my boss is making me a counteroffer to stay, and I am not sure what to do?

One of my close friends, a graduate from the University of California, Berkeley, was hired by a major firm in Orange County. It was his dream job – the perfect location, fair pay, and good career prospects. 

Within four years of his hiring, the three senior execs who hired him – the CEO, the chairman, and the executive vice CEO had all left their positions. The new management team intended to offer him a reduced salary. 

But after numerous hours of negotiations and multiple offers/counteroffers, it turned out that his job was infrangible. He walked away from those negotiations with a raise. 

My friend was smart enough to realize one thing when he was hired – there may be trouble regarding his position down the road. The three execs who hired him were all pushing sixty. He guessed they would all be gone before his career takes off.

So, for four years he did errands for different company departments that had zero to do with his role at the firm. He did these errands at lunch breaks, after hours, and on weekends. He stockpiled well-wishers throughout the firm.

So, when the new management crew came in and started to evaluate his position and salary at the firm, there was a call for concern throughout the firm – “This man is indispensable! Getting rid of him will damage the future of the firm!” His job wasn’t just saved, he quickly renegotiated a better paycheck with the new management team.

My friend was fundamentally enmeshed in a four-year negotiation with his firm. The company members didn’t even realize they were part of a negotiation. For four years, he identified the people who could be on his side if and when his job was in question. He considered their needs – event planning for other departments, helping the advertising team during the weekends, etc. 

In the end, his firm got free services from him for four years. He became a valued employee and successfully fought corporate politics. He was constantly preparing for a brutal negotiation. He was incremental, smart, and most importantly brave enough to leverage his strengths (his relationships with other employees) at the right time. 

Employees Need to Be Fearless

When I ask some of my friends, what stops them from getting remunerated what they’re actually worth, I hear one term time and again – afraid.

“I am afraid to not accept their final counteroffer.”

“I am afraid to ask for higher pay and come off as greedy.”

“I am afraid to demand a better job title.”

“I am afraid they’ll fire me if they think I’m burdening their salary structure.”

Time after time, I hear how afraid employees are to even consider the idea of demanding higher pay. For many, quitting and taking up a higher-paying position at another company is a better option than negotiating a better deal for themselves at their current jobs. This fear of negotiation is driven by the fear of the unknown and it will hurt employees tremendously.

Why Employees Need to Learn How to Negotiate

Relationships between employers and workforces are becoming more challenging every year. The conventional exchange was that workers would contribute their devotion, ability, and time in exchange for job stability and fair remuneration.

Unions wanted to systemize that. In the last two decades, the balance of bargaining power has evidently transferred toward employers in most industries.

• A key factor behind the breakdown in employees’ bargaining power has been the attrition in the percentage of workers in private-sector unions, which fell from 24.2% in 1973 to 6.2%, a record low, in 2019. Research demonstrates that this attrition and this power shift has a bigger impact on middle-wage workers, regardless of whether you are part of a union or not.  
• Another factor that has eroded the bargaining position of employees is the increase in the average levels of unemployment. The unemployment rate in the US is currently 8.4% and research has constantly demonstrated that workers’ pay is directly reactive to unemployment rates in the country. Slow pay growth, especially for low and mid-paying jobs, is consistent with high rates of unemployment. 

In such a challenging environment, savvy negotiation skills, just like my friend had, are vital. So, if your counteroffer is unsatisfactory, just remember this – If this is the nicest they can be to you, be very prepared for when they’re not in the mood to be ‘nice’ anymore.

Companies have always worked with negotiation experts to find new ways of improving monetary offers, counteroffers, and financial gains. Of late, negotiation tactics in companies have started focusing on more qualitative outcomes of workplace negotiation, such as employee satisfaction with the outcome. 

Employees must know about these tactics if they want to get what they desire. Here are some fundamental aspects of negotiation that you must know to ‘out-tactic’ your employers while dealing with offers/counteroffers and fight the fear of losing your job. 

Negotiation is Situational 

The employment market is packed with advice – don’t say this, never ask this, always prepare for that.  The problem with a lot of this advice is one size doesn’t fit all. Negotiation will always be situational.

Hence, understanding the other party (in this case your employer making the counteroffer) and getting an objective view of the situation is vital. Only then you can start developing an efficient negotiation strategy for a specific situation.

Negotiation strategies will keep changing but your goal should remain consistent – making yourself more valuable in your organization. My friend in the earlier example relied on his perceived value at his company to retain his position.

So, even if you plan on switching jobs in the future, the better your perceived value, the more you’ll progress in your career. 

• Leveraging Time

Generally, a company will make a counteroffer only when they’re sure that –  

1. You’re qualified for the job. 
2. You’re likely to accept the position. 
3. The compensation package is fair in their eyes.

The best way to secure higher pay is leveraging time. So, talk salary details with your employer when they’re ready to pay more than they think they can afford.

For instance, a student will take a loan to go to college because he knows the four-year degree will improve his long-term prospects of landing a well-paying job. Similarly, you need to be the education loan that your employer can’t actually afford at the moment but can’t afford to avoid either. 

When employers make counteroffers, they’re as close as they can get to thinking about you as a valuable asset. The employer is convinced you’re the ideal candidate and prepared to juggle the budget to get you.

Making the employer wait until after your performance review to discuss a raise can further increase your chances of securing a better offer. If your performance reviews are constantly impressive, your employer’s perceived value of what you bring to the organization will improve further.

