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EQUITY AT WORK

Why we need to eliminate salary negotiations altogether

The cofounder of FreeWill insists we really need to talk about solving the underlying problem that negotiation poses and eliminate it altogether.

Why we need to eliminate salary negotiations altogether

[Images: Michael Noel/Pexels; mohamed_hassan/Pixabay;
rayul
/Unsplash]

BY Lydia Dishman4 minute read

Looking to better address the persistent gender pay gap where women continue to earn 83 cents on the dollar relative to men—with the disparity far worse for women of color—forward-thinking lawmakers have begun making employers disclose potential salary ranges within their job postings, knowing that enacting such policies can help drive towards pay equity.

New York City and Colorado already have salary range mandates, and California just recently joined. Assuming New York’s governor signs, a quarter of the U.S. population will live in states with salary range mandates, which should soon be the norm.

This is all very exciting progress that ought to be commended. But let’s take a step back: The reason transparency on salary ranges is important is because it helps democratize negotiations that can happen during the hiring process. It’s well-documented that the mere existence of negotiations happens to favor men. Men are four times as likely to initiate negotiations, and of those who ask for more, 84% receive it.

That raises the question: If we truly want to get serious about gender pay equity, why not advance the conversation from instilling the negotiation process with salary range data to discussing the merits of eliminating negotiation from the hiring process?

As a chief executive, I am a staunch supporter of having a non-negotiation policy as a centerpiece of any hiring process designed to foster diverse, equitable and inclusive environments. I believe it is a best practice for pay equity and it should be adopted widely.

Thankfully, my male cofounder was completely on board with implementing a non-negotiation policy when we founded our company five years ago. Today, we employ more than 200 people and not negotiating has been a tremendous asset. True to our original intent, we’ve found that women and people of color tend to appreciate non-negotiation the most.

Why is this?

  1. They know they are not leaving anything on the table when they’re interviewing.
  2. They are not worried about later finding out that someone else is doing the same job and making far more.
  3. They are not anxious about what their future relationship with a manager might look like after the stress of a negotiation.

Negotiating is, in and of itself, a skill that advantages some candidates more than others. It also might not be a skill that is helpful for the job you’re looking to fill. By letting candidates negotiate, companies open the floodgates to societal biases.

Negotiating is also not something that everyone readily enjoys, regardless of their gender or background. Relatively few candidates are professional negotiators by trade, and there’s an inherent experience and information imbalance between job candidates who rarely do it and companies that handle personnel issues each day. When candidates do negotiate, it’s not out of enjoyment – it’s sparked by fear of missing out.

What’s more, as previously mentioned, women tend to negotiate far less than men. Numerous studies have concluded this and several have explored causes. Is not electing to negotiate merely a confidence problem? Not quite. The most plausible explanation I’ve heard is that women correctly perceive that they will bear more “social costs” if they try to negotiate, so they instead choose to avoid it.

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Social costs refer to the political baggage a new employee might carry with colleagues: the risks of being seen as an aggressive negotiator. Women are more likely to avoid negotiating their salary due to apprehension about social costs. Studies have shown they’re rightly concerned, that men do face less costs with their future managers after negotiating from the opposite side of the table.

In short, there are many benefits to having a non-negotiation policy. At the same time, you may be asking if, by refusing to negotiate, we constrain our ability to effectively recruit top talent. That is a fair question. The answer is that this has indeed happened—exactly once (out of thousands of interviews) since we implemented the policy. Far more often, we’ve found it easier to recruit and retain talent specifically because of our policy.

Suffice it to say, non-negotiation policies are a best practice around pay equity. Full stop. If you’re considering how to do this and how to make it work, here are a few tips:

  1. Have a clear philosophy for guiding the process of setting salaries, and share it with your full team.
  2. Utilize third-party platforms to check salaries for roles when you post them, because if you’re not going to negotiate, you won’t have flexibility on the back end.
  3. Consider adding signing bonuses for certain roles in highly competitive fields.
  4. Post the salary in your job descriptions and talk about the non-negotiation policy within the first conversation so there aren’t any surprises.
  5. Make sure the ranges are small enough to actually be meaningful, and be open to changing the salary for a role if you get strong feedback that the salary figure is off.

I’d be remiss not to add that the non-negotiation policy is also good for employers. We save a great deal of time by not negotiating, and we’re able to budget more accurately.

I’m happy to see the broadening of transparency in salary ranges and I hope it continues, but what we really need to talk about is solving the underlying problem that negotiation poses and eliminate it altogether. Doing so would be a win-win for employees, employers, and society as a whole.


Jenny Xia Spradling is the cofounder and co-CEO of FreeWill.


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ABOUT THE AUTHOR

Lydia Dishman is the senior editor for Growth & Engagement for fastcompany.com. She has written for CBS Moneywatch, Fortune, The Guardian, Popular Science, and the New York Times, among others More


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