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We're really trying to nail a good way to deal with salary negotiations when onboarding people, at GrantTree - one that gets out of this "gotcha" approach to sa

by swombat 10y ago

We're really trying to nail a good way to deal with salary negotiations when onboarding people, at GrantTree - one that gets out of this "gotcha" approach to salary. So far the best we've figured out is to be the first ones to name a number, and be super-transparent about how we arrived at that number. The reasoning is that "in a salary negotiation the first person to quote a number loses", so since we (as the employer) are in a naturally stronger position, we deliberately "lose" upfront to avoid forcing the other person into a negotiation dynamic where they're going to try and push it as high as they can, and we end up trying to push it as low as we can. I think everyone loses out from this, and it starts the working relationship with distrust. Instead, we run a pay evaluation process internally, including feedback about the value of the role and the person from all the people who interviewed the candidate. We publish all that feedback, as well as the suggestion/reasoning of our pay trustees (a group of people who use that feedback to try to place the candidate on our pay scale), along with the number this maps to, and the full pay scale, and the list of how much everyone is being paid in the company so they know where they stand (anonymised, because not everyone is comfortable yet with someone who is not yet a team member knowing their salary). So far we've successfully used this process once and it led to a great onboarding experience. It's a recent development. I hope it continues to work, and allows us to avoid the games described in this very helpful podcast. I thought I'd share it in case other employers here are struggling with the same question. This won't work in every company. Have a read through http://danieltenner.com/open-cultures/ http://danieltenner.com/open-cultures/ if you want to understand more about how we run the company - hugely important in making this work.

