Ambition penalty deters working women

By now, we've all heard about the gender gaps in pay and wealth: On average, women in the US earn $0.82 and own just $0.32 for every $1 earned and owned by a man, and the disparities are even wider for women of colour.

What's less talked about is that women themselves tend to be blamed for these gaps. (See: "Women don't pursue high paying jobs;" "Women drop out of the workforce;" "Women let their partners manage their money;" "Women don't invest.") And they're often penalized when trying to close them. This paradox is what I call the "ambition penalty" - the social, professional and financial costs women face when asking for more. Understanding it is critical for tackling gender inequality when it comes to money. Because nothing will change if we keep telling women to step up, only for them to be pushed down when they do.

This penalty is something many of us have experienced first-hand, including one 26-year-old woman who told me about having a job offer rescinded after following advice to "always negotiate." Like me, this young woman is pursuing a career at a time when women are bombarded with an ever-growing list of directives for success - from cutting the word "just" in emails to avoiding extraneous apologies to always asking for more.

The problem with this messaging is it implies that a woman's primary obstacle to economic power is herself, and that inequities in pay and wealth result from our own behavior. There's no acknowledgment of how women are often penalized for pursuing their ambitions.

Consider how when women do negotiate (which they may do as often as men), they're more likely to be labeled aggressive and demanding and less likely than their male counterparts to receive the raises and promotions they've requested.

Although a rescinded job offer may be one of the more extreme penalties, other types are more common. One 2018 study found that, even at the beginning of their careers, recruiters avoid working with high-achieving women. Research from 2012 observed that when women did reach leadership positions, they were more likely to be disliked and disrespected by peers.

A 2020 study linked this backlash directly to ambition: When women were arbitrarily assigned leadership positions, they were less likely to be found unlikeable. It was only when a woman was actively pursuing a leadership position that she encountered penalties. This suggests that more than power, influence or success, women are penalized for the pursuit of those things. This shows up in tangible outcomes, like the denial of job opportunities, raises and promotions - all of which can make building wealth harder.

So what can we do about this? How can we close pay and wealth disparities without telling women to do more and leaving them alone to suffer the consequences?

Mentors should give better advice. If we consider all the ways in which women's ambitions are penalized, we might begin to understand how much of what we've traditionally called the "confidence gap" or "engagement gap" at work and in investing is an adaptive response.

Before encouraging women to negotiate more or harder, perhaps it's useful to ask why there may be some hesitancy to negotiate in the first place. Could it be a realistic fear of backlash, rather than a presumed lack of confidence?

Before shaming women for deferring money decisions to their partners, perhaps it's better to ask why women may not feel financially empowered to begin with, Could it be because husbands get stressed when female partners hold more financial power? Or because some heterosexual men prefer female partners who are less ambitious than them?

Before assuming women simply prefer not to take high-paying jobs, perhaps it's worth asking why women might not initially feel welcome in those positions. If the data is any indication, the answer lies (at least in part) in the ambition penalty.

Companies should support women's ambition. Companies can build out networks, like affinity groups, where women's career and financial ambitions are celebrated rather than penalized. These kinds of networks have been shown to help predict women's leadership success.

Leaders should also investigate any gender differences in pay and advancement. For example, if women are clearly underrepresented in management, could it be because women get less frequent and lower quality feedback than men? Or because they're penalized more harshly for mistakes? When companies make an effort to promote gender diversity and make progress on metrics of gender equity, women are more likely to seek out leadership roles.

Women should consider their environment. Rather than following blanket advice to "speak up more" and "always ask," perhaps our energy would be better spent identifying where our ambitions will be supported.

If you're considering a new job, that might mean researching the company on LinkedIn to learn more about who works there, how long those employees stay and how quickly they advance. A leadership team made up exclusively of white male MBAs can be far more illustrative of a company's commitment to gender and racial equity than the inclusivity statement on the website.

Of course, we don't often have the pick of the litter when it comes to job prospects. So it's important to consider what's possible in your current role. Are you in an environment where your ambition will be held against you? If so, are there ways to reframe financial and career goals, for example in terms of how they might benefit the organization, to win more support?

Ultimately, however, it's not women who need to change or be "fixed" as the current worldview so often suggests; it is the conditions that reinforce gender stereotypes and undermine women that need to be reconsidered. If we want to close these gender gaps, we'll first need to get to a place where we stop penalizing women for trying to do so themselves. (Bloomberg)