How To Tell your Employer You Have A Higher Paying Job Offer & Not Alter Your Relationship

I recently read a question on Quora: I like my job and boss, but I am underpaid. I received an offer from a competing firm for 30% more. How should I use this to increase my current pay, given that I have no intention to quit and don't want to harm my relationship with my manager? Continue reading for my answer.


Let me share a few thoughts from the employer viewpoint as an executive coach and repeat CEO. In summary, if an employee comes to me and says they already have another job and they want more pay; except in extreme cases where I truly need them, I will almost always tell them to take the other job; in my view, once an employee starts looking around, they are not sufficiently engaged at my company to be of much continued service; and I expect as a CEO that the pattern of looking around will continue; I'd rather that my company invest in a new employee who could become a highly valued employee for the long term.


Next, there is an uncomfortable truth for executives in this thread, that is widely known and shared among millennialists in general, and that is this: young career minded talent realizes that statistically they will get paid more by job hopping every 2-4 years, than be staying with one company for 10-15 years. The only hope of the company to keep millenials in the company long term is to provide an aspirational career journey with your company (a vision), mentoring, training, fulfilling work opportunities, AND pay that meets or exceeds what they could possibly hope to achieve by jumping around.


So here is my advice to CEOs, and the plan that I have used myself in my own businesses;


First, as an executive, I absolutely hate my firm to be vulnerable to talent leaving my company due to pay. Rockstar talent costs too much to replace in terms of search costs, training, customer expectation setting, business lost. Considering that most top sales persons sell 8x-10x of their peers, losing a rockstar can be devastating. And what counts as a rockstar in sales counts doubly so for engineering talent; you can't beat awesome talent. So as a CEO, I would myself annually, conduct a salary comparability study for all of my employee positions; and if during the year I heard news on the street of changes in market compensation, I would adjust my scales and get in front of compensation issues; I do not want to be vulnerable to my greatest resources leaving my firm on terms of pay.


Second, I would bring in my Rockstar employees (meaning, uber Talented, uber Experienced, and Great Cultural Fit), and share with them how valuable I think that they are to the company, and I would compensate them typically 125% to 150% of the benchmark for the industry; I do not want a rockstar employee leaving my firm on reasons of pay. Next, I would tell them, that because I thought so highly of them, I hoped that when the phone rang from a recruiter, that they would hang up the phone. I shared with them that it was my hope that they never want to leave our company, and truly, if anything came up that was creating problems in the workplace for them, please come to me as the CEO, and I would do whatever I could to make our place to work, the best for them as possible. This method helped me retain top talent for long periods of time.


Third, I would encourage my Rockstars in Training (meaning, uber Talented, little but growing experience, and Great Cultural Fit), to stay with our company in the following ways; a) we mapped out a career path and training plan for them at our company; b) we showed them how their pay could leapfrog forward as each milestone was achieved; c) we gave them real work, with real responsibility early, so that they enjoyed the work experience, feeling that they were learning more than they could elsewhere. These employees were compensated initially near the industry baseline plus a few points more to be competitive. However they were given encouragement, mentoring, and a career flight plan that was within their power to influence. I knew that my rockstars in training were the future of the company, and I did whatever I could do to develop this squad of talent to be our next leaders.


Fourth, if you were a good trusted and reliable employee, making regular contributions, and a great cultural fit, I would proactively come to you (before you came to me to ask for more money) and tell you how you can make more money at the firm. Usually this was by doing more work, taking on more responsibility, taking risks and getting rewarded for the work efforts etc.


Fifth, if you were neither a Rockstar, a Rockstar in training, or a good trusted and reliable employee, then you were not on path leading to a long career with my firm. I might come proactively to you and suggest how to get on the path if that was your interest. I want engaged employees. And if you failed to engage, I would keep you only as long as it took to find a more engaged and 'good fitting' employee. I would also encourage you to find work elsewhere were you could get more pay and progress.


The fact is, everyone in my company always new where they stood. Retention was high for top performers, and there was a steady pool of new talent coming in that could become top performers.