Few Stanford Graduate School of Business MBA students would argue that Professor Margaret A. Neale is a powerful woman. At over six feel tall, even my male classmates would be intimidated to negotiate with her. And it’s not just because she often calls out students’ “sub-optimal” negotiation strategies in front of the whole class—it’s because she’s clearly a master negotiator.
Maggie, as her students know her, starts her two-week, highly sought-after Negotiation seminar by introducing people to the cost of not negotiating—which could be years of additional work to make the same salary as colleagues who negotiate. Unfortunately, women suffer the most from this—which is why Maggie spends much of her time outside of the MBA program, co-directing the Stanford GSB Executive Program for Women Leaders.
Personally, my most interesting moment in the class came when I was assigned to negotiate on behalf of constituents and I was able to play the mediator. It was also my best negotiated outcome of the semester, and that’s no coincidence—as I learned, women often do best in representative negotiations.
I recently sat down with Maggie in her Stanford office, me on a low chair in front of her packed desk, her towering over me on a blue medicine ball. Read on for the scoop on why women don’t ask—and what we can do to change that.
Why should women negotiate?
Linda Babcock did a study for her book Women Don’t Ask where she found that there was a 7.6% difference between the salaries that women MBAs were getting and those that men were getting. A lot had been written on the comparable work issue already and much of the blame for the difference had been placed on organizations—basically institutional sexism.
Linda doesn’t say that doesn’t happen, but she does ask if there is something more. One of the questions she asked people is, “When you got your offer, did you attempt to negotiate?” She found that about 7% of women attempted to negotiate, while 57% of men did. Of those people who negotiated, they were able to increase their salary by over 7%. So, you can see that if women and men negotiated in similar proportions, that 7.6% difference would be cut dramatically.
One of the things I ask my students is: If you think of a $100,000 salary, and one person negotiates and gets $107,000, and the other doesn’t—what’s the cost of that? In a simple-minded way, some people say, “Is $7,000 really worth risking my reputation over?” And I agree, $7,000 may not be worth your reputation.
But that’s not the correct analysis, because that $7,000 is compounded. If you and your counterpart who negotiated are treated identically by the company—you are given the same raises and promotions—35 years later, you will have to work eight more years to be as wealthy as your counterpart at retirement. Now, the question is: $7,000 may not be worth the risk, but how about eight years of your life?
When women do attempt to negotiate, what mistakes do they often make?
They don’t prepare. Oftentimes you’ll see that even when women say “I should negotiate,” they don’t do a good job preparing by knowing how much more they want and why. They don’t know how to tell their counterparty persuasively why they should get what they want.
The other problem is that women have systematically lower expectations. The problem with having systematically lower expectations is that you get systematically lower outcomes, because expectations drive behavior. So, they get less not because they are women, but because their expectations are lower.
There was a study done at Harvard Business School where they demonstrated, much like Linda Babcock’s work did, that male MBAs get more. But when they equated the knowledge that women had about the going salaries for these jobs with the men’s knowledge, the difference disappeared. So when you equate expectations, performance is equivalent.
How do women need to think about negotiating differently than men?
Women are concerned about the reputational risks of negotiating, and they have cause to be concerned. If I negotiate for an increase in my salary, and I have a male boss, the research suggests that I will be penalized in a way that my male counterparts will not be. If I have a female boss, she’s going to penalize both males and females, so it’s not like I get any benefit for working with a woman.
One thing I would encourage women to do is to have a communal motivation for asking for more. If I’m a man and I’m negotiating a salary, I can talk about my competencies. What women need to do is yoke their competencies with a communal concern.
When I interviewed at Stanford, I obviously knew this research, so I did a lot of research to frame how my package of resources could allow me to fulfill the needs that Stanford has. The whole theme was, “What can I do for Stanford and what can I do to help the Dean solve the problems that he has?” This communal orientation—it’s not about me, but it’s about what I can do for you—mitigates the negative reputational affects for women.
Does this communal focus also improve women’s expectations?
Women are not as good negotiating for themselves as men are, mostly because of different expectations. But women outperform men in representational negotiations—that is, negotiating for someone else. As a woman, it is unacceptable for me to be greedy on my own, but it’s completely acceptable for me to negotiate for someone else, because that is a caretaking thing, a communal thing. I’ve certainly had women CEOs of moderate-size to large organizations tell me they have no problem negotiating on behalf of their company. But asking the Board of Directors for a raise? That is hard.
So the question is: How can you, in your own mind, frame your negotiations as representative?
What are your top recommendations for negotiating a job offer?
Package, package, package: If you go issue by issue, you make it adversarial. And part of the frame you want to bring is: “Here are the recourses I need to be effective.”
Prepare: Use your network to get insights. Before I came to Stanford, I spent a lot of time talking to friends of friends to understand what kind of issues were easier to get at Stanford and which were harder in order to frame my argument.
You are as good as your other options: My first job as an academic, I didn’t negotiate because it was the only reasonable research position I was offered. But when I was coming to Stanford, I was happy to negotiate. I had a really great job at Kellogg, I was really happy living in Chicago, everything was great. California was expensive and weird, and I’d never lived on the West Coast. But it had this caché and there were some really interesting people doing research here, so I was intrigued. So I negotiated and—let me tell you—they were surprised!
The more options you have, the more in demand you are going to be. It’s just like dating: The more competition there is for your attention, the more valuable people think you are.
Do you have any other recommendations for The Daily Muse readers?
Yes—the intro to my Negotiation class: Got a problem? Try to negotiate.
People, especially women, need to broaden their definition of what it means to negotiate. Sellers don’t come to you to negotiate and say, “You’re paying too much”—it’s your job to think: “Is there a creative way for me to engage my counterparty in a way that I am better off and he or she is at least as well off?”
Think about four steps in negotiations:
Assess: Is this a situation where I can influence the outcome?
Plan: How might I influence it? What do I want to achieve? What is important to them? Why are they making this decision or creating this problem?
Ask: Here is what I need to help solve this problem that makes me better off and at least keeps my counterparty whole.
Package the proposal: Take the information you have and your counterparty has to find a better solution. No one has perfect information. For women, do that with a communal view.
And finally, don’t be afraid of asking!