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I am blessed to find myself in a fortunate situation. I am gainfully employed by a large fortune 500 company, but have been approached by a small company in the private sector with a very compelling offer that I would like to accept.

I notified my employer of my intent to leave, and they asked me to wait a few days while they assemble a counter-offer.

The Problem

The small company offered a package who's value is approximately 20% more valuable than my current wage. The large company is planning on countering with a package that is 30% greater than my current wage.

My Questions

1) After I receive the counter offer, is it courteous/acceptable to approach the smaller company and ask them to match the larger offer? If so, is it unprofessional to ask both parties for a best-and-final offer?

2) In the event that I accept the smaller company's offer, the large company asked me if I would consider contracting my services to them for 6-12 months after my departure. (ex: new job during the day, doing contract work at night and on weekends). Is this common, or is this considered an unprofessional move that could burn bridges? (the companies are in different industries and are not competitors)

Thanks for taking the time -- I'll edit with more questions if I have any, or just ask in the comment space below your answers. Thank you!

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If you take the small company's offer you should NOT do contract work for the large company. You shouldn't really even take the counter offer, because eventually that could come back to bite you in the rear, because you have already shown your hand ( the fact you were unhappy enough to get a job offer at another company ). –  Ramhound Jul 23 '12 at 12:51
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@Ramhound - disagree with you on both counts. Informing his current employer and allowing a counter-offer indicates that he IS happy in his current position and would consider staying. Doing contract work for his current employer after he leaves will bring in extra money AND remind them of his dedication to the work there, which can always be useful in the future for recommendations, future employment and his reputation in his line of work. –  David Navarre Jul 23 '12 at 15:09
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@Ramhound: Just for clarification -- I did not "go get a job offer" at another company, nor did I say I was unhappy in my current position. (sorry if that's the impression I gave in my post.) I was scouted by the smaller firm and offered a position based on my reputation for delivering projects on time and under budget. I wasn't even looking for a new job. –  ajax81 Jul 24 '12 at 19:31
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BTW, if you are going to consider contracting, you should ask for an hourly rate that is equal to your NEW annual salary / 1000. If your new salary is $80K/year, you should charge $80/hour. –  kevin cline Jul 29 '12 at 22:01
    
@kevincline: Thanks for the advice, Kevin. I've never contracted before. Can I ask how you arrived at x/1000 as your methodology? –  ajax81 Jul 30 '12 at 2:30
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5 Answers

up vote 18 down vote accepted

Be wary of accepting a counter-offer. If you take the counter-offer, when the next performance review comes around, you may hear that you are now above the top salary for your pay grade, and are ineligible for further adjustment. It's also possible that you will be looked upon as disloyal, and will not be considered for further promotion. At worst, you could accept the counter-offer, then find yourself training your replacement and then dismissed.

Your new employer is hiring you hoping you will do well, and they are probably prepared to give you a further increase if you perfom well over the next year.

Besides, do you want to stay at an employer who acknowledges that their practice is to knowingly underpay critical employees?

In short, if the new opportunity is attractive for reasons beyond salary, take it and leave the 10% on the table, or tell them you have a higher offer and see if they will match it. There is no need to tell them it is a counter-offer from your current employer.

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Sir, I believe you just nailed it. "Do you want to stay at an employer who acknowledges that their practice is to knowingly underpay critical employees?" just made everything very, very clear to me. Thank you! –  ajax81 Jul 22 '12 at 23:04
    
This was the situation at my current company - my superior said something along the lines: "How could we get anywhere if we paid everybody the going rate". And they allways cry about being unable to get or to keep good personell. –  Owe Jessen Jul 23 '12 at 11:37
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I only saw the question this AM - but there is a general consensus amongst my circles that if you receive an offer you like, you submit your notice, and try to burn no bridges - you never know when you will need them again! –  warren Jul 23 '12 at 14:50
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@warren: Yes, if the OP decides to decline the counter-offer, it should be done politely. –  kevin cline Jul 23 '12 at 15:31
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The question seem to focus on remuneration package only and the following part of the answer will keep the tone.

