti-competitive.

What is stopping all of the top SV companies from colluding on what a "fair salary" is? This just reeks of a glass ceiling that rewards nobody but the corporation. And now it comes in the name of feminism?

cracell2• 11 years ago

The solution here is to help teach everyone how to negotiate their salaries. Not to let companies completely dictate the terms of your employment.

Also "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." is a contradiction.

They are saying they won't negotiate and that you can negotiate in the same sentence. Asking for a swap is a negotiation unless you have an offer that gives you multiple salary to stock option balances to choose from to begin with.

dragonwriter4• 11 years ago

They are saying they won't negotiate and that you can negotiate in the same sentence.

No, they aren't. You are inserting assumptions not in their statement to come up with that interpretation.

Asking for a swap is a negotiation unless you have an offer that gives you multiple salary to stock option balances to choose from to begin with.

Since nothing in what they say indicates that they are not not providing offers that give multiple salary to stock option balances to choose from (or a base salary/equity balance and a defined swap ratio and range in which swaps are allowed), and as you yourself note the only way the statement is internally consistent is if it does do that, why do you assume that the offers aren't structured that way?

hashberry• 11 years ago

If women are not good at doing something that men are (e.g. negotiating), then don't let men or women do it.

Is this feminism or sexism?

nostrademons• 11 years ago

Possibly unpopular opinion here, but I don't think this policy will change much. At least, it is not as universally anti-employee as people make it out to be.

Already, the best way for anyone to get a better salary is to have a competing offer in hand. "Asking for more money" will just get you back the ~$5K that the company low-balled you in the first place, figuring that you would ask for it. Folks in the comments here are talking about getting a raise of $7.5K by asking for it - I've had multiple offers (at the same time) differ by ~35%, and doubled my compensation by switching jobs after about 2 years.

What this policy will do is ensure that Reddit will lose candidates who shop around to a higher bidder. This is not a loss for the candidate - they get the higher-paying job anyway - it's a loss for Reddit. Or maybe it's not, if Reddit is looking to employ "true believers" who care about the site itself and not their salary.

Or Reddit could up its base salary so that it has a reasonable likelihood of being the highest offer for any candidate it wants to employ. That's a win for all of Reddit's current employees, a financial loss for Reddit, but may be a cultural win for Reddit.

bmm6o2• 11 years ago

That's what I was thinking, but TFA is too thin on details to draw any conclusions. Like your example about a candidate having a better second offer and asking Reddit to bump theirs - I guess that counts as negotiation, but is that the kind of behavior this policy is supposed to "level"? It seems like the easiest kind of negotiation there is, and the kind I imagine would help women the most. Especially since if you remove the opportunity for negotiation later, the initial offer becomes that much more important.

mallyvai• 11 years ago

I have incredibly mixed feelings about this. Zero-negotiation policies are great tools for eliminating unfairness if executed well, the problem is that you still force the employee to end "trusting someone at their word", and every company claims they're going to make a fair, standard offer. Here's the thing:

1) Yes, being strict and almost formulaic will reduce inequality and increase probability that folks are compensated according to actual value.

2) But you need meaningful transparency around this. I guarantee you, 100% that if I had a live offer at Reddit, I could find some way to negotiate some additional crap that amounted to a meaningful compensation bump in the end.

3) Every company that does this ends up making exceptions for people the higher-up you go. Wealthfront, Stack Exchange, and now Reddit, will join the club of companies that negotiate with execs they hire, VCs, and bizdev partners, suppliers - basically, everybody except their employees. And even then only "most of the time"- there are always exceptions - just hold out for a higher comp band. Get a stronger inside referral. It's always possible.

Something very close to the Buffer model is the only real way to do things. You can tweak the variables, but you need strictness and transparency. https://open.bufferapp.com/buffer-open-equity-formula/

Ellen, Alexis - If you're reading this, I'd love a chance to understand your challenges in crafting these policies, and see if I could offer any input from my perspective as well.

(Source I founded http://OfferLetter.io - we help engineers and other tech workers negotiate for what they're worth. I've personally had literally hundreds of conversations with folks about this.)

JrobertsHstaff• 11 years ago

This policy might not change much, but it will level the playing field for Reddit's diversity recruiting efforts. It's too bad that the few feminists there are in tech like Ellen Pao get so much criticism for trying to change an extremely male-biased industry.

Reddit CEO eliminates salary negotiations for new employees

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