Should you ban new-hires from haggling over pay?

No negotiation – this social-news site says newcomers can take it or leave it when it comes to starting salaries – but why?

Should you ban new-hires from haggling over pay?
Social-news site Reddit.com is one of San Francisco’s most desirable employers but there’s one thing that might put potential applicants off – the company point-blank refuses to negotiate pay with new hires.

Interim CEO Ellen Pao insists the controversial move isn’t just a poorly-thought out display of authority – it’s about fostering transparency and fair pay.

Pao says that pay negotiations often put women at a disadvantage because men tend to negotiate more often – and more aggressively – than women. 

“People who perform the same should be paid the same,” says Pao. “We want to make sure we maintain this level playing field.”

Linda Babcock – an economics professor at Carnegie Mellon University – says the policy does have the potential to help close the gender-pay gap but only if Reddit can stick to its guns across the board.

If they allow exceptions, “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,” explained Babcock, who researches women and pay negotiation.

Research by both Babcock and Hannah Riley Bowles – a Harvard University lecturer who studies women and negotiation – has shown that men are about four times more likely than women to negotiate pay.

Not only that, but when women do negotiate pay, they’re viewed more unfavourably.

“Women’s reticence to negotiate is very real,” says Bowles.

On the up-side, it seems not all new hires are deterred when they hear offers are final – according to Pao, many admit that they like losing the added stress having to haggle can bring.

Free newsletter

Our daily newsletter is FREE and keeps you up-to-date with the world of HR. Please complete the form below and click on subscribe for daily newsletters from HRD New Zealand.

Recent articles & video

Alec Baldwin cut-out used to protest employee pay

Worker spikes colleagues with LSD because they’re ‘too uptight’

After Disney-Fox merger, thousands brace for massive job cuts

Conducting reference checks: What you need to know

Most Read Articles

Are employees on maternity leave entitled to accrue leave?

How can HR build resilience in the workplace?

Worker spikes colleagues with LSD because they’re ‘too uptight’