The psychology of salary negotiation for women

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.

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.

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 negotiate for a salary increase routinely! 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.”