Salary Negotiations Could Become Moot Point with Pay Transparency
Workspan Daily
April 21, 2023
Key Takeaways

  • A smaller salary negotiation gap. Data from Pew Research Center found that 32% of men surveyed asked for higher pay than what was offered to them for their most recent role versus 28% of women doing the same.  
  • Experts believe pay transparency could be the reason. More states and localities requiring organizations to provide salary ranges on job postings and an overall push for pay transparency as part of a good business practice could be increasing the liklihood of women negotiating for higher pay.  
  • Mitigate the need for negotiation. Organizations that nail pay transparency are less likely to be confronted with salary negotiations because the pay range will be clearly defined and they will be able to clearly explain where a candidate or existing employee sits in the range and why.  
  • The next battleground. More pay transparency could lead to a severe decline in salary negotiation but could simultaneously lead to more negotiation over a job’s classification or level at an organization.  

A common axiom brought up in the pay equity discussion is that men are more likely to negotiate higher salaries than women, which exacerbates gender pay gaps. New data from Pew Research Center supports this notion, but the gap between men and women negotiating pay is much smaller than one might suspect. 

Pew’s data found that 32% of men surveyed asked for higher pay than what was offered to them for their most recent role versus 28% of women doing the same. Previous data indicated that men initiate negotiations about four times as often as women.  

Pew’s research, conducted in early February with 5,902 respondents, did not surprise experts in the compensation space, as the push for pay transparency via legislation and as part of an effective compensation strategy has no doubt emboldened more women to seek higher pay.  

“You have so much more information out there, in some respects I think it’s reshaping how some folks are going about any sort of salary negotiation,” said Nancy Romanyshyn, senior director of total rewards strategy and solutions at Syndio, a pay equity software company.  

“Employees and job candidates have so much more access to this information and I think that’s what’s influencing these results — you’re not seeing as much of a distinction in this group around negotiation.” 

Pay Transparency Plays a Role   

Advocates of increasing pay transparency have posited that over time it will level out the playing field and limit the effects of bias — the type that could potentially occur from salary negotiations.  

Pew’s research lends some credence to that idea when compared against historical data.  

Older research, like that found in “Women Don’t Ask: Negotiation and the Gender Divide” published in 2003, revealed women were 2.5 times more likely to say they feel “a great deal of apprehension” about negotiating and four times less likely initiate a negotiation.  

More recent research focused on the psychological aspect of why women are less likely to negotiate, with a 2020 Harvard report citing that it required women to “behave contrary to deeply ingrained societal gender roles of women as passive, helpful and accomodating.” Men, by contrast, generally can negotiate for higher pay without fearing a backlash, the researchers said, because such behavior is consistent with the stereotype of men as assertive, bold and self-interested. 

Pew’s survey found women are still less comfortable than men in asking for higher pay but the gap is much smaller at 42% vs. 33%.  

“As long as compensation continues to remain transparent and equitable in the workplace, women will feel more empowered to negotiate their pay, which helps put them on the same playing field as their male colleagues,” said Tanya Jansen, co-founder of compensation software company beqom. 

Another potential effect of increased transparency is it could mostly eliminate the need for a negotiation altogether. If the salary range provided by an employer is done with precision and not overly large, there’s less room for negotiation. 

To that end, 60% of all employees surveyed by Pew did not ask for higher pay after receiving the initial offer. However, men are more likely than women to say the reason they didn’t attempt to negotiate is because they were satisfied with the pay they were initially offered (42% vs. 36%).  

“Pay transparency can build stronger trust between employees and employers by eliminating any sense of secrecy or potential wrongdoing on the employer’s part,” Jansen said, “and it helps employees feel secure that their earnings are fair, especially compared to those in their same role.” 

Prepare as an Employer  

Both Romanyshyn and Jansen noted organizations that are already transparent in their pay practices are best positioned when it comes to potential salary negotiations.   

At minimum, this means the candidate or existing employee is starting out with a clear understanding of the pay range for the job they’re applying for. Thus, the initial offer shouldn’t come as a surprise.  

However, if a candidate attempts to negotiate for more money, organizations should ensure they’ve done a detailed analysis based on internal equity and external competitiveness, Romanyshyn said, to equip those making the pay decisions with guardrails to eschew the creation of pay inequities within the organization.  

“The principles we’ve always had as compensation folks in terms of setting up structures and making sure [hiring managers] are adhering to that, those are still there, now I think with transparency it forces more precision,” she said. “We’re all learning together in how to apply those in a better way so we can ensure any kind of negotiation is happening [in an equitable way].” 

With this data, employers should be able to explain to a candidate or employee where they sit in a pay range and why. Further, employers should be prepared to explain who they consider competitors and what their market is if presented with external salary data that doesn’t fall within those parameters.  

“With employees being able to do their own research, it’s important to continue to have that conversation and inform them of all the things for which their pay is based on,” Romanyshyn said.  

Compensation and pay structure analysis must be performed year-round, Jansen said, to safeguard against unintentional pay inequities across the organization.  

“To ensure salary negotiations are equitable, organizations must proactively identify potential bias by routinely evaluating their pay strategy, making certain that no gender or racial biases are influencing compensation decisions,” Jansen said.  

The Next Negotiation 

While it’s still early on the pay transparency front, there is room for some salary negotiation, even at the most transparent organizations. Romanyshyn said she believes the next battleground for employers when it comes to negotiation is the job classification or level.  

The thought process is that rather than haggle for a slight increase in pay when the range is clearly defined and explained, those that sit at the top of a range might instead provide the case for why their job should be classified at the next rung in the organization’s job range.  

“We’re going to get to a place where employees start to negotiate the level of the role that they’re coming into,” Romanyshyn said. “It’s going to become a conversation about experiences, skills and qualifications. And employees are going to advocate for their job being classified at a higher level, which would allow them to access a higher pay range.”  

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