If you can't stay in business without underpaying a lot of people, your business is in trouble.
If there really is a difference in negotiating ability between women and men, it would seem far more beneficial to teach women how to negotiate for a fair wage rather than abolish the entire thing altogether. In fact, teach all employees to quantify their abilities and how much value they will provide to their employer. Demonstrate that if companies are unwilling to pay them a fair wage, that they should not devalue their employment.
But the most recent steps toward banning negotiation will ultimately hurt all employees. When companies like Apple, Google, and other Silicon Valley companies agree not to hire employees from each other, and threaten to replace tech workers in the US with less-expensive H1B visas, we should question their true motives. This newest idea of "banning negotiation" is nothing more than another tactic used by a profit-maximizing entity to reduce costs.
Let the market drive the compensation level. If "the compensation for the position - take it or leave it" is too low, then the company won't be able to hire anyone, and they will have to alter it over time.
If it's "take it or leave it" from the employee, you wind up underpaying people with humility, and overpay people who are overconfident.
Note: I'm not at one of the large companies that have been in these lawsuits, and lost an internal fight to move to the "one price" policy that I'm advocating for. I'm doing my best to implement it in my part of the organization, and even there it doesn't always work.
Rather, there are many ways to approach this:
1. Salary negotiation could be included within curriculum at CS schools. (Schools would love if alumni made more money!)
2. Techniques could be included in books (like "Soft Skills"), podcasts, etc.
3. The culture in Silicon Valley could emphasize the importance of negotiating a fair wage.
Left to their own devices, companies WILL exploit those who believe that negotiation is "bad". Companies might not even do so intentionally, but might do so merely by hiring the cheapest employees who have the highest skills.
A side effect is that even if only 75% of employees negotiate to higher wages, the "market rate salary" for employees will increase. If, instead, 75% of employees did NOT negotiate, you'd see a depression in wages.
This is such a good idea. The modern school system oscillates between industrial training and academic pursuit, and very practical skills like this one (or householding finances) which could directly benefit the actual person, are terribly neglected.
What is it that stops teachers from talking about everyday matters related to money? Is it their own sense of inadequacy on the subject? Fear of letting out how much they (don't) make? Is it "political pressure"? Or simply that they love their academic subjects so much, they'd rather not talk about more prosaic stuff?
Student feedback always suggested these were incredibly valuable lessons.
There is also the issue that the same behaviour is seen differently when coming from men and women. What is assertive in a man can be aggressive and offputting in a woman. Which means you'd have to have different kinds of courses for different genders, and it only starts there (more minority groups with less studies of what happens when they act the same as a white male). So, there is even more of a hurdle for potential training classes to overcome.
http://www.huffingtonpost.com/entry/men-see-powerful-women-a...
I think for very senior roles, individual negotiations still might make sense, as the value prop of those hires is highly variable and can have big impacts on the organization. But for roles like Software Eng I, and Software Eng II, etc... in the long run it is better for morale, attrition, and equality to use defined salary ranges. And you can still use bonuses to adjust compensation based on performance.
And just because a company has defined salary ranges doesn't mean employees have no voice in the matter. If they feel those salaries are not keeping up with market rates, they can make that known to management, or they can go find greener pastures.
It is a very worthwhile path, but it certainly is not easy for the founders (and is probably impossible in a large traditional, top down, public company where "the owners" are a faceless group of shareholders who definitely want to believe they are in control - even though they definitely are not).
At this point, we (my cofounder and I) have pretty much zero control over how much people are paid in the company. We provide advice to people making those decisions but we are not the decision-makers. And the conclusion of that experiment is that people actually seem to care far more about getting the arbitrary salary formula right than we do, so I believe it was very much the right choice to let go of this lever and let the company design its own salary structure.
Thanks to this situation (however difficult it was to get there), the problem you outline is not there because there is no "employer" entity separate from the employees that could collude or have incentives different from the employees.
A friend recently had an offer, ready to sign, but the salary was lower than she wanted. She wrote back asking if there was room to move upward. She had the offer withdrawn.
I remember one of my first colleagues as a professional in this industry had to fight and fight to eke out a lousy 3% raise, despite being s superstar employee.
Later I found out that she was making 30% less than me, and They had just threw a ton of equity at me to try and keep me from leaving.
When did these Silicon Valley companies threaten to hire less-expensive H1B visas? Do you have any citation on this? Are the H1Bs working for these companies paid less than non-H1Bs? Looking at the publicly available salary data for these companies - AmaGoogFaceSoft kind - seem to pay their H1Bs very well.
Consequently, since they've eliminated the possibility for negotiation, I will never approach them for prospective employment.
