Coinbase is no longer allowing new hires to negotiate their salaries: ‘We are OK if we lose some candidates due to this decision’

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Coinbase is set to directly list on the Nasdaq on Wednesday.

  • Applicants who receive a job offer from Coinbase will no longer be able to negotiate the salary.
  • Employees with the same title and location will receive the same starting compensation package.
  • “We are OK if we lose some candidates due to this decision,” Coinbase wrote in the announcement.
  • See more stories on Insider’s business page.

Coinbase, the biggest US bitcoin exchange, continued its shakeup of Silicon Valley norms this week after last week’s announcement that it is done with centralized offices.

Next on the chopping block: compensation negotiations for new hires.

“We are officially eliminating negotiations on salary and equity from our recruiting process,” Coinbase Chief People Officer L.J. Brock wrote in a blog post announcing the move. “If you pass our bar and are hired to do the same work, you get the same offer as the next candidate for a role.”

Deva Hazarika, who launched the Help Wanted Project with angel investor and marketing advisor Emily Kramer to help people understand and compare job offers, praised the move, saying that underrepresented candidates often lack the networks and resources to land the best offers.

“For a variety of reasons – financial security, personality, et cetera, some people are just more aggressive salary negotiators than others,” he told Insider. “This leads to equally qualified people getting wildly divergent offers at some companies just based on their knowledge about and attitude towards compensation negotiation.”

He added that these disparities compound over time, since raises and top-up grants are generally based off of that initial starting offer.

“I believe no-negotiation policies for offers benefit employees,” Hazarika said. “Two candidates with the same skill, given the same offer, both get that offer, not some mystery offer based on how good they are at negotiating.”

In his announcement, Brock emphasized that compensation differentiation is not being eliminated. Coinbase very much wants to pay people differently – it just wants those differences to be based on the actual performance and impact an employee has after joining the company, rather than their ability to persuade a recruiter.

Brock noted that Coinbase already increased its cash and equity package to line up with the 75th percentile of its peer firms, up from its previous level at the median. A Coinbase spokesperson was not immediately available for comment on the new policy.

A recent Insider analysis of crypto job listings showed a range of salaries from $66,000 to $312,000 for titles including Blockchain Analyst to Senior Engineering Manager.

Read more: Crypto salaries revealed: Here’s how much you could earn working in cryptocurrency

“We are OK if we lose some candidates due to this decision,” Brock said. “The best candidates for Coinbase are those who are looking for a highly competitive package and are ready to let their contributions speak for themselves.”

Coinbase has seen its share of unusual hiring practices, from founder and CEO Brad Armstrong’s decision to find a co-founder with a wanted-ad on Hacker News, to hiring their first employee, Olaf Carlson-Wee, who sent his undergraduate thesis about bitcoin in an “annoyingly long” cold-email to the founders in hopes of an interview.

The company also made headlines last year when Armstrong instituted a ban on political discussions and social activism in the workplace, prompting at least 60 people to quit and take severance packages.

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3 things to consider before renegotiating salaries for remote workers who moved during the pandemic

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Some employers may consider compensating employees based on their new remote location,

  • There’s a trend of remote workers living in rural areas but earning salaries meant for large cities.
  • Employers may consider localized compensation to account for remote workers’ new location.
  • Be careful to avoid penalizing employees who moved and communicate with them before any change.
  • See more stories on Insider’s business page.

The pandemic has changed the way we live and work – in some cases permanently. Many employers have decided to keep remote work as an option for some workers. Predictably, many workers have realized the boon to their finances by taking their big city salaries and relocating to cheaper locales.

This trend puts employers in a pickle. Remote workers who relocate are taking advantage of salaries intended to be competitive based on regional housing costs around headquarters. Their salaries now have greater value because of their relocation. Meanwhile, workers required to work at headquarters must continue to pay higher housing costs with the same salaries. Many companies are responding by renegotiating the salaries of their relocated remote workers.

A new term has emerged: localized compensation. Employers must consider the practical and ethical questions when negotiating salaries based in part on where the worker lives. These questions are even more pressing for existing employees who relocated.

Privacy questions

Employers have a right to know where their workers live, but do they have a right to know their employees’ rental or mortgage payments? Localized compensation attempts to address this intrusion by setting salaries based on regional housing prices rather than the actual housing costs paid by workers. Fortunately, there are some helpful tools that your HR department can use to determine the costs of housing for relocated workers. The National Association of Realtors’ Housing Affordability Index breaks down housing costs to the levels of county and metropolitan statistical area. There are other similar tools offered by private firms and public agencies, such as the United States Census Bureau’s American Housing Survey.

Once you know the relative difference in housing costs between your headquarters and the relocated worker, you can adjust salaries fairly. At least that’s the simple expectation. The reality might be much more problematic.

What about commuters?

Of course, not everyone who works at headquarters lives near headquarters. What about long-distance commuters who have already been taking salary advantage of housing cost differentials? Should their salaries all of a sudden be subjected to localized compensation evaluations? Many of them moved to the distant ‘burbs to take advantage of lower housing costs as they started their families. Should they be penalized for not living with their new families in a cramped, pricey apartment in the city?

These are questions that every employer will need to consider from an ethical perspective. A good argument against adjusting the salaries of commuters is that the commute itself represents a significant penalty. Unlike remote workers, commuters are not using remote work to take advantage of the housing cost differential. What about those commuters who now work remotely? Again, they did not relocate to maximize their salary against a lower cost of living. Personally, I would leave my commuters alone.

Guiding principles: transparency and collaboration

Determining localized compensation raises a number of ethical, financial, and managerial issues. Employers must work collaboratively with workers to set a salary system that is both coherent and fair. Workers must know what metrics were used to set their salaries. They should also know how their salaries could change if they relocate.

Most of all, localized compensation must account for the reality that some salary advantage will always be realized by those willing to live in cheaper locales. Setting a price on that advantage is the problem that can be solved through a transparent and collaborative localized compensation process.

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