How to negotiate a raise, if they want me to get an offer letter?

Question

I've been working for this organization (80.000+ employees across the globe) for more than 7 years now as a software engineer. I now have 12+ years of experience. During my interviews with this company, they've given me the upper-bound of my salary expectation. In all these years my salary has grown by approximately 53%, while the salaries on the market in my country has grown by ~150%+.

Last month, I started to talk to my manager that based on my yearly evaluations, I'm exceeding the expectations yet I'm being paid junior level salary. Long story short, I got to talk to our branch manager, who in a very calm manner told me that I can expect a raise next year which will be significantly less than the inflation, let alone the 25% I asked for - which is still far behind he offers anyone with 5 years experience coming in fresh. He also let me know that indeed they're paying ~1.5x the salary for junior colleagues who join the firm now.

Now in order for him to give me (taken by his word) any number I ask for, he expects me to get an offer letter from another company. Now I have some problems with it. Particularly that I really like my current role. I bring quite a good impact, I get nice words from other branch managers, I have a great degree of freedom in my work, yet it seems like they expect me to go through a whole new interview process with another company and pray they'll make an offer just to "blackmail" my current employer to give me the same pay he already does to newcomers. Not to mention that I find it unfair with the other company to prepare an offer for something I know I won't accept. They'd be just a tool for a raise negotiation to bring my junior level pay up to medior level pay, instead of where it would be if I were to change. I know, I don't really want to change roles/company and start over whatsoever just to have a nice monthly pay but quite possibly a worse role.

What do you think? How would you approach this situation?

P.S.: Don't get me wrong: the extra stuff (that's not guaranteed, like bonus, stock options, etc) are great. It's just my base pay that's laughably low, literally newcomers freshly out of university with zero experience earn nearly the same amount as me (2-5% difference max).

A bit of a summary/update:

• I don't want to leave, I'm not sure if that was clear or not but there. I'm not even thinking about it. Might have been the biggest mistake that I told it loud and clear when I asked for a raise. Lesson learned. The job itself is great, and I enjoy it way too much to change into something unknown.
• I'm also not intending to use another company who pays me fair just to have my current employer give me a raise, who knows, 5, maybe 10 years and I might want to work just there. Too bad I might have burned that bridge down.
• The raise I ask for is not even close to what I could get if I were to change, all I wanted was a tiny bit of correction but not so tiny that I get year after year. On average I get 5% raise, I asked for 25%. Marginally bigger than our inflation this year. If I were to change I would get at least 80% increase in base pay alone.
• Now, after all these, for an update. Something clearly changed, as they made me essentially an engineering manager for 3 months for now to see if that could work out. Although for the same laughably low base-pay and no word of any change on that front.

Answer 1

Obviously, it's unethical to go to another employer solely for the purpose of using their offer letter to leverage your current employer. When you apply for a job, you need to have at least some credible intention of giving their offer reasonable consideration. You are right to see that as unfair. I suspect your manager is trying to use this as a way of saying no. Assuming that you won't go to another employer, it's a way of closing down your options. It's a risky game, because your options now come out as:

1. Apply elsewhere, but with the intention of leaving if you are made a good offer.
2. Tell him you won't negotiate that way. You want, quite reasonably, to discuss your current situation with your current employer, and apart from the ethical problem, an external offer is not going to be part of that discussion. Your manager needs to either solve your problem or end up with an employee that knows they are undervalued. He's already acknowledged that comparable employees are getting paid more.
3. Play it his way (not really an option)

If you decide to apply elsewhere, it's not in your interest to let him know you are doing so. Applications elsewhere are your own private business, and your current employer will be adequately informed when you give notice. (It's always possible that you find out that your current deal isn't so bad, and then you might want to stay without anyone having known you looked elsewhere.)

If you go for option 2, it might not hurt to be clear that you know what is your business and what is theirs, but do find a way to communicate this without being confrontational.

Answer 2

I'm going to give you some tangential advice:

Never accept a Counter Offer.

