Don't Hesitate to Negotiate

That might be the main message from some recent studies of pay differences among men and women and minorities of both genders. A review of compensation for corporate general counsels found that there a gap between white males and their female and minority colleagues. As reported on the law.com website here:

According to data culled from ALM surveys (ALM is Corporate Counsel's parent company), proxy statements, and the Minority Corporate Counsel Association, there is good news and bad news on this front. First, the good news: The number of women on Corporate Counsel's annual list of the 100 best-paid general counsel is on a steady and gradual rise. . . . Now for the bad news: When you look at the number of white women, minority men and minority women in the top 100 salary positions over a recent five-year period, there is a noticeable and troubling disparity.

The law.com article notes that the pay gap comes from a complex mix of gender, racial, psychological and generational factors. This mix plays out at negotiation time. With a lower self-assessment of value (based on previous salary, perhaps, or a perspective that the employer "will compensate me fairly after I have proven myself") and a reluctance to actively negotiate, women and minorities, according to the article, may end up settling for less compensation than a white male might under the same circumstances. And if this gap appears among lawyers trained to negotiate and advocate, there is a good chance that there is a similar compensation gap among executives in other positions.

The ALM survey data dovetails with a report from the American Association of University Women Educational Foundation, released earlier this year, which identified a pay gap between men and women across professions, even in the first year after college. According to the report (which can be downloaded here), even controlling for variations in education and other factors, a pay gap still existed. The AAUW report noted that one possible contributor to the pay gap is that women are reluctant to negotiate for themselves and have a negotiating skill deficit because they lack the experience of negotiating for their own benefit. In other words, as the law.com article concluded "you get what you ask for, not what you're worth."

Negotiating Tip

• When you are preparing to negotiate a compensation package, think about those times when you are negotiating for something on behalf of your employer: a supply contract, a distribution agreement, a marketing campaign . . . anything where you have felt comfortable seeking the best possible deal. Take that same approach when you negotiate on your behalf.
  
  

Options Backdating

For some of my thoughts on options backdating and the troubles they cause for HR executives, please read the cover story in this month's Human Resources Executive magazine.

Editorial Note: Human Resources Executive magazine misstates my name as "Michael R. Rosenthal" rather than "Michael H. Rosenthal".

Gender Discrimination in the Workplace? Gee. . . No, its GE.

Do you think that executives are immune from workplace discrimination? Not according to GE Transportation General Counsel, Lorene F. Schaefer, who accuses GE of systemic company-wide discriminatory treatment of (1) female executive band employees, and (2) all female attorneys. Schaefer is highest-ranking legal employee in General Electric’s $4.2 billion Transportation Division. She is seeking to change GE’s alleged discriminatory pay and promotion policies and practices. Schaefer also seeks $500 million in damages for a class of approximately 1500 Executive Band female employees and female attorneys. Each female Executive Band employee and female attorney would receive, on average, approximately $300,000. Schaefer said that “[t]his suit is not only for GE women, but for my daughters and all daughters who should not have to face what I have faced at GE.”

Schaefer’s lawsuit came on the heels of a Supreme Court decision that limits the right of executives and other employees to remedy pay discrimination based on gender or other impermissible reasons. Although a bill will soon be introduced in the Senate to overturn the decision, Judge Alito’s remarks at his Senate Confirmation hearing are worth considering:

There are subtle forms of discrimination and the judicial process has to be attentive to the fact that discrimination exists and, today, a lot of it’s driven underground.

Ferreting out those subtler forms of discrimination may be difficult. But executives who are not satisfied with their career path should consider whether the differences in pay,responsibility and promotion opportunity are truly merit based or instead a by-product of “underground” discrimination.

Leading From Below

The Wall Street Journal published a great article on leadership, “Leading From Below,” in its March 3-4 weekend edition. Executives and managers below the “C-suite” level must look at themselves for leadership initiative and risk-taking because senior managers may be distracted by “demands from investors and analysts for immediate results.” The authors, James Kelly and Scott Nadler, studied managers in two areas that are rarely at the top of a company’s agenda: environment, health and safety and corporate social responsibility. The authors found certain “common threads” among those lower-profile managers who shifted to leadership positions.

The bullet points for the aspiring leader include:

• Make the decision to become a leader.

• Focus on influence, not control -- do your job with your colleagues. “[G]etting people to act on their own to achieve the goals you have in find is far more effective than having them react to your direction.”

• There may never be a “perfect” time to risk taking the lead, so just look for situations where you may be assert your leadership and do not wait for an invitation from the C-suite.

The authors note that in many of the cases they studied, the managers were able to demonstrate leadership without any support from the C-suite. But the authors also recognize that senior executives can take steps to encourage leadership development such as:

• Seeking a broader range of perspectives and encouraging managers, especially those aspiring leaders, to do the same.

• Creating vacuums by identifying important issues without “dictating the source or nature of answers.”

• Posing “what-if” questions that require others to think through the consequences of each step of a proposed course of action. Different approaches may prove to be preferable and managers will become more comfortable with exercising critical thinking skills, rather than merely accepting a decision and executing directives from above.

In my view, the ideas presented in the article apply to all aspiring business leaders regardless of their area of managerial responsibility. At the macro level, the business world may be moving towards a more collaborative model (e.g. Wikinomics: How Mass Collaboration Changes Everything). At the micro level, a collaborative model may be even more powerful because, as the authors note, "[p]eople simply react more enthusiastically to being enlisted in a common cause than they do to being ordered around." The complete article is on the website of the MIT Sloan Management Review, a “journal of management research and ideas.”