Getting the Short End of the Stick: Racial Bias in Salary Negotiations

Companies need to be aware of — and take action to mitigate — pay inequity in the hiring process.

Gender and racial inequality in pay is making headlines these days, and many companies are moving to eradicate it. One major and often unrecognized obstacle companies face is a less-than-robust understanding of the role of the salary negotiation process and the biases and behaviors of job seekers — as well as the people responsible for hiring them — in the problem. This may be a function of the taboos associated with offering prescriptive advice by gender and race. Nevertheless, decades of social psychological research demonstrate that these differences can play a key role in producing pay inequality.

Consider gender: There is a substantial and significant body of research examining how gender differences influence negotiation strategies and outcomes, how they stem from conformity with social roles, and how they depend, to some extent, on context.1 Specifically, researchers consistently find that women tend to negotiate lower salaries than men because of gender-specific role expectations. Women are expected to value the relational aspects of employment over more instrumental exchanges. Therefore, they can be more sensitive than men about being perceived as pushy or aggressive, and end up with lower pay.

In the case of race, markedly less is known. There is relatively little research examining its influence on negotiation. And scholars have focused more on discriminatory behaviors minorities must contend with in employment processes, rather than the role they themselves play in those processes.

We do know that a Black-White salary gap exists, and that researchers have attributed it to factors such as social network differences, salary expectations, and risk aversion due to different perceptions of economic insecurity.2 In our own research, we have found that the context of the job negotiation itself is partly responsible for the salary gap. That is, because of the distinctive race-related psychological features that influence people’s expectations, a Black job seeker can face unique challenges.

Black employees, relative to other racial and ethnic groups, are more likely to be taught at an early age that life is unfair through a process known as racial socialization. In this process, parents communicate to their children the importance of racial identity and prepare them for bias that it may provoke.3 And rightly so, given the fact that Black employees tend to experience more discrimination than their White or Latino counterparts.4

Now, consider a Black male job seeker preparing for a job negotiation. Will he prepare by simply researching the salary and benefits such a job should offer? Or will he also prepare for the bias that he might encounter? Might he ask for less than a White male job seeker because he is sensitive to being perceived as overly aggressive? And, given the fact that implicit and explicit racial bias and stereotypes stubbornly persist within human beings, will employers expect the Black job seeker to be satisfied with what he is offered — and will they respond negatively if he attempts to negotiate?

In a series of studies we conducted with professors Sabrina Volpone and Cheryl Kaiser, we sought empirical answers to these questions. In our first study, we showed participants a number of resumes of White and Black job applicants. Participants were asked to evaluate each job seeker and rate the likelihood that the applicant would negotiate should he be offered the job. Controlling for the applicants’ objective qualifications, the participants identified Black Americans as less likely to negotiate than White Americans.

Since this expectation might lead employers to approach negotiations differently depending on applicant race, we sought to further unpack the role of racial bias. In a second study, we tested the effect that a stratified world view (a racially-biased mindset in which people deem one or a few dominant races as superior to others) had on the evaluators of job applicants. Our findings revealed that evaluators with a stratified worldview had different role expectations of Black job seekers than White job seekers: Like the participants in our first study, they expected Black job seekers to negotiate less aggressively.

In a third and final study, we had the job seekers and their evaluators actually interact. Within the context of job negotiations, Black job seekers reported having negotiated comparably (in terms of the number of offers and counteroffers made) to their White counterparts, but their evaluators reported that the Black job seekers had negotiated more than White job seekers. It appears that because they expected Black job seekers to negotiate less, the evaluators had an exaggerated view of their behavior. Furthermore, the perception of having been pushier resulted in Black job seekers receiving lower starting salaries.

Let’s translate these findings to the real world: Given that Black job seekers are disproportionately more likely to find themselves negotiating with dissimilar others, the misalignment in how they and others perceive job negotiations is highly likely to work to their disadvantage. We believe that this misalignment affects their financial outcomes — and their fairness perceptions, job satisfaction, and turnover intention — throughout their careers. More broadly, it contributes to the persistent economic divide between employees of different races.

