Why We Opted to Compute Employee Salaries, Not Negotiate

Many companies see salaries as a helpful carrot: managers promise a raise to tease out better performance, or recruiters sweeten a deal by adding a chunk of change to the compensation package.

But at 360Learning, we’ve taken the opposite approach. Instead of allowing employees to negotiate salaries (during the recruitment process or at any other time), we compute them based on our internal system. We believe this is both the fairest approach and the most efficient one.

Why We Don’t Negotiate Salaries

From a purely pragmatic perspective, negotiating salaries takes time and unnecessary energy that you could use elsewhere. Instead of setting up meeting after meeting and trying to wheedle answers in a series of email threads, candidates and employees know what to expect, even during the interview process.

And candidates appreciate salary transparency. A 2017 survey from Glassdoor found that nearly all (98%) job seekers and employees say it would be helpful to see pay ranges included in open job market listings.

Crucially, transparent salary ranges go a long way when it comes to fighting bias (whether explicit or implicit). Especially considering that 60% of women say they never negotiate their salaries, it makes sense to avoid rewarding savvy negotiators purely for their silver tongues. When wages are out in the open for all to see, it makes any favoritism or discrimination wholly apparent and, therefore, easier to eliminate.

What We Do Instead

So, how do we determine who gets paid what? We use a rigorous, no exceptions grid of levels. There are eight levels in total (with half levels in between, so in practice, it’s more like 16), ranging from the most junior (Analyst, at level 1) to the most senior (C-Level, level 8). We associate each level with a degree of impact and responsibility.

For instance, we expect a Manager at level 3 to be able to collaborate effectively internally or externally when starting from clearly opposing views. They need to be able to lead small, low or medium complexity, low or medium stakes projects. A level 6 Director, however, is expected to lead large, medium, or high stakes, high complexity projects and be able to handle conflict effectively internally or externally.

An essential part of the recruitment process is assessing a candidate’s level. We do this based on their experience, job titles, and the impact they could have on the organization if they were to join. Again, this is an assessment, not a negotiation—a candidate can’t go from a level 4.5 to 5 by offering to join sooner or sweetening the deal.

By communicating their level early on, we can talk salary bands and get down to brass tacks transparently and clearly. We base salary bands on job type—Client Success teams have different salary bands than Sales, for instance. 

For each band, there’s an upper and lower limit. For instance, a US 4.5 level Account Executive won’t be made an offer below $200,000 (with a 50% variable), but they won’t be offered more than $216,000. So even if a candidate comes in expecting less, we’ll make an offer that corresponds to the level we assess them at—we’re not in the business of lowballing our new hires. 

How We Deal With Raises

Candidates might ask us how and when they’d qualify for a raise if it isn’t through negotiating. Again, we use our system of levels, biannual “leveling up” sessions, and yearly compensation reviews to determine who gets a pay hike and how much.

Twice a year, employees can raise their hands to be assessed by their coach and the People Team to see if they qualify to move up a level. Suppose we feel they’ve earned the level up when the yearly compensation review rolls around on January first. In that case, their new level will factor into their raise, performance over the past four quarters, and current salary. 

Regarding that last point, we’ve set up our Merit Increase Matrix (the data crunching tool we use to compute raises) to reward those with lower salaries over those with higher ones. In other words, everything else being equal, people who are paid less get higher raises than people who are paid more.

We Fully Own the Transparency

All the information outlined above, from salary bands to individual levels, is available to any employee at 360Learning. I can look up my colleague, my boss, or my boss’s boss and see their level and, therefore, their corresponding salary band. In the name of equity, the People team goes a step further, and publishes aggregated data on gender, showing how women’s salaries stack up to their male peers, for instance. 

With this kind of transparency also comes predictability. The people team offers a simulation calculator so that once employees know their level, they can input their past performance and figure out how much their paycheck will increase in the new year.

This system is a core component of our company culture and a big draw to candidates since we also pay in the top 30% of the tech market on top of this transparency. We believe it’s a winning system for all—it keeps the company honest and accountable and eliminates the guesswork and rumors for candidates and employees. 

With more and more sites like Fishbowl and Glassdoor, there’s little room for companies with unfair compensation practices to hide. Hopefully, the salary transparency trend will continue to take off, making it that much easier to close pay gaps and make everyone’s lives a little easier.

 

Liane Huang is the Lead Talent Acquisition Manager at 360Learning. 

 

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