Karina Collis

The Psychology of
Salary Negotiation
FOR WOMEN

By Karina Collis, March 2021

The final step in breaking the gender pay gap should be taken by women.

Here is a step-by-step guide for women on how to do this.
It is not widely known that when Barack Obama became president, the first act he chose to sign was the Lilly Ledbetter Fair Pay act.

Lilly Ledbetter was a top-performing executive. One day she received an anonymous note revealing that she was earning much less than the men in her position. It encouraged her to file a sex discrimination case. Today, equal pay legislature carries her name.

I'd like to celebrate the Day of Women's Empowerment with a discussion about what can be achieved today by women who are ready to advance their careers, who want to have their voice heard and have a positive influence on the people around them.

The beginning of the 21st century increased the awareness, in many parts of the world, of the importance of an equal society where women and men compete equally for top positions and are compensated for their work equally. Policymakers, boards of large and small corporations, media and academics support women's empowerment. However, the final step of breaking the gender pay gap should be taken by women themselves through active and consistent negotiation for higher pay.
Two overlapping circles, one with blue colour, the second one showing a women working on her laptop

Accumulation of disadvantage

Research suggests that women and men don't necessarily start from the same level of compensation. While men are consistently negotiating a pay raise, women accept what is offered. Employers, in return, anticipate that they need to pay men more than women and contribute towards the vicious circle of unequal pay.

Let's look at the example of Sara and Fred, who recently graduated from the same European business school. At the age of 22, Sara and Fred receive a job offer with an annual salary of €25k. Fred negotiates and gets his job offer raised to €30k. Sara accepts her 25k offer. Assume they start with the same company and simply receive an equal pay rise of 3% every year. By the age of 60, their pay gap will widen to more than €15k a year (Fred will be paid €92,243 and Sara €76,870). Just imagine how big the pay gap will be if Fred continues to routinely negotiate for a salary increase! Researchers note that even when differences in the performance evaluation awarded to men and women are minuscule (1%), it doesn't take long before the overwhelming majority of people at the highest levels with the highest compensation level are men. This is what sociologists call the "accumulation of disadvantage."

Why is it harder for women to ask for a pay rise? For a start, it is wrong to assume that men and women are in the same position when they raise the question of higher compensation. Social stereotypes are still strong among all groups of society and men's competitive behaviour in business is perceived as usual while women are still expected to be understanding, patient and less demanding. Multiple case studies show how women are penalised socially much more than men for asking for higher pay. Women who chose to negotiate are facing a social dilemma: they compare the potential gains from negotiating a better compensation against the social losses, adverse judgements and being labelled as "difficult" and "demanding".

How women can break the gender pay gap

So how can women overcome the social dilemma they face and successfully negotiate what they deserve without downside?

1. Negotiate, more often and with more ambitious goals

The winning strategy is to choose negotiation in the first place. Negotiation skills are like any other skills: they flourish and grow with practice. What doesn't help is avoiding negotiation and waiting for a better outcome. So the first step is deciding to go for negotiation, practicing and being prepared. It is proven that women become excellent negotiators through training. Role simulations at home or with friends, as well as live practice while shopping for food or buying a car or hiring a handyman for home improvement, can be a good playground in order to prepare for the first big negotiation and all the ensuing ones.

It is also known that setting higher aspirations tends to deliver higher payoffs. Someone said that "high aspirations are like motivation vitamin for individual achievement". The salary for a position is never written in stone. It is usually a range, and without aspiration, women will simply not get the compensation at the highest end of this range. So next time you ask yourself how satisfied you are with your current compensation, remember that, on average, women report salary expectations that are between 3 and 32 per cent lower than those reported by men for the same jobs (source).

But how to aim high while staying realistic? Preparation and research help, and we will discuss this later.

2. Focus on relationships and communal benefits

In salary negotiations, the winning strategy for women to avoid the social cost of being perceived as "demanding" is to emphasise the importance of relationships, promote communal benefits and concern for others.

Expressing a strong willingness to cooperate and do it within a perceived partnership can help women in salary raise negotiations. "I believe it is very important that we work together towards finding the right solution", "my main priority is to build a long-lasting partnership with you and the team", "I think first of all about our team", "I care most about my relationship with you and the team and always put people first" are the type of statements that will help you get to the result you are looking for.

