In salary negotiations, what salary negotiation skills can you use if a potential employer asks you about your past salary? If you earned a competitive wage, your concern may be whether the new employer can afford you.
Back on August 1, 2016 Massachusetts governor Charlie Baker signed into law a bill that will prevent employers from asking prospective workers to provide their salary history. The new law, which won’t take effect until 2018, will also allow employees to discuss their salaries with their colleagues without facing retribution from their employers, as reported by the Associated Press.
The law’s intent is to reduce the persistent gender pay gap between men and women. Currently in Massachusetts, women are paid about 82% of what their male counterparts earn for comparable work. Experts have attributed such inequities in part to women’s fear that they will face a backlash for negotiating assertively on salary. In fact, women—but not men—who negotiate their salaries do tend to be perceived as less likable and as less appealing colleagues than women who don’t ask for more, suggesting steep negotiation costs for women negotiating salary, Harvard Kennedy School professor Hannah Riley Bowles, Carnegie Mellon University professor Linda Babcock, and Tulane University Lei Lai found in their research.
Beyond the gender gap, the new Massachusetts law raises important issues for job candidates seeking to improve their salary negotiation skills and strategies—and reminds us of the advantages of negotiation in such discussions.
When Employees Talk Salary
Comparing salaries has long been a social taboo between workers in the United States, but that’s changing, according to Kevin Hallock, director of Cornell University’s Institute for Compensation Studies (see also, Salary Negotiations and Setting Standards at the Negotiation Table and Salary Negotiation Skills Different for Men and Women). Websites such as Glassdoor.com, where people can post their salaries and other information about their jobs, and increased openness on social media are spurring a trend toward salary sharing among colleagues.
Employers have long believed that open discussion of salaries, and employees’ resulting awareness of pay differences, can reduce morale and productivity. If you learn that a colleague who has the same job earns more than you do, you may overlook the fact that she has more experience or greater responsibilities. Our perceptions of unfairness can breed discontent and lower productivity.
Reacting to Knowledge of Pay Discrepancies
If you learn you’re being paid less than a colleague or colleagues at a similar level, what salary negotiation skills are at your disposal? Consult with others in your field, or review objective industry standards before making any demands of your employer. If you do find solid evidence that you are underpaid, present your employer with the facts as you see them, being careful to stress that you believe any discrepancy is unintentional.
If you’re a hiring manager, job grade systems that divide employees into levels with set salaries can improve the odds that employees will be fairly treated and feel fairly treated.
Dealing with the Salary Questions and Salary Negotiations
Why does the new Massachusetts law prevents employers from asking employees about their past salaries in job negotiations? Because women tend to earn less than men, including early in their careers, the information they share about their past salaries may put them at a disadvantage relative to men as they negotiate for new jobs. Due to the anchoring effect, first documented by psychologist Amos Tversky and Daniel Kahneman, the first number mentioned in salary negotiations, such as how much one earned in one’s most recent job, exerts a strong influence on the discussions that follow.
If you are having difficulty finding a job in a competitive market, you may want to play up your experience and suggest your willingness to make concessions on salary, relative to your last salary, in exchange for other benefits, such as vacation time. If, by contrast, your past salary was on the low end, you might simply explain that you believe you were underpaid and quickly move on to reveal how much you think you’re worth.
If asked you to name your price, how should you respond? In their book 3-D Negotiation (Harvard Business School Press, 2006), David Lax and James Sebenius recommend making a “non-offer offer,” or a statement that could anchor the discussion in your favor without seeming extreme (see also, Negotiation Strategies and Salary Negotiations: How to Negotiate for a Higher Salary).
Suppose your research suggests that you would mostly likely fall into the $70,000 to $80,000 pay range, but the next-highest category seems within reach. Rather than saying, “I think I deserve $80,000,” consider saying, “Correct me if I’m wrong, but I’ve heard that people like me typically earn $80,000 to $90,000.” Notice that this statement is not a demand. Yet due to the powerful impact of the $80,000-to-$90,000 anchor, it could very well move the numbers toward your upper goal.
Please share an example below of a time you successfully negotiated your salary.