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27-02-2020

Diversity & Inclusion Series, Part 7: Reducing the Gender Pay Gap by Reducing Ambiguity around Negotiating Salary

In the final part of our Diversity and Inclusion series, we have selected a sample of iconic and measurably impactful behavioral designs, targeting both staff members and managers, at different moments of the employee experience.

Note that the BVA Nudge Unit’s behavioral design interventions will generally involve a combination of nudges, so as to maximize impact. We also support companies to more broadly build behaviorally-informed organizations.

This example summarizes the findings from the research paper “Do Women Avoid Salary Negotiations? Evidence from a large scale natural field experiment”, by Andreas Leibbrandt and John A. List (2012). It is targeting women as negotiators of their own salary.

About the adjusted gender pay gap

Equal pay for equal work (i.e. equivalent work contributions at comparable positions, possibly taking into account academic and professional background) is simply fair.

However, the gender pay gap is significant in most western countries – even when adjusting the calculations to compare equivalent positions, and taking into account specific factors like industry, company size and title. In the US, for example, the gender pay gap is still a difference of 25%  for pilots, chefs and C-suite executives. According to a study from Glassdoor, the adjusted gender pay gaps in 2019 averaged across job categories, were 4.9% in the US, 3.7% in France, 4% in the UK and 6.4% in Germany.  

The gender pay gap can be explained by a number of factors including occupational segregation, motherhood, gender differences in education and qualifications, part-time work… The adjusted gender pay gap, however, controls for all these parameters and many more. The reasons for this remaining gap must therefore be found in the behaviors of employees and decision-makers in organizations.

In general, we tend to consider that this salary gap, for equivalent positions, is due to employers’ stereotypical views on the quality and/or quantity of work, or on the potential of men vs women.

But what if the behavior of women in salary negotiations also played a role in this gap? And what if we could use this information to reduce the gap?

The specific case and behavioral diagnosis

To address this question, two versions of real job advertisements were placed for administrative assistant positions. The key difference was that the first one explicitly stated that “salary is negotiable,” while the second one did not, leaving ambiguity. Around 2,500 job seekers responded:

  • Men were generally more likely than women to apply – irrespective of the advertisement.
  • Men were also more inclined to respond to the ad where negotiation of initial wages was ambiguous. In contrast, women appeared more likely to apply to workplaces that offered explicitly negotiable wages.
  • Moreover, when there was no explicit information that wages were negotiable, women were more than 20% less likely to negotiate than men (8.2% vs. 10.6%).
  • What was key in this study, however, is that when it was explicitly mentioned that wages were negotiable, women were nearly three times more likely to negotiate (23.9% vs 8.2%)! In that situation, women were also slightly more likely to negotiate than men (23.9% vs. 22%).

The behavioral design

Just adding a simple sentence, “salary is negotiable,” increases the likelihood that women will apply for the job, and significantly increases the likelihood that women will negotiate salary.

The main levers for success

Providing this specific guidance reduces ambiguity. It has been observed that women can be more averse to “larger levels of ambiguity” and uncertainty than men. For example, for a tech university with whom we are working with, providing clarity on the job opportunities that are available after students complete their studies plays a large role in encouraging more female students to apply.

This example can be replicated within organizations, and at different moments of the employee experience, for example by addressing targeted messages to female employees and/or managers at annual reviews.   

If you missed them, check out the different parts from our Diversity & Inclusion Series: Why Behavioral Science for Diversity?How to Apply Behavioral Science for Diversity, Behavioral Science Outputs for Diversity, Mind Your Language #WOMEN4STEM, Reducing the Impact of Stereotypes During Performance Reviews and Promoting Diversity in International Mobility by Reframing a Question.

In this case study series, we have chosen a range of examples that are both impactful and which play on various levers: framing, default option, messenger effect, and many more. To learn more, please contact us.

Anne Charon, Jenic Mantashian & Suzanne Kirkendall

BVA Nudge Unit

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