‘The result could be ugly’: Former Microsoft HR exec says you shouldn’t chase a raise by waving a competing job offer at your boss — if you’re after more money, do this instead

This is how you can effectively negotiate a raise

Hitting a higher salary range can improve one’s financial situation, but there's a right way — and a wrong way — to try to get a boost in your paycheck.

For example, using a counteroffer from another company as a bargaining chip won’t exactly win you any points.

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"If you're at the point where you're haggling over salary, your relationship with your employer could be in trouble," Chris Williams, a former vice president of human resources at Microsoft, wrote for Business Insider. "Waving a competing offer at your boss might not end well… the result could be ugly."

While it may be tempting to try to convince your current company to give you more money if you have a better job offer on the table, Williams said doing so could undermine trust and cause your career prospects to stall.

Here’s the right time to negotiate your salary — and the strategies that will set you up for success.

When is the right time to negotiate your salary?

While using a counteroffer as a negotiating tactic may not always be the best option, you should absolutely fight for your right to a fair salary — but when is the right time?

Williams wrote in his Business Insider article that the best time to enter salary negotiations is when you're first hired. "When negotiating your initial job offer, discussing compensation and haggling over salary is fine and often expected.”

And, given how the current cost of living is affecting the majority of Americans, making sure you’re paid your worth is essential.

According to Moneywise research, which used data from the Bureau of Labor Statistics (BLS), the Federal Housing Agency (FHA), and Redfin, 97% of occupations’ salaries have failed to keep up with inflation over the last five years.

In addition, salaries have fallen by an average of 8.2% in the same time period. Despite this, house prices have ballooned by an average of 56% in the last five years.

Stats like these may be sitting uneasily in the back of your mind. But when negotiating your salary, it’s important to remember that your prospects at your job depends, in large part, on your employer having trust in you.

Companies want to believe you're committed to your job and that you plan to stick around. If you come to them with a competing offer and ask them to increase your salary in order for you to stay, this may just break whatever employer/employee bond you've formed.

Employers may see you as disloyal, and Williams warns that this could have far-reaching consequences.

"If your employer's forced to make you a counteroffer, the company might feel it's been held hostage," Williams wrote. "The company could be wary… you might not get additional training or opportunities — why invest in someone who might be out the door soon?"

Williams said that, even if your company does give in to your demands, they may be less likely to give you raises or promotions you'd have been eligible for in the future since they'd rather promote people who they don't view as a flight risk.

So, outside of negotiating salary when you’re first hired, what can you do to get a raise at a later date?

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How to effectively negotiate for a raise

According to the Bureau of Labor Statistics’ (BLS) latest numbers, the government reported 7.7 million job openings as of July 2024.

It ultimately doesn’t matter whether you need the pay bump to help eliminate debt or because you want to advance your career: don't settle for less.

But before you set up a meeting to discuss a pay raise, you may want to do a little research first. Look into the average salaries and benefits for your position within your industry.

Resources like LinkedIn, Glassdoor, Indeed, and the BLS, can provide valuable information on salary ranges. After all, there’s nothing like data to backup your request for a pay bump.

Once you’ve done some digging, you can consider asking for a raise during a performance review. If you don’t have one already scheduled, consider requesting one.

Use this meeting with your employer to demonstrate your accomplishments and provide research showing how you're being paid less than the industry average.

However, if these efforts don't work and you have to resort to a threat to get your company to pay you more, that business is probably not somewhere you want to keep working anyway.