Part 2: The Negotiation Career Advice No One Tells You
Would you ask for a raise if getting it meant retiring 8 years earlier with the maximum amount of money? If you have ever shied away from negotiating, you’re not alone. Research shows that women are less likely than men to initiate a negotiation, especially in ambiguous situations.
In Women Don’t Ask: Negotiation and the Gender Divide, Linda Babcock and Sara Laschever illustrate the impact of this finding among MBA students: the starting salaries of male graduates exceeded those of their female counterparts by 7.6%. At first glance, one might associate this with the wage gap (after controlling for credentials, experience, academic performance, and other factors, women are paid on average less than men for the same work), but there is more to the story. A closer look at the case of the MBA students revealed that only 7% of the women had attempted to negotiate a higher salary from the hiring company’s offer, while 57% of the men did.
Interestingly, the success rate was the same for male and female MBA graduates who attempted to negotiate their starting salaries. Those who asked for more (most of whom were men) successfully increased their starting salaries by 7.4%—almost exactly the difference between the men’s and women’s starting salaries.
The long-term cost of not negotiating
When it comes to negotiating, the risk of being perceived as too demanding, greedy, or unlikeable, is larger for women than for men, even when there is a lot at stake. Just how high are the stakes? Let’s use the example of two equally-qualified 30-year old applicants: a man named Chris and a woman named Fraser. If they receive salary offers of $100,000 from the same company, but only Chris negotiates, his offer will likely go up to $107,400. If they then receive 5% annual raises at the company for 35 years, Chris will be making at least $100,000 more than Fraser when he retires at 65. Fraser would have to work an additional 8 years to catch up with the compound effect of the original $7,400 difference.
This example highlights the long-term cost of Fraser’s one-time decision not to negotiate. When contemplating a job offer, consider how much you are willing to ‘pay’ to avoid the short-term discomfort from negotiating or the negative perception that may ensue. Eight years of your life? You may not need to negotiate everything, but consider the real cost you incur over your lifetime—just from fear of being seen as greedy.
So, was Fraser’s choice not to negotiate wrong? To answer this question, one needs to consider Fraser’s own goals. Maybe she just wanted a job and was less concerned with her compensation package, or the initial offer was more than she expected. In these instances, one could understand why she would choose not to challenge the first offer. Nonetheless, all goals aside, it’s important to understand the real cost of not negotiating.
How to approach a negotiation
Having a clear idea of the desired outcome helps guide a negotiation. The gold standard for evaluating an outcome is whether or not you are better off after negotiating. As such, the underlying goal in any negotiation is to get a good deal. People often tend to change their goal during a negotiation from wanting a good deal to accepting any deal. Research attributes this to an agreement bias, where individuals are more likely to choose an alternative that was worse for them if it were labeled “agreement” than if it were labeled “Option A.”
Bottom line: the stakes are too high not to negotiate. Now, how do you determine a good deal? Stay tuned for Part 3 in this series, and don’t miss Part 1: Negotiation is Problem Solving—Here is How to Do It.
Margaret Neale is the co-author of Getting (More Of) What You Want and the Adams Distinguished Professor of Management at Stanford Graduate School of Business.
About Elevate for Her: This is the second of a three-part series by Elevate For Her, a professional development organization offering programming specifically for women. Programs include negotiations, empowerment, unconscious bias, personal branding, and even improv for business. The organization’s founder, Rhonda Moret, is a professional speaker and seasoned marketing professional who has worked on accounts including Nike Golf, PGA of America, and Universal Studios and has also worked with high profile personalities such as Billie Jean King, Tiger Woods, bestselling author Robert Kiyosaki, and more.