Why Reddit and other companies don’t let job candidates negotiate their salaries
Most professionals expect to negotiate their salaries when they receive a job offer, seeing it as the best time to get a boost in pay.
But according to a recent article in The Wall Street Journal, companies like Reddit.com, Jet.com, Magoosh, and Elevations Credit Union refuse to haggle over money with potential recruits.
These companies have two main objectives for adopting this novel, no-negotiation policy: to foster transparency and help alleviate the gender wage gap.
At Elevations, a credit union based in Boulder, Colorado, the salaries are set based on title and published online, according to an NPR podcast. The company did this in response to complaints from employees. Annette Matthies, head of HR at Elevations, told NPR that the policy helped relieve employee unrest and improved recruitment efforts and retention.
The take-it-or-leave-it policy also aims to cultivate fair pay.
“The standard now is that people don’t really know what each other earns, that some people negotiate and some people don’t, and so there’s tremendous inequities in salary,” Carnegie Mellon economics professor Linda Babcock, who studies the gender pay gap, told NPR.
Research shows that women are significantly less likely to negotiate for higher salaries than men, and if they do, people react more negatively than they would to a man asking for more money.
These negotiation differences ultimately contribute to the gender wage gap, which is why Reddit interim CEO Ellen Pao decided to ban salary negotiations altogether. Pao’s decision came on the heels of losing a high-profile sex-discrimination lawsuit against venture capital firm Kleiner Perkins Caufield & Byers.
Reddit employees now have two salary options, according to WSJ: one weighted more towards equity, and one more towards cash.
“People who perform the same should be paid the same,” Pao told the publication. “We want to make sure we maintain this level playing field.”
The policies at e-commerce startup Jet.com and test-preparation firm Magoosh look slightly different, but follow the core idea of eliminating wiggle room in the job offer.
At Jet, employees are offered one of 10 set salaries, ranging from about $37,500 to the upper $100,000s; and at Magoosh, employees earn between $40,000 and $150,000, and managers will raise pay when the company reaches a certain revenue milestone, according to WSJ.
However, critics argue this policy leaves a lot of power in the hands of the employer and could ward off top talent.
It could also backfire when it comes to narrowing the gender wage gap, according to Babcock. She told WSJ that if exceptions to the policy are made, “women will follow the rules, men will still try to negotiate, and if they are successful, that will further the gap. It could make things worse.”
Other companies have taken the opposite approach. Google, for example, has a counterintuitive policy to “pay unfairly.“ Laszlo Bock, SVP of Google’s People Operations, says in his book “Work Rules!“ that the range of rewards at almost any level in the company can easily vary by 300{6fac3e6a3582a964f494389deded51e5db8d7156c3a7415ff659d1ae7a1be33e} to 500{6fac3e6a3582a964f494389deded51e5db8d7156c3a7415ff659d1ae7a1be33e}. He argues that rewarding your company’s elite is smart management for any highly competitive business.
SEE ALSO: Why every company should ban salary negotiations right now
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SOURCE: Business Insider – Read entire story here.