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.

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

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,, or 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]

About the author

Lydia Dishman is a reporter writing about the intersection of tech, leadership, and innovation. She is a regular contributor to Fast Company and has written for CBS Moneywatch, Fortune, The Guardian, Popular Science, and the New York Times, among others.