Salary Negotiation - Making the Price Right for Women
Updated: Feb 1
We’ve all heard the noise around women and salary negotiation, from their lack of negotiation to the delicate balance between being too passive or aggressive, and the myriads of stereotypes and preconceptions women face when job hunting. A fair amount of literature and studies highlight that negotiating differences (and success rates) between men and women directly contribute to the persistent gender wage gap.
If you need more convincing, take a look at Linda Babcock’s and Sara Laschever’s book titled Women Don't Ask: Negotiation and the Gender Divide (2021) where they provide an intimate look at “how women can and should negotiate for parity in their workplaces, homes and beyond.” They cite a study where on one hand, men tend to negotiate salaries that are 4.3% higher than the original offer they receive. On the other hand, women negotiate on average 2.7% higher than their first offer. At face value, this 1.6% discrepancy appears trivial and a waste of our time, but mighty oaks from little acorns grow. This is the “accumulation of disadvantage” phenomenon, and it should give you pause. We will not solve all these issues, but below is a starting guide of tips and tricks on salary negotiations.
Know Your Value.
That’s what it comes down to when negotiating your salary - value. You should be adequately compensated for your time and skills. Often adequate compensation stems from one good or bad initial salary negotiation. That starting point, that initial salary amount, will be your future benchmark so you need to get it right. You need to advocate for your value or attribute significant importance to it because the reality is no one else will. A little introspection here can go a long way. Ultimately, this is a contract negotiation – plain and simple – and in contract negotiations, one rarely gets more than what they ask for. This is especially true in salary negotiations.
The good news though, is that help is on the way (no, not just our tips and tricks below), we are seeing traction in certain states and cities enacting pay transparency and pay scale disclosure laws. In October 2022, Governor Newsom expanded California’s existing salary history law to include additional disclosure requirements and enforcement mechanisms. California is not the only state, we are seeing this trend in other places such as Colorado, Connecticut, Maryland, Nevada, Rhode Island, Washington, and even the one and only New York City. Talk about getting one step closer to closing the pay gap!
That said, you will still need to put in the negotiation work. Let’s face it, it should be a class taught to everyone in high school, or at the very least, in college. Or let’s say a standard class of a Master of Business Administration (M.B.A.) degree – well, you would be wrong. M.B.A. programs at some of our most esteemed universities do not offer “negotiations” as a core class and only a select few offer it as an elective. It’s no wonder we are not equipped to negotiate the salary we deserve. We haven’t been taught how to negotiate our salaries and have likely never seen it first-hand.
Negotiate.
You have your eye on your next position. The process generally starts with a screening interview with the company’s Human Resources or Talent Acquisition representative. In this initial meeting, they will check standard employment qualifications and experience. They are doing just that, screening you. The next step is often an interview with the hiring manager. Hopefully, all goes well, you speak about your experiences and make quite an impression. Of course, you did, you prepared! Before you know it, you’re negotiating your salary, but how much time did you invest in preparing for the salary negotiation part of the process. Many of us, unfortunately, do not invest enough time. Ideally, you’re in a jurisdiction where you already know the range because of these new salary disclosure laws, but even if a range is disclosed, there is still room for negotiation.
Let’s go through a few steps and tips to help in your next salary negotiation:
(1) Due Diligence – this is your base. If you wouldn’t buy a house without looking at comparables, then do not start salary negotiations without assessing your value on the market. Here are a few tips:
(a) Research. The internet is your best friend here. Use sites such as Glassdoor.com and LinkedIn to help you learn about an employer’s average salary range for similar titles. Also, research what competitors pay for similar positions; this can also be helpful as presumably, they are competing in the same pool of talent.
(b) Location. Even in the era of remote and/or hybrid work, the salary range for the same position with an employer can vary (up to 10%) solely based on locality (e.g., NYC vs. Minnesota). These ranges are often due to different costs of living, taxes, etc.
(2) Don’t sell yourself short – as pointed out in Babcock’s and Laschever’s Women Don't Ask: Negotiation and the Gender Divide “women often get less than men when they negotiate, focusing on their tendency to ask for too little and concede too much or too soon.” Let’s break this cycle and never ask for less than the median base salary based on your research. That said, you should also consider that lower-end salaries for similar positions usually result from internal promotions, try to discount those when calculating that median base. If you’re more comfortable providing a range, aim at a minimum of 10% over the median.
(3) Be clear & direct – this is your time, be firm on what you think you are worth. They want you, and with your research to back you, you should feel confident in your salary request. Remember, women have a “tendency to ask for too little and concede too much or too soon” – let’s change that narrative.
(4) Don’t leave perks on the table – this level of detail typically comes up at the end of the interview cycle. At this point, the employer is invested - time has been spent, discussions had, and decisions made. This is the time when you will yield the most power vis-à-vis your future employer. There are a few things you can negotiate in your offer here:
(a) Signing bonus. There is almost always a signing bonus available – you must ask for it! Generally, this can range from 10% of your annual base pay or more for senior-level executives. Companies use this to make the offer more enticing and/or to accommodate a missed bonus from your existing employer. They understand you wouldn’t walk away from your employer if you were losing money.
(b) Stocks! Stocks! Stocks! Depending on the company, stock options and vacation days are usually set by the level of the position – but that doesn’t mean you can’t ask for something more. If you have stocks with your current company, they’ll likely need documentation on how much has been disbursed and anything you would be leaving on the table (i.e., restricted stock units). Again, they understand you wouldn’t walk away from another gig if you were losing money.
(c) 401(k) matching plans. Like stocks, such benefits are typically set by the level of the position. That said, you should still ask if there is room for an increase.
(d) Healthcare benefits. This may seem like an obvious one, but everyone should ask for benefits on day one, especially if you are already going up the corporate ladder, no reasonable employer should expect you and your family to go without benefits. If you are aiming for a more junior or entry-level position, you should still consider making this ask.
You are setting the stage here for your base, this the foundation upon which you can build your success. Each small win you achieve along the way may seem insignificant at first, but over time, they accumulate and greatly impact your lifetime earning potential. These small wins serve as stepping stones towards achieving your goals and maximizing your financial growth.
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