It was also established by multiple researchers that professional women were significantly more likeable and therefore more influential when they used a friendly social style of influence and not a more direct style of communication. Interestingly, men's persuasiveness is not affected by the style of communication they choose for their negotiations (read here). This is just another reminder that gender biases are still very present.

So here is an example of an opening line putting forward the importance of teamwork:

"I hope it's ok to spend a few minutes discussing my salary. For me, the most important is to build a strong relationship with you and the team and I don't want to create any tension by bringing this up. I just thought this might be a good moment for me to openly discuss this topic."

3. Collect more information and use solid reasoning

The trap of being friendly is, however, that it can be perceived by men as a weak position and showing concern for the team's priorities might suggest your preparedness for concessions. Many experts and academics confirm that, stereotypically, female communication styles are often associated with low-status influence styles. Solid reasoning can help to avoid falling into this trap, making the request legitimate. Use appropriate reasoning, justified by context, and rely on facts, not emotions or feelings, to move forward with credibility and legitimacy.

Besides, to make sure that you set ambitious goals, you need to collect good information to minimise uncertainty. Are you fairly paid? Are you entitled to a pay rise? What is the average in your industry? What benefits can you ask for? If a man and a woman are in a situation of equal uncertainty about what is appropriate, it is proven that a man will adopt a more aggressive style in asking for more. To avoid this trap, get your data right to have more confidence in the legitimacy of your asks.
woman pointing at a white board
To benchmark your salary level, you can for example contact recruiters to discuss a salary range for your level of experience. There are also multiple websites where you can find information about compensations in different industries. Also, don't forget about your colleagues and your network. Research shows that men are much more open to discuss their compensation packages, so don't hesitate to ask them. The more information you get, the better you will be prepared, the more ambitious your demands will be and the more legitimacy you will have for a pay raise conversation.

Once you are armed with facts, you can formulate your position clearly. For example:

"My compensation last year was $50k plus bonus. Talking to some industry colleagues working in similar positions to mine as well as to a few recruiters, I understand that I should be getting a base salary of at least $70k. I want to emphasise that I am very happy here, I enjoy working with the team and my motivation is to continue working with the best experts in our sector. The only reason I am bringing my compensation up is that I believe I entitled to receive a fair market compensation for my expertise and seniority".

Another job offer for more money might be an effective strategy too, but only if you really have an alternative offer. It should be used as a justification for asking for fair compensation, not as an ultimatum style "take it or live it" strategy unless, of course, you are prepared to take the other offer. If social bias expects women to care for team relationships, this strategy can easily come across as a threat and result in negative social outcomes (potentially, this strategy might work better for men rather than women because of the different social norms and expectations).

4. Negotiate for the entire female community.

Research shows that women perform better when their role is to advocate for others as opposed to negotiating for themselves. In fact, in representation negotiations where women act on someone else's behalf, women outperform men by 23%. Men's behaviour and the ensuing social effects don't shift much depending on whether they are negotiating for themselves or others.

When negotiating for others, women develop more aspiration, which allows them to achieve better results. So when you need to negotiate for yourself, think about the groups you represent. By negotiating your pay raise, by asking for more responsibilities and a higher management position, you are negotiating not only for yourself but on behalf of the entire female community. It is extremely important for other women to see that it is possible and that many women are successfully negotiating their position. For example, there is evidence that when more women gain high-status managerial positions, the gender pay gap reduces for lower-level workers.

Conclusion

I'd like to finish this article by encouraging women to build support groups, surround themselves with people to whom they can turn for advice, to encourage each other to negotiate, to build self-confidence with practice. A lot of women are afraid of negotiation, so when they have to negotiate they are ill prepared. Avoid this scenario by using any chance you get to practice these new skills. Prepare well for every negotiation, collect facts to minimise ambiguity surrounding compensation discussions and bring legitimacy to your requests for higher compensation. Communicate your focus on strong relationships within your organisation and your concern for social outcomes. All these actions will help you and many other women to achieve more and break the gender pay gap for all levels.

Would you like to learn more about negotiations for women?

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