Should companies ban salary negotiations?

Ellen Pao, the interim CEO of Reddit, is pictured leaveing a courthouse in San Francisco, California March 25, 2015. REUTERS/Stephen Lam

It’s an unpleasant fact but a persistent one — women consistently tend to earn less than men. In fact, women earn about 24 per cent less, according to a global average calculated by the U.N. Women Report released this year. Over her lifetime, the average woman will earn just one-half of what a male counterpart earns.

Ellen Pao, interim CEO of Reddit — and the former plaintiff in a high-profile Silicon Valley gender discrimination lawsuit — wants to change that. She made the bold move of banning salary negotiations for new employees, in an effort to create greater pay equity. 

Pao’s reasoning is that a significant body of research shows men tend to negotiate much more aggressively than women — one potential factor behind the wage gap. 

“Men negotiate harder than women do and sometimes women get penalized when they do negotiate. So, as part of our recruiting process, we don’t negotiate with candidates,” Pao told the Wall Street Journal. 

“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. We ask people what they think about diversity, and we did weed people out because of that.”

Pao deserves credit for attempting a new solution to an age-old problem, said Katie Donovan, salary and career negotiation consultant and founder of Equal Pay Negotiations in Boston. 

“There’s definitely a need to try new things that haven’t been tried before because (the gender pay gap) has stuck around the same percentage for around a decade now… but not knowing how they decide on the actual offer is the question mark.” 

Pay equity continues to be an issue, said Robert Levasseur, principal and senior consultant at McDowall Associates in Toronto.

“Legislatures have been trying to deal with pay equity issues for probably 30 years now, and there really hasn’t been that much progress.”

It’s unclear whether doing away with negotiations will accomplish anything for the average employee, said Levasseur. 

“(Pao) is speaking very much as a senior executive,” he said. “When senior executives are hired, they usually walk in with their team of lawyers and the company walks in with their team of lawyers, and it turns into a real negotiation. When regular folks like you and me apply for a job, they usually tell you what the salary scale is and where they want to start you.”

The best way to get at pay equity is to have more women in jobs that are male-dominated, he said.

“Wage discrimination is probably going to start disappearing when there isn’t a preconceived notion of whether a job is ‘for men’ or ‘for women.’” 

— Read the full article at HRReporter.com

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