A "master" engineer taking low equity living/working in SF only makes ~$155k: no thanks.
https://buffer.com/salary?r=1&l=10&e=3&q=1
In my humble opinion: this kind of hiring strategy rewards low performers who get lucky and dissuades and marginalizes A-players who know what they are worth.
You may believe that sets you apart as an "A player" and means we only hire B players. I believe the concept of A players and B players is false, and have discussed this here: http://danieltenner.com/2014/09/11/there-are-no-b-players/ . That said it is your right to believe this dichotomy exists and that you are on the right side of it. I put it to you that if you insist on having an A/B player dichotomy your desire for an environment which makes you feel worthy through paying you more makes you inherently a B player in the environment at Buffer or GrantTree, where this kind of mindset will have all sorts of side-effects that will make it difficult to work with you.
Almost all the people who we interview are very keen to work in this kind of environment. The last job we had opened (admittedly a relatively low skilled job) we had 200 applicants, interviewed about 20, and almost all those 20 were really, really keen to work in this open environment (and none found it a turnoff, though some didn't really understand what it meant). I like to think we hired someone who will be able to do the role very well and be happy doing it in our company. What I love about your comment is that you are far from alone to have this reaction, but because we are very upfront about our culture, people with your reaction never seem to apply. That's a win on both sides: you don't waste your time interviewing with us, and we don't waste our time interviewing you.
I find it difficult to work with people who are compensated less than me. I want my coworkers to be better than me.
I do not want to work with people assessed as "masters" making $155,000/year in San Francisco, CA. I am accustomed to working with people being paid more.
Full disclosure: Over four years ago, I was receiving offers $10,000+/year more for like roles (SF, FTE, backend development). I would certainly not proclaim myself a "master," either. Especially not 4 years ago.
> I love about your comment is that you are far from alone to have this reaction, but because we are very upfront about our culture, people with your reaction never seem to apply.
Please do not turn this into a matter of "culture."
I find nothing wrong with a culture of transparency. I find Buffer's actual compensation packages problematic.
The lack of negotiation ability makes what might otherwise be a fruitful business relationship impossible. I do not believe that transparency and negotiations are mutually exclusive.
Sincere counter-question: how can you retain talent with fixed salary ceilings? Why would someone stick around when they're leaving a ton of money on the table?
Entirely my opinion: this is potentially the A/B dichotomy.
If someone is developing their skills, is extremely productive, is increasing their worth, at one of these companies they can choose to leave money on the table (altruistically donating their higher value to a for-profit company) or leave. Are they a "bad culture fit" because they wanted to make what they are worth?
> I find it difficult to work with people who are compensated less than me. I want my coworkers to be better than me.
I much prefer that attitude to the opposite :-) Though surely even better is to work with great people whom you're learning from in a variety of ways, whether or not they are paid more or less or the same. A lot of the value that someone can bring to your life is not correlated with their value to the market.
> The lack of negotiation ability makes what might otherwise be a fruitful business relationship impossible. I do not believe that transparency and negotiations are mutually exclusive.
I can't speak for Buffer, but in GrantTree it is not that you cannot negotiate, but that you cannot negotiate in secret - so it's more a discussion than a negotiation (I hope... sample size is limited at the moment!). As I mentioned in my original post, we start the ball rolling by saying where we think you fit on the pay scale and why, and if that's not where you think you should fit you are welcome to engage in a discussion to help us get it right!
> Sincere counter-question: how can you retain talent with fixed salary ceilings? Why would someone stick around when they're leaving a ton of money on the table?
> If someone is developing their skills, is extremely productive, is increasing their worth, at one of these companies they can choose to leave money on the table (altruistically donating their higher value to a for-profit company) or leave. Are they a "bad culture fit" because they wanted to make what they are worth?
There's a really good question here and I don't have a great answer to it. If you or anyone has any suggestions I'd love to hear them. To an extent, part of my answer would be: surely that's true of any small company. People might grow faster than the company. When that happens, I guess they leave and move on to something else. I guess that's ok. It's not like everyone has to keep working for GrantTree for the rest of their life! People might leave for this reason or for another reason. I hope they then look back at GrantTree as a place where they grew and learned a lot, had a great time, made some great friends and did some worthwhile work. In that time, they contributed to GrantTree's growth as well as their own, so it's not like the company is left high and dry here.
And no, I don't think that makes them a "bad culture fit" in that sort of insulting way. It might mean they are no longer a good fit for working here. That's ok. People change. Companies change. Someone that was a good fit to work in a small 3-people startup is not necessarily a good fit to work in that company 20 years later, obviously. That doesn't have to be an insult or a put-down.