“I’ve never, ever, ever asked for a raise,” Indra Nooyi, former PepsiCo CEO, said in a recent interview with The New York Times. “I find it cringeworthy. I cannot imagine working for somebody and saying my pay is not enough.”
Research suggests that Nooyi is not alone. Twenty percent of women never negotiate at all. In discussing the importance of negotiation to a woman’s career, Hannah Riley Bowles, research director of the Women and Public Policy Program at the Harvard Kennedy School, says, “How women negotiate their career path is arguably a more important determinant of lifetime earnings than negotiating a little extra money.” A woman who opts not to negotiate her starting salary upon graduation will forgo an average of $7,000 the first year, and will lose between $650,000 and $1 million over the course of a 45-year career.
So why do women leave money on the table so often? For one, men pick “winning a ballgame”, while women pick “going to the dentist” when selecting metaphors for the process of negotiation. The more that women see negotiation as a chore, the less likely they are to negotiate (or do so in ways that lead to the best outcomes). There is also the very real fear that negotiating may come at the cost of being disliked. The 2019 Women in the Workplace study by McKinsey and Co suggests that women who negotiate are more likely to receive feedback that they are “intimidating,” “too aggressive,” or “bossy.”
Clearly, negotiating is critical for women and several of them don’t seem to be very fond of it. The good news is that negotiating skills can be enhanced—with some skill, persistence and practice! Based on a growing body of research in negotiations and training during my MBA from Etan Green, combined with my own personal experience (on both sides of the table), here are three strategies, tactics and principles that can help women engage and perform more effectively in negotiations.
1. Preparation is key to have leverage in a negotiation
Oftentimes even when women say “I should negotiate”, they don’t do a good job preparing; they don’t know how much more they want and why. And even if they take the time to research before a negotiation, a much smaller percentage talk to others about how to approach the issue and then rehearse the actual conversation.
It is important to help an employer understand why you think you deserve what you’re requesting. If you have no clear, defensible justification for a demand, it may be unwise to make it. Make your case using helpful benchmarks: perhaps your pay at your former employer for a similar skillset, or other competing offers that you might have received. Similarly, if you are negotiating for a raise or promotion within your existing organization or role, you are more likely to make a convincing case for yourself if you can talk about how you have been a high performer and taken on increasing levels of responsibility.
It is also important to demonstrate that you have considered and understood the whole deal. For instance, when moving from management consulting to the tech industry, it was important for me to demonstrate that I understood how pay structures differed in these two industries. The consulting world, in general, was more skewed in favour of a high base pay with little to no equity upside (until you were at the highest levels of the firm and had skin in the game), whereas compensation increasingly comes in the form of stock as you rise in the tech world. An understanding of how a lower base pay with a piece of the pie of a valuable tech company might equate or represent much more value than a higher upfront cash salary demonstrated that I had thought through not just about how I was willing to be rewarded but also when.
Further, focusing on the value of the entire deal (the responsibilities, location, travel, flexibility in work hours, opportunities for growth and promotion, perks, support for continued education, and so forth) while preparing for a negotiation also allows you to negotiate multiple aspects of your deal simultaneously, instead of serially. Proposing all your changes at once allows the person at the other end of the table to make a considered decision and likely come back with an offer that leaves you better off. For instance, starting off with: “The salary is a bit low. Could you do something about it?” and then coming back with “Great, now here are two other things I’d like…” once your employer has worked on your first demand, is unlikely to ensure that they remain in a generous and understanding mood. Further, signaling the relative importance of each of your demands ensures that the two things you value least are not the ones that the employer comes back with—because those might be the easiest to indulge.
Lastly, preparation helps you deftly address the difficult questions that you were hoping not to face. Do you have any other offers? If we make you a competitive offer, will you accept it? Are we your top choice? If you’re unprepared, you are more likely to say something that sounds evasive or, worse, untrue and end up losing leverage. It is best to never lie in a negotiation. Preparing for curveballs will better help you answer them honestly without looking like a less attractive candidate.
2. Negotiations are about more than the numbers, they involve people
There is an inherent tension between explaining why you deserve more, and being likable. But that does not mean one should underestimate the importance of likability. People will only root for you if they like you.
This can be a tightrope: asking for what you deserve without seeming arrogant or greedy, pointing out deficiencies in the offer without seeming petty, and being persistent without being a pain. But a smart negotiator can navigate some of these pitfalls by understanding the person across the table. Companies don’t negotiate; people do. And understanding the other person’s interests and individual concerns is vital before you can influence them in your favour. For example, negotiating with an HR recruiter is very different from negotiation with a prospective boss. You can perhaps afford to follow up with the former with multiple detailed questions regarding your offer, but you don’t want to delve into the minutiae of your offer with someone who might become your future manager. On the other hand, HR may be incentivized by hiring targets and therefore be less willing to break precedent for one candidate over filling the spots expediently, whereas your future manager might be more willing to bat for you with a special request if she is really bullish on your candidacy and will benefit more directly from you joining the company.
Finally, it is also important to consider how certain constraints may be constraints that negotiation can loosen. A savvy negotiator will figure out where they are flexible and where they are not. For example, if a large company is hiring 20 similar people at the same time, who are fresh out of business school, they probably can’t give you a higher salary than everyone else regardless of how well you negotiate. But they may be flexible on start dates, vacation time, or signing and relocation bonuses. On the other hand, a startup that has never hired someone in your role might be more willing to adjust the initial salary offer or job title but not other things. The better you understand the people and their constraining variables, the better you will be able to optimize for options that solve both ends of the equation.
3. Negotiations are not a one-time-transaction. Don’t negotiate just because you can
MBA students who have just taken a class on negotiation often find it hard to resist the temptation to bargain tooth-and-nail with a prospective employer the first chance they get. If something is important to you, you should absolutely negotiate. But haggling over every little thing to just get a bit more can antagonise people who might be your future colleagues, mentors or sponsors and limit your ability to negotiate with the company later in your career, when it may matter more.
Also, what’s not negotiable today may be negotiable tomorrow. Six months in, you will likely have more trust and credibility in an organization to persuade them in your favour. Instead of treating a negotiation like a one-time barter, be willing to continue the conversation and to encourage others to revisit issues that were left unaddressed or unresolved.
Finally, you can master the art of negotiation and still lose out if the negotiation you’re in is the wrong one. Your satisfaction from a job hinges less on negotiating right and more on picking the right job for yourself. Experience and research demonstrate that the industry and function in which you choose to work, your career trajectory, the day-to-day influence of your coworkers and the work-life balance can be vastly more important to satisfaction in the long run than the particulars of a well-negotiated offer. While effective negotiation to get the offer you think you deserve matters, it is most important that you make a thoughtful search to ensure that the path you’re choosing will lead to where you want to go.
(Hustle Fuel represents my own personal views. I am speaking for myself and not on behalf of my employer, Microsoft Corporation.)
About the Hustle Fuel series: Hustle Fuel, a Founding Fuel series, looks at the world of work and entrepreneurship from a woman’s lens. Building a company or a meaningful career is brutal, and role models for a path less trodden are always invaluable. The Hustle Fuel series is relevant especially for women—but not just for women.
Thriving in the evolving workforce demands ‘hustle fuel’. It demands having to punch above one’s weight to earn a seat at the table—not because you are a woman but because you are the right person for the job. Interestingly, it just so happens that this hustle fuel is precisely the attitude any entrepreneur needs to survive. Whether a man, woman, or from an ethnic minority community.