Employee: Please pay me more.
Company: Why?
Employee: If you don't then I will be able to find a more
lucrative/satisfactory position elsewhere.
At this point in the conversation, the company has only a couple of possible responses:
1. You're free to do so. I'm not increasing your pay.
2. Ok. I'll take your word for it. Here's a raise.
3. Prove it, and I'll give you a raise.
#1 is the only option if the company is strapped for cash and the best option when the employee's net value is low.
#2 can be a good choice if you have a very good sense of the job market and what makes a competitive compensation package OR if the employee's net value is high and an equally good substitute will be difficult to find.
In all other situations, #3 does seem the most sensible and least risky.
If a company is inclined to #2, they can and probably should award the raise preemptively, before it has been asked for.
Now, as an employee, if I suppose the company has thought all of this through, and they haven't preempted me with an offer of a raise, then I can infer that #2 is not among the possibilities. So I probably don't even need to ask for a raise. I should probably just look for other jobs and then when I get an offer I can find out if the company is going to take option 1 or option 3.
As a big company, such as a Fortune 500, often a manager will want badly to retain an employee and would happily go for #2, even preemptively. But if the senior management (who never even sees that employee) does not share the manager's assessment of the employee's value or the manager's familiarity with the job market for that role, then they will not allow it.
I've seen all of these cases occur. Happily, my current employer is happy to pursue option #2 for high-performing employees.
You forgot Response #4: Ok. I'll take your word for it; here's a raise. (Aside to other managers: this guy is a flight risk. Don't offer him any promotions, and start thinking about how we might replace him.)
It happens. Not infrequently. It's why I never tell my employer when I get an offer. They might just give me the raise because it would hurt to lose me today but they can lose me in a couple months, and then the offer I had at the new company is long gone.
> You forgot Response #4: Ok. I'll take your word for it; here's a raise. (Aside to other managers: this guy is a flight risk. Don't offer him any promotions, and start thinking about how we might replace him.)
This seems like a counterproductive response if the labor market is tight.
Definitely agree. The one time I ever got a significant raise required me to lobby unbelievably hard despite the fact that I was carrying the weight of my whole team and had to do an unreal amount of shit shoveling devops, web service, and data cleaning work in addition to all the machine learning work that was “actually” my job.
I was lucky that my direct manager valued me and guided me through the process of documenting my accomplishments in the right ways to present the case for a substantial promotion.
Apart from this one time, I have always been told the company can’t offer raises or discretionary bonuses beyond whatever the board grants for cost of living, and have to switch jobs repeatedly if I want to earn more.
I don’t get it. I feel like it must be some misaligned incentive problem with HR preferring to make executives believe turnover and constant hiring have to always be the norm, to justify their jobs, instead of cultivating a culture of long tenures by actually offering substantial raises or bonuses.
It happened to me at IBM. I got a 5% raise the first year, and 10% the next; both we're suprises. (And I was making good money for the area when I started, so I don't think they were trying to catch me up.)
My direct managers were awesome, but I ended up leaving for other reasons.
You are right about that. This is a slightly different situation, though. What you describe is scenario #2 up-thread. The person I was responding to was posting an alternative to scenario #3. I'm just saying that in a tight labor market a company adopting response #4 instead of response #3 is cutting off their nose to spite your face.
So, having received an offer that you're inclined to accept, you will never be swayed by a counteroffer from your current employer? I suppose the logic is sound, especially if you know you aren't hard to replace.
I feel I need to at least go through the motion of entertaining the counteroffer, though. Otherwise they'll think I don't like them or be offended and I'll have maybe burnt a bridge. Of course, for the same reason, I was never looking for another job. That offer came to me on its own.
Dude, sometimes people are in a financial stretch and the increase in compensation is the only reason to search for alternatives.
Especially in big corps there can be a policy of being stingy with the wages unless there is some scenario like a need for counteroffer for a high performing individual contributor.
Now, you can think the company is cheap and does not really earn you contribution.
However, the psychological reality is that people don't work in their companies - they work inside teams within companies, and the duties and the culture of the team can be great even if the company policy (likely sculpted out of feeling of ficudiary duty towards stockholders among other things) feels cheap.
Great teams and great managers are far more important for a great job than "great companies". Yes, the latent company culture affects team as well, but that's only one aspect of the whole.
When HPE hired me on, I know I was about 20% more then the guy who had been doing the job for 20 years. Companies don't value you if you stick around. Your only hurting yourself.
I’m actually sort of in this situation. I just interviewed for another position and it went extremely well. The thing is I’m pretty happy with my current job and role except for one dimension: Salary.
If they would pay me what the market says I’m worth (and I’ve done a ton of market research) then I’d be happy to stay where I am for the foreseeable future. But if another company offers me a job and the work and environment seem comparable but they’re willing to pay more... I’d seriously consider that offer and be prepared to leave. However, if my current employer comes back and says, “Actually we will beat that by x%” then I’d seriously consider staying.
It also helps that someone else in the company did just this and is still with the company a couple years later.
If "not being paid enough" was what made you start job hunting, then a counteroffer would likely change the situation.
