Pay transparency can narrow the gender pay gap — but may not close it

Pay transparency can reduce the gender gap during salary negotiations, though other factors such as aggressiveness and competitiveness also come into play, according to recent research.

For instance, women tend to rely on job websites for salary information, while men tend to depend on direct social comparison through professional networks of classmates or colleagues. Based on that social comparison, men also act more aggressively during negotiations and react when they feel their masculinity is threatened, the researchers wrote.

“Before this research, it never even occurred to me that men and women may differ in the kinds of information they use,” Dustin Sleesman, an associate professor of management at the University of Delaware and one of the study’s researchers, said in an Aug. 14 statement.

“Negotiators, both men and women, should be very cognizant of the information they are seeking and really think about the psychological impact it may be having on them,” he said.

In a hypothetical job offer negotiation experiment, 950 participants — evenly split between men and women — applied for a product manager position. They conducted their own research about the role, learned the salary range and were given information about another employee’s qualifications and salary level.

The job seekers were divided into four groups: either they were told the other employee had fewer qualifications than them, the employee had more qualifications, the employee had about the same qualifications, or they didn’t receive any such information. Then the participants were asked to come up with a salary and rate how competitive they felt.

Overall, the control group that didn’t receive employee information had a wide range in salaries. Men asked for nearly $17,000 more than women on average. 

In contrast, participants in other groups who had salary information — for an employee who was either less qualified or similarly qualified — asked for more money than those in the control group. In addition, the gender gap nearly disappeared.

However, in the group with information about a more qualified employee, men asked for about $5,000 more than women. Although a smaller gap than in the control group, the difference was significant.

In general, the researchers found that the gender gaps in both groups were due to a greater sense of competitiveness among men. This can reduce the efficacy of salary transparency, the researchers noted.

At the same time, gender remains only one factor in salary negotiations and isn’t the main driver of differences, the researchers said. Although it’s tough to create a definitive solution for the gender pay gap, pay transparency, preparation and mindset can go a long way, they wrote.

“Some people still deny that gender even matters in negotiations,” Sleesman said. And while it apparently does, “it’s not the end all, be all.”

Pay transparency policies could reduce the racial pay gap as well. To address pay equity, employers should analyze their data, develop a process to address the inequities and communicate with employees, experts told HR Drive.

Pay equity is gaining momentum as pay transparency laws take effect across the country this year. Employers who stay ahead of the trend and voluntarily post salary ranges are more likely to attract and retain top talent, research shows.

More organizations are also addressing pay equity because they feel it’s the “right thing to do,” according to a recent survey, though transparency remains an issue. About a third of organizations tell employees that they’re doing a pay equity analysis, and a quarter share results with their employees.

 

This article was written by Carolyn Crist from HR Dive and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.