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Talent Management Column

Maybe Women Are Smarter to Negotiate Less

While the Lean In approach calls for women to push more often for higher salaries, new research finds women are actually more economically rational about when to negotiate than men.

Monday, January 23, 2017
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There is a widespread view that women in the workplace lose out in the negotiating process compared to men because they don't "ask" for more often enough, they don't push hard enough and they should learn to negotiate more effectively. One of the key aspects of the Lean In view articulated by Sheryl Sandberg is that women should be negotiating more often as well.

The underlying assumption behind these views is that it doesn't hurt to ask, that negotiating has plenty of upside and little downside. But that's not necessarily true. There is a line between asking for things and being a whiner, and it is easy to overstep that line. The costs can be especially great, and are most obvious when we are negotiating at the start of a relationship, for example -- when we are asking, "How much are you going to pay me to work for you?"

What's the cost? The employer says, "We will pay X," you say "I need Y," and the employer says "Sorry, we can't do that. Next!" Even if the employer agrees to your demands, you may start out in the job being perceived as ungrateful and demanding -- thus winning the battle but losing the war.

Most of the arguments saying that women should negotiate more focus on the issue of starting salary.

For the record, I've been teaching negotiations for 25 years at Wharton. While women students disproportionately believe they aren't good at negotiating, I really haven't seen compelling evidence that they are any worse at it than are my male students. While research shows women don't negotiate as often, the evidence also indicates that many other factors that vary with gender also drive negotiating outcomes. (Those of us who teach negotiations like to think it's really about managing conflicts. In the context of these arguments about gender differences, however, "negotiating" is really used as a proxy for demanding more, thereby creating conflicts.)

An interesting National Bureau of Economic Research working paper titled Knowing When to Ask: The Cost of Leaning In, by Christine Exley, Muriel Niederle and Lise Vesterlund, looked at the negotiating behavior of women versus men in an experimental context in which it was possible to win by negotiating but also to lose, depending on the context. 

The study created one context whereby the participants were required to negotiate a starting wage. In that context, women did as well as men, with no significant differences. This would seem to suggest that when women do negotiate, they do as well as men.

In the second context, the participants got to choose whether they wanted to negotiate their starting wage or accept what the employer offered them. Here, they found that women were less likely to negotiate and more likely to accept the wage offered than were men. When they chose to negotiate, they did better on average than when they didn't and they also, on average, did better than the men.

As the authors note, this might seem like great evidence for a Lean In argument: that women should be negotiating more often than they do. Except that, in this experimental context, they could force the women to negotiate in those circumstances in which they had chosen not to. What did they find? They ended up worse off, losing more often.

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So what's the takeaway here? 

One overall conclusion is that the women seemed to know what they were doing. They negotiated in those circumstances in which it really paid off, and they didn't in those where the benefit really wasn't there. Men actually seem to be less economically rational about whether to negotiate than women in that they are less concerned about the potential payoff from the negotiations and more concerned about fairness issues. Encouraging women to negotiate more than they did would have caused them to lose more often.

In the workforce, I think most everyone with experience knows that demanding more is often not a good idea, so the simple advice to push more often is pretty risky. Knowing when to push is very important, and we probably underestimated the extent to which women may have figured this out.

Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School of the University of Pennsylvania in Philadelphia. His latest book is "Will College Pay Off? A Guide to the Most Important Financial Decision You'll Ever Make."

 

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