"There's no way to win": Ellen Pao shakes up Reddit by eliminating salary negotiation in hiring

Pao's gender discrimination suit may have been a tipping point, her real legacy could lie in her tenure at Reddit

Published April 6, 2015 8:08PM (EDT)

Ellen Pao          (Reuters/Robert Galbraith)
Ellen Pao (Reuters/Robert Galbraith)

Ellen Pao lost a gender discrimination suit against venture capital firm Kleiner Perkins Caufield & Byers, but her case is still regarded as something of a tipping point around gender and representation in venture capital and the tech industry it feeds. The visibility of the trial -- and the dirty laundry it aired -- may have brought the barriers women face in a male-dominated industry into sharper relief, but Pao's most significant contribution as a reformer may be in her current role as interim CEO of Reddit.

In her first interview since the trial, Pao told the Wall Street Journal that she has made diversity a priority during her tenure as CEO, a role she hopes to make permanent. She called the position "an opportunity for me to try to put in things that I think are going to create this equal opportunity environment for everyone."

At Kleiner Perkins, Pao was a junior partner trying to cut a path in a boys club. Now at Reddit, she’s the boss.

Among the more dramatic changes at the company under Pao’s leadership: salary negotiation is no longer a part of the company's hiring process. "Men negotiate harder than women do and sometimes women get penalized when they do negotiate,” she 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. 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 is right about disparities in outcome when men and women negotiate. According to a 2006 study, researchers found that women who negotiate often pay a price. The study found the "negative effect" of negotiation -- a decline in the evaluator's willingness to work with the person who negotiated -- was 5.5 times greater for women than it was for men.

“It’s not that women can’t negotiate, but they have to be much more careful about how,” Linda Babcock, one of the authors of the study, said in a 2014 interview with Slate. “Men can use a wide variety of negotiation approaches and still be effective. But women generally need to pull off a softer style.”

Babcock said that the complications of negotiating while female are largely about “what’s normal, what the norms are.” Culturally, women are expected to be less aggressive, but “when people don’t behave the way we expect them to, there are often negative consequences,” she explained.

Other research has shown that women also tend to lowball their ask when advocating on their own behalf. (Interestingly, when women negotiate for others they tend to do so more aggressively and make the same demands as men.)

Taking negotiating off the table as a way to neutralize disparities in how men and women tend to fare in those situations is a sharp departure from advice that tells women to change themselves rather than question the culture. But it’s also a controversial move.

Banning negotiations means asking women to trust that their starting offer is fair in the first place. Pao may be implementing policies to ensure that women and men are compensated equally in the same positions at Reddit, but this is rarely, if ever, the case when women and men are starting a new job.

According to data analyzed by Bloomberg Businessweek, women starting out in finance earned, on average, close to $22,000 less than men. Women in tech were offered $12,300 less than their male peers, and women in consulting faced a salary gap of around $11,500.

Adam Grant, a professor at Wharton, who is perhaps best known for partnering with Sheryl Sandberg in her “Lean In” campaign, told Mashable that he sees the change as a “promising step toward greater fairness in the workplace,” but also said that the perceived "lack of opportunity to exercise influence over their own salaries” could “frustrate” some employees.

But Pao’s decision to take the option off the table may be a direct response to her own experience of working at a firm where she viewed the odds as rigged against her. She told the Wall Street Journal that she, like many women she had spoken to in the wake of her high-profile trial, found that navigating a male-dominated field like venture capital as a woman was like being asked to thread a needle when "there's no hole in the needle."

"From what I’ve heard from women, they do feel like there’s no way to win," she continued. "They can’t be aggressive and get those opportunities without being treated like they’ve done something wrong."

By Katie McDonough

Katie McDonough is Salon's politics writer, focusing on gender, sexuality and reproductive justice. Follow her on Twitter @kmcdonovgh or email her at kmcdonough@salon.com.

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