  1. In many cases, when current employer tries to stop an employee from leaving offering them better salary people go to the new potential employer with this and most of the the time the least they get is similar proposal. Personally I treat just as specifics of labor market which gives power to employees, e.g. IT job market these days, and I don't think it is bad or wrong, even though I've lost a bunch of people because of such actions.

    Going further, if I made you a counter-offer once I won't give another. It's not some kind of weird auction. At this point it is take it or leave it.

  2. If you consider working for both parties start with making it clear for both companies, especially for your new one, asking them if it is OK. Considering the companies don't compete odds are everyone would be OK with that. As long as you're honest with all parties it won't be considered unprofessional.

    The bigger problem however is whether you're able to cope with both jobs. Much depends on how the contract terms would look like, but if it's going to be "nights and weekends" I really challenge the assumption you would manage. I can hardly think of any people who were able to work like that longer than just a few weeks, let alone the whole year.

However, when I read your question I instantly thought that we might be discussing the wrong thing here.

You seem to bring down the value of the offer to material things only. I would look more on non-material aspects on work: how it is going to develop you, whether you're going to like, how it would affect your pace of learning, etc. I would take worse salary with better opportunities of learning than the other way around. It will pay off big time in the long run.

So my advice would be: if you're talking about 10% difference in remuneration package, forget about the money and focus on other aspects of work -- simply which one you're going to like better or which one helps you to push your career in desired direction.

Note: focusing heavily on salary negotiations you also send a signal to your (potential) employers: what I care about is money; not the stuff you build, or the people I'll work with, or the things I'll learn, but money. It is unlikely that this will be a problem for a Fortune 500 company. It might be for a small company.

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+1 20% or 30% more salary for a job you hate going to is a fools bargain. –  Chad Jul 23 '12 at 13:29
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is it courteous/acceptable to approach the smaller company and ask them to match the larger offer?

Above feels slippery.

To stay on the safer side, I would at least use different wording than "ask them to match". Say, informing them on higher counter-offer (purely informing - no pressure please) would be both courteous and acceptable, I would definitely do that. There could be further negotiation involved down this road, but it is rather impossible to give a one-size-fits-all advice here.

2) In the event that I accept the smaller company's offer, the large company asked me if I would consider contracting my services to them for 6-12 months after my departure...

First thing I'd consider in this case would be to consult with that smaller company. I would try to avoid risking my relations with the guys I am going to spend next few years working with.

A nice "side effect" of this would be an extra-proof that I can be a valuable asset indeed. This may be helpful since in the beginning of the career there is often a degree of uncertainty whether the hiring decision was right.


A word of caution: when negotiating in the bidding war, keep your eyes on mid-term perspectives, not only the short-term ones.

As an example, salary I once got thanks to some bidding war put me into the grade level higher than I was really ready for. As a result, I spent two quite tough years trying to catch up to the required level before this discrepancy bites me.

And this is not specific to me or the company I landed in: many of my friends who happened to get to another side of "bidding fence", into another company, had similar problems too. They told me performance reviews turned out quite a hard game for them because of the non-favorable comparison to guys hired outside of war period being paid less for doing same job.

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Is this really only about money? If it is, then you are free to shop your services for the highest rate you can get.

If it's about something else — better long-run opportunities at the small company, people you would miss at the large company, a better work environment at one of the two, whatever — then you need to think long and hard about what each company would do for you. Larger companies are more stable, but also tend to be more hidebound in their approach to things; smaller companies tend to move more quickly, but often get acquired by larger companies or simply lose funding or go out of business for other reasons.

In short, make sure you know what you're really looking for.

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Heck, the bigger company might even decide to expand into a new line of business by buying the smaller company.... –  David Navarre Jul 23 '12 at 15:14
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I wouldn't bother asking for a best-and-final offer, I would imagine that your current companies offer will be their last, and if the smaller company responds that will be their last as well. I don't see either company treating it like a bidding war on ebay and going up by 50 cents an hour for each offer...

As for your second question, I don't think it's common, but neither is it unknown. I don't see how accepting the contracting offer would burn any bridges, quite the opposite in fact. You should probably run it past your new employer, being clear that they will be your priority once you start working for them, and include an out in the contract with your old company so that you can cancel it at any time if it is causing problems with your new company. Get feed back from your manager at the new company before accepting the contracting offer from your old.

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