I want to talk about this for a second. I've seen this sentiment a couple of times. I want to start by saying I understand it and I don't disagree. But I want to take this opportunity to talk about my experience with the "no negotiation" policy.
5 years ago, I worked at a company called Clover Health. I joined as the first engineer, and I was largely responsible for our early hiring policies along with the co-founder and other early employees.
We had a no negotiation policy for almost my entire tenure there. We didn't invent the idea of course. But as far as I know, we were one of the earliest startups in the bay area to institute no negotiation for reasons *expressly tied* to building a diverse workforce.
The reasoning went something like this:
- We want to take a stance that seeks to establish and maintain pay equity in our company as much as possible
- We know that negotiation favors men, and white men in particular
- We want to take a stance that seeks to establish and maintain pay equity in our company as much as possible
- We know that negotiation favors men, and white men in particular
- We know that the negotiation process often introduces additional bias and risk into a hiring process that is already fraught
- We know we have no good mechanism to ensure negotiation is handled fairly and consistently across the department. (this only applied to the tech group)
- We know we have no good mechanism to ensure negotiation is handled fairly and consistently across the department. (this only applied to the tech group)
With all of that as inputs, we decided that our policy would be we do not negotiate on monetary compensation. Whether it be base salary or equity. FYI, we had an "open" PTO policy, so that was off the table as well. But that wasn't part of the "no negotiation" policy decision.
As we were hashing out the details, the co-founder and I had a conversation about the issues I could see around this. I was able to inject a couple of additional constraints that I think were critical to how it worked out.
If there was no wiggle room in our policy, then in order for our offers to be competitive, we needed to ensure that the offer we gave was the highest offer we could afford. If there was money left on the table, someone would inevitably make an exception for "top talent".
This is where the bias usually creeps in. Because what I've seen is that most people really do believe in differentiated pay. Few people believe in pay equity as a hard rule. They just disagree on who deserves more and why.
So we after we did our market research on compensation at that time, we set our salary offer as high as we could stand it. For a long period, Clover was offering significantly above average market rates. And I believe we were partially responsible for market rates climbing.
The other big problem I could see with a "no negotiation" policy is that it did not account for hiring people at different levels of skill and experience. We also wanted to commit to hiring less experienced talent, instead of buying into the "everyone is senior" trap.
It became clear to me that pay equity had to hang on a strong career ladder with established levels for hiring and promotion. We ensured that compensation was tied directly to those levels. And that every offer had to be based on the level we set for a candidate after evaluation.
This structure became extremely important in mitigating the bias in the system. First, it allowed me to develop our interview process around determining level. It was a two step process. First, do we want to hire you. Second, at what level would we hire you.
As I said in my article on hiring, the whole team participated in interviewing and evaluation. But the decision about leveling was strictly under the purview of leadership. It was a management decision and not open to input from the team. firstround.com/review/my-less…
Once the level was established, there was no conversation about the offer details. There was a spreadsheet that had the levels and the compensation that went with them. It was impossible for one level 3 engineer to make different money from another L3. From hire onward.
Where I have seen most companies get this wrong is that they do not extend their leveling system into the hiring process, or they do not have compensation tied directly to leveling. Missing either of these leaves huge loopholes in any system.
Even with these checks in place, it was difficult to keep things from going off the rails. When someone really wants to hire a candidate, they will try to find ways to get them the compensation they ask for. That's going to happen. The question is what do you do when it does.
I learned to use these levers to push back on almost all of these issues. You can't separate compensation from levels, so people would end up arguing to over-level candidates. But we a strong interview process which gave us plenty of evidence to refute those attempts.
This also worked in reverse. Yes, I saw all of these biases in realtime. "She will take less than top pay. She's never made that much money before." But it wasn't about what they would take. It was about their value to us, which we firmly established through our interview process
I hired a ton of amazing people and gave them more money than they even expected. I also lost some candidates who wanted to negotiate. They were told there is always money on the table after the first offer. I understand that, but it wasn't true for us at that time.
Of those candidates who walked way mad, I can tell you that a great many of them disagreed with how we leveled them. They thought they were better than what we offered them. But their opinion didn't matter as much as our evaluation.
This is a difficult stance to take. And in hindsight, I view it as yet another loophole that I didn't anticipate. I was very confident in our ability to evaluate engineers. But without a strong evaluation process, people who are just good at interviewing have an advantage.
Once I was not directly overseeing hiring and leveling decisions, the quality of those decisions started to deteriorate rapidly. The reality is that all of this comes back to the people in charge having good judgment and strong integrity. There is no magic.
In closing, I want to say that people are *right* not to trust most companies who claim that a "no negotiation" policy is in their best interest. No policy or process can ensure fair hiring. It's all just humans making decisions. You have to know your own worth.
I explain all of this mostly to show there was a thought process behind our "no negotiation" policy. That it can work in service to DEI rather than just being a ploy to manipulate people. My goal is to give people an alternative perspective to consider when they run into it.
Yes. Many tech startups have unstructured levels and comp bands. If they have levels at all. Bigger companies usually have these in place. I will say that doing this early in a startup's life cycle is challenging and feels like too much effort to people.
Yes, I experienced this a lot too. Largely with people of color and white women. It was a heartbreaking validation of how we teach URMs to undervalue themselves.
Yes. Our leveling guide was used for promotions. They were never arbitrary. We started with a leveling promotion that was earned through impact and value. Then you got the raise in compensation dictated by your new level. Same as offers.
I'm glad you asked. Our leveling system was actually more sophisticated. Each level had sublevels. The sublevels were *also strictly tied to compensation*. It allowed us to acknowledge growth within a level with the only thing that counts, money.
*However*, be advised that the sublevels thing essentially re-introduces room for pay inequity. We had to decide on a policy around which sublevel to offer new hires by default. You do *not* have enough fidelity from an interview to break down into sublevels. Don't do it.
This is not something I've been able to try out personally. I have mixed feelings about it. I understand the proposed benefits. But I believe there downsides as well, and they are not discussed enough.
FYI, I also gave you some details on the career ladder thing. I give this shit away for free in hopes that people will use my experience to do better.
I realized there is some ambiguity here. I'm not against the idea of sublevels. By "don't do it", I mean don't fool yourself into thinking you can evaluate sublevels based on an interview. You *cannot*. Pick one and *always* offer that.