How can companies combat the insidiousness of such dysfunctional interactions? Our research over the past decade suggests a multifaceted strategy is most effective. Organizations can foster a higher and more explicit awareness of racial bias in negotiations through formal training processes and informal discussions of best practices among managers.5 They can design organizational systems and structures that encourage open communication, provide checks and balances to ferret out biased decision making, and empower individuals to act on their uniqueness (rather than suppress it).

By addressing the less-recognized causes of gender and racial pay inequality in the workplace, companies can attract a more diverse workforce and better leverage it in the quest to attain sustained competitive advantage.6

References

1. L.A. Barron, “Ask and You Shall Receive? Gender Differences in Negotiators’ Beliefs About Requests for a Higher Salary,” Human Relations, 56 (2003): 635-662; A. H. Eagly, Sex Difference in Social Behavior: A Social-Role Interpretation. Hillsdale, NJ: Erlbaum (1987); L.J. Kray, A. Galinsky, and L. Thompson, “Reversing the Gender Gap in Negotiations: An Exploration of Stereotype Regeneration,” Organizational Behavior and Human Decision Processes, 87 no. 2 (2002): 386-409; L.J. Kray, L. Thompson, and A. Galinsky, “Battle of the Sexes: Gender Stereotype Confirmation and Reactance in Negotiations,” Journal of Personality and Social Psychology, 80 no. 6 (2001): 942-958; S. J. Solnick, “Gender Differences in the Ultimatum Game,” Economic Inquiry, 39 (2001): 189-200; A.F. Stuhlmacher and A.E. Walters, “Gender Differences in Negotiation Outcome: A Meta-Analysis,” Personnel Psychology, 52 (1999): 653-677.

2. D.R. Avery, “Racial Differences in Perceptions of Starting Salaries: How Failing to Discriminate Can Perpetuate Discrimination,” Journal of Business and Psychology 17 no. 4 (2003): 439-450; J. Dominitz and C.F. Manski, “Perceptions of economic insecurity,” Public Opinion Quarterly 61 (1997): 261-287; M. Gasser, N. Flint, and R. Tan, “Reward Expectations: The Influence of Race, Gender and Type of Job,” Journal of Business and Psychology, 15 (2000): 321-329; C. Green and M. Ferber, “Do Detailed Work Histories Help to Explain Gender and Race/Ethnic Wage Differentials?” Review of Social Economy, 63 (2005): 55-85; M.L. Seidel, J.T. Polzer, and K.L. Stewart, “Friends in High Places: The Effects of Social Networks on Discrimination in Salary Negotiations,” Administrative Science Quarterly, 45 (2000): 1–24.

3. D. Hughes, “Correlates of African American and Latino Parents’ Messages to Children About Ethnicity and Race: A Comparative Study of Racial Socialization,” American Journal of Community Psychology, 31 (2003):15-33; J.S. Phinney and V. Chavira, “Parental Ethnic Socialization and Adolescent Coping with Problems Related to Ethnicity,” Journal of Research on Adolescence, 5 (1995): 31-53.

4. S. Levin, S. Sinclair, R.C. Veniegas, and P.L. Taylor, “Perceived Discrimination in the Context of Multiple Group Memberships,” Psychological Science, 13 (2002): 557-560; A.J. Romero and R.E. Roberts, “Perception of Discrimination and Ethnocultural Variables in a Diverse Group of Adolescents,” Journal of Adolescence, 21 (1998): 641-656.

5. M. Hernandez, D.R. Avery, S. Tonidandel, M.R. Hebl, A.N. Smith, and P.F. McKay, “The Role of Proximal Social Contexts: Assessing Stigma-By-Association Effects on Leader Appraisals,” Journal of Applied Psychology, 101 no. 1 (2016): 68-85.

6. D.R. Avery and P.F. McKay, “Doing Diversity Right: An Empirically Based Approach to Effective Diversity Management,” Pages 227-252 in G. Hodgkinson and J.K. Ford (Eds.), International Review of Industrial and Organizational Psychology. West Sussex, England: Wiley (2010).