Ellen Pao, former junior partner at Kleiner Perkins and now interim CEO of Reddit, has consistently made headlines. First, for her highly publicized discrimination suit against her previous venture capitalist employer, and then for making a bold move as the Reddit chief executive. Just days after losing her case, Pao announced that she would be eliminating salary negotiations at the social news-sharing site in order to eradicate the gender wage gap. Now all new-hire job offers at Reddit are attached with a take-it-or-leave-it salary amount. According to Pao, the offered pay is based on comparing the salary for similar positions against industry standards and does not take into account a candidate's salary history or other personal factors.
Pao claims that eliminating the uneven bargaining table that women encounter when they try to negotiate can help close the wage gap. For instance, of graduating MBA students, half of men negotiated their job offers, while only an eighth of women did (Harvard Business Review, 6/16/2014); but research into why women are hesitant to negotiate has revealed that it has less to do with a lack of confidence and more to do with how women are treated when they advocate for higher pay. Women who are hesitant to negotiate have been advised to simply "man up" and use tactics that work for men – being more assertive, sharpening their competitive instincts, and maintaining a firm stance. However, even when women employ these "masculine" techniques, they still lose. Women who negotiate pay a social price: they are seen as demanding and less-than-ideal colleagues. In a study, the evaluators of those negotiating salary found that the "social cost" of negotiation – a decline in the evaluator's willingness to work with the person negotiating – was 5.5 times higher for women than for men (Harvard Business Review, 6/16/2014). Realizing that women are statistically less likely to negotiate than men and that "when they do they're often penalized for it," Pao has taken negotiations off the table entirely.
Reddit may also be benefiting from an unexpected advantage of the new policy: a less antagonistic and suspicious dynamic when hiring new employees. Pao has claimed that they've had many new applicants to Reddit because of the new rule alone. But critics of Pao's policy contend that it rests on enforcing the gender stereotype that women can't or won't negotiate and also takes the control from the employee and gives it entirely to management. A candidate may not deem their offered salary as "fair" and is given little to no room to communicate a differing viewpoint. Reddit does not have salary transparency, which means that any new hires must simply trust that they are being offered the same or similar pay to their counterparts. Detractors worry that taking away negotiations strips candidates of their power to evaluate their own worth and results in a hiring process that happens behind closed doors. Additionally, it is unclear whether eliminating negotiations would actually help eradicate gender pay disparity. Opponents point out that a "fair" offer from management does not ensure that implicit bias has not influenced the salary offer.
Rather than eliminating negotiations, critics counter that Pao, Reddit, and other companies should give women the tools to negotiate more effectively and create a work culture that does not penalize women for being assertive and negotiating pay. Some point to Marc Benioff, CEO of Salesforce, as an example of a positive alternative. The company has launched a program that will examine the existing salaries of all 16,000 female employees to eliminate gender pay disparity. The initiative also aims to hire and promote more women and has set a new policy that at least 30% of the people at every meeting must be women.
No stranger to sex discrimination, Pao hopes to eliminate what she considers a no-win scenario for women by abolishing salary negotiations. However, it has yet to be seen whether her plan will help women close the gap in pay.
Readers, would you apply at a company without salary negotiations? Do you think it could help eliminate the gender pay gap? Comment and let us know!
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