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How to deal with the problem of needing another offer to get a raise

If you’re already feeling underpaid, having to get another offer can make you feel even more unappreciated.

How to deal with the problem of needing another offer to get a raise
[Source photo: Precondo CA/Unsplash; Darja Kustova/iStock]

When I finally got up the nerve to ask for my first raise after nearly two years on the job in the media industry, I knew that being at a larger company meant that getting a raise would require running my request up the corporate ladder. But after more than six months after making my initial ask, I hadn’t received an update. In the meantime, multiple colleagues had been given raises because they brought in outside offers that my organization then matched. 

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My supervisor confirmed that the company culture had evolved to where employees could usually only get a pay bump after coming forward with another job offer. I explained I didn’t want to exit; I just wanted to be compensated for the increased responsibilities I had taken on. Another senior-level colleague advised I look for a job I had no intention of taking just to make our organization budge. So, feeling undervalued and discouraged, I reluctantly started applying for outside roles I hoped to leverage at my current firm.

“It’s a legitimate way to attempt to get a raise, and it never hurts to explore your value in the marketplace,” talent strategist Caroline Vernon says. “But if you’re simply using an outside offer as a way to gain more money in your current situation, it’s not advisable in the long run. Before doing that, people need to be prepared to leave.”

So where does that leave workers like myself? It helps to first understand why you might be in this position:

How companies get here 

Companies have numerous reasons for developing this reactive raise structure, even though it may create an environment where employees feel underpaid or unappreciated. These include:

Budget: “An outside offer provides external evaluation of the employee’s value,” Syracuse University assistant professor of management Lynne Vincent says. “It simplifies the organization’s decision-making process. It’s like, this employee is seen at this value from other places; maybe that’s how we should be valuing them. Or maybe we can’t afford to keep them.”

Company age: “This practice is seen more with newer companies,” says Jamie Klein, founder and president of Inspire HR. “A more sophisticated HR department would not put that burden on an employee.”

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It’s easier than rehiring: “The hiring process—interviewing, training, onboarding—is a cost-heavy burden on organizations,” Vernon says. “It’s a lot more cost-effective to negotiate with this person as far as compensation is concerned.”

Devaluing employees’ competencies: “As companies are trying to catch up with external market changes, they’re forgetting that firm-specific human capital, which is the most critical for firms to make its own unique product and services,” says Cornell University ILR School associate professor Tae-Youn Park. “Firm-specific human capital is the skills, knowledge, traits, and other competencies that are necessary for the firm’s production.” Take, for example, building a Boeing aircraft, says Park. “Boeing has its own specific way of building its aircraft, which may not be useful at Airbus.” 

Carelessness: “It’s laziness,” says career coach Ashley Stahl, adding that companies often don’t want to have to go through the process of giving raises “unless the market forces them.”

The problem with this method

Even though there are many reasons that this raise structure can develop, it often puts employees in a tough spot. Along with decreasing an employee’s morale and risking not getting a counteroffer, coming to a supervisor with an outside evaluation can create distrust.

Managers get the idea that an employee who brings in an outside offer “isn’t as loyal” as they once thought, Vernon says. “Sometimes they feel blackmailed,” she continues. “And sometimes other people on your team feel like you’re getting special treatment. You never really repair that level of trust, and that means a lot of the times people will leave anyway.”

Women may especially experience this sort of resentment from their managers. “Research shows that when women advocate for themselves and engage in negotiations, they experience more social backlash than men do,” Vincent says. “That can be their supervisors disliking the females more, or they’re less likely to want to work with them on other projects or suggest them for promotions.”

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What to do

While you might feel stalemated when it comes to negotiating a raise without an external evaluation, being proactive can help you combat the practice without having to put yourself on the job market. 

Have regular check-ins with your boss: “I’m a big fan of once-a-quarter checking in,” Klein says. “Talk about where they are on their career path, what they can do, and if they are a candidate for a promotion, the path to get there.”

Tell your supervisor you’re considering leaving: “Prior to getting to the point where you’re serious about going on interviews, if your relationship with your manager is healthy enough, you should feel like you can have those conversations with your manager,” Vernon recommends. “Say, ‘I’m feeling underpaid. I’m feeling underappreciated. I feel like I need to start looking around.’ Then at least you can say you tried.”

Make a list of why you deserve more: When the time comes to have the raise conversation, Klein suggests “going to your leader with a one-pager. Leaders love to have something to respond to, and they love to feel someone has done advanced thinking before meeting with them. So go in and say, ‘I’ve been here for X amount of time, I bring these skills to the organization, these are some quantifiable accomplishments I had, and I see myself being a candidate for this path.'”

Come in wanting to stay: “If you come to the negotiation table with authentic intentions to negotiate, you have to want to be there. That is key,” Vincent says.

Always be looking: “Options come down to a willingness to be creating them, and that translates into making job hunting a way of life,” Stahl says. “It’s not about looking even when you’re happy, it’s about relationship-building; that’s something that’s an ongoing investment in your career, not something that should spike when you have a need, because the worst time to connect with people is when you need something from them.”

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Dana Rose Falcone is a journalist in New York City.

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