When Corporations Use Social Causes as Cover for Cutting Costs

My absolute favorite example of corporations using social causes as cover for cost-cutting is in hotels.  You have probably seen it -- the little cards in the bathroom that say that you can help save the world by reusing your towels.  This is freaking brilliant marketing.  It looks all environmental and stuff, but in fact they are just asking your permission to save money by not doing laundry.

However, we may have a new contender for my favorite example of this.  Via Instapundit, Reddit CEO Ellen Pao is banning salary negotiations to help women, or something:

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.’

Like the towels in hotels are not washed to save the world, this is marketed as fairness to women, but note in fact that women don't actually get anything.  What the company gets is an excuse to make their salaries take-it-or-leave-it offers and helps the company draw the line against expensive negotiation that might increase their payroll costs.

Postscript:  Yes, I understand the theory of negotiation and price discrimination, as used by auto dealers.  One can make an argument that setting prices high (or wages low) and then allowing negotiation by the most wage or price sensitive is the best way to optimize profits, and that Pao's plan in the long-term may actually raise their total compensation costs for the same quality people.  I don't think she is thinking that far ahead.

  • Jason Azze

    When I first heard about this, I thought she was banning negotiations for raises. I'm stunned to learn this policy is for hiring. I'm not sure the word "recruitment" means what she thinks it means.

  • bigmaq1980

    Gosh, that seems wrong headed.

    Wouldn't they want people who are willing to be a bit assertive in getting what they want. After all, they need their corporate interests represented well, which won't happen with a hired bunch of compliant wall flowers (the kinds of people most attracted by this kind of offer, IMHO).

  • randian

    What these "fairness to women" ideas mean, in practice, is "screw men". Can't charge women more for haircuts or health insurance? Men's haircut and insurance prices get jacked up. Men can't negotiate wages? Men's wages go down.

  • Bruce Zeuli

    I completely support the wisdom behind this excellent idea and encourage everyone in the industry to follow the very same path.

    On a completely unrelated note I would like to let folks know that we have several openings for talented and motivated software architects, developers, trainers and salespersons.

  • morgan.c.frank

    "but we aren’t going to reward people who are better negotiators with more compensation"

    am i the only one thinking that this is a form of banning pay for performance? i mean, doesn't this self select for new hires that are bad negotiators?

  • marque2

    The reddit thing is bizarre, but more along your towel point, I roll my as well. Others: We put these awful CFL's in your hotel room to be eco. Let us stop sending you paper bills to be eco. We made your water bottles thinner to be eco, so when they crush in your hand, and spill everywhere its for your good. Then there is the ubiquitous, think of the environment before printing this email. And restaurants not giving drinking water automatically to save the environment. I am sure there are more.

  • Mondak

    Ha! My thoughts exactly. Lets face it though. What does a "ban" mean? If as an employer you want someone and they are not willing to accept your offer, won't you just bypass this ban? I bet this is applied subjectively.

  • ErikTheRed

    It's been done, and it doesn't work. Steve Jobs attempted to make salaries equal and transparent at NeXT, and eventually it was a disaster.

    http://www.quora.com/How-did-Steve-Jobss-experiment-of-publicizing-all-NeXT-employees-salaries-and-having-only-two-pay-grades-fare

    I think that the most interesting (and successful, so far) experiment in an open (albeit unequal) wage structure is Valve (makers of Half-Life and the Steam game distribution platform), who have a hierarchy-free organization:

    http://www.gamasutra.com/view/news/187296/How_Valve_hires_how_it_fires_and_how_much_it_pays.php

  • me

    I don't tip because it's racist.

  • roxpublius

    i'm not certain it really is a brilliant move. i suck at negotiating, and its resulted in my job-hopping instead to advance my career. i like to think that my employers regret not having paid me more, and lost a valuable employee who moved on rather than negotiate. whether my little fantasy about myself is true, the possibility that this could encourage valuable workers to seek opportunities elsewhere certainly exists. banning negotiation as a means of keeping salaries down is just another way of letting others outbid you for the most talented labor.

  • obloodyhell

    }} 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.’

    Allow me to translate:
    "So, if you're a man, or at least, not a bet-wetting metro-sexual liberal of a man, don't come to work for Reddit. We don't want you."

    Great way to discriminate without any legal repercussions. Of course, it's going to hurt Reddit's bottom line, but that won't be at all visible until long after she's negotiated a better deal to be CEO somewhere else.

  • obloodyhell

    Sexist!!!