and feel free to delete the previous comment.

But I think the reason is simple. You don’t want to work for anyone who feels that the counter-offer is a good idea. Sure it’s an ego boost for you, but it’s really desperate management decision. Do you want to bank your future on desperate management?

The game is simple, an employee generates X revenue and the company pays that employee Y, where Y is X minus expenses and a risk-adjusted profit margin. In fact, it’s a lot like the stock market (actually, it is the stock market, but that’s a different discussion). Either way, the goal of the employee is to maximize the hourly yield for the work they’re willing to do, they want to maximize Y. The goal of the employer is to maximize profit, they want to maximize X and minimize Y.

The problem of course is risk. If you “over-minimize” Y, then you drain X (lower productivity) or you lose X all together (employee leaves). In the grand scheme, employers have been doing a lot to minimize Y: reduction in pension, reduction in health care allowances, no more 20-year gold watches or 10-year sabbaticals, etc. But many employers still insist on making some silly decisions with Y.

In Patrick’s case, the competition was willing to pay 30% more Y. Assuming that Patrick could generate an equivalent X, the company felt that Patrick was a small enough risk to pay him 30% more.

That’s a very big difference in evaluation. That’s the same thing as me thinking a stock is fairly-priced at $100 when you think it’s fairly-priced at $130. Of course, we hear about lots of 20 & 30-somethings jumping jobs to make these types of pay raises.

There are typically three reasons this happens:
1. The company is doing poorly and cannot afford to pay the employees more. Or they’re likewise not generating money from having the employee around.
2. The company is trying to extract as much profit as possible from the employee or using the employee’s profits to fund a different venture.
3. The company really has no clue (typically poor management). Any/all of: they don’t know the market rates, they don’t know which employees are generating money or losing money, they don’t have a growth plan, they don’t have a succession plan, they don’t understand what the employee really wants…etc

In a case like Patrick’s I’m sensing a heavy dose of #2, with a little #3.

What I don’t understand is why they suddenly perceived me as valuable as soon as I mentioned leaving?

It’s up to management to manage and mitigate risks and they really blew this one. (And remember the profits they make are their “risk-adjusted” piece of the pie) Not only did they underestimate your value by 30%, they also underestimated the value of their counter-offer by another 10%. That they would even go back to “up the ante” again means that they were still suffering from a #2 brain fart.

So back to the original thesis. You don’t want to work for these guys.

If they suffer from #1, then they’re likely laying people off and even if you don’t lose your job, you won’t be getting a good pay raise. If they suffer from #2 and they’re underpaying by 30% (or more), then they’re not showing a lot of foresight. If they suffer from #3, then you’re resting the fate of your next raise, your next promotion and even your next paycheck on the back of someone who doesn’t have a clue.

You don’t want to be working for these guys. You want to be working for proactive managers. You want people who have vision, who can see problems before they arrive. You want people who lead, people who hire more staff before everyone gets too busy, people who give pay raises before you have to ask for them, send you to training before you need it.

So if your employer makes a counter-offer, they are not one of these people. They’re one of the hordes of reactive managers. Just because they’ve finally realized they’re behind and can afford to pay you more doesn’t mean that they’ve changed their ways and stopped being bad managers.

So don’t accept a counter-offer, you don’t want to work for the type of people who make counter-offers.

Good point about the MIS jobs, and that also applies to other jobs as well. Some employees who deal with proprietary info are on a short leash when it comes to things like this. It is easier to kick someone out immediately and find a replacement compared to trying to reverse the amount of damage that could potentially be done by a disgruntled employee…

I wished you had asked them that. Even if the answer isn’t something you really care about it may have planted the see in their minds that keeping quality personel isn’t about being reactive to their desire to leave.

One word of advice though for anyone who is considering the advice from ideal4investors above; I work as an adjunct to the main MIS department at my company. The moment any MIS employee or adjunct employee tells their supervisor of another job offer, they are escorted out of the building and all access to the corporate infrastucture is cut off. Just something to think about if you are a professional who plays a role involving confidential corporate information.

The time to take the counter offer is before you resign. You go into your boss and tell them you have another offer of X (more salary, flex time, job title, whatever the incentive was to leave). Usually, the boss will ask you when you need to make your decision by and they talk to HR. You usually can get what you want. Of course, you should only do this if you want to remain at your current job. You do not want to take the counter after you made the announcement to your colleagues, because it leads to gossip, envy, etc.