Constraints and Triggers: Situational Mechanics of Gender in Negotiation
Gender gaps are more likely to emerge in negotiations when there is a lack of clarity about compensation or price standards.
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. This paper presents the results of four studies analyzing men and women’s responses to ambiguity in a negotiating environment.
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.
This paper is based on the results of four studies: In Study 1, the researchers analyzed archival data from 525 graduating MBA students at a major American business school. They obtained data about each student’s prior work experience as well as details of the job they planned to take following graduation. Then, career service professionals rated the degree of salary ambiguity in each student’s industry of interest. (Survey: Multivariate Regression) Study 2 involved a simulated negotiation between a buyer and a seller over a price of a good. The researchers manipulated the amount of ambiguity on the buyer’s side by providing or withholding information on an external price standard that would help determine a fair price for the good. Price ambiguity was controlled on the seller’s side by providing negotiating limits and target prices. The simulation involved 210 adults in mixed-sex pairs. Study 3 analyzed the impact of shifting representation roles on the performance of men and women in a negotiation. The simulation’s 170 participants (who were executive training program participants) negotiated over compensation for an internal candidate within a corporation. Some participants were assigned the role of the candidate, while others were assigned the role of a mentor, negotiating on behalf of the candidate. Study 4: Individuals participated in a single-issue, pay for performance, mixed-sex pair negotiation over hourly compensation for a part-time student employee. The 301 participants played one of three roles: the recruiter, the candidate being recruited, or a representative for the candidate.