As a woman who has worked in the financial services and private funds industry for over 20 years, it’s saddening to see stark gender disparities when it comes to compensation. Of course, the gender pay gap, unfortunately, exists in all corners of our world, but I’ve witnessed firsthand, time and time again, how these issues manifest in the financial services industry – an industry where men still outnumber women. This makes the biases and the struggles to negotiate and advocate for ourselves as women, all the more difficult.
Too often, I see women in this industry give themselves a “haircut” by lowballing their skills and credentials and by not asking for what is commensurate with the value they bring to the table. We know this is reflected in the data: In the financial industry, according to MLA’s 2022 In-House Compensation Survey, male in-house lawyers earn 29% more than women in Average Total Actual Cash, which consists of base salary and annual variables combined. This percentage is even greater in the financial services industry, and further greater in private funds.
The negotiation process can stall for a few reasons. The most prevalent reason, in my experience, can be an understandable level of discomfort and unwillingness to have compensation conversations. While the cause of this discomfort varies and requires a more nuanced discussion, it often boils down to society’s biased perceptions of female assertiveness.
Per Harvard Law School, “When women negotiate for higher salaries, they must behave contrary to deeply ingrained societal gender roles of women as passive, helpful, and accommodating. As a result, their requests often face a backlash: relative to men who ask for more, women are penalized financially, are considered less hirable and less likable, and are less likely to be promoted, research by Hannah Riley Bowles of the Harvard Kennedy School and others shows. Men, by contrast, generally can negotiate for higher pay without fearing a backlash because such behavior is consistent with the stereotype of men as assertive, bold, and self-interested.”
The reality is, this perception results in women missing out on compensation in a material way. Many studies have revealed that women may be leaving over $1 million on the table by not negotiating compensation at the initial stages of their careers and/or over the course of their entire careers.
To bridge this gap, two things must happen simultaneously:
The good news is, if you equip yourself with tools, talking points, and a collaborative mindset, you will be able to approach negotiations with confidence and grace. To effectively advocate for themselves and work to reframe their approach to compensation, women should:
Ladies, you’ve got this! Demonstrate your value, do your research, rely on data, compensation surveys, and third-party-validated sources of information. Have detail on your track record of wins and accomplishments, identify where you’ve created value and made an impact, create a roadmap for the value you plan to create going forward, communicate with confidence and grace – and perhaps, most importantly, learn how to toot your own horn. Never cut your own hair…and don’t let others cut it either!