Never Cut Your Own Hair: How Women in Funds Can Negotiate for the Compensation They’re Entitled To

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:

1. Men and women in leadership roles must acknowledge how these gaps are allowed and work to close them. Given their position of power (both socially and financially), those in leadership roles—more specifically, men in leadership roles—must acknowledge the privilege they’ve long enjoyed in the workplace (and elsewhere), and make a concerted effort to understand and disassemble these dynamics.
2. Women must adapt to better advocate for themselves and reframe their approach to compensation and their value/role at a company. To clarify, while the onus should not be on women to fix deep-rooted gender issues in society, the reality is women have been forced to adapt and adjust their behavior to look out for their best interests. This reality will not change in the blink of an eye, so it’s up to women to look out for themselves while we strive for the greater shift needed.

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:

1. Do your diligence! Research is the first thing you need to do to prepare for a negotiation
   • Get data, do your research, and arm yourself with facts
   • Understand the market and be knowledgeable about the compensation trends in your industry and your geography
   • Having facts at your fingertips will enable you to feel more confident in your proposition
2. Know your value! Be able to clearly and concisely articulate your value proposition – with evidence
   • Have concrete examples of accomplishments, milestones, and times you have outperformed
   • Be able to discuss the value you have provided previously and the impact you will have going forward– help them understand why you are and will continue to be a valuable asset
   • Take time to outline your roadmap for future value creation, how you will continue to drive value and progress at your organization
   • If possible, quantify your accomplishments
3. Be collaborative! Sometimes, a negotiation can become tense – emphasizing a collaborative mindset can ease the tension
   • Use collaborative statements like “Let’s work together on this” or “Let’s find a solution that works for both of us”
   • Remaining assertive yet collaborative will be a reminder that you are a team player, always looking to work together to achieve objectives and solutions
   • Remember negotiation is a process and collaboration and compromise may be necessary to get across the finish line
4. Rehearse, rehearse, rehearse! Practice makes perfect - make sure you are comfortable articulating your value proposition
   • Negotiation is a muscle you have to build over time, the only way to build that muscle is to exercise it
   • Know your talking points cold
   • Be confident, be classy – be cool, calm, and collected
5. Anticipate! Be forward-thinking in your approach
   • Anticipate what objections the counterparty may have and be ready with answers
   • Find phrases you’re comfortable using at the moments tensions run high or when you disagree with your counterparty that keep the conversation respectful and on the right track to resolution
6. Advocate! Understand that you are your only advocate and you have to negotiate every step of the way
   • As tough as it sounds, the only person looking out for you is yourself
   • Push yourself to take the reins of your career and your future

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!