Earlier this month, LinkedIn Influencer Sallie Krawcheck, the former president of the Global Wealth & Investment Management division of Bank of America, wrote a piece provocatively titled The Highest Return Investment for Women.
She explains how she is often asked to speak to women about investing. Naturally, she talks about the basics of saving, diversification and asset allocation. She also coaxes women to take more risk in the pursuit of higher returns.
She then writes that there is an investment that women can make that by far has the greatest risk-adjusted return available. And that is asking for a raise.
Sounds weird? Not if you do the math.
She quotes the often-cited figure of women making 77 cents for every male’s dollar with this discrepancy starting from the first job. “If a woman were to earn at parity with a man, that represents a return of 30% per annum on her current salary…. which compounds. (!) One can’t get that return on government bonds (now yielding in the low-single-digit-per-cents) or in the stock market on a consistent basis (even in the bull market since the crash, the US market has returned less than half of that annually).”
However, Krawcheck does concede that women asking for a raise is not too welcome in the corporate world and gender challenges abound.
Last year, CNBC carried an article on the very same subject. The author spoke to numerous professionals and experts only to conclude that women are damned if they do and damned if they don’t. If they do ask for a raise, there could be a backlash and they are viewed as “assertive and self-promoting” and “people don’t like it when women do this.” On the other hand, because they have not asked, they will not get it, or at least not to the level they seek.
In a global survey on workplace habits, Accenture polled 4,100 business executives online in 32 countries and found that women, including those in India, hesitate in asking for promotions and pay hikes, unlike men. But the good news, according to the survey, is that 56% of women asked for a raise and 82% received it. While 54% of women polled asked for promotions, and 81% received it.
Going by that statistic, women would do well to heed Sallie Krawcheck’s parting shot: “Ladies, please ask for the raise”.
