Friends,

I spent the last week moving between the couch and the bed as my immune system decided to have a break from doing it’s job. I didn’t realise this had a name, but it’s called the ‘Let-down effect’. The things you learn when you’re writing your newsletter intro!

That aside, I realised that — lately — I’d been ignoring the provenance of this newsletter, and hadn’t written about comp in a while. Time to change that.

I get a lot of interest in topics that can often be considered controversial. One such practice is the idea of a company not-negotiating salaries.

I’ve had the good fortune to implement this practice not only in the companies I’ve worked in during my career, but with clients of FNDN, too. So I’ve had a first hand view into how much goes into making a decision like this stick.

Let me know what you think, and whether you’d ever see something like this working in your own organisation.

Enjoy this week’s edition ✌️

Matt

In case you’re new here (or just missed it) here’s the past three editions of the FNDN Series:

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When it comes to pay, I've always been a bit of a shitty negotiator.

I still remember a job I applied for, where the recruiter told me the salary was one number, and when the offer came, it was slightly lower.

I was keen to leave my current role, so I didn't raise it, rather than risk derailing the move.

But I couldn't shake the feeling that the company didn't really value me. It was a big part of why I eventually left, for one that did.

It's one small reason among many for the growing pushback against pay negotiation.

On one side, there's the recognition that it's bad for business.

On the other, there's growing pressure on companies to explain what they pay and why. Gen Z is a quarter of the global workforce now, and they have a very different relationship with pay than the generations before them. This pressure is driving companies towards practices that ultimately eliminate negotiation as a basis for what someone is paid.

It's easy to see why negotiation should be limited. Actually doing it is another thing entirely.

If you're not negotiating on pay, it's because you're confident the number does its job. Four things need to be in place for that to be true.

Start with the basics of your pay philosophy:

Those answers get you to the question that matters most: is what we're offering affordable, and is it aligned to the market?

Because a recruiter with a shortlist sitting 15% above your ranges will undermine a no-negotiation stance on its first test.

Most companies use salary ranges. Where they go wrong is not prescribing how the range is used, and why. You need to set the rules for your ranges and stick to them.

Better yet, some companies I've worked with use pay tiers, a single number for a role at a given level, which removes the haggling inside the range altogether.

Depending on where you're from, negotiation is a rite of passage. Putting the salary in the ad is one of the best ways to head it off, and it does two things.

You end up with candidates who know what's on offer and are far less likely to negotiate it.

Engage the CEO, the CFO, the Head of Talent, and whichever exec runs your most contested talent segment, and get their blessing before you launch.

There will be moments when you need them to come to bat for this, and you don't want that to be the first they hear of it.

Having the number is one thing. Sticking to it is another. The stance has to work as part of a system, and a few things hold it in place.

Most of the success or failure of this approach comes down to setting expectations from the start. The range in the ad isn't enough. Tell candidates early, in plain words, that you don't negotiate on pay, and if any criteria move the number within a range, say what they are and how they're assessed.

At offer, state:

Say it before they ask. Up front, it reads as policy. After a counter, it reads as a tactic.

If extra leave or equity are still up for negotiation, the inequity just moves elsewhere.

I've been in the room when a hiring manager was shut down on comp for their "unicorn hire", only to watch them push on everything else. The whole offer has to be locked in.

Most of the reluctance I see toward the pay structures this needs is a perceived loss of flexibility. Two of my favourites:

Both are talent problems, and good talent practices solve them.

I regularly see hiring managers try to hire someone more senior than the role they went to market for, then get upset when the salary doesn't work and argue it's "not market". They either undercooked the role when they scoped it, or they're overhiring for what they actually need.

The reverse happens too: a candidate with outsized expectations and undersized capability gets pushed up a level to make the number work. I don't have to tell you how that ends.

As for the best employee who's looking elsewhere: money doesn't make people happy, not for more than a day or two. Someone leaving and citing money is usually telling you they didn't feel valued.

That's a respect problem, and it's mostly solved by being upfront about how pay works and paying people the right salary from the start.

A no-negotiation policy doesn't remove negotiation entirely. It pushes it elsewhere, and exceptions are the release valve that keeps a policy like this alive.

Because your pay practices aren't infallible. Bands can go stale, roles get scoped wrong, and the market moves faster than your review cycle. Exceptions exist to fix a gap in the structure. They don't exist to reward someone for asking.

That distinction gets muddied by the price-quality heuristic, the same effect that makes the $100 bottle of wine taste better than the $50 one when you might not even be able to tell the difference. A candidate's asking price might tell you about their last employer, or their confidence. It tells you nothing about their capability.

So the test I use is simple.

Is the case about the role, or about the person? If it's about the person, it's a no.

"They're worth 20% more" gets translated into a question about the role. Is it a level bigger than we scoped?

Whatever you decide, write it down:

Then apply it the same way every time, because an unexplained exception does more damage than the exception itself.

Having introduced this approach in a few companies now, here's what you can expect a few months in.

But despite the kind of impact this can have on your business, the real driver for me in why practices like this are a no-brainer, are experiences like one I had at a former workplace.

We were hiring at a globally distributed company and landed on a candidate in a developing country where our salary minimum was USD 30k.

They had asked for 15k.

Under the old approach, someone would have paid them 15k and called it a great hire.

We paid 30k, because that was the number for that level in that country, and the number didn't depend on who was asking.

The appreciation just oozed out of them, and I'd later learn how much it changed their life. Suddenly they could afford things that had been a dream, things most of us would call normal. Better childcare, for one, which gave them and their kids the support they needed.

And it quickly became apparent how much better an employee the company got, for a trivial amount more.

There’s much more to taking a no-negotiation stance than just not negotiating. But with some planning, and systems thinking, it can be a powerful enabler for your business and your people.

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A roundup of the most interesting stuff from the week:

When you’re ready, here’s three ways I can help you:

1. Tools & resources
Resources and tools that give you what you need to build your own startup compensation practices.

2. Comp consulting
Building startup compensation practices that are clear, fair and competitive.

3. Startup People Summit
A 1-day annual event for People professionals in scaling companies. Creating the playbook for startup people practices. Grab recordings from past events, or subscribe to join the next summit.