Do I mention a competing offer when negotiating a raise?

Question

I still keep in touch with my previous employer. Unsolicited, I received a job offer for about 25% more than I make now. There isn't a deadline on the offer; it's "just there" if I want it.

I enjoy working for my current employer. The biggest disadvantage is that it isn't as much as I could make. At one time, this wouldn't have mattered too much, but now it does.

I am already paid competitively compared to market and company averages. It seems difficult to justify an increase that large. I could mention the competing offer, to "justify" the pay increase. Also, this isn't just a "tactic". If the new offer turns out to be the best one, I will take it.

But I've heard it is a bad idea to mention offers, as it makes me seems "disloyal", and backfire, i.e. make a raise less likely. (I've never really understood "loyalty" to a company, but I still would rather play nice.)

Should I try negotiating a large salary increase solely on my performance, without mentioning an offer, or should I use both? If I do mention it, how should I do it in order not to seem ungrateful or hostile?

Answer 1

This isn't just a "tactic". If the new offer turns out to be the best one, I will take it.

It sounds like you are more than willing to leave if your current company doesn't offer you the same salary. Make sure this is the case before mentioning a competing offer.

It's entirely possible the response from your manager will be, "Sorry, we can't afford that" and you have to leave to get the pay increase.

Should I try negotiating a large salary increase solely on my performance, without mentioning an offer, or should I use both? If I do mention it, how should I do it in order not to seem ungrateful or hostile?

To be successful in negotiation you need to be able to walk away.

It sounds like you are. It also sounds like you are going to ask for one heck of a raise above and beyond what is normal for your position, if you are already paid market salary and yet want 25% more.

What you need to do:

• Read this question about how to ask for a raise and everything there. Likely your boss cannot just go "here's another 25% salary!" without some justification. Maybe this means you take on more responsibility. Maybe this means you have a new title reflecting your current responsibilities.
• Research as best possible what your market salary is. If possible, try to determine your pay range for your position. Sometimes this is public, sometimes not. But learn as best possible what options your manager even has.
• Figure out whether money is the sole factor affecting your job choice.
• Discuss with your boss using the methods from the first bullet here. Be very careful to avoid "I want more money or I'm leaving" but rather make it, "I would like to take on more responsibility for more money, how can we make this work?" If your manager feels you are fighting him/her then this will end poorly.

I would try to avoid mentioning the other offer unless absolutely necessary. It will come across as "match this or I leave" which is not the impression you want your manager to have, should your current employer be able to match it.

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Also, make sure you aren't returning to your previous employer only because of money. If you left because of the work environment, or other things which likely haven't changed, you might be sorely disappointed when returning.

Answer 2

As a manager, I am not overly concerned about "loyalty" as you put it. I fully expect that each of my employees could at any time entertain another offer, and doing what is best for them, their career, and their family should be their top priority.

On the other hand any time an employee is unhappy enough to start actively looking for another job, I feel I've already lost them. I try to encourage my employees to come to me about issues before they get to this level. I will never get into a bidding war for an employee (some managers will). If money was the only reason an employee started looking - the company failed to adequately compensate/appreciate them in the first place, and the lack of appreciation will probably continue into the future when they're up for the next raise - especially since they're now making more than typical. More than likely, there were other reasons the employee started looking, in which case those other reasons will still be there.

I know you're saying that you were approached about this job, but if you bring it to your boss, they're going to assume you're willing to take it and are therefore unhappy. Unhappiness tends to spread, so letting you go to the other opportunity may be their best approach.

You're better off having an honest talk about how you'd like to be making more, what you want to be making, what kind of performance would justify that compensation, etc. If your boss is open to this conversation, he may likely ask "where did you come up with +25%?" and you could then delicately bring up the standing offer, but you better be sure it's a real offer since you may end up needing to take it. Bringing up a raise in the context of "What can I do to make myself that valuable to the company?" is really the best approach.

Answer 3

I think it would only be fair for you to mention the other offer. Be honest about it though, you aren't holding them hostage or anything, but your services have gone up in value with this competing offer.

Give them a chance to retain you. They may offer perks, like extra vacation, a better office, or even a company car, as well as salary. Be open to what they offer and you may get a nice rounded package. (don't ask for the perks though, you will come off as greedy, let them come back with their best counter, whatever it is).

On the other hand, if they are offended, upset or otherwise unprofessional, you have the other offer.

The biggest mistakes I have made in my career have been not taking an opportunity when it was presented

Answer 4

At one time, this wouldn't have mattered too much, but now it does.

If the new offer turns out to be the best one, I will take it.

Should I try negotiating a large salary increase solely on my performance, without mentioning an offer, or should I use both?

While I don't normally advise making job choices based solely on who will pay the most, you have already decided that you will go to the highest bidder.

Thus it makes sense that you push the bidding along by mentioning to your current company that you have another offer and that you will make your decision based on their offer.

But I've heard it is a bad idea to mention offers, as it makes me seems "disloyal", and backfire, i.e. make a raise less likely. (I've never really understood "loyalty" to a company, but I still would rather play nice.)

If I do mention it, how should I do it in order not to seem ungrateful or hostile?

Well certainly it can be viewed as "disloyal". And it could "backfire" in the sense that one or both parties won't want to play the bidding game.

If you still decide you want to risk it and play the game, your best bet is to go to your current employer and indicate that you have a solid offer to go to your former company for a 25% increase.

You could indicate how grateful you are, that you really like your current company, and that you really like your current manager (if that's the truth).

You could point out how stellar your performance has been, and how valuable you are to the company.

You could also indicate that you understand you are being paid competitively, and that at one time, this kind of increase wouldn't have mattered too much, but now it does.

You then ask if they would be willing to match or beat your other offer.

That way, if they match or beat the other offer, you can still take two different paths:

• you could choose to play a somewhat riskier game and go back to your previous employer and try to get them to beat the new offer
• you could play it safer and choose to accept the new offer from your current company

And if they choose not to match your other offer, you thank your current company, and either

• accept whatever they do offer (if anything), or
• accept the 25% increase from your former company.

Answer 5

I think most employers realize there is always somebody else that could pay you a higher salary. They probably feel they offer competitive salaries, so they can differentiate themselves on other perks, benefits, job satisfaction, corporate culture, etc. and won't get into a bidding war. If you tell them you're considering another job just for the money, there's little room to negotiate.

Justify the increased compensation on how you are helping the company and making them more profitable or whatever other reasons they're in business (Maybe you work for a non-profit?). That is always what is important.

Loyalty works both ways. The companies that are interested in their employees should expect their employees to do what is best for their career, personal life and family. Making more money is a part of that and sometimes the company just can't compete. Has your company ever changed a supplier for a cheaper price? Would they keep everyone on the payroll even though the company is going to go out of business and cost everyone their jobs? Don't let them take the "high road" and throw loyalty in your face when we all know it's just business.