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Haggling: Babcock and Bowles

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Jul. 31st, 2007 | 08:14 am

As discussed in April ("Getting what you deserve", 4/13/07), men are repeatedly shown to negotiate for higher pay more often than women. Linda C. Babcock and Hannah Riley Bowles think this isn't just about getting women to speak up: "This isn't about fixing the women... [women] are responding to incentives within the social environment." Bowles told The Washington Post (2007). What Bowles and Babcock have found is that women are more penalized for negotiations than men. Babcock, Bowles, and Lai (2004) found that women who negotiated for higher salary were judged more harshly than men who did. Babcock, Bowles, and Lai (2005) further determined that men only penalized women for negotiating, while women penalized both sexes. Bowles, Babcock, and Lai (2004) also suggest that there's a link between how ambitious a negotiator's goals are and how disliked they become during the course of negotiation.

Not that Bowles is against teaching negotiation to women; her book Women Don't Ask (2003) with Sara Laschever released a new edition earlier this year. Bowles, Babcock, and McGinn (2005) suggest some mediating and moderating factors for the gender effect on salary negotiation such as "the degree of uncertainty in parties’ understanding of the economic structure of the negotiation" makes a huge difference. Where uncertainty is low, women do nearly as well as men in negotiating. Training may be able to reduce the ambiguity for women.



So. How do we fix it? Funny that we were just talking about self-perpetuating differences yesterday in the comments. Women don't ask for more money, so it stands out more when they do. A woman asking for more money is rare; a man asking for more money is normal. So when a woman asks for more money, she's "unpleasant", and she doesn't get the job, or deals with resentment. Next time she doesn't ask. The man asks for more money, gets more money, and next time he asks again. How does this tie in with structural ambiguity? Perhaps it is just that when negotiations are understood to be part of the culture, women do it more often, and the rarity factor declines.

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Comments {15}

deadkytty9

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from: deadkytty9
date: Jul. 31st, 2007 01:19 pm (UTC)
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The choice of job probably has something to do with it too. It's hard to negotiate for more money if you know that your employer can turn around and replace you easily. I think stereotypical women's jobs are perceived as easier to fill (and more likely to be unskilled), even if this isn't necessarily the case, with the current nursing and teacher shortages.

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The Difference Blog by Dan4th

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from: differenceblog
date: Jul. 31st, 2007 01:26 pm (UTC)
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*nods* that's a good point. Most of the research appears to be with recent MBA recipients, to control for job choice. The 2005 paper with McGinn suggests that even within MBA-type jobs, industry affects the level of negotiation uncertainty:
"The high ambiguity industry categories (in order of increasing ambiguity) were telecommunications, other financial services (e.g., commercial banking, real-estate finance), health/human services, other manufacturing (e.g., agribusiness, industrial/transportation equipment), other services (e.g., computer services, transportation), advertising/marketing, retail and entertainment/media (percent of sample = .31; rating M = 4.50, Max = 5.33, Min = 3.33). The low ambiguity industry categories (in order of increasing ambiguity) were investment banking, consulting, consumer products, venture capital/private equity and high technology (percent of sample = .69; rating M = 6.20, Max = 6.67, Min = 5.67).

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ephraim_oakes

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from: ephraim_oakes
date: Jul. 31st, 2007 02:00 pm (UTC)
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ban all wage negotiations and work strictly by a point system like government jobs use, adjust regularly for inflation.

of course that has nothing to do with the gender inequity at the root of the problem, but it might fix the symptom.

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The Difference Blog by Dan4th

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from: differenceblog
date: Jul. 31st, 2007 02:04 pm (UTC)
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Erk. I have a very strong, visceral reaction against a system like that, because it doesn't seem to leave any room for penalizing people who do piss-poor work, but I'm not sure my reaction is rational. I'll need to think about it.

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yes, *that* Dawn person

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from: dawn_guy
date: Jul. 31st, 2007 02:18 pm (UTC)
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My current employer's pay scheme involves jobs being classified according to something like the Hay System, with some jobs falling across several categories depending on the incumbent's skill and responsibilities (complete with hatred of HR for taking months to reclassify people to a higher pay grade). Pay rises are annual, across the board, and linked to annual performance reviews.

It is institutionalized and sucks somewhat, but it does avoid the problem of good negotiators who are not particularly good workers getting a larger share of the pie than good workers who are not good negotiators.

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ephraim_oakes

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from: ephraim_oakes
date: Jul. 31st, 2007 02:58 pm (UTC)
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maybe not in the way that it's used in govn't jobs at the moment...but points could be denied to folks who get bad evaluations. i just think people should be rewarded for doing their job, not for their haggling skills (unless haggling skills are important for that particular job).

