Reddit CEO Ellen Pao Ban Salary Negotiations In Effort To Cut Gender-Pay Gap
Fresh off of losing a high-profile sex discrimination lawsuit, Ellen Pao, the interim CEO of the website Reddit, says she wants to take salary negotiations off the table at her company as a way to level the playing field for women.
Pao was asked about any changes she hopes to enact at Reddit during an interview with The Wall Street Journal earlier this week, her first since a jury ruled against her lawsuit against her former employer, the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers.
“It is an interesting perspective, because it’s an opportunity for me to try to put in things that I think are going to create this equal opportunity environment for everyone,” Pao said.
One way to do that, she claims, is to change up how job applicants negotiate for salary so that female candidates aren’t at a disadvantage. But rather than revamp the company’s hiring process to encourage women to negotiate, Pao is considering enacting a ban against negotiations altogether.
“Men negotiate harder than women do and sometimes women get penalized when they do negotiate,” Pao said. “So as part of our recruiting process we don’t negotiate with candidates. We come up with an offer that we think is fair.”
Pao’s assertion is not without evidence.
According to the Harvard Business Review, one study of MBA degree-holders found that one-half of men negotiated their salaries compared to one-eighth of women. Other studies have found that women who negotiate are perceived in a more negative light compared to men. One researcher dubbed this the “social cost” of negotiating.
“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,” Pao said. “We ask people what they think about diversity, and we did weed people out because of that.”
Though evidence does support Pao’s fundamental argument, it has one inherent flaw: the business world generally favors employees who have strong negotiating skills.
Facebook chief operating officer Sheryl Sandberg touched on this catch-22 in her recent memoir, “Lean In.”
She wrote that when she was negotiating with Facebook founder Mark Zuckerberg for her job in 2007 she received advice from a relative who said that any candidate in her position would present a counteroffer.
“I went back to Mark and said I couldn’t accept,” Sandberg wrote in “Lean In,” according to Forbes. “But I prefaced it by telling him, ‘Of course you realize that you’re hiring me to run your deal teams, so you want me to be a good negotiator. This is the only time you and I will ever be on opposite sides of the table.'”
Pao emerged as an advocate for female business executives after she filed suit against Kleiner Perkins in May 2012.
She claimed that she was given negative job evaluations and overlooked for promotions with the company because she is a woman. She also claimed that she was fired from the company in Oct. 2012 after filing her suit and because she claimed she faced discrimination.
Pao’s suit sought nearly $160 million in lost income and damages from the company. But a jury ruled in favor of Kleiner Perkins, forcing Pao to compensate the company for some legal expenses.