When it comes to using another job offer to get a raise, you could say Phoenix-area software engineer Timothy Sweet is an old pro.
Sure, the 29-year-old’s first attempt to do this--at a run-of-the-mill retail job he took before entering his current profession--failed. But since then, Sweet has managed to gain a raise and promotion twice by leveraging counteroffers, once from a new company and a second time from a separate division of his existing company. Most impressively, a few years ago he walked away with a 33% raise from an existing employer--boosting his annual pay from $62,000 to $81,000--by using this tactic.
“When I told my employer, ‘the [other company] wants to give me an offer that’s substantially more,’ they didn’t match the offer but they did give me more,” says Sweet. “And it was enough to get me to stay.”
But while using another job offer to leverage a raise and negotiate a better career often works, if you’re unprepared, it’s a gamble that could backfire--and there are some career experts who advise against it completely. Here’s how to decide if it’s it’s the next best move for you, and make it work.
Perhaps you’re working in a position at your current job and can’t seem to advance, so you’ve started looking for another job. Or, perhaps a recruiter noticed your résumé on LinkedIn. However you got to this point, you now have a job offer that promises more money or benefits than you have now.
In such cases, shaking things up by presenting your boss with an offer from another company--in other words, letting your current employer know you have other suitors--may be your best bet for boosting your salary, like Sweet did.
I made my first and only attempt using a counteroffer to get a promotion about 14 years ago, at the beginning of my journalism career. At the time, I was covering a niche wireless technology beat for a business-to-business publication but making pennies (about $30,000 per year plus benefits). When my work caught the attention of a competitor, my supervisor offered me a $5,000 raise, plus more opportunities for travel.
Using the advice of a wise friend, I called a meeting with my supervisor, with whom I had a great relationship, and told her that, while I loved my job, I was eager for more dough and bigger assignments--and that a new employer was offering both. Within an hour she sent me an e-mail letting me know that her higher-ups had approved a $7,000 raise as well as a promotion that would grant me more oversight over editorial decisions and opportunities to attend conferences. Needless to say, I decided to stay for another year, until the company’s overall financial direction (not good) spurred me to change employers.
My experience is no surprise to Victoria Pynchon, co-founder of She Negotiates Consulting and Training, which offers career, promotion, salary and fee-negotiation strategies for women. Often people--and especially women--underestimate their worth, she says, so a counteroffer can be a great way to remind an employer of their value.
“If you’re negotiating a raise with your current employer, with an offer in your back pocket, you are the one who is able to negotiate a great deal,” says Pynchon, who in 2012 helped a female lawyer working in Silicon Valley negotiate a 43% raise at her corporate council job by using a counteroffer.
Pynchon’s client didn’t just barge into her supervisor’s office waving a counteroffer from another employer. Rather, she presented the counteroffer after doing some careful research.
Here are the steps to take before you actually have the conversation with your current employer:
1. Assess Your Career Goals
Ideally, you should continually reevaluate your career goals before you are courted by another employer. But once you have an offer, you need to figure out fairly quickly what you want most, such as more money, more respect or a promotion. “They should ask themselves, ‘Where do I really want to go?’” says Pynchon. “Do I want to aim for the C suite? Am I in a position in my life at this time where I want to pull back? There are times when it’s appropriate to say, ‘I need to pull back, I need a little more breathing room.’ And the place that’s more likely to give you more breathing room, where you have established a reputation, where people owe you favors, where you have supporters … is your current job.”
2. Assess Your Market Value
“There are a number of online resources that will help you determine acceptable salary levels in your geographic area or city,” says Jessica Miller-Merrell, a hiring and recruiting expert and author with recruiting site Glassdoor. And what you find might surprise you: After researching salary data and talking to peers, Pynchon’s lawyer client learned she was worth up to four times the $250,000 salary that one private law firm had offered her. Others in her same area of specialty--intellectual property law--were making around $1 million a year.
When she received a counteroffer of $300,000 from a private law firm, Pynchon’s client used what she’d learned to counter their offer, asking for a cool $1 million, and the firm met her at $800,000. Still, she decided to stay at her current job. Her thinking? It offered more stability and better opportunities for advancement. While her company didn’t quite match the counteroffer, they did offer her a 43% raise, along with a promotion.
