The One Career Mistake That'll Set You Back $500,000

Over the course of their careers, women stand to lose as much as half a million dollars just by failing to negotiate their first job's starting salary. Here's how to make up lost ground.

When Sue Thirlwall, CEO of Miniluxe (think the Starbucks of nail salons) was a newly minted Harvard MBA, she discovered some life-altering information. “I learned that male MBAs were getting paid $5,000 more than I was.” Though she’d negotiated her best to be at parity with the guys, the firm that made her an offer wouldn’t budge. "They were adamant,” she recalls, “despite the fact that [being slightly older] I had significantly more management and leadership experience.”

Thirlwall took the job anyway and received a very early promotion. She still wishes she’d held out for more. “I believe they may have come back with the same salary [as the men’s] had I turned it down.” As a result, Thirlwall believes she was behind in compensation because she accepted the lower starting salary.

She’s not alone. In a study cited by Linda Babcock and Sara Laschever, authors of Women Don’t Ask, if a woman doesn’t push to ask for more money in her first job, she stands to lose more than $500,000 by the time she reaches age 60.

Ironically, says Thirlwall, negotiating that first salary should be easiest. “The stakes are lowest before you go into a company,” she argues, “It’s just like dating before you actually get to know someone.” A recent study from the National Bureau of Economic Research indicates that women aren’t really less likely to negotiate. What they are is reluctant to do so in certain circumstances, like a face-to-face meeting, the study found.

A report by the Atlantic noted that the study didn’t follow job seekers as they advanced through their careers--or show how men and women negotiated differently as a result of age and experience. So Fast Company turned to career coaches, human resources directors, and employment consultants to weigh in on what might happen next. Here’s what they told us.

Time and Trust Makes Negotiating Harder
Dianne Shaddock Austin, founder of Easy Small Business HR, finds that things do change over time for women, but they still view negotiation as a negative. “Women are more willing to compromise and want to be agreeable and non-combative.” She says they’ll take a “reason and logic” approach saying, “I’m very excited about the offer, but given my experience compared with what you are seeking in a candidate, I was actually hoping for $10K more than what was offered.” A male counterpart will cut to the chase, saying, “That’s much too low. I was looking for $90K and you won’t find someone with better qualifications than mine.”

Shaddock Austin says trust is also a factor. “I think that some women feel that if they could get more pay, it would have been offered to them, and that the salary offered must be the best that an organization can do.”

Kara Chambers, The Motley Fool’s vice president of talent strategy, has seen this backfire. Women tend to view working incredibly hard as a reason to get a raise without asking for one. Unfortunately, says Chambers, waiting for someone to notice only leads to frustration that could turn future discussions about compensation into emotional events. “Everyone works hard,” she asserts, and men will often detail how they add value to the business by saving money or delivering projects on time.

It's Nothing Personal
Part of the reason men have an easier (read: less emotional) time talking about compensation is that they tend to have more superficial relationships with their bosses, according to Kathy Sweeney. As a certified employment interview consultant, Sweeney’s observed that men are more likely to talk about the weather, sports, and other “non-personal” topics, as well as business successes. This, Sweeney says, allows men to separate work from their personal lives, and negotiate from an all-business position.
 
In contrast, she says, many women tend to form “deeper” relationships with bosses and talk more about their lives outside of work rather than their achievements. “Women are also usually very observant in the workplace, know what they and others have accomplished, and expect their bosses to be the same way,” Sweeney explains.

That notion is reinforced the longer a woman stays with a company, says career coach Cheryl E. Palmer. “Women are more inclined to think that a boss they know well and with whom they have a good relationship will look out for their best interests,” she notes. “When this is their mindset, they are not going to push hard for a raise, even if they clearly deserve one.”

The Downside of Perks
It only gets harder for women if they’ve negotiated an extended family leave or have arranged to telecommute, says Palmer. “She is probably going to be much more cautious about advocating for herself because she feels the company has already done so much for her, and she doesn't want to seem ungrateful,” Palmer notes. Women granted these perks may feel as though they’ll be taken away--or that they’ll lose their job--if they ask for more.

You Don't Know What You Don't Know
Pat Palleschi, PhD, founder of the Executive Agency coaching firm, says, “Women do have the instincts to know when they have pushed to the limit. But they don't usually push at all.”

Palleschi finds that women are in the dark about what they can ask for, including realizing that the first "offer" they receive is just that, a first offer; to not dealing with HR on salary negotiations; to understanding that anything from salary, stock options, to a car, phone, and severance is negotiable.

“Usually the salary range has 10% play,” Palleschi argues, that’s best discussed with the hiring manager in a face-to-face meeting. For those cringing at the thought of taking a hard line in an initial meeting, Palleschi advises starting with a positive statement. "I really want to work for you but to perform at my best, I need to talk with you about the total rewards picture and work with you to create a total rewards package that will be both fair to you and motivating to me.”