If you have gone through the interview process at another company, to the point where you have a written offer letter with a higher Salary, you are at the point where effectively your current employer is making you a counter offer.

These rarely end well.

There are a myriad of YouTube resources from HR professionals discussing this topic, but I'll boil it down to the main points:

1: Whatever the reason for the company not meeting your salary expectations are, will still remain.
2: You've now identified yourself as a flight risk and they will likely begin administratively firing you (removing you from projects, assigning you menial 'busy work', looking for a replacement etc.)
3: It's always better to leave on your terms than to be forced out on your companies terms.

Although tangential - I trust that this answers your question.

Answer 3

I know, I don't really want to change roles/company and start over whatsoever just to have a nice monthly pay but quite possibly a worse role.

How would you approach this situation?

I would decide if it's worth my time and effort to go out and get an offer, then hope my current company will match that offer, or not.

For me, it would almost certainly be "not". In my case, if I felt I wasn't being paid what I was worth, I would find a new job at the salary I desired.

Over 7 years, I would have expected regular raises and promotions. At the point I felt that wasn't happening, I would be gone.

Sometimes you just hit the top of your bracket and won't get much of a raise. Sometimes, it's just better to leave.

Answer 4

I'm going to suggest a counter-opinion to the other answers, that maybe your branch manager is doing their best to help you out. You say this is a giant corporation. That means there will be extensive policies around raises and promotions.

It's quite possible that your branch manager's hands are tied. That policy says they can't give you a large raise unless it's to counter an external offer.

Seen in that light, this response:

Now in order for him to give me (taken by his word) any number I ask for, he expects me to get an offer letter from another company

Is them saying they'd like to pay you a much larger number and are happy to do so. But they need you to go and get another offer so they can bypass the internal policies preventing them from doing so already.

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Regardless of whether that's the case or not. Whether they're on your side or not, the way forward has been made clear:

Either you accept the salary you have, or you go and get yourself another offer.

Once you have the offer then you can decide whether to take it or not, but whichever one you pick you still have to go and do it.

Answer 5

Getting an offer letter from another company to get a raise at your current company is basically the nuclear option. Yes, you may get the raise at your current company, but you will likely be flagged internally for this.

• This means you will likely not be considered for further significant salary increases.
• If the company decides to start trimming the workforce, persons who have previously shown their willingness to leave are more likely to be considered to be let go.
• Your "resignation" can have implications depending on how your HR handles this offer letter. They may reset your start date meaning any time based benefits could be reset. It could also mean no longer being eligible for bonuses or other perks due to the "resignation" on your file.

Personally, the only way I would go through the trouble of applying for and interviewing with another company is if I am serious about leaving my current company. As you pointed out, it is unprofessional to use another company just to improve your status at your company. Your current company obviously has the means to give you what you want but they are simply being cheap and are basically waiting for the nuclear option.

Answer 6

I think your boss is being limited by his boss.

Your boss has limitations that would not apply to new hires or counter offers. He probably doesn't have the authority to give you a raise without it being part of a counter offer or hiring offer package.

I'd first check with the boss if this is the case.

Because if it is not, then the boss is insulting you to your face. He is saying directly that he values new, unproven, graduates more than he values you. Either that or he thinks he can walk all over you without consequences, which is just as bad.

In this case I'd say the options are:

1. Do the interviews and get an offer, then accept the counter offer
2. Do the interviews and get an offer, then accept the offer and leave the current company
3. Leave the current company due to the level of insult from the boss. Do the interviews and get an offer and start the new job
4. Threaten to quit without having done any interviews. Then you either get the raise you want or you're back at square 1 having to interview
5. Be appalled at the lack of respect and quit out of principle

Answer 7

It's time for you to find a new employer that pays the going rate, unless job satisfaction makes the amount you're underpaid worth it. It's as easy as that.

You could bring an offer letter to your boss, but you'd probably burn a bridge with the company that gave you the offer letter. Also, this does nothing to address the issue with your current employer's pay scale.

