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Reddit CEO Ellen Pao's bold move to end gender discrimination — banning salary negotiations

Ellen Pao is swiftly emerging as the new face of feminism in the U.S., despite losing a closely watched gender discrimination lawsuit against one of Silicon Valley’s biggest venture capital firms last month. Pao, who has been interim CEO of Reddit since November, is now speaking out about how her experience has changed the way she manages her own employees.

In an interview with the Wall Street Journal published Monday, Pao says she decided to rewrite the rules of hiring at Reddit. In addition to hiring workplace diversity consultant Freada Kapor Klein, the company no longer allows new hires to negotiate their salaries. Pao defended her move based on studies that have shown that when women negotiate, they don’t fare as well as their male counterparts.

"We’ve got a lot of diversity on our team," she told Yahoo's Katie Couric in a separate interview. "We could use more, but we’re very excited to make sure we have different perspectives that represent the people we have using the site." 

Although Pao doesn’t name specific research, there have been plenty of studies to back up her claims. One 2006 study led by Carnegie Mellon University professor Linda Babcock revealed that when women negotiate, both men and women are less likely to want to work with them. Men, on the other hand, are much more respected for their negotiation skills. For women, it’s generally a lose-lose situation. In another study published in 2014, researchers found that female negotiators are perceived as more easily misled than male negotiators and are more likely than men to be lied to in negotiations.

Pao’s solution wouldn’t give hiring managers a chance to inadvertently discriminate against women who ask for more. “We come up with an offer that we think is fair,” Pao says. “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.

We reached out to Reddit for comment but have not heard back yet.

This might sound like a good idea, in theory at least. It’s hard to argue with any move that might make the hiring process and salary decisions as democratic and equitable as possible.

Still, it’s hard to imagine a corporate world where salary offers are the final word. There are people whose entire careers are built upon the promise that they will help people (and women in particular) master the art of negotiating. In recent years, blockbuster books like “Lean In” and “Know Your Value,” penned by high-ranking women working in male-dominated industries, have focused on coaching women to negotiate in a gender-biased workplace.  And by removing the ability to negotiate, it's possible some employees will feel disempowered knowing that they have no real control over their compensation.

“Does [ending salary negotiations] mean it will be better for every single woman? No, that’s not how things work,” says Joan Williams, a law professor at UC Hastings. “But if you want to eliminate an advantage men have because of these prescriptive stereotypes, then this is a clear way to do it."

Williams has been outspoken against people who encourage women to negotiate more, saying this strategy tends to blame the victim and rarely acknowledges the fact that women are fighting a losing battle.  

“Women don’t negotiate because they sense, often correctly, that it will hurt them if they do,” she says. “A man is signaling that he’s a man to be reckoned with when he negotiates for starting salary, but a woman who negotiates risks being seen negatively as a prima donna and not a team player.”

On March 27, a jury of six men and six women ruled against Pao’s claims that her 2012 dismissal from Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, where she was a junior partner, was fueled by gender bias.

What do you think about Pao's decision to end salary negotiations? Drop us a line at yfmoneymailbag@yahoo.com or send me a tweet @MandiWoodruff.

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