Boss offers a raise only when faced with resignation - is this a red flag? [duplicate]

Question

EDIT:
I've decided to accept the duplicate suggested by a few people as it's a bit more broad and is probably easier to apply to various real-life scenarios others might find themselves in. This particular question was created from a specific scenario that didn't even affect me, personally. I am, however, grateful for all the responses that were submitted.

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Disclaimer: I'm asking this question on behalf of someone dear to me - I do not have all the information beyond the general situation.

My GF was very unhappy with her job - the pay was low and management was sort of a joke (note that "management" in this instance is her direct manager, not the company owner); she was denied bonuses (when everyone else got them) for example, probably because she received a small raise after she was responsible for successfully completing a VERY big project for a very important customer almost single-handedly. Finally the company has undergone some restructuring recently and now implements a corporation-like structure; all the red-tape with very little of the benefits because the employee count isn't that of a big corporation (for example the mentioned manager had literally only TWO people under her supervision).

She found a different job offer and passed the recruitment process and was sent a pre-contract to sign (standard 3-month trial period with the agreed upon salary). She hasn't yet signed it because she wanted to try and negotiate a shorter notice period with her current boss; if that'd go through this pre-contract could be changed to let her start the new job faster (and no real loss if this request would be denied).

Well, her boss was quite shocked that she wanted to leave, and came back with a counter offer. It seems he was quite impressed with her handling of the important project I mentioned earlier and agreed to not only match the pay-raise of the competition but raise it slightly. Supposedly he understands the "management problem", but the solution is that said manager will be assigned to another team...

This all seems a bit worrisome IMHO, and I wonder if this is a red-flag or not. Specifically, that her boss effectively doesn't know if his valued employees are happy or not. Additionally, the raise is 50%, so not an insignificant amount and it's only offered when threatened with the employee in question coming in with a letter or resignation.

While I fully understand that no one here can really make a decision for my GF, I am quite interested how often such a situation ends up in the employees favor (employee threatens to resign, gets significant raise, stays).

Answer 1

I'm assuming that the "boss" you reference in your question is the business owner and not her direct manager. If so, it sounds to me like the problem was her direct manager, not the owner. It sounds like the owner wasn't aware of the issues and was relying on and trusting the direct manager. This isn't uncommon. It also sounds like now that the owner is aware of the issues he is taking positive action to rectify them.

So is this a red flag? Not to me. The owner wasn't aware of the issues. Now he is. He's taking positive action. Those are good signs.

Can you blame him for being blind to the situation? You could, but it's probably not as cut and dry as you might think and it doesn't mean that he was ignoring the issues. It means he hired a manager, trusted them to manage, and focused on growing the business. Now that he's been made aware of the issues he's working to fix them. Again, those are good things.

Answer 2

Never accept a counter offer.

Your company paid you less than what they think you are worth for quite a while, so you should hold that against them. If you get a raise, you know that will be your last raise ever. And they know now you might leave, so you are a marked man or woman and they will get rid of you as soon as they can.

Some people make promises but break them as soon as you reject the offer from the other company. Worst case - and people posted here that it happened to them - as soon as you give up the new job, they fire you for revenge.

Answer 3

Money can solve a lot of problems, but it's important to consider what the underlying issues actually are.

I don't think anyone here can offer any more than anecdotal evidence regarding your literal question, but in my experience, 100% of people who accepted a counter offer had left the company shortly thereafter under their own volition - because the real problems that were making them unhappy never changed.

Generally, the way this plays out is that everyone thinks their biggest issue is being underpaid. They accept a counter offer under the assumption that money will make them happy - or, at least, that money will somehow make it "worth" the hassle.

But then once they get that raise, the money-pressure is off, and they start realizing the real problems that have been there all along (poor decision making processes, manager doesn't know what they're doing, coworkers they can't stand, and so on).

Better to take the time upfront to figure out what your real issues are, and what your real needs are. Do you want a certain type of environment? A certain level of freedom? A big team, or a small team, or solo work? Figure out what drives you, and then evaluate your current employer based on those factors, before deciding whether you should stay or not.

