Apart from this being highly immoral, of course. The reason I'm asking is that an employee that I manage claims to have gotten another job offer, but I'm sceptical about the legitimacy of his offer. We are a small company, and I have no method of checking if this is a legit offer or not. Is it bad practice of me to try and find out? Do bigger companies have methods to handle such cases?
Smile, and tell the employee that you will look into what options the budget allows.
Then promptly begin advertising for the position they hold.
If it is a legitimate offer, they are going to leave soon: either they'll take that offer or they'll stay for a very limited time after your counter-offer (see other questions on The Workplace SE regarding whether to accept counter-offers).
If it is not a legitimate offer, this indicates a problematic employee:
if they simply wanted a raise, an honest person would talk to you about that
if they are prepared to blackmail you for something legitimate, what are they likely to do if they discover the company has an unprotected liability?
if they are prepared to lie to you about their external prospects, what internal factors will they be dishonest on?
We have often answered here the question from the other side: If you have an offer for a better job, should you go to your boss, tell them, and ask for more money, better working conditions etc.? And the answer is that this is a bad idea, that most of the time you are going to leave anyway in a short time, in the USA there is even the chance that you get a raise, reject the job offer, and get fired a week later.
With that in mind, it doesn't matter if there is a job offer or not. You ask yourself if you are paying enough or not. If you are paying enough and he has an offer where someone is willing to pay him too much, let him go. If you are not paying enough, then you should change that, whether there is a job offer or not.
PS. Just as we will advice people that telling your boss about a job offer that you have is rarely a good idea, we would likely advice them that telling your boss about a job offer that doesn't exist is worse.
PS. If you don't know what your employees are worth, then you could look at job adverts, for example. Your employees would be well adviced to do the same thing. Keep in mind that replacing a good employee means you will get a new employee where you have no idea whether he is a good or bad employee, and even a good employee costs a lot of money to hire.
You are almost certainly never going to get confirmation that he lied, and confirmation that he was telling the truth will come with his resignation letter. If he stays, that doesn't mean that he didn't have the offer, just that he didn't take it. So don't waste time on that.
Spend your time on your real problem -- you don't know how much you should be paying him. You should know what his position is worth, what value it brings to the company, and what the general range for his skills are in your area. Once you know those things you can respond appropriately, tell him congratulations, give him a raise, cut his salary, whatever is appropriate.
In short, only their morals and integrity stop someone from inventing up another job offer - but it doesn't matter on how you respond at least initially...
These are the questions that you need to answer:
- Why did they start looking for a new role in the first place?
- How exposed is the company to them leaving?
- Have they already accepted the other job offer?
- Do you want to keep them as an employee?
(1) is really important. Think about this... did the job offer suddenly appear out of thin air? Probably not. They have had to update their CV, attend several job interviews and so on to get to this point. If you can understand WHY they put all that effort in to do that, you will understand what it would take to keep them as an employee - and perhaps more seriously address these issues so you do not lose more staff in the near future.
(2) This answer allows to understand the consequences of them leaving - and the cost. As it's a small company, It may be that you are commercially exposed to the point that paying a premium for their continued employment for the next 6 months is sensible.
(3) It is normal for people to accept the new job offer and then resign. If they have not resigned, it suggests that they do not really want to leave - so addressing the issues in (1) will keep them as an employee.
(4) if the answer is no, then ensure they have resigned, accept their resignation, thank them for their work over the years and follow your companies normal termination process.
**If at some point, it becomes clear that they are making up the other job offer, then that is a conduct issue. They have acted in a way that completely undermines trust between employees and employer, and is considered gross misconduct in the U.K., and as such is grounds for being fired, without notice. Other countries interpretation may vary **
Your industry must have salary surveys. Look those up. If your employee is not being paid market value, those surveys will tell you.
As to double-checking the other offer, that's not your information to have. How would you feel the next time you interviewed someone, that person tried to find out who was their competition, and then went ahead and spoke with them. That would be totally unprofessional. Right?
The same goes for you. You can't get in touch with the other company making the offer. Use only the information you have at your disposal. And don't rely too much on what some other company is offering anyway.
That other company doesn't know your employee as well as you do. Only you know if your employee is worth the money he's asking. And if you need to double-check anything, use existing salary surveys for your industry to see if your employee's salary is in line with industry averages in your area.
Assuming that this employee is telling the truth:
People tend to look for alternative employment because of more than one factor - i.e. money in this case. They usually look for alternative work for things like
- daily commute
- training opportunities
- career prospects
- change of scenery
So I guess there are other motivations that this employee is also looking for another job.
With this in mind, if you did pay him extra, how much longer will this keep him happy. Probably another year at best.
If this is a porky
You do not need to pay him extra. (s)he should have just asked for a raise and discuss that without a threat.
Either way it is probably time that it is time to move on amicably.
What keeps people from lying about another job offer in order to get a raise?
They are gambling with their income. If employee says the new place is offering a 20% raise and an extra week of vacation. But the current company says the best we can due is 5% now, 10% next year and flex time. How can they say OK sounds good I will stay. Of course the current company could also say, spend your last 3 days documenting everything, then turn in your keys.
I'm skeptical about the legitimacy of his offer. We are a small company, and I have no method of checking if this is a legit offer or not. Is it bad practice of me to try and find out?
I know of no way to find out. Some people have asked for a copy of the letter. But some question if that will work because the offer letter is sometimes labeled confidential, and the employee would be reluctant to show it.
There is no database of offer letters. There is no way to call a toll free number to check future employment info.
Employees are also afraid to show the letter, or even reveal the company name for fear the current boss will call up the new company and spread lies about them.
Does bigger companies have methods to handle such cases?
Bigger companies face this issue every day. Therefore they know the data about how quickly employees with offer letters eventually leave. They know anything they offer is generally a bribe to keep them around long enough to get them past a deadline, or to find a replacement.
Frequently they offer things that take time to happen: that special training class next year, or the next opening on the day shift. That way they cost nothing now, and they may never have to pay that price.
When this question is posed the other way around, ie: "Should I tell my boss that I got another job offer and ask for more money, promotion, etc", I always answer with the following shred of advice:
Who you want to work for is nobody's business except for the person interviewing you.
I tell people not to try to leverage a pay, position or benefits increase with another job offer. All this tells an employer is that:
- The employee doesn't like working for them, for whatever reason
- The employee wants more money or benefits
At the end of the day, it's any company's interest to employ workers at a given salary relative to their skill, experience and economic factors. If someone leaves a company, 99% of the time, that company will find someone else with the same skill and pay them exactly the same as the last guy, and the replacement will be loyal to the company. However, it's in a company's best interest to nurture that loyalty by paying attention to salary data and compensating employees fairly. I would take a look at that data before making any decision.
In my opinion, the employee is either not very intelligent in telling you they are looking elsewhere, or they are trying to get you to say "Oh no, we need you!" and get a raise. The latter is more likely. Neither motivation is indicative of an employee I would want to keep, whether he's bluffing or not. I would let him go and replace him with someone who wants to work for you.