In my role as a finance and business operations leader, I’ve had the rare opportunity to be a part of thousands of compensation negotiations with candidates, employees, and recruiters. What I’ve observed, time and time again, is that compensation negotiations inadvertently reward confidence over competence, and add needless bias to a process which can otherwise be empirical, fair, and pragmatic.
And my experiences are not unique. There is substantial data pointing to an ask-gap in offer negotiations. This perpetuates a pay gap between white men and historically marginalized populations including women, gender nonconforming, and nonbinary people. A recent study found that a statistically significant 3.4% gender pay gap in starting offers could be entirely attributed to the difference in the salaries that candidates asked for during the interview process, amounting, on average, to a $4k difference in annual salary between the two groups studied.
Furthermore, paying higher salaries to stronger negotiators directly rewards a skill—confident self-advocacy in a stressful, power-and-information-imbalanced social situation—which is not an indicator of performance or success in the majority of roles.
No-negotiation policies have their critics, and there are certainly situations where a no-negotiation policy could end up accomplishing the opposite of its intent. For example, no-negotiation policies can fail if there’s no process, or bad process, for determining the non-negotiable pay rates, if pay is benchmarked using candidate or employee profiles, rather than on role descriptions, or if current employees don’t get regular benchmarks to keep their pay in lock-step with offers going out to new candidates. These types of policies are at risk of increasing, rather than eliminating, inequitable pay gaps.
How we handle no-negotiation at Tidelift
Even before the pandemic, Tidelift has always been a remote-first company with a distributed workforce spread across the United States. We’ve made several choices in our approach to compensation intended to create a fair, inclusive environment at Tidelift rewarding the people who stay committed to Tidelift over time, wherever they live, and whatever their background prior to joining us.
- Location-agnostic benchmarking. We benchmark offers to aggregate major metros (e.g. Boston, NYC, DC, Chicago, Seattle, Los Angeles) market data, no matter where a candidate might live and work from. We believe employees hired to perform the same role should receive the same compensation, regardless of location, negotiation prowess, prior salary, or years of experience prior to joining Tidelift. All Tidelift offers have set compensation packages that are determined prior to the start of recruitment, and are benchmarked to be competitive with the market data. This, along with a structured interview process, is intended to mitigate the effects of both shifting criteria bias and the ask gap on wages within Tidelift, and is an essential element of our equity, diversity, and inclusion strategy.
- Rewarding tenure. Our no-negotiation policy extends to our approach to raises and promotions internally as well. Rather than base annual increases on subjective measures of performance, we have rolling 4-year compensation trajectories for each career path within Tidelift that we share with employees and award to them based on their tenure alone. When you join Tidelift, you’ll already know what you’ll be making (at a minimum) in years 2, 3, 4, and beyond if you stay in the same role. Promotions or transfers to a new role come with a new trajectory, and all of this data gets refreshed with new major metro technology data each December.
- Sharing our process transparently. We document and share how we approach compensation at Tidelift, including our methodology for calculating initial offers, raises, and promotions, so that candidates and employees know exactly what they can expect from us over their career here.
Tidelift has had our no-negotiation policy for offers in place since our second hire, and we’ve only recently extended it to apply to raises and promotions in an effort to live our values to be optimistic, additive, practical, and inclusive more completely.
But the employment landscape has changed significantly since this policy was enacted. Remote workforces are no longer uncommon, but rather the norm, for many companies. More and more local governments are enacting legislation that requires companies to be transparent about pay in their job postings. In that sense, what was once a differentiator for us (work anywhere in the U.S. for Boston/NYC/DC/Chicago/Seattle/Los Angeles-area rates!) is no longer such a unique benefit, and Zoom towns are bristling with newly relocated remote workers around the country.
Furthermore, the great-resignation has companies scrambling to backfill talent with ever increasing wages, which may necessitate more frequent benchmarking exercises on our part to keep our employees’ pay in line with the market, and our offers competitive. Have we lost candidates and employees who we were really excited about over the past year because of this policy? Yes, but far less often than you might think.
At Tidelift, we believe that a no-negotiation policy paired with compensation process transparency is essential to living our additive and inclusive values, and to ensuring fair and equitable compensation for all of our employees. We hope these policies are already making Tidelift a more fair, diverse, and inclusive culture, and we look forward to continuing to learn from our efforts and review our compensation philosophy regularly to ensure it continues to be fair and transparent.