At this stage, negotiations can fall apart, she says, because women don't know how to pivot. For instance, if a salary increase isn’t possible at that time, ask for a review in several months' time. Just be sure to ask what goals need to be met in order to earn the wage. Likewise, during uncertain economic times, Palleschi advises asking for severance in case their boss gets laid off and a new supervisor wants to start fresh. “High-level executives are known to ask for 2-3 years of severance on the way into a company,” she underscores.

How To Play To Win
To increase the chance that negotiating will work in their favor, Sweeney advises women to look at their job description, identify areas where they excel such as making the company money, decreasing costs, or improving productivity, and detail those achievements in writing. Also, include work that isn’t part of their formal job description. She also suggests women do their homework at Department of Labor, Glassdoor.com, or Salary.com to research what others in their industry are earning.  
 
Finally, women should use their keen observational abilities to know when to ask for a raise. Sweeney says the best times are when the company is doing well and in the beginning or middle of the fiscal year, to avoid bumping into the budget cycle.

The most important thing is to have the conversation, Chambers maintains. Rather than worrying about refusal, women just need to ask for what they want. Though the answer may be no, she says, “It’s more information for you about what your boss and the company values.” That can lead to a discussion of goal setting. Says Chambers: “It’s not about making them feel guilty. There’s no tension if you just continue to work toward those goals.”

[Image: Flickr user Zack Mccarthy]

Add New Comment

27 Comments

  • Lalala

    This article is wrong. Women DO ask...and the bosses still say no! There are certain jobs where pay is simply NOT negotiable. Many of us have jobs where pay is tied into a contract. You can "negotiate" till you are blue in the face and the answer will still be "no" and then they'll tell you "If you don't like it, then just leave. There's 100 people waiting to take your place" and in this economy, is that a risk anyone should be willing to take, unless they are fascinated with the idea of being homeless and on the street?

  • adam

    well, this is an article about a "career," not a random job that a million people apply to where you dont need any specialized talent or experience. i think thats why youre missing the point.

  • Lpasanen

    This article is extremely ignorant to the desperation women experience in getting an maintaining employment in a very gender biased society.  Media love to bash women and tell them they are "failing"!!!!  The message sent to women over and over again in society is completely unacceptable.  Research done by Virginia Valian a decade ago has clearly spelled out the gender inequality women face and the reasons for it.  Society has failed in allowing women to reach and even request equality!!!!!

  • Lalala

    To read the corporate media, you'd think all women were executives and not  executive assistants/secretaries when the cold hard reality is that it is the other way around.I'm sick of seeing the 2% of women who are in executive ranks getting all the attention. What about the more than 90% of us who are just regular everyday working stiffs in traditional female jobs? Who advocates for us? Certainly not Fast Company. Just once I'd like to see an article that's geared for the rest of us and not just the one gal who was just lucky, had a rich dad or slept her way to the top :(

  • M.C

    If that's what you truly believe then you're a disgrace. I'm 24 and started off in a graduate role 3 years ago. I'm now commanding a salary of $100K because I've studied and worked very hard, learnt a lot in my jobs, picked up skills and I've stuck to my guns when negotiating. Not because I was lucky or had a rich dad (I worked 2 retail jobs to put myself through uni) or slept my way to where I am. I hope you do better for yourself in the future.

  • adam

    hahahahaha . . . "traditional female jobs, like secretaries" good job at being more misogynistic than any male commenters on here.

    and wow, there would be freakin riots if a man said "...not just the one gal who was just lucky, had a rich dad or slept her way to the top" (in regards to any female with a good job).

    no wonder you are not in a high-paying/responsibility job, you have no idea how the business world works. maybe try being intelligent and working hard, you might get a better job; i mean, thats how all the successful women i know got there.

  • Lalala

    True. I never thought something like that would happen to me, but I've discovered it happens more often than people think. Yet no one ever talks about that in a publication like Fast Company, do they? 

  • Melanie Madden

    This reminds me of the cliche that first impressions are everything.  I disagree.  Why give young women the impression that if they didn't negotiate well on their first job that all is lost?  Those who are successful in life are those who make mistakes and learn from them.  I would argue that it is never too late to start negotiating as you get your next job.  I'm sure one can make up for that first misstep.

  • Heather Rogers Thompson

    Excellent point. I agree! I feel each of us has the responsibility to grow from our experiences, enhance our self-confidence, and always seek improvement - including developing our emotional intelligence - which will mean a lot when it comes time to negotiate our 'value' to a business/firm.

  • Drs

    Um, my degree was in Purchasing. I knew how to negotiate. Didn't help much. You have to work 3x as hard to get 2x the offers and use that as leverage. Still, have kids and you get the real blow to your salary and career prospects. I worked 2x as hard, negotiated for pay raises and promotions. It's a loosing battle unless you're part of a tiny minority that benefits from forced fairness. See http://www.unc.edu/courses/200...

  • amelia elisa

    This article has a lot of great advice-- not just for women, but for anyone. 

