Topic: Management

Michelle Florendo, MBA 10
Founder and Principal, Powered by Decisions LLC

Summer 2023|By Gail Allyn Short| PHOTO: MICHELLE LUO

Headshot of Michelle Florendo, MBA 10.Michelle Florendo has made a career out of teaching people how to make better, faster decisions and to lead with confidence.

“Most people have never been taught a specific process for decision-making, and yet it’s something that we’re expected to do innumerable times a day,” she says.

The self-described “decision engineer” is the founder and principal of Powered by Decisions, a leadership coaching and training firm. Florendo has coached executives at some of the most influential companies, including Microsoft, Google, and Amazon.

Recently, she taught an MBA workshop at Haas focused on addressing emotions associated with making decisions. “Instead of ignoring the emotions, I teach students how to observe and decipher their feelings and how to either manage those emotions or integrate that data into a structured decision process,” she says.

While business schools teach students frameworks for financial decision-making, people don’t usually get instruction for issues not involving the bottom line, she adds.

Another passion of Florendo’s is working with the Berkeley Executive Coaching Institute where she supports professionals in developing coaching skills.

“It felt like coming full circle because the co-founder of the Institute, Lecturer Mark Rittenberg, introduced me to coaching while I was a student at Haas,” Florendo says. “He helped me understand how much I loved it and how good I’d be at it.”

linkedin.com/in/michelleflorendo

Future Sense

Summer 2023|By Rachel Layne| ILLUSTRATION: ©BEPPE GIACOBBE/THE ISPOT

Spotting prescient ideas

Man holding a book open as drops of multicolored ink rain down.

Subtle shifts in how people use language can foretell big changes in how we think about the world. For example, when followers of astronomer Copernicus stopped calling the sun a planet, it signaled the beginning of the end of the belief that the earth was the center of the universe.

Getting out ahead on far-sighted ideas can yield big financial or reputational rewards, but these can be difficult to spot, even though signals about the next big idea may be lurking in everyday language. Advances in natural language processing are now making it possible.

Professor Sameer Srivastava and co-authors have developed a deep learning model that can identify where and when prescient ideas—those that go against convention but later become widely adopted—first emerge.

By parsing millions of public utterances by senators, judges, and executives, they found that far-sighted ideas tend to emerge not from established leaders but rather in the language first used by those on the fringes.

“This is a way to go back and actually find when somebody first used an idea in a way that became prescient,” says Srivastava, whose research with Haas post-doc researcher Paul Vicinanza and Stanford’s Amir Goldberg was published in PNAS Nexus. “Our research suggests there’s a reasonable chance that those people were more likely to be on the periphery of their field.”

Srivastava and his co-authors used a deep neural network known as Bidirectional Encoder Representations from Transformers (BERT) to unearth the linguistic markers of prescient ideas in politics, law, and business and trace how they became mainstream. They defined prescient ideas as those that are not only novel—words or phrases used for the first time in a new context—but that rethink the dominant assumptions in a particular field. To be considered prescient, the idea must also foreshadow how the domain will evolve in the future.

Political outsiders

Among nearly five million floor speeches delivered by members of the U.S. Congress from 1961 to 2017, the model identified Mississippi Senators John Stennis as the most prescient and James Eastland as the least prescient. Both fiercely opposed civil rights legislation in the 1960s, but the well-connected and powerful Eastland made his case with overtly racist rhetoric. Stennis, meanwhile, was “among the first to base his objections on the principles of ‘color blindness,’ limited government, and individual freedom,” the researchers wrote. This indirect set of arguments proved highly prescient, “laying the groundwork for contemporary conservative talking points on race relations in the U.S.”

The model flagged smaller firms as more prescient than larger, established players. More prescient firms also had above-average stock returns.

Landmark lower courts

The same idea held true for the law. In examining 4.2 million digitized federal and state legal rulings, the researchers found that landmark U.S. Supreme Court decisions, such as legalizing gay marriage or affirming the Affordable Care Act, tended to originate in lower courts. The most prescient decisions—those with the highest number of citations—were 22 times more likely to come from state appellate courts than the U.S. Supreme Court.

Prescient businesses

In the business world, the researchers had a smaller dataset to work with, analyzing transcripts of the Q&A portion of public quarterly earnings conference calls—a relatively recent practice compared to similar records in law and politics. In these calls, managers often reveal strategy not found in press releases or official filings. The model flagged smaller firms as more prescient than larger, established players. More prescient firms also had above-average stock returns. (The authors are doing more work on business figures to expand the data pool.)