sillysaurus3 10y ago
Instead, we run a pay evaluation process internally, including feedback about the value of the role and the person from all the people who interviewed the candidate. We publish all that feedback, as well as the suggestion/reasoning of our pay trustees (a group of people who use that feedback to try to place the candidate on our pay scale) None of those factors are why someone is worth $X salary. You say I'm worth $X. I go get a job offer for $Y. If $Y > $X, you were mistaken. It's both as easy and as hard as that, for candidates. If you want to get anywhere close to your earning potential, you'll have to have more than one option when job seeking. It doesn't matter what you're paying other employees or whether that information is known to employees. EDIT: To clarify, this is about market value, not intrinsic value.
- swombat 10y ago
  No one is worth any intrinsic amount. The amount is relative to the work they do, the industry they're in, the state of the economy, how many other people can do that job, how many have actually applied, etc. Any salary formula is entirely arbitrary. We have a pay scale simply because it is a useful tool for conversation, not because it represents any sort of intrinsic property of the person being placed on the pay scale. If your main concern is getting paid as much as possible then we're probably not the right place for you to work anyway. We try to pay well but we certainly can't afford to pay as much as, for example, banking, or Facebook. Importantly, we have no interest in trying to sucker someone into working with us if money is their primary motivation. They won't like it here. To answer a likely reflex-response to this: that doesn't mean we think people should be working for free, or that we judge people who want to earn more money. It's totally fine to want to make more money. Different people have different expectations and requirements at different stages of their life though.
  - brianwawok 10y ago
    > Importantly, we have no interest in trying to sucker someone into working with us if money is their primary motivation. Are you a charity doing good work with orphans? Or are you a business trying to make as much money for the investors as possible? If the latter is true, why wouldn't someone work for you with "money as the primary motivator" ? (This is not Rhetorical, I actually know nothing about your business. But I do see this argument a lot from companies that are 100% for profit and do nothing to better the world)
    - swombat 10y ago
      Neither. We're a purposeful, for-profit, founder-owned[1] company. Just because we are for-profit doesn't mean profit is our only motivation. It's a false dichotomy to suggest that because you want to make money that must be your only driver. Our view of business is that, much like humans, it can achieve and balance multiple objectives. You want to make money: does that mean you want only that to the exclusion of or above other objectives like finding love, raising children, being a good person, etc? I assume not. We want to make money: does that mean we want only that to the exclusion of or above other objectives like having fulfilling work, working in an open organisation, being respectful of others, etc? No. [1] Though opening up the shares to employees within the next couple of months... it's taken a while to put the right system in place. Options wouldn't work because we have no intention of ever selling the business. Edit: Given your clarified question, I will also add that what we do is to help other tech businesses to raise government funding so they can develop cool tech. Many of them have raised money from investors - I don't think that necessarily means that their only purpose is money (though it's certainly true of some). See argument above.
mathattack 10y ago
I've struggled with this a lot. I used to believe in making it a negotiation. The more I've seen, I've switched to paying for the position. Unless hard negotiation is part of the job description, it shouldn't be rewarded. I've also found that rewarding hard negotiators pushes companies down the path of paying men more than women for the same job. If you can't stay in business without underpaying a lot of people, your business is in trouble.
- deleted 10y ago
  [deleted]
- xviia 10y ago
  Without salary negotiation, the company gets to choose the price. Unfortunately, Silicon Valley has shown that it is willing to collude to keep that price down. Therefore, when companies argue that they're banning salary negotiation to "promote equality", you should assume that this equality is merely a gimmick to hide the true purpose: lower wages. 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.
  - mathattack 10y ago
    I don't think "teaching women to negotiate" is practical. Is Google or Facebook supposed to send candidates to negotiation classes before offer negotiation time? Is there evidence that a training class can overcome whatever combination of nature and nurture causes the discrepancy? 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.
blaze33 10y ago
I read about someone who described his own salary negotiation: he writes the minimum salary he's willing to take, the recruiter writes the maximum they're willing to pay , then you show your numbers. If minimum > maximum, call it a day otherwise you continue the negociation. His trick was to write a minimum of 0 as in if you're not satisfied with his job he won't take your money, supposedly he got much better offers doing the negociation this way, probably because he gets the other party to give a number much higher than what they would otherwise have said. Also it may have been for contracting work and not an employee position. (Can't remember where I read this, probably on hn though).
- pnut 10y ago
  In a world of unpaid internships, I think there are probably a number of employers who would break out the contract with a big, fat goose egg on it if you tried this.
qznc 10y ago
> "in a salary negotiation the first person to quote a number loses" This assumption is wrong. Read about the anchoring effect. Your process still seems fine though.
- dionidium 10y ago
  If the assumption is that employers tend to quote a higher initial number than prospective employees, then the anchoring effect supports the claim that the first person to quote a number loses.
  - gricardo99 10y ago
    What's that assumption based on? I would assume the opposite, that the employer negotiates in their self-interests, and tend to quote lower numbers.
    - dionidium 10y ago
      Right, but even then, you're in a position to counter their initial offer and move up from there. If you name the number first, then it only has one direction to move (and it's not the good direction).
      - gricardo99 10y ago
        That rationale contradicts negotiation approaches that I've read about in a few places, specifically the idea of "anchoring." (Other commenters have also mentioned this) I'm not sure how much data there is to support either approach. https://en.m.wikipedia.org/wiki/Anchoring https://en.m.wikipedia.org/wiki/Anchoring
TrickzOnU 10y ago
""Instead, we run a pay evaluation process internally, including feedback about the value of the role and the person from all the people who interviewed the candidate. We publish all that feedback, as well as the suggestion/reasoning of our pay trustees (a group of people who use that feedback to try to place the candidate on our pay scale)"" Problem with this approach is that inevitably part of the formula is also "level" -- so you just converted one problem (negotiating $) to another (negotiating level.) That is when the real tricky people come in -- those who want a high level and just manage others, often adding no value (good managers add a lot of value, but if you tell people that the only way they can make more money is by being manager or senior managing level, then you force people who should not be managing into managing roles.)
- medmunds 10y ago
  > if you tell people that the only way they can make more money is by being manager or senior managing level... This is actually a separate issue. A healthy engineering organization needs to have parallel technical and management tracks, with similar growth opportunities (both compensation and responsibility) at every level. On the tech track, think about a path that leads to CTO. Of course, you'll still get people (in either track) arguing they want a higher level than they merit.
dpweb 10y ago
Asking the salary question of a prospect is un-necessary, and doing it to find opportunities to low ball someone, it's game-playing - it's wrong. The company should know about how much that person is worth. Low balling really isn't necessary to live up to your management responsbilities on the company side of it. On the employee side, best to get out of the question as quick as possible. One thing to say is, I have offers higher than that already. They can find out your current salary, but the other offers, doesn't have to be disclosed.
- paulddraper 10y ago
  > The company should know about how much that person is worth. If anything, a person would know even better how much they are "worth". E.g. they know the necessarily short interview wasn't accurate.
  - dpweb 10y ago
    Not to that company. I may be worth 150 in the marketplace, but that company pays everyone 120. The company is finding people at 120 and balks at the 150. The employee probably goes somewhere else and that's it.
LanceH 10y ago
Another way to approach this problem is to not anchor salaries based on previous salary. I've worked at a company where we hired obviously talented people with little experience. We hired them on as jr devs, with commensurate salaries, but within a year their salaries had increased to their productivity levels (30-40%). I've seen too many people with low salaries get "exceptional" raises of 5% when everyone in the company gets 3%. So you have an employee who works his way out of tech support into dev admin but he's the bottom of a very large band. There is no hope for that person to get to salary parity when mountains have to be moved to go from 3% to 5%.
erikb 10y ago
Yes, open information, even going so far as to teach your bargaining partner, is the best way to reach a really fair end result and making people feel that way.
nunez 10y ago
The problem with this approach is that no matter how transparent you are or what numbers/ranges/data you give, the candidates on the other end will always think you're taking them for a trip. It's the same problem that car salespeople at "no-hassle" or "no-haggle" dealerships deal with. Even though they really cannot budge on their out-the-door price, you'll still have tons of people trying to eat at their already minimal profit margin. I'm not sure that there is an individual solution to this problem. EVERY company (or most companies) would have to be ultra-transparent about their salaries before people can trust something like this, which works against how a lot of high-profile companies currently compensate (i.e. fixed salary ranges, highly variable bonuses)
- swombat 10y ago
  There's definitely a problem there, I agree. In practice, the people that we take to that stage of the interview process typically have quite a lot of self-awareness and also know a fair bit about our company by then, so so far it's worked out alright. But I definitely see that that could be a problem with some people. As I said elsewhere it's not something any company can just implement without thinking about it and have it just work. It takes a lot of work in many areas of the business.

