Someone asked me for advice on negotiating a counter-offer from your workplace when you have an outside offer on the table today, and my high-level advice on this is pretty direct: Take the offer or don't, but don't tell your current workplace about it unless you're giving them your notice and politely turn down any counters you receive.
My more nuanced advice is as follows: Whenever you have a current job and another offer on the table you have to weigh the risks, benefits, and goals of your situation to decide what's important to you, and then make the decision aligned with your personal goals.
In general, I do not recommend opening negotiations with your current employer for a raise when you have an offer in hand. This is pretty commonly supported advice, and I've both experienced firsthand and observed others experience negative impacts of accepting a counter to stay.
All of your big salary jumps in your career are likely to come from changing companies. Once you're inside you're unlikely to see large gains. This is not universal, of course.
You might have a great boss or a flexible firm or be unusually valuable, but generally you should expect 7-20% for a raise when you get a promotion and maybe an extra 5-15% when you step into a people manager role from an IC role. Contrast that with anywhere from a 30-50% jump that you can negotiate if you're a confident high performer just by changing firms and stepping into a higher level role.
Even getting a 20% bump + signing bonus for a lateral move at the same level is pretty easy. If you're not getting at least 20% for switching, it's probably not worth the hassle unless you dislike your current work environment because benefits tend to accrue over time for knowledge workers and your resume is stronger for staying where you are longer than 2 years (but less than 6-8). If you don't like your current workplace, you definitely shouldn't let them counter. It's all downside for you unless they're going to beat your current offer substantially (and even then it's probably not worth the money, because you might not be there for long anyway).
You shouldn't justify this decision on the basis of "increased pay will give me future negotiating leverage" because if you're negotiating correctly your current salary is irrelevant. A title bump will give you far more actual negotiating leverage for new roles than an increase in pay will because it's social proof that you're somehow talented rather than social proof that sometimes companies pay different amounts of money. It's almost never worth it to stay where you are if you're not happy and don't see a future where you want to stay put in the current environment and dynamics.
Navigating the politics of this situation gets trickier if you do like your current manager or workplace. First off, don't underestimate the value of having a manager who genuinely likes you and will fight for you. Many managers are bad and/or indifferent to your growth and success and this is worse for your career than lower pay with a great manager who cares about your happiness and will set you up for future success.
Next, don't underestimate the value of liking your coworkers or work environment. It's very hard to tell how you'll fit in when introduced to a new manager or new political environment and this can also be rocky for your career. You're spending 40 hrs/week (minimum) with these people, so the quality of your interactions matter a lot! Don't be so quick to hop out of situation where you have lots of friends and people like you and appreciate your work.
But let's say you do have a 20%+ pay bump offer on the table and you like your current environment reasonably well and don't have strong motivation to leave. What do you do then? It is still generally a bad idea to ask your current work for a counter-offer for the following reasons:
- Businesses will interpret this (correctly) as you being willing to step away for the next best offer available and it will damage you politically with your upline management even if they pay you out. This is because your manager will need to get approval up the chain for your matching offer, and it will spark some backdoor discussion of your value where you will not look great even if they want or need to keep you right now. It incentivizes them to make you less relevant to their business.
- It is very likely that this will have some impact on your career progression at the company. If you force a 15% out-of-cycle pay raise in your current role against the 20% offer (they often won't match dollar for dollar), you're unlikely to be promoted as fast as you would have otherwise, for both social and budget planning reasons. This is bad because your biggest salary gains actually come from getting a title bump and then using that as leverage for higher offers outside of your current company. Title bumps are more valuable than % salary increases for this reason, and even if you do get promoted later they'll give you a lower salary bump and use the previous raise to justify that.
- Just by negotiating in this way (asking for a matching offer) you're damaging your chances of being able to come back to the firm down the line. People come and go all the time for all kinds of reasons, but they might not counter or you might not like the counter. If they don't counter, it can sting your pride and you've also damaged your public perception for nothing because you've made it clear you're leaving only for the money. If you turn down their counter, it looks even worse because you made them jump through hoops and then didn't stay anyway. It's going to be very hard to come back a few years later on positive terms if you want to, assuming the same management is still in place.
- If you previously had good relationships with your upline managers, this will damage them a bit and may make your workplace less pleasant than it currently is. Asking for more money with your skillset as a hostage may sour them toward you or increase demands placed upon you. When you're forcing your manager to devote more budget to you, this can strain their hiring planning and cause them to hold you to a higher standard even if your job description hasn't changed. It can create stress for both of you and generate conflict.
So you should always be looking around and interviewing, but if you get an offer I recommend you either take it or keep your mouth shut about it and don't accept any counters that are offered.
When deciding if you should take an offer in your hand, don't just look at the money. Look at the expected career trajectory and advancement opportunities for title bumps at both your current and offering firms, and consider your relationship and vibe with the manager on both sides.
If you want more money, consider that staying where you are might be more valuable if you're up for a promotion in 6-12 months, because you're unlikely to get promoted that quickly in a totally new role unless you're a rockstar who's great at workplace politics. When you get that promotion, it opens you up to a new set of roles and offers that you can negotiate for. Consider that you can often negotiate for roles a step up from your current title, so waiting for the promotion gives you an extra step up at a higher pay band.
But if there isn't much career opportunity in your current role, it's a no-brainer to take an offer for even a smaller bump if it seems like you can climb more quickly there and hop somewhere else in 2-4 years.
Of course, all of this depends on what your goals are. If your priority is a mission that resonates with you and coworkers you like, that's ideal if you can find that and I would be careful about stepping away from it. If your priority is cash, be honest with yourself about that and be mercenary.
There's nothing wrong with rolling the dice and moving a lot in the modern economy. Average job tenure for many tech workers is 2-3 years at a company and 18 months in role or in a title if you're focused on climbing. If you move every 2 years in every job you have, just be aware that it will influence how some companies view you and interact with you, but manager perception plays a huge role here and your social skills matter more than tenure if you can tell a story about increasing skills.
Don't let your employer guilt you into staying or taking a counter-offer. If it's a very small company, you might be able to avoid some of these dynamics if they're genuinely invested in your future with the firm, but most businesses will take your decision to stay as an opportunity to make you less important to their operations and release you at a time that's more convenient for them.
Even if you don't think your manager would do this, you're fighting against human nature and political dynamics. Social perception is extremely important to career growth, and there's no way you can tell them you're interviewing or demand a counter-offer without hurting that perception. Even if they know people are interviewing, admitting it is a social gaffe that weighs against you.
You have to be honest with yourself about your goals for your career and be ruthless in pursuing them, whether those goals are a workplace and coworkers you enjoy, maximizing your salary, or scaling to the pinnacle of the corporate ladder. Negotiating for a counter-offer with your current workplace hurts all three of these situations in different ways.
Just say no to counter-offers and either take what's on the table or don't.