So, avoid rushing into counteroffers. Try to leverage time in your favor. 

• Avoid Informal Offers

Often counteroffers of salaries are on a casual basis. Your boss may propose the idea of a small promotion in an informal discussion and later follow it up with a formal written offer. Avoid committing during these verbal discussions. Convey your gratitude and interest but delay your response to: 

1. Objectively assess the advantages and disadvantages of the counteroffer. 
2. Discuss with family. 
3. Compare the offer with average salaries and job titles on employment websites like PayScale, Glassdoor, etc. 
4. Discuss with your peers. 

Common sense also says that shoppers get the best deals when they exercise patience. Employment is a lot like buying and selling of goods. When you passively agree to a salary range, you become one of many candidates who are willing to work for similar fees in the employment market. You become one of many sellers who are competing to offer the company a good deal.

If you postpone counteroffers and salary discussions, the roles are reversed – your employers become the sellers. They’re selling the position to you. Now, it becomes their job to offer you a better deal for your contributions. 

• Presenting Your Case  

In sales, there’s a concept called ‘introduction time’ which affect quality perceptions of consumers. Shoppers spend more time in stores they find pleasant and where it’s easy to obtain information about deals they’re interested in. Sales professionals communicate information to increase customer interest in products. They – 

1. Provide relevant information on products
2. Create presentations to demonstrate attractive features about the product
3. Draw comparisons between different products. 

All of this information can boost the chances of sales and customer satisfaction. Just like customer perceptions are changed when sales professionals offer them information on other products, employers’ perception of your role at the workplace may change when you share details about the value you bring to the organization. 

Sales professionals change the “subjective value” of products and employees can do the same while renegotiating salary offers.

For instance, my friend highlighted his relationships with other departments in his company to secure his position. He paid a lot of attention to the value he added to the company. All employees should use this tactic and make their employees realize their true value. 

Will your employers feel annoyed if you explain to them why their offer isn’t worth the value you bring to the organization? Possibly. But effective negotiation is never about sequences of financial moves and countermoves. It should always be about relationship building.

If your organization doesn’t encourage such relationship-building conversations, you are always going to bear the burden of negotiated price concessions.

• Anchoring Effect

The initial salary offers from employers are almost always lower than what you deserve. They either expect a counteroffer from the employee that’s lesser than the amount they actually want to pay you or they expect you to accept the offer. 

In deal-making, people who make the initial offer always assume the counteroffer will anchor the negotiation to a favorable position. For instance, if you think a second-hand television is worth $400, you’ll always offer $300 first and then accept a deal around the $350 mark.

So, whenever your employers make salary offers, they’re hoping you’ll anchor the deal to an outcome that’s favorable to the company. Most employees don’t realize this because they don’t know their market values. So, let’s learn how to determine your actual market value. 

Bear in mind – a fair market value will never be one fixed and tidy number, but a range of figures from perfect to worst-case scenarios. You can qualify for ideal amounts of compensation if you maximize each of these factors – 

1. Objectively Examined Value – The objectively examined data from recently published information about salaries and ‘going rates.’ You can find this info on PayScale or Glassdoor. 
2. Subjective Individual Value – A subjective evaluation of your track record at the job and how it applies to the offers made by your boss. Are you a seasoned professional or an entry-level candidate as per your skills and workplace responsibilities? Do you bring any unique competitive advantages to the workforce? How do you stack up individually against other employees in your industry? Consider all of these details while determining your market value. 
3. Risk-Factor – Speculative compensation, i.e., the amount you think you’ll be making for the company in the future. How does your salary proposal correlate to your future contributions to the employer? Or, what will the company be losing if they don’t remunerate you on your terms? 
4. Perks – Sometimes, there are aspects of the job that you can’t undervalue. For instance, if getting a new job means traveling to a place you don’t want to live, it’s okay to accept pay-cuts just because of the other perks you receive from the company.  

So, your Market Value = Objectively Examined Value + Subjective Individual Value + Risk-Factor + Perks.

Don’t think it’s possible to mention all of these details in a salary proposal? Here’s a three-line salary proposal that one of my colleagues made that helped him secure better pay – 

 “You’re creating a team of sales professionals to expand into the pharmaceutical industry. I have three years of experience in sales in that industry. I can help the company avoid common pitfalls from the beginning and create a focused pharmaceutical sales team.”

• Minimum and Maximum Salary

Before negotiating any counteroffer, consider asking yourself this vital question – “What is the absolute minimum salary you need to do this job?” To answer this question objectively, you’ll need to assess these details – 

1. Your current salary. 
2. Your market value (as discussed above)  
3. The maximum salary you think you can get. 
4. What other employees in the company are currently making?
5. How desperately do they need your services?
6. How desperately do you need this job?
7. How are your merits and skills increasing at the job?
8. What bonuses do you get from the job?  

Pick a fixed minimum acceptable salary and mention a higher amount to your employer (10 to 20% higher than the minimum acceptable salary). If they offer your minimum acceptable salary, consider countering that offer based on how badly you need the job.

Typically, a good range for a counteroffer is 10-20% above the employer’s initial offer.

To know how aggressively you should approach this counteroffer, do this simple calculation – 

How desperately the employer needs you – How desperately you need the job = How much aggression you should show while making a counteroffer. 

If the employer can’t meet your minimum acceptable salary, you should probably start looking for employers who will value you appropriately!