by swombat 10y ago

sillysaurus3 10y ago

Instead, we run a pay evaluation process internally, including feedback about the value of the role and the person from all the people who interviewed the candidate. We publish all that feedback, as well as the suggestion/reasoning of our pay trustees (a group of people who use that feedback to try to place the candidate on our pay scale) None of those factors are why someone is worth $X salary. You say I'm worth $X. I go get a job offer for $Y. If $Y > $X, you were mistaken. It's both as easy and as hard as that, for candidates. If you want to get anywhere close to your earning potential, you'll have to have more than one option when job seeking. It doesn't matter what you're paying other employees or whether that information is known to employees. EDIT: To clarify, this is about market value, not intrinsic value.

swombat 10y ago
No one is worth any intrinsic amount. The amount is relative to the work they do, the industry they're in, the state of the economy, how many other people can do that job, how many have actually applied, etc. Any salary formula is entirely arbitrary. We have a pay scale simply because it is a useful tool for conversation, not because it represents any sort of intrinsic property of the person being placed on the pay scale. If your main concern is getting paid as much as possible then we're probably not the right place for you to work anyway. We try to pay well but we certainly can't afford to pay as much as, for example, banking, or Facebook. Importantly, we have no interest in trying to sucker someone into working with us if money is their primary motivation. They won't like it here. To answer a likely reflex-response to this: that doesn't mean we think people should be working for free, or that we judge people who want to earn more money. It's totally fine to want to make more money. Different people have different expectations and requirements at different stages of their life though.
- brianwawok 10y ago
  > Importantly, we have no interest in trying to sucker someone into working with us if money is their primary motivation. Are you a charity doing good work with orphans? Or are you a business trying to make as much money for the investors as possible? If the latter is true, why wouldn't someone work for you with "money as the primary motivator" ? (This is not Rhetorical, I actually know nothing about your business. But I do see this argument a lot from companies that are 100% for profit and do nothing to better the world)
  - swombat 10y ago
    Neither. We're a purposeful, for-profit, founder-owned[1] company. Just because we are for-profit doesn't mean profit is our only motivation. It's a false dichotomy to suggest that because you want to make money that must be your only driver. Our view of business is that, much like humans, it can achieve and balance multiple objectives. You want to make money: does that mean you want only that to the exclusion of or above other objectives like finding love, raising children, being a good person, etc? I assume not. We want to make money: does that mean we want only that to the exclusion of or above other objectives like having fulfilling work, working in an open organisation, being respectful of others, etc? No. [1] Though opening up the shares to employees within the next couple of months... it's taken a while to put the right system in place. Options wouldn't work because we have no intention of ever selling the business. Edit: Given your clarified question, I will also add that what we do is to help other tech businesses to raise government funding so they can develop cool tech. Many of them have raised money from investors - I don't think that necessarily means that their only purpose is money (though it's certainly true of some). See argument above.

mathattack 10y ago

I've struggled with this a lot. I used to believe in making it a negotiation. The more I've seen, I've switched to paying for the position. Unless hard negotiation is part of the job description, it shouldn't be rewarded. I've also found that rewarding hard negotiators pushes companies down the path of paying men more than women for the same job. If you can't stay in business without underpaying a lot of people, your business is in trouble.

deleted 10y ago
[deleted]
xviia 10y ago
Without salary negotiation, the company gets to choose the price. Unfortunately, Silicon Valley has shown that it is willing to collude to keep that price down. Therefore, when companies argue that they're banning salary negotiation to "promote equality", you should assume that this equality is merely a gimmick to hide the true purpose: lower wages. 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.
- mathattack 10y ago
  I don't think "teaching women to negotiate" is practical. Is Google or Facebook supposed to send candidates to negotiation classes before offer negotiation time? Is there evidence that a training class can overcome whatever combination of nature and nurture causes the discrepancy? 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.