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The Difference Blog by Dan4th

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from: differenceblog
date: Jul. 31st, 2007 03:07 pm (UTC)
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These are the times when I really wish I was a better economist. My guesses are:

(1) Resources are finite. Adding to person A takes away from person B. This is probably not entirely true when it comes to corporate pay scales. Person C is the corporation, who someone has a responsibility to maximize benefit for, but I'm not sure who in this system that is.
(2) Persuasion is an appropriate job skill to all professions. Everything is sales.
(3) "No haggle" sounds the same as "take it or leave it" to me, which doesn't allow a lot of room for people to make mutually beneficial arrangements. One of the points in the Bowles, Babcock, McGinn paper was that "single-issue" negotiations were a "gender trigger" - in that male gender became a greater predictor of success/satisfaction. In multi-issue negotiations ("Sure, I'll take the 3% raise, but I need to have some flex-time"), women and men had much more equal results.

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The Difference Blog by Dan4th

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from: differenceblog
date: Jul. 31st, 2007 03:34 pm (UTC)
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oh crap, we've entered the point where I feel it necessary to argue with myself *chuckles*

(2) is a glib oversimplification which doesn't really stand addressing. Everything is sales because we live in a circumstance where haggling is already the norm. The value of anything is based on what you can sell it for, but that's an artifact of the haggling paradigm. Removing haggling entirely renders this point moot.

The unfortunate part, in my experience, is that it's impossible to remove negotiations from the process in reality. For example, when I posted in April, it was because I had to negotiate a raise with a new promotion I was taking at work. I was told that there was a fixed job-coded pay rate that went with the job. I gritted my teeth and asked anyway, and got more money, despite being told that it was non-negotiable.

The other situation I've seen happen with fixed-pay-scales is that the only way people are able to substantially increase their pay is by leaving the company, working somewhere else briefly, and being hired back into a new job title. I don't see a way in which this is beneficial to the company or the employee.

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deadkytty9

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from: deadkytty9
date: Jul. 31st, 2007 03:50 pm (UTC)
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doesn't seem to leave any room for penalizing people who do piss-poor work

Fire them, demote them, make them work more hours to finish the job... there are plenty of ways to make life suck for an employee without cutting their salary.

Not that I'm for this, but the opportunity is there.

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consider that you may be wrong

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from: ukelele
date: Jul. 31st, 2007 08:09 pm (UTC)
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Your icon is so awesome.

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deadkytty9

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from: deadkytty9
date: Jul. 31st, 2007 08:28 pm (UTC)
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Thanks :)

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consider that you may be wrong

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from: ukelele
date: Jul. 31st, 2007 03:22 pm (UTC)
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My workplace uses a points system and is trying to move away from it because, basically, it sucks.

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The Difference Blog by Dan4th

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from: differenceblog
date: Jul. 31st, 2007 06:26 pm (UTC)
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Can you go more into how it specifically sucks at your workplace, or is that more detail than you can share?

Honestly, it looks like "pooling tips" to me, and from my experience waiting tables, pooling tips hurts service and pay for everyone.

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consider that you may be wrong

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from: ukelele
date: Jul. 31st, 2007 08:08 pm (UTC)
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Superficially it looks like we all have comparable jobs -- we're all teachers, after all -- but that's not really true. Teachers of different levels and subjects have very different ways of spending their time (for instance, as an upper school language teacher, I tend to have fewer students/less grading than others, because my third-year classes are so small, but I also tend to teach 4 or 5 different classes, whereas a math or English teacher would usually have 2). People are always feeling like they do more work than other people and the point system should be changed to reflect this (in reality, I suspect they do more *of certain types* of work, but aren't necessarily aware of where other teachers have more to do). It gets very political, with people arguing that certain kinds of activities are literally worth more, and people feeling like you need to taxonomize every possible duty and set a price on it (after all, if you're paying by points, that is the reductio, right? shouldn't my contract mention everything I do -- lunches and study hall and preps and grading, etc. -- and assign a monetary value to it all?). But the more you break it down, the worse it gets -- people not liking the specific values you've set to things, people whose jobs really are very similar getting paid different amounts because of fairly coincidental differences on paper, people whose jobs are actually pretty different getting paid the same because of coincidental similarities (should you really be paying the same for "study hall coverage" to the person whose study hall has 15 kids and the one with 75...?). And the only place all this arguing over details leads is to people disliking and distrusting their coworkers, and feeling like they do the most work of anyone and don't get recognized for it and everyone else is an overpaid slacker.

Compound this, of course, because I work in a field where merit pay is anathema, so it's sort of unclear what you can do other than a points system -- there's really no way to earn extra money by being good at what you do; you can only earn it by taking on additional duties, represented in your contract by points...

(Although I am very much in the minority in my field, the lack of merit pay drives me crazy.)

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consider that you may be wrong

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from: ukelele
date: Jul. 31st, 2007 08:09 pm (UTC)
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(Oh, and speaking of confounding the problem, we also don't have job evaluations to speak of.)

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