Whether you’ll be successful at getting a raise or promotion out of your counteroffer has a lot to do with the relationships you have with your peers and supervisors. “It can be a useful negotiation tool, especially if you have a manager or boss who is your advocate and can try to fight for an increase for you,” says Miller-Merrell.
For Sweet, speaking openly to his manager about career goals and how a counteroffer would help him get there was key to getting more opportunities in house. “Be completely open with your manager and say, ‘Hey, this is what I am interested in, and this is what this other company is going to give me the opportunity to do.’ That’s the conversation I had with my manager at the time. Maybe [your manager] saw that you had that skill and didn’t know you wanted to pursue it.”
4. Carefully Consider the New Opportunity
Is leaving your old, comfortable job worth the risk? Pulling the counteroffer tactic entails some degree of risk--so you shouldn’t go to bat for just any company’s offer, adds Miller-Merrell. “Don’t waste your time on something that isn’t a good fit for you,” she says. “Understand that taking on a different job involves risks, and you will need to weigh the pros and cons to determine if taking a different role is a good long-term strategy for you.”
Let’s say you’ve done your research, know your market value, have assessed your career goals, and are sincerely interested in the new company’s counteroffer. Now it’s time to call a meeting with your boss.
Start the discussion by talking about what you like about your current job. Then gently but firmly bring up the counteroffer and its benefits, and ask whether your existing employer can offer you any incentives to stay.
No matter what, don’t resort to threats, anger or bullying.
“Focus on the positive, but let him or her know that you have received another job offer,” says Miller-Merrell. “Talk about what’s most important for you and be prepared for some give and take. Your boss is a human being. He or she may have the same thoughts, fears and frustrations as you. Acknowledge that and talk about what matters most to you.”
One thing to keep in mind, says Miller-Merrell, is that the average annual salary increase is between 2% and 5%. “If you are expecting a 20% increase in pay, you need to be prepared to take on extra responsibilities and/or sell your worth if you would like to stay with the same company,” she says.
“When it comes to negotiating, you should lead high with the understanding that you will only go down from your opening number--in order to meet in the middle. If a 15% raise is realistic, you can start the negotiation at 20% and/or add in some additional perks like working from home, a company car or cell phone to help sweeten the deal.”
Most experts agree that if a current employer doesn’t respond to your counteroffer with a promotion, raise, or some kind of acceptable career improvement, your best bet may be to walk away and take the new gig.
“I don’t think you always have to walk away, but failing to follow through makes people question you and how qualified or committed you actually are [to your current job],” says Miller-Merrell.
But assuming your current employer wants to play ball--meaning, they go ahead and counter your counteroffer with a raise, promotion or other incentive--try to remain noncommittal as long as possible to see how far both companies are willing to go to keep or obtain you (within reason, of course!).
“Let your preferred company know it is your top choice, but the other company is offering ‘x’ more in pay, additional vacation or other perks,” says Miller-Merrell. “Depending on precedent and what they can afford, you might be able to negotiate everything you want, but it’s likely you will have to negotiate and compromise. Know what’s important to you, such as more flexibility, and be realistic about what you can and can’t handle before you take on that new job opportunity.”
You should also weigh the risks of a new job, and the intangible costs, including “the time it will take to replicate the good reputation you earned at your existing company,” says Pynchon.
Yet even if you are offered everything you think you ever wanted from your current company, Alison Green, a management consultant who writes the advice blog Ask a Manager, suggests thinking long and hard about whether your employment situation is a happy one.
“There’s a reason you started job-searching in the first place, and it probably wasn’t just money,” says Green. “Usually there are other factors beyond salary that drove you to look--things like dislike of your boss, boredom with the work, lack of recognition, or long hours. Those things aren’t going to change, and as soon as the short-term glow of a raise wears off, they’re likely to start bothering you again.”
This article originally appeared in LearnVest and is reprinted with permission.
[Image: Fickr user Pete O'Shea]