Negotiations

Negotiations happen throughout someone's career, most commonly around hiring and promotion. Gaining a better salary through negotiations has been named as a significant factor in the pay gap between women and men who share similar roles, backgrounds, and levels of experience.

Many different studies show that stereotypes negatively affect how someone who initiates negotiations is perceived. Initiating negotiation goes can lead people to feel irritated or resentful at the same behavior from a woman of color that from a white man would would seem acceptable.


Facts and data

  • Women opting out of negotiations can be a smart move. Researchers set up a negotiation laboratory. They found that 49% of women get a better deal after negotiations; 9% end up with a worse deal; 8% end with no change; and 34% don't negotiate at all. To determine if avoiding negotiations 34% of the time was financially wise, the researchers did a second experiment in which they mandated that women negotiate. When this happened, women’s overall wages decreased – 49% of women still got a better deal, but the percentage of women who got a worse deal increased from 9 to 33% [HBR]

  • Women may benefit from negotiating in some situations. One study asked actual graduating master's degree students who had received job offers about whether they  accepted their offered starting salary or had tried to negotiate for more. They found that four times as many men (51% of the men vs. 13% percent of the women) had pushed for a better deal. Those who negotiated tended to be rewarded: they got 7% percent more on average [Washington Post]

  • Women are seen more negatively for negotiating. In another study, researchers divided 119 volunteers at random into different groups and provided them with descriptions of male or female candidates who tried to negotiate a higher starting salary for a hypothetical job, along with descriptions of applicants who accepted the offered salary. The volunteers were asked to decide whether they would hire the candidates, who were all described as exceptionally talented and qualified. While both men and women were penalized for negotiating, researchers found that the negative effect for women was more than twice as large as that for men [Washington Post]

  • Women DO initiate negotiations as often as men when comparing those of similar backgrounds. Women on average are less likely to be successful, but there's no difference between millennial men and women. Researchers in  Australia examined 4,600 randomly selected employees across 800 workplaces. Australia was chosen because it documents useful info  on “asking” behavior. They found that, holding background factors constant, women ask for a raise just as often as men, but men are more likely to be successful. Women who asked obtained a raise 15% of the time, while men obtained a pay increase 20% of the time. That being said, these same researchers also found that younger women in the labor market appear statistically indistinguishable — even in “getting” — from the younger men. Hence it could be that negotiating behavior through the years has begun to change


Despite the fact that women negotiate for raises and promotions more than men, they are less likely to receive them [McKinsey]


An Academic's Conclusion

What we found across all the studies is men were always less willing to work with a woman who had attempted to negotiate than with a woman who did not. They always preferred to work with a woman who stayed mum. But it made no difference to the men whether a guy had chosen to negotiate or not... This isn't about fixing the women. It isn't about telling women, "You need self-confidence or training." They are responding to incentives within the social environment... It makes sense that women are more reticent to negotiate for themselves than men if the social costs of doing so are greater for women than they are for men. ~ Hannah Riley Bowles, Senior Lecturer in Public Policy and Management at Harvard Kennedy School of Public Policy [Washington Post]


Champions

Telstra, the Australian telecommunications provider, recently developed a female talent strategy that includes a newly launched website featuring real role models, pertinent advice for career-oriented women, and targeted recruiting messaging for this audience (for example, highlighting a proactive approach to gender pay equity). The communications provider has seen a double-digit increase in the number of job applications from women [BCG]


Take Action

  • If you allow negotiations, let all candidates know they can negotiate. Using a "natural field experiment" researchers designed a randomized control trial of nearly 2,500 actual job seekers. They posted a job online and sent back job application forms that either explicitly named negotiations were invited or left it ambiguous. The researchers found that the gender gap in applications was much bigger for jobs that left wage negotiation ambiguous, and that including the wage was “negotiable” in the job application caused the gender gap in applications to reduce by 45%. Lastly, they found that when there was no explicit statement that wages are negotiable, men were more likely to negotiate than women, but when it was explicit there was no negotiation gender gap [Harvard Kennedy School]

  • Set salaries by role and avoid negotiations. If companies determine starting salaries using a candidate’s previous salary, this greatly exacerbates pay gaps over the course of a career [Paradigm]. BCG suggests eliminating these negotiations altogether since they have been proven to disproportionately negatively impact women [BCG]

  • Monitor negotiation and pay outcomes. Regularly reviewing pay across the organization can help avoid bias and ensure equity. Reviewing compensation policies and monitoring for bias at each stage in compensation-setting is helpful for uncovering the source of inequities, if they do exist. [Paradigm]


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