Will Coinbase’s move to eliminate salary negotiations serve as an example to reduce the gender pay gap?

This article was originally published on 13 May 2021 on Forbes.com

For many people and workplaces, that question remains a taboo topic. While the National Labor Relations Act means it is legal to discuss your pay with your colleagues, those conversations often feel off-limits. Unless, of course, you work at software firm 10Pines, where your colleagues determine your salary. Or you work for Buffer, which has an open spreadsheet of salaries. But those approaches are outliers. Generally, there is a lack of transparency around pay, and this lack of transparency benefits employers and can also widen the gender pay gap.

One experiment to reduce the gender pay gap

Coinbase recently announced a new approach to compensation. While two of the three changes—increasing compensation targets and annual equity grants—are laudable, it is the third change that is most intriguing. Coinbase has decided to eliminate negotiations from the hiring process. Anyone hired into the same role will be paid the same.

Why this move could help narrow the gender pay gap

Negotiation research has found that men tend to achieve better outcomes in salary negotiations than women. Coinbase recognized that gender and a whole host of factors play into someone‘s initial salary—and the differences in that first offer can follow employees around for their entire career.

From the blog post:

Traditionally people expect they need to negotiate for the best package after being hired in a new job. Those that do this well tend to be rewarded, and those that don‘t lose out. These negotiations can disproportionately leave women and underrepresented minorities behind, and a disparity created early in someone‘s career can follow them for decades.

Granted, the parity in pay will not necessarily continue once hired. Performance, promotions, and other workplace markers of success will determine subsequent salary increases as employees progress through their career at Coinbase.

Will this be the way forward for other businesses?

Hopefully, Coinbase plans to measure their current gender pay gap, and then measure it again after this policy has been in place for six months to a year. The results of this data could be illuminating. After all, one of the best ways to reduce the gender pay gap is via policy changes—and a policy to standardize pay is a good place to start.