Implications

The findings have big implications across many disciplines, says Srivastava, the Ewald T. Grether Professor of Business Administration and Public Policy. One result, he says, may be more recognition for people who have been historically marginalized—such as women and minorities. “They may be the ones generating a lot of the ideas, even if they aren’t getting credit for all of them.”

Negotiation Frustration

Summer 2023|By Laura Counts| Illustration: Anna Godeassi/The Ispot

Who says women don’t negotiate?

Two women with a speech bubble between them showing hurdles, as for a track meet.

For decades, a closet industry of books and workshops has promised to make women better negotiators and help close the gender pay gap. But new research by Professor Laura Kray shows that believing women don’t ask for higher pay is not only outdated, but it may be hurting pay equity efforts.

“Continuing to put the blame on women for not negotiating away the gender pay gap does double damage, perpetuating gender stereotypes and weakening efforts to fight them,” says Kray, the Ned and Carol Spieker Chair in Leadership.

Last year, women earned about 22% less than men, on average. But broken down by income level, the gap for middle- and lower-wage women has decreased over the past 20 years while the gap for those with higher salaries—where there is often more room for negotiation—has increased.

Women MBA grads earn 88% of what men make after finishing their degree but only 63% of what men make 10 years later, past research by Kray and others has found.

Women Do Ask

The researchers’ survey of a nationally representative sample confirmed the perception that women negotiate less than men and are less successful when they do. Yet when Kray and her co-authors analyzed a survey of students graduating from a top MBA program between 2015 and 2019, they found that significantly more women than men reported negotiating their job offers—54% versus 44%.

The researchers then delved into a 2019 alumni survey of 1,900 MBA grads and found, again, that the women earned 22% less than men. But other than women’s lower pay, the only differences that emerged along gender lines were that more women than men said they had attempted to negotiate—and more women reported being turned down.

“Continuing to put the blame on women for not negotiating away the gender pay gap does double damage, perpetuating gender stereotypes and weakening efforts to fight them.”

Revisiting past conclusions

Kray and her co-authors also used an updated statistical approach to revisit a 2018 meta-analysis of studies on gender and negotiations. Focusing on nine studies published from 1982 to 2015 that measured gender differences in initiation of salary negotiations, they found no difference overall. But when they looked at changes over time, they found that men did report higher rates of negotiating versus women early in the era. The gender difference appeared to disappear around 1994 and reversed beginning around 2007. The trend has continued to grow since then, Kray says.

Many factors may have contributed to women’s greater assertiveness over the past two decades, including the “lean-in” movement sparked by Sheryl Sandberg’s book of the same name. But the downside of such messages has been to “blame the victim,” Kray says—putting the onus on women to fix the pay gap by working more and trying harder.

Another experiment exploring attitudes about the pay gap’s causes and support for solutions found that people who believed more strongly that women’s lower negotiation rates fueled the pay gap for MBA graduates were less likely to support salary-history bans and more likely to justify the current system.

“Negotiating for pay or promotions is clearly beneficial, and there’s room for everyone to do more negotiating,” Kray says. “But it’s time to end the notion that women don’t ask.”

New research shatters outdated pay-gap myth that women don’t negotiate

| by Laura Counts
Photo: Adobe Stock

For decades, a cottage industry of books and workshops has promised to make women better negotiators and help close the gender pay gap. Yet not only does the pay gap persist, it tends to be larger for women who gain advanced business skills.

New research by Berkeley Haas Professor Laura Kray shows the belief that women don’t ask for higher pay is not only outdated, but it may be hurting pay equity efforts. Contrary to popular belief, professional women now report negotiating their salaries more often than men, but they get turned down more often, Kray found. 

“While men in the past may have been more likely than women to negotiate, the gender difference has since reversed,” says Kray, the Ned and Carol Spieker Chair in Leadership. “Continuing to put the blame on women for not negotiating away the gender pay gap does double damage, perpetuating gender stereotypes and weakening efforts to fight them.”

The new paper, co-authored by Vanderbilt University Associate Professor Jessica Kennedy, PhD 12, and Haas post-doctoral scholar Margaret Lee, is in press in the journal Academy of Management Discoveries.

Wage gap increases with higher pay

Overall, the gender wage gap in the U.S. has barely budged over the past 20 years. Last year, women earned about 22% less than men, on average. But broken down by income level, the situation is more nuanced: The gap for middle- and lower-wage women has actually decreased while the gap for those with higher salaries—where there is often more room for negotiations—has increased. 