blaze33 10y ago

I read about someone who described his own salary negotiation: he writes the minimum salary he's willing to take, the recruiter writes the maximum they're willing to pay , then you show your numbers. If minimum > maximum, call it a day otherwise you continue the negociation. His trick was to write a minimum of 0 as in if you're not satisfied with his job he won't take your money, supposedly he got much better offers doing the negociation this way, probably because he gets the other party to give a number much higher than what they would otherwise have said. Also it may have been for contracting work and not an employee position. (Can't remember where I read this, probably on hn though).

pnut 10y ago
In a world of unpaid internships, I think there are probably a number of employers who would break out the contract with a big, fat goose egg on it if you tried this.

qznc 10y ago

> "in a salary negotiation the first person to quote a number loses" This assumption is wrong. Read about the anchoring effect. Your process still seems fine though.

dionidium 10y ago
If the assumption is that employers tend to quote a higher initial number than prospective employees, then the anchoring effect supports the claim that the first person to quote a number loses.
- gricardo99 10y ago
  What's that assumption based on? I would assume the opposite, that the employer negotiates in their self-interests, and tend to quote lower numbers.
  - dionidium 10y ago
    Right, but even then, you're in a position to counter their initial offer and move up from there. If you name the number first, then it only has one direction to move (and it's not the good direction).
    - gricardo99 10y ago
      That rationale contradicts negotiation approaches that I've read about in a few places, specifically the idea of "anchoring." (Other commenters have also mentioned this) I'm not sure how much data there is to support either approach. https://en.m.wikipedia.org/wiki/Anchoring https://en.m.wikipedia.org/wiki/Anchoring

TrickzOnU 10y ago

""Instead, we run a pay evaluation process internally, including feedback about the value of the role and the person from all the people who interviewed the candidate. We publish all that feedback, as well as the suggestion/reasoning of our pay trustees (a group of people who use that feedback to try to place the candidate on our pay scale)"" Problem with this approach is that inevitably part of the formula is also "level" -- so you just converted one problem (negotiating $) to another (negotiating level.) That is when the real tricky people come in -- those who want a high level and just manage others, often adding no value (good managers add a lot of value, but if you tell people that the only way they can make more money is by being manager or senior managing level, then you force people who should not be managing into managing roles.)

medmunds 10y ago
> if you tell people that the only way they can make more money is by being manager or senior managing level... This is actually a separate issue. A healthy engineering organization needs to have parallel technical and management tracks, with similar growth opportunities (both compensation and responsibility) at every level. On the tech track, think about a path that leads to CTO. Of course, you'll still get people (in either track) arguing they want a higher level than they merit.

dpweb 10y ago

Asking the salary question of a prospect is un-necessary, and doing it to find opportunities to low ball someone, it's game-playing - it's wrong. The company should know about how much that person is worth. Low balling really isn't necessary to live up to your management responsbilities on the company side of it. On the employee side, best to get out of the question as quick as possible. One thing to say is, I have offers higher than that already. They can find out your current salary, but the other offers, doesn't have to be disclosed.

paulddraper 10y ago
> The company should know about how much that person is worth. If anything, a person would know even better how much they are "worth". E.g. they know the necessarily short interview wasn't accurate.
- dpweb 10y ago
  Not to that company. I may be worth 150 in the marketplace, but that company pays everyone 120. The company is finding people at 120 and balks at the 150. The employee probably goes somewhere else and that's it.

LanceH 10y ago

Another way to approach this problem is to not anchor salaries based on previous salary. I've worked at a company where we hired obviously talented people with little experience. We hired them on as jr devs, with commensurate salaries, but within a year their salaries had increased to their productivity levels (30-40%). I've seen too many people with low salaries get "exceptional" raises of 5% when everyone in the company gets 3%. So you have an employee who works his way out of tech support into dev admin but he's the bottom of a very large band. There is no hope for that person to get to salary parity when mountains have to be moved to go from 3% to 5%.

erikb 10y ago

Yes, open information, even going so far as to teach your bargaining partner, is the best way to reach a really fair end result and making people feel that way.

nunez 10y ago

The problem with this approach is that no matter how transparent you are or what numbers/ranges/data you give, the candidates on the other end will always think you're taking them for a trip. It's the same problem that car salespeople at "no-hassle" or "no-haggle" dealerships deal with. Even though they really cannot budge on their out-the-door price, you'll still have tons of people trying to eat at their already minimal profit margin. I'm not sure that there is an individual solution to this problem. EVERY company (or most companies) would have to be ultra-transparent about their salaries before people can trust something like this, which works against how a lot of high-profile companies currently compensate (i.e. fixed salary ranges, highly variable bonuses)

swombat 10y ago
There's definitely a problem there, I agree. In practice, the people that we take to that stage of the interview process typically have quite a lot of self-awareness and also know a fair bit about our company by then, so so far it's worked out alright. But I definitely see that that could be a problem with some people. As I said elsewhere it's not something any company can just implement without thinking about it and have it just work. It takes a lot of work in many areas of the business.