And then, take it a step further. When you start looking for a new job, take advantage of the fact that interviews are meant to work in both directions. Evaluate your potential new employers based on those important factors, not just on the salary number.

From an employer's perspective, it can seem very attractive to try to retain important staff by throwing money at them. But, in practice, this rarely works. The real key is figuring out what makes an individual person excited, happy, and fulfilled - and then determining if you, as an employer, are able to meet those needs or not. So, be wary of employment offers that effectively consist solely of a big number, with no other factors taken into account. Employers that throw money at candidates rarely know how to actually connect with individuals in a meaningful way, and rarely retain staff in the long term.

Answer 4

While I fully understand that no one here can really make a decision for my GF, I am quite interested in how often such a situation ends up in the employee's favor (employee threatens to resign, gets significant raise stays).

And few months down the line, she gets replaced as the boss now knows that your GF not only wants to leave but is also willing to pull that trigger, so he can start looking for a replacement. If he only realizes that you value an employee when you get the resignation papers, instead of compensating them before. Similarily, if the boss knew about the management issue before, why didn't he fix it then?

This is just putting out fires as they come along, instead of fixing them when they happen, and there is no reason to expect this to change anytime soon.

Answer 5

I was in a similar position at my last company. I was underpaid and they wouldn't pay review so I handed in my notice. They guilt-tripped me into staying, acting surprised my salary was so low, saying I should have been on 20% more. They promised a pay review in a few months if I stayed.

Regrettably, I stayed. The pay review never happened. I just got further promises that went unfulfilled.

I heard via one of the managers that our bosses didn't think anyone would leave the company, so pay raises were as low as they could get away with. This ended up with some junior staff being paid up to 20% more than senior staff that had been with the company for almost a decade. This led to a very toxic culture as a result.

If accepting the counteroffer, make sure it's official before turning down the new offer. However, I would advise once you hand in your notice, it should be final or it will happen again.

Answer 6

As a counter to the prevailing opinion that she should quit, I have been on both side of the fence in similar situations...

Early in my career, I was working in a company in Japan and was severely underpaid, not so much compared to my co-workers but quite a bit compared to what the market could pay me (I was much more qualified than my co-workers however). I approached my boss following a better job offer (which paid about 80% more) and he convinced me to stay by doubling my salary. I stayed a couple years more until I decided to leave the country. Years later, I'm still good friends with my former boss and I don't think there was necessarily any malice in keeping my salary so low but more of apathy and bad management.

Later on, I've been on the other side of the fence and started a company. One employee who had done particularly good work came to me asking to resign. I really hadn't realized that that employee was having issues or felt underpaid mostly because, while hustling to try and get more business and sales and concentrating on the work to be done, I lost track of how some of the employees were doing. It was totally my fault and something that a more experienced business owner and manager would have kept making time for that but I was overwhelmed with other things. I fully wanted him to stay for the long haul and offered a rather big increase to match the new offer plus tried to alleviate the issues that employee had been having but he unfortunately decided to leave. I think the trust had been broken and that was all my fault...

So, I would say that it really depends and it's not necessarily red flags or at least not the ones you think of. The truth is that it's very easy to lose track of important things as a business owner especially if it's the first business. It's not necessarily malice...

From the description, given that the business owner was impressed with the job that was completed, it kind of sound like the case I had with my employee.

Answer 7

It sounds like your GF was severely underpaid.

It's possible that the boss really wasn't aware of that and that they honestly consider this a mistake. If that's the case the boss should own up to this and not only raise the salary to market value but also offer back pay for an appropriate period to make up for their mistake. That's actually a fair and sustainable solution

1. It was the boss fault or oversight, so they own the consequences. The company has benefited tremendously from this mistake, so its only fair that they give at least some of that back.
2. It keeps your GF whole and creates a real incentive not to leave
3. It protects your GF. The company invested extra cash on her so they are not going to fire her at the first opportunity as they would loose their investment
4. Action speaks louder than words: that would clearly prove the company is interested in keeping her long term

Typically a back pay offer comes with a retention agreement: if you leave before a certain period (maybe a year or two), you need to pay some or all of it back. That's normal and fair.

Back pay counter offers do happen occasionally and it's ok to bring this up as long as you don't sound overly greedy. The talking points above can really help in the conversation: it's not about "gimme money to stay", it's about fairness, owning up to a mistake and creating incentive and protection for the employee.

If they go for it, I would consider staying. If not, it's probably best to leave. They have only made the minimum offer that may keep you there and if they are not accepting a mistake, it's unlikely they will do so in the future.

Answer 8

Counter offers to resignation is just the employers way of saying "it would be bad for me if you left right now, here is a few dollars to stay until its convenient for me to get rid of you." Its just to hold you in place until they can find a replacement. I would never take such an offer. There's no way the employer is suddenly okay with paying 1.5x more for the same employee. A 50% raise just isn't sustainable.

Answer 9

I’ll give one counterargument for consideration, but understand that this would only apply in certain situations. Unless your GF is quite secure in various aspects of her current company, I would agree that the cat is out of the bag and her safest and best bet is to move on to the new opportunity.

My first real job was as a devleoper in a company that had a software product to support its main work, but was far from being a software company. So they had little experience in what the role really entailed. I had a solid reputation and a great rapport with my boss—and I had little idea what the market for developers was as well. When I tested the waters, an interviewer asked my current salary, paused and told me I was underpaid by at least 30%. Because I had the history and relationship with my boss, I told him the following day that I really liked it there but had realized I was deeply underpaid so would continue looking. A week later, they upped my salary and I stayed on until I chose to leave a couple years later.

It is not inconceivable that your GF’s company just mismanaged her compensation. But even so, IMO, she’d need much more reason than a small increase over the other offer. Career path, actually liking what she does and some reason to believe this wasn’t simply a means to hold onto her until they found a convenient time to get rid of her would probably all need to be positive in order to not cut ties. Barring those conditions, little short of a golden parachute should keep her there.

Answer 10

This all seems a bit worrisome IMHO, and I wonder if this is a red-flag or not. Specifically, that her boss effectively doesn't know if his valued employees are happy or not. Additionally, the raise is 50%, so not an insignificant amount and it's only offered when threatened with the employee in question coming in with a letter or resignation.

I would add a slightly different angle than the "never accept a counter offer" answers, especially on the restructuring side. Sometimes restructurings are for the good. I understand that her Boss was replaced, potentially because his/her Boss understood that this manager tries to make numbers look more beautiful than they are. Maybe also a lot of Managers just don't know that happens 2 levels below them, at least not in the detail needed to understand it, so maybe the Boss really did not know the salary structure of the teams. So yes, maybe the restructuring addressed a problem, and maybe there are enough non-filled positions right now that your GF will find a place and responsibility where she is not replaced.

Answer 11

First - if the company want to give you rise on the spot of 50% it means it have the budget for it. It's just they don't feel they should/have/need to do that.
And, IMHO, it means they do that on all things. Especially if they get out of their way to explain lack of bonuses with a previous raise.

Second - your GF boss recognize that, probably, bus factor for her department is 1. And it's her. So if she quits there will be a lot of problems. So they'll try to keep her as long as it's needed to hire some replacement.

Which will happen as they will try to compensate for that extra 50% "loss". Your GF is an example of company skimping on money any way they can.

Now, for the whole company culture/enviroment. It will stay the same. Promises of raise and "change of managment" were done as a last minute fixes. It's not planned, it's not done based on any evaluation or audit. And the solution is to move the problematic manager to different department. Instead of removing the problem that make their bus factor 1 to resign they just move it somewhere else. And who's gonna be her new manager? If you raise your employee pay by 50% and remove her manager wouldn't it make sense to maker HER the new manager?

Answer 12

If a boss wanted an employee to stay, they should have appreciated that employee earlier. The reaction of the boss is flawed - wanting to negotiate with the employee who wants to resign.

Many things push a person to make the decision to start looking for a new job. Salary is only 1 of them.

A resignation is a bad negotiation reason/argument.