When You’re Clear, You Can Choose What You Want to Negotiate

RESOURCE CREATED BY: HARVARD KENNEDY SCHOOL

This article was written by Hannah Riley Bowles, Linda Babcock, and Kathleen McGinn, and was originally published by the Journal of Personality and Social Psychology in March 2005.

Gender gaps are more likely to emerge in negotiations when there is a lack of clarity about compensation or price standards.

Introduction

Women have been shown to ask for and receive less than their male counterparts in salary negotiations. This initial wage gap continues to increase over the span of a career, leaving women with a significant lifetime wage deficit relative to men. To close this gap, it is necessary to understand the factors behind the difference in men and women’s negotiation outcomes. One contributing factor could be the opaque nature of comparative salaries. A person negotiating a salary rarely has access to the full range of information that could be considered in the decision. And the greater the ambiguity in the negotiation, the more unconscious gender biases may work for or against a candidate.

Findings

In negotiations where more information is available on the criteria on which decisions are made, the difference between men’s and women’s negotiation outcomes disappears. In negotiations with opaque information, women get better results than men when negotiating on behalf of someone else rather than for themselves.

In job negotiations with clear industry standards, there were no differences in salaries negotiated by men and women. When industry standards were unclear, female MBAs accepted wages that were, on average, $10,000 lower than those accepted by male MBAs.
When price comparisons were not available, male buyers paid 27% less for a good than their female counterparts. However, when price standards were clear, the difference disappeared.
Female and male executives negotiated equal compensation agreements when negotiating for themselves, but the female executives secured much higher salaries when they were negotiating for their subordinates. Male executives, however, were unaffected by this distinction.

In short, ambiguity heightens the potential for gender to play a role in price and salary negotiations, while clarity diminishes gender differences in bargaining outcomes.

Read the full article here.

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