I got offered a job with better pay, but my current company countered with a raise after I gave notice. The company is a good place to work, I was just being massively underpaid. Part of me feels guilty for using the offer as leverage, but the other part wonders why I had to threaten to leave to be valued. Would you stay for more money?

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No. Never accept a counteroffer.

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They will recoup the raise by not giving you raises in future years and you’ll end up in the same underpaid situation you are now. Don’t fall for it.

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It depends. There really is no black and white because most companies want to get the best candidate at a low cost. If you find a better opportunity and it results in a counteroffer then you know you are valued where you are otherwise they would help you pack your bags. There is an argument to be made that if you have to leverage your way to a raise, it may happen again. Its really about what you value. This happened to me but I had an enemy on the Board who insisted i have a more experienced attorney above me so a new GC was brought in and I trained in my new boss (my title was Sr Mgr. at that time). He seemed to think he was always the smartest person in the room and felt threatened by my presence and decided to fire me (no reason given) within three months. I was given about three month severance and within two months of being let go, i got a call back asking if I could help them during a transition as they fired the GC. I came back as a contractor, while still collecting severance, they determined my value and the CEO apologized to me for allowing my dismissal to happen under his watch. I got a nice offer from a new opportunity with the title and nice pay increase so I gave my notice and they quickly asked me what it would take to get me to stay. I gave them a verbal offer over lunch and after some negotiation, it was accepted the same day. Things have been better, though I do wonder how the new opportunity would have been like. I really enjoy the work and the people and that can be hard to find elsewhere. Look at the full package and make the decision based upon that and not just based on statistics.

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Nope.

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