    It's especially relevant for freelancers, who have to negotiate rates and contracts for each of their multiple jobs. In my own personal experience, I can say it definitely pays to go in with confidence and leave emotion at the door. Think of it this way: If you this were a business deal, you wouldn't take the low offer. Same goes for selling your house or trading in your old car. You'd negotiate until the financial gain matched the value of what's being sold. So why not apply the same reasoning when it comes to your salary? 

  • ieatstars

    I have several issues with this article, but I'll keep my response to three points.

    1. Don't make excuses. The economy sucks, you're a woman - great, so am I - but there is always wiggle room in an offer. Whether it's $1/hr more, or $5,000, negotiate! Every little bit makes a difference.

    2. That leads me to Mary McHuff's comment; "If I were to turn down a job offer because they won't budge on the salary, they will hire the next person in line."

    False. If you are half as talented as you think, no company will turn you down just for asking for a higher salary. If anything, it shows you are confident and know your worth. 

    3. When researching salary for your role/industry, do your homework thoroughly. Use multiple sources and calculate an average. I have found incredible inconsistencies within glassdoor.com, for example. Don't ever rely on one source for your end-all, be-all number.

    If negotiating scares you, do your homework and practice with a friend, but don't sit around complaining if you didn't try.

    If you don't fight for yourself, no one else will.

  • Dryniewicz30

    First I buy your magazine and follow your articles.  I wish I could work for your company.   The article above is true.  I know that there are men saying that why are you alway's talking about women in the work place.  But, I read the article above and it held true for me.  I worked for a company for 28 years.  And within those years 10 of them I posted to different positions.  The reason, the men I had reported to were jealous when I got recognition or a bonus.   Or, I was hit on.  Ethical reasons, but the jealously was the hardest, because I was recognized by some Senior Staff that were observing me from a distance.   I did this for 10 years and than was offered a position for a subsidiary.  At first I had declined it but I changed my mind 3 months later.  Because I had been asked to develop, test and train people who were higher than me.  And even though I had asked numerous times for a salary increase or a bonus the man wouldn't give me one. He said he was trying but I didn't believe him.   I took the job because of this and it was a higher level position.  When I accepted the position, they kept me at the same level even though the posting was at a higher level.  It took a year for someone to right a wrong.  I than started to observe others in the unit and I was doing the same work but even more.   I gave it time and year's went by, until I was promoted.  Still taking on more and having staff put under me and recruiting and interviewing additional IT people, they came in without the experience and again trained them only to be at the same level.    These employee's came in at a higher level with no experience when I was at the same level.  Finally, I was promoted to a Director Level position.  But, one of my male peers were also promoted.  I really feel that it took away from my promotion because I had taken on so much responsibility.  I was a project manager, an analyst, someone that developed solutions and saved the company with everything that I did over $13 million dollars.   How can you be jealous of someone who just has common sense or the some of the senior staff go to you to resolve or create something for them and than they turn on you and take the credit for your work?  I know what I did and they know what I did, I worked 15 or more hours a week.  I was receiving phone calls from clients on my vacation.  I was on call 24x7 even on vacation.  I was there go to person, it caused conflict because I was directed to say no but each time my boss (male) was out of the office, they took full advantage.  Now where am I?  Well all those people that had asked me for help made me jump through hoops, they still have a job.  Most of them male.   And as for me, the company had closed and I was layed off.   I stayed to long.  I did above and beyond well over my job description.   And when I was promoted, there were only 3 people who congradulated me, out of 13 internally.   Don't feel sorry for me.  I don't I learned an important lesson the lessons that are within the article.   And the people that I trained and developed automated programs for that were Directors and Vice Presidents, They still have a job.  Or, they are related to people in higher positions.   No one can take away from me what I did for the company, but to explain now on interviews all the roles I was doing, it's hard for them to imagine. All my documentation, project plans and backup contingency plans well, They are still being used to this day.   There is one person who is a consultant and sells the automation that I created. 

    Look at all the salary's, look at all the positions and the people around you and look at other states and country's and yes you will find that some women are not paid for what they do. 

  • pika

    Maybe you need to work in your grammar... Sorry to say this, but it was really hard for me to understand your comment. 

  • Mom Corps

    Lydia, great piece. I think an interesting aspect you share here is the role emotion plays in women's compensation, versus men's. I can't help but think that if more professional women are aware of this, and acknowledge it, then it can be overcome. Looking forward to sharing this with my networks.--Allison O'Kelly, founder/CEO of Mom Corps 

  • Lalala

    Emotion? So in other words if you 'act like a girl' then you're stuck for life. Well, acting like a man hasn't helped either.

  • Mbacham Fanny Nyoh

    to succeed you have to dare.Go in with confidence that the services you are providing are the best

  • Mary McHuff

    This is incredibly frustrating. Women need to negotiate their salary when starting their first job? Let's assume most women starting their first job are fresh out of university. Have you taken a look at the job prospects for new grads right now? Do you know how many people apply to any given job? If I were to turn down a job offer because they won't budge on the salary, they will hire the next person in line. It isn't until you have 10 years experience that a company will fight for you.