The Game of Chicken: Seeking Outside Offers to Snare a Raise
With more people job hopping, some workers are opting to use an outside offer they're only lukewarm on to try and leverage a raise.
For the past three years, Lily has wowed her bosses with her work as a market research analyst. Not only has she helped bring in new clients with her succinct and sound reports on retail trends in Asia, she's also streamlined the way research is conducted and tapped into new ways of finding out what consumers want. Despite her efforts, she still hasn't received a significant pay boost beyond the de facto cost-of-living raise each year.
So Lily decided to try a ploy that mentors and colleagues often suggest: get an outside offer. For her, it wasn't about leaving her gig, it was trying to get her company to match it. "The only way people seem to get raises here is to get an offer from a competitor," she says.
There's a reason Lily and many other professionals consider such a strategy-it sometimes works. After all, research shows that getting an offer from another company can make your current firm pony up because your request appears more legitimate. Like it or not, outside recognition of your talent often changes the way your manager perceives you. And while it's usually cheaper for a firm to throw an extra 10% someone's way instead of finding the equivalent intellectual capital and training a replacement, negotiations rarely proceed in that manner. "Unfortunately, people usually don't get respect and pay until they go elsewhere," says Alexander Lowry, a former JPMorgan executive, now a finance professor at Gordon College in Massachusetts. "It's almost like breaking up. Until you lose something, you don't realize what's there."
Of course, it doesn't help that job hopping is increasing. The median time spent in one job is now about four years, according to the Bureau of Labor Statistics, down from six in the early 1980s. And the statistics are even more stark when demographics come into play. The median tenure for workers ages 55 to 64 is about 10 years per job-more than three times that of workers ages 25 to 34, who spent a median of 2.8 years in each position.
No doubt, searching for an outside offer just to stay inside is rife with risks. Obviously, it can backfire if your manager doesn't counter and tells you best of luck. One of the first ways to figure out if it's a smart strategy is to ask your mentors and colleagues about your manager's compensation style. For some bosses, the only way to get them to cough up more money is for them to hear they may lose you. But for other bosses, the tactic reeks of disloyalty. "In my head, all I'm hearing is alarm bells," Lowry says. "Maybe a company wants to poach you, but more likely, your coming to me with an outside offer means you've been interviewing. So in my mind you're going to leave at some point anyway, so why would I want to promote you or give you a raise?"
At the same time you're researching the preferences of your boss, career consultants say, it's also important to get the bigger picture of your company's financial health-and your market value. If, for example, the firm just invested in a major initiative or merger, chances are they're pouring money into that endeavor and have scaled back on raises for the moment. Employees of public companies can check quarterly financial reports and listen to the conference calls top management conducts with analysts to help decipher a company's state. As for market value, you can talk with recently departed colleagues who are at new places, and use websites that give estimates of salaries for a variety of professions to get a sense of what the market will pay for you.
Even when you're armed with all this intel, one of the best ways to gauge your leverage is to first explore what's out there within your own firm. Career pros recommend having conversations at your current company to understand your market value and see if there are other places within your firm before searching externally. Many medium to large firms have a variety of divisions, and making a lateral move to a new group can often feel like a fresh start.
That's what Rebecca did. The senior manager at a Fortune 500 pharmaceutical company, Rebecca felt she wasn't valued appropriately, considering she was doing the job of about four people. But because she liked the company culture, she took another role in a new division, where she clicked with a new manager and had opportunities to expand her knowledge of profit-and-loss analysis, an area she wanted to move into. As for her old team? They realized her value a little too late-and had to hire three people to replace her.