Just when you think your company might be getting on the pay equity bandwagon, there’s one more thing employers have to take a look at: bonus pay.
Even if male and female employees’ take-home pay is in line with pay equity laws, bonuses can widen the pay gap by an average of $3,500, according to a new report from the ADP Institute.
ADP’s study looked at the earnings of men and women who started out with the same base salary. After six years, however, male employees had ultimately earned more due to receiving higher bonuses.
So how does this research help women move forward to correct this disparity? In their own companies, women leaders need to work with upper management to review the company’s pay practices and conduct periodic audits.
To close the bonus gap, women need to be savvy about negotiating for themselves.
Bridging the bonus gap
Asking for a bigger bonus can be tricky. Here, some negotiation and career experts offer suggestions for what you can do to close the bonus gap:
Start the conversation early. One of the best ways to set yourself up for success is to be as proactive as possible in understanding the parameters and requirements attached to getting a better bonus, suggests negotiation expert Fotini Iconomopoulos. And start those discussions well in advance of an annual review or decision-making.
Get smart about the numbers. Ask for some time to sit down with your boss and walk through the company valuation and your equity compensation. “Annual grants, vesting schedules and potential upside are all important details to know and understand,” says executive coach Suzanne O’Brien. Asking for this information “is acceptable and shows your savvy and interest in the company’s future.” It signals that you have a deep interest in the future success of your company.
Focus on the decision maker. Salary and incentive pay are rarely coming from the same part of your organization’s budget, says negotiation coach Jaime Lee. This information is important to keep in mind because “there is more flexibility, seasonality, and taxes for bonuses than salaries,” she says. She also suggests paying close attention to the key decision makers and the key factors that will influence bonus amounts “so that you can influence the decision before it’s made for you,” she says. And try to determine what kind of formula or measurement your decision maker uses to justify bonus amounts. If you can, “that doesn’t leave them any wiggle room to vaguely claim you didn’t earn it,” says Iconomopoulos.
Pose the right questions. This will help you gain the information you need, says Iconomopoulos. This approach can be effective if you sense resistance. You might ask “What circumstances are required?” or “How often do others get paid out?” By helping your decision maker get more specific, you will have information that can increase your negotiation outcomes and set you up for greater success down the road.
Getting a bigger bonus certainly isn’t easy. But when you know your value and can recognize the right opportunities to negotiate, you’ll find that it’s a lot easier to ask for what you deserve.