Last place I left, I made it exceedingly clear, a year before resignation, 6 months before resignation, and during resignation, that all they needed to do to retain me was to bring me back up to market rate. I would have definitely stayed if they were forthcoming with a counteroffer.
I'm pretty happy where I am right now, but if you give me an offer to an attractive position for 20% more money I'd at the very least entertain the notion.
My point is that an offer like that would seem attractive, but two things:
A) The company didn't value you until it was too late. Their opinion of you hasn't changed, just the pay rate.
B) The company now has painted a target on your back as someone that is "in it for the money" and doesn't have the best interests of the company in mind. It's bullshit, but that's now management thinks. Next time a budget cut or RIF is necessary, guess who is first in line?
In both cases, you need to weigh if that's worth sticking around for.
I am assuming that this answers are not done on the spot, but after a minimum debate.
With this answer, the standard process for the employee will be to polish their resume, put themselves on the job market, research candidate companies, explain dozens of time why they want to leave their current job and interview up to getting a proposition.
At that point, there is sunk cost associated with all of that time spent, they have successfully came up with legit reasons to leave the job, and are facing people that want to work with them more than you seem to be.
At that point, I think that mentally moving to a new job is just easier than staying.
I think it’s already a done deal if the employee is threatening to leave.
Up until that point, there’s usually:
- self assesment from the employee to explain their perf
- response from the employer about what they agree with and what they don’t like, and what is needed for them to give a raise.
- eventual employee appeal of the decision
- response to the appeal
At that point, if the employee pulls the “I could go somewhere else card”, or the employer was trying to screw the employee, and giving a raise will still leave a bad taste in the mouth of everyone; or the employer can’t do anything and the employee has no choice but to actualy leave.
That’s also why I think trying to keep someone who puts down a demission is useless, except if the company has a drastic change coming up that solves the employee’s complaints.
I loved working at Rolls-Royce, via DXC. I begged them to give me some sort of raise or even a timeline, to offset the 10% salary cut I took due to a benefits change during the HPE to DXC spinoff.
I know that just a small portion of the work I was doing covered my salary and the other two guys I worked with. I know there was room, but the company had no flexibility to offer raises. So I switched to another company and got a 12% raise. I'm not going to wait around for a match.
Prove it, by interviewing at our competitors and getting a better job offer? From the employer's standpoint, it seems silly to bluff like this. You're banking on the guess that the probability that the employee can find a better offer, times the salary difference, is less than the raise you could just give him/her today.
This is a managerial failure in my opinion. Manager/company is proving that they are not doing their job by saying that.
It's not a place to stay, although most of the places are always like that.
When I’ve been made a counteroffer I sometimes try to explain that if it had been in my annual raise anyway we wouldn’t even need to have had this conversation. But managers are completely deaf to that message. That they happily pay all the costs of replacing someone, recruitment fees, lost productivity while the new worker gets up to speed, loss of institutional knowledge, etc, shows that management incentives are poorly designed.
The vast majority don't job hop though, it's cheaper to address it one off as you observe, rather run up salary on the majority who're "eating the crumby cheese till it's all gone"[1]. In my personal network I'm astonished at how many stay at one job for years, making far less than they could.
no, managers are not stupid, it's just that their incentives are aligned this way
to get you a raise, (s)he needs to do a lot of convincing to their boss, HR, etc - a lot of trouble, really, so they are not naturally inclined. But having offer in hand helps with the process and creates urgency, so they will do it
otoh, to fill a vacancy is most probably a streamlined process which keeps everyone busy and happy (even if its worse for the company as a whole)
> otoh, to fill a vacancy is most probably a streamlined process which keeps everyone busy and happy (even if its worse for the company as a whole)
I find it hard to believe that the cost of interviewing candidates, onboarding and ramping up a new employee is less work than making the case for a raise with a solid performer.
immediate_cognitive_cost(making a case for a raise) > immediate_cognitive_cost(doing nothing and hoping it sorts itself out and _maybe_ having to replace)
but obv it changes when the departure looks imminent, as I said
Exactly. Managers do what is best for them most of the time, not what is best for the company. (Hey, just like normal employees! We're all people, after all.)
#2 can be a good choice if you have a very good sense of the job market and what makes a competitive compensation package OR if the employee's net value is high and an equally good substitute will be difficult to find.
In all other situations, #3 does seem the most sensible and least risky.
If a company is inclined to #2, they can and probably should award the raise preemptively, before it has been asked for.
Now, as an employee, if I suppose the company has thought all of this through, and they haven't preempted me with an offer of a raise, then I can infer that #2 is not among the possibilities. So I probably don't even need to ask for a raise. I should probably just look for other jobs and then when I get an offer I can find out if the company is going to take option 1 or option 3.
As a big company, such as a Fortune 500, often a manager will want badly to retain an employee and would happily go for #2, even preemptively. But if the senior management (who never even sees that employee) does not share the manager's assessment of the employee's value or the manager's familiarity with the job market for that role, then they will not allow it.
I've seen all of these cases occur. Happily, my current employer is happy to pursue option #2 for high-performing employees.