Statistics for the elite group of women who invest in earning MBA degrees are sobering. Women earn 88% of what men make after finishing their MBA, but only 63% of what men make ten years later, past research by Kray and others has found. This pay gap among MBA graduates “is especially notable considering the nearly identical skills and qualifications held by men and women at the time the degree is conferred,” write Kray and her co-authors.

Women do ask

The researchers surveyed a nationally representative sample and confirmed the popular perception that women negotiate less than men and are less successful when they do; and that men are more likely to receive better pay without asking for it.

Yet when Kray and her co-authors analyzed a survey of students graduating from a top MBA program between 2015 to 2019, they found that significantly more women than men reported negotiating their job offers—54% versus 44%.

The researchers then delved into a 2019 alumni survey of 1,900 MBA graduates. The survey asked the MBAs for their salaries, and included a multipronged question about whether they had ever asked for raises or promotions; whether those negotiations had been successful; and whether they had received a raise or promotion without asking.

The analysis confirmed that people who ask for higher pay are indeed more likely to get higher pay than those who don’t ask. “People should be encouraged to ask,” they wrote.

But overall, they found that the women earned 22% less than the men. And other than women’s lower pay, the only differences that emerged along gender lines were that more women than men said they had attempted to negotiate, and more women reported that they had been turned down. 

“Given women’s greater, not lesser, tendency to ask, a gender difference in negotiation propensity cannot account for the gender pay gap found in these alumni data,” the researchers wrote.

Revisiting past conclusions

Kray and her co-authors also used an updated statistical approach to revisit a 2018 meta-analysis that concluded that women were less likely to initiate negotiations—focusing on the nine prior studies published from 1982 to 2015 that measured gender differences in initiation of salary negotiations.

In their new analysis that parsed out changes in negotiation propensity over time, the researchers concluded that men did report higher rates of negotiating versus women early in the era. However, the gender difference appeared to disappear around 1994 and reversed beginning around 2007. 

The trend has continued to grow since then, Kray says. 

“There’s a good-news story here. Both men and women are negotiating more, and the increase is much greater for women than men,” Kray says. She noted that many factors may have contributed to women’s greater assertiveness over the past two decades, including the emphasis on negotiating and the “lean-in” movement sparked by Sheryl Sandberg’s book.

Blaming the victim

Still, the downside of messages like lean-in has been to “blame the victim,” Kray says—putting the onus on women to fix the pay gap by working more and trying harder.

“If people believe men have better outcomes simply because they negotiate and women don’t, then they think we just need to train women to negotiate better rather than fixing a discriminatory system,” Kray says. “We call this a ‘legitimizing myth.’”

To explore attitudes about the causes of the pay gap and support for possible solutions, the researchers next conducted a series of experiments. In one, they asked 500 college-educated people with managerial experience to read a paragraph on the post-MBA pay-gap increase, and asked questions about what they think drives it.  

About 15% mentioned differences in negotiation rates, and almost half mentioned women’s choices—including beliefs that women may be less ambitious, work fewer hours, or have less experience. About 64% mentioned lack of fairness, discrimination, and structural issues, such as the “old boys’ network,” or a glass ceiling preventing women from rising to the top. 

Men were more likely to blame women’s choices for their lower pay, while women were more likely to mention discrimination. But over and above those explanations, men and women thought negotiation rates were a significant contributor to pay disparities. Those who believed more strongly that women’s lower negotiation rates contributed to the pay gap for MBA graduates were less likely to support legislation that prohibits employers from asking prospective employees about their current or past salaries—aimed at correcting past inequities—and more likely to justify the current system. 

How gender-based messages can backfire 

In one final experiment, Kray and her colleagues showed that messages intended to promote equality in negotiations can contribute to sexist stereotypes. After reading a passage from a book aimed at getting women to negotiate, people were more likely to endorse gender stereotypes than those who read from a gender-neutral negotiations book. 

“Negotiating for pay or promotions is clearly beneficial, and given that negotiation rates are pretty low, there is a lot of room for everyone to do more negotiating,” Kray says. “But it’s time to end the notion that the pay gap occurs because women don’t ask.”

Kray is continuing to investigate the relationship between negotiations and outcomes, including whether the higher rates of women asking but being turned down leads to higher turnover, and whether this reflects negatively on employers. She is collaborating with Haas Dean Ann Harrison, who is focusing her sabbatical this fall on researching the causes of the gender wage gap.

Read the paper:

Now, Women Do Ask: A Call to Update Beliefs about the Gender Pay Gap
By Laura Kray, Jessica Kennedy, and Margaret Lee
Academy of Management Discoveries
Published online: August 15, 2023