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Think back to the hiring process that led you to your current position. Did you negotiate your salary or accept what you were offered? If you?re a man, chances are that you haggled over your salary offer. If you?re a woman, it?s more likely that you agreed to the first offer on the table. Our research and that of others reveals that men are significantly more likely than women to use negotiation to promote their own interests. This has serious implications not only for individuals, but also for organizations. Left unchecked, gender disparities in negotiation quickly transform into clear pay and promotion inequalities and costly employee turnover.
The accumulation of disadvantage
In salary negotiations alone, women routinely leave hundreds of thousands of dollars on the table. Over the course of their careers, small differences between what women accept and what they could have earned mount up dramatically.
The organizational costs
If an organization hands out important projects, opportunities and promotions on the basis of who asks for them, that organization will inevitably waste the skills of the most talented women on its payroll.
Surveys indicate that people most often leave their jobs because they feel their skills aren?t being fully used or appreciated. If women see their male peers receiving better assignments and bigger raises, they may decide to leave.
Turnover is really expensive: On average, replacing an hourly worker costs an organization 50 percent of that worker?s annual salary; replacing a professional worker costs 150 percent of her annual salary.
Why so much? Add up screening and hiring costs, opportunity costs for the employees doing the hiring and lost productivity until the replacement worker gets up to speed. Factor in the low morale of employees who have to pitch in while replacements are found and trained, and the costs skyrocket. Our calculations show that turnover costs can have a huge impact on the bottom line of a typical midsize company?costing as much as 3.4 percent of revenues and an astounding 45 percent of profits.