The most common method of negotiating compensation is to wait for the “year-end talk” and hope it includes “good news.” Those with confidence in their contributions tend to be more assertive. Increasingly, those with considerable confidence, who view their market value to be underappreciated, are using a negotiation method nearly abandoned years ago: “Counter-Offer Negotiation.” It may well be wise for you to consider its utility in your own career.

In the past few years we have assisted several clients in negotiating additional compensation – and in one case, a promotion – by “Counter-Offer Negotiation.” The unspoken message underlying the process is “My market value is greater than my present compensation,” implying that “sooner or later, I will succeed in getting what I am worth.” Here’s what you need to know:

1. Understand the Basics of Counter-Offer Negotiating: To get your employer to provide you greater reward(s), chances are you will need to both (a) make a request, and (b) support that request with a compelling rationale. The most compelling rationale for increased compensation is that you represent a significant contribution to your Managers’ own success, and thus, how much it is in their interests to keep you on board and happy.

The message underlying Counter-Offer Negotiation – although it is not presented this way – is that you might actually be tempted to leave your present employer if your present employer will not consider providing you greater reward. It is not to be presented as a threat, or demand, but rather as an underlying and compelling reason for your seeking greater reward. People work for reward of one kind or another; it’s that simple.

2. First and Foremost, Consider Your Leverage: Leverage is what motivates others to do what you wish. It is not primarily what is said “at the negotiating table,” but rather, what you bring to “the table.” It is your Managers’ perception of your value to them, how much you are viewed to contribute (a) to their revenues, (b) more importantly, to their relationships, and (c) most importantly, to their reputations, both internal and external.

Strong relations with peers, supervisor, customers and clients – all of whom would be upset to see you leave – are also great sources of leverage. If you are the only member of your team in your “protected class,” with a needed skillset, facility with a certain language, valuable business relation or awarded a professional honor or ranking, chances are you have considerable leverage, much of it untapped, just waiting to be unleashed.

3. Assemble Data that Supports Your Request and Your Unrecognized Value. To enhance your Managers’ perception of your value, we commonly use extrinsic indicators of value, including (a) recruiters’ enticements, (b) online databases, (c) objective performance metrics, (d) performance reviews, and (e) information shared by colleagues.

Most importantly and most potently, the best proof of your value in the employment marketplace, is what other employers are willing to offer for your services, especially, an offer that you have “in hand.”

4. Identify and Mitigate the Attendant Risks. There are three primary risks to use of Negotiation by Counter-Offer:

a. Risks of Harming the Present Relation: If you do not have sufficient leverage – perceived value to your Managers – there is an undeniable, though usually small chance that your Manager could take offense at your request. The two ways of mitigating that risk are to ask for consideration of an upward compensation adjustment with what we call “the three R’s of a safe way to ask for anything: Respectful presentation, Reasonable ask, and compelling Rationale.

b. Risks of Losing the Offered Position: Without question, you should not commence a Counter-Offer Request until such time as your offer letter and related materials are carefully reviewed and approved by experienced Legal Counsel. In this way, your “fallback” is a positive one, with greater compensation or other rewards firmly in place and committed to. The biggest risk to guard against is losing both positions, a rare but potential result.

c. Be sensitive to Relational Risks: It goes without saying: this type of negotiating might “ruffle feathers” with some of those who hire and manage employees at your level in your industry. For this reason, an extra dose of sensitivity to the manner in which you engage in Negotiation by Counter-Offer needs to be on the more humble, less demanding, manner of interaction. Most, though, are not offended by its use, but rather sanguine about its necessity.

5. Adapt to These Usual Steps and Their Order: These are the steps usually followed in putting forward a Negotiation by Counter-Offer, to be adapted as needed to your own unique facts, events and circumstances:

a. Hire Experienced Legal Counsel. There is no substitute to having at your side an experienced employment attorney to review documents and provide guidance. Have her or him review documents previously signed with your present employer, including among them employment agreements, notice requirements, “garden leave” agreements, non-compete agreements, and deferred compensation/vesting equity agreements to identify and assess possible vesting dates and potential forfeitures.

b. Seek a New Position Elsewhere. Use the same methods and means you would in any job search, bearing in mind, though, that the only serious discussions you should have with prospective employers are with employers you’d be pleased to work for.

Consider all aspects of making a move to a new employer, including the offered compensation, potential career elevation, their work-life balance or even flexibility in location. Keeping your search for an alternative “real” is a wise way to mitigate the risk of your present employer “turning sour” on you.

c. Have Legal Counsel Identify and Address Potential Onboarding Issues. Among the most important may be preconditions to employment, “make whole” commitments, and vesting timing and conditions. Your Counsel’s preparing and transmitting a detailed list of comments and requests on any Offer Letter and related materials provided by the New Employer’s Counsel should buy you sufficient time to speak with your present Manager, and get at least a “good read” on a likely decision and its timing.

d. Sit with Your Present Manager; Have a Script and Precise Request in Hand. After pleasantries, note the reason for the meeting, your concern about being underpaid, and the reasons for your view. Give her/him a chance to ask if you have an offer “in hand.” If asked, say, “Yes,” and discuss it. It might be necessary to disclose from whom it has come; feel free, though, to say, “Since the person I am replacing does not yet know, I’ve been tentatively sworn to secrecy.” 

e. Consider the Response, Make Your Decision – Stay or Go: Be prepared to do so in just a few days, as you may be required to accept or reject a counter proposal quite quickly. Also, it is suggested you follow up by email to thank your Manager for the time, and if a deadline is given to you, to note that you appreciate being given “until Monday, May 25” to respond. Be especially careful about missing existing vesting dates and minimum notice requirements. You surely don’t want to invalidate an upcoming vesting date or pending bonus payment.

f. Accept, Decline or Resign. In all your communications, be clear, express yourself with grace and humility, and most of all, In Writing.

6. Any Promise or Assurance You Get, Insist It Be Put into Writing. Always have assurances reviewed by Counsel, including all “strings attached.” And, too, bear in mind that negotiating rarely gets you all you want or asked for; the other person has to feel some success in negotiating, too.

In sum, there are many ways to negotiate greater rewards for your workplace efforts. Negotiating by Counter-Offer is one way that is available to you, at any time, and is potentially the most effective way, provided first you