Answer 8

Given they are paying 50% more to people who is joining the firm now, you should probably apply to open positions in your company. This may turn out to be useful or not, but given you are not actually interested in moving to a different company, applying to your own company seems a reasonable choice.

Answer 9

There's already been a lot of good answers, but to pick up on the update:

Something clearly changed, as they made me essentially an engineering manager for 3 months for now to see if that could work out. Although for the same laughably low base-pay and no word of any change on that front.

If your manager was really looking out for you, but with his hands tied by policies about raises, then one strategy that would be open to him would be to promote you - more responsibility, but more pay. I've come across that a number of times with companies in budgetary problems, "no raises except via promotion".

But, he's given you more responsibility with no raise, even though he knows you're unhappy with your salary in the old role. This is ridiculous - he wants more from you with nothing in return. Either he's seriously goofed up and brought you a bad package from his higher-ups, or, and I think more likely, he knows you will accept it and carry on. Indeed, you say yourself

The job itself is great, and I enjoy it way too much to change into something unknown.

so he knows you are highly risk-averse. He's relying on your reluctance to change to keep his salary budget down, as he must know that he'd have to spend a lot more to replace you. If you were to look at other companies, I'm sure you'd be very selective as to the ones you actually believed you would enjoy working for rather than taking the highest offer, which is fine - enjoying your work is very valuable. But if you won't even look for fear of ending up at a place that you don't enjoy so much, you'll miss a lot of great possibilities and your boss will carry on taking advantage of you.

Answer 10

Your manager's suggestion sounds very fishy. Normally managers would want to ensure their reports are happy with their job and aren't interviewing elsewhere, and your manager instead pushes you to go and talk to other companies. I'd only do this if I was almost 100% confident that my lead has my best interest in mind, and having an outside offer is the only way they can make a case for their management that you need a big raise (which also feels off).

I'd suggest that you consider other factors besides compensation: you're saying that you like your job and are respected in the organization, and these aren't the kind of things you should take for granted. If your compensation discrepancy indeed makes you miserable then I'd suggest interviewing elsewhere and changing jobs once you get a good offer, but making the move solely for better compensation may land you a job you hate. Which isn't to say that you can never go back!

Answer 11

tl; dr. There is every reason to go and get the offer adequate for your level, and none against.

As it was said, "bring me an offer letter" is a nuclear option.

Manager may say this because:

• They WANT you to leave (they are unhappy with you);
• They don't believe your qualification is worth the raised salary (they are barely happy with you);
• They need a serious leverage (they are happy with you, but their hands are tied);
• The company is really, really struggling (if it is, there must be signs. And it's time to prepare to eject in advance).

Either case is a reason to do exactly what they asked.

Another reason: verify your market value. Best case, you will prove them wrong; worst case, you will discover something to improve in your skillset.

• If you don't even try to go and get it, then you are actually happy with the current position as it is, being undervalued and paid 60% of a fair price.
• If you get the offer, only then you will have an informed choice.

Because current choice is between "do nothing, get nothing, know nothing certain about your current market value" and "work on interview preparaion, verify your value, and get something, potentially a lot".

Using other company is OK. This is the rules of the game: companies make offers, you accept one and refuse others. They are fine with it. BTW, you cannot be sure today about what you will decide in half a year, given an actual figure. If the offer will be x2, you might want to accept it.

Yet another reason to go and try: interview preparation will increase your market value. Refreshing your memory on all the current technologies, training even the silliest LeetCode problems, reading up on system design and a little bit of everything means growing your skills.

Answer 12

Your manager is mad.

Lots of people would advise you to look for a better paying job, and when you get an offer letter and it is good, then you accept the offer, give notice and move on.

And your manager tells you to go to the step where all you have to do is sign a contract.

Once you get the offer letter, you don’t even try to get a raise with it, you take the new job.

Maybe your manager isn’t mad at all but wants your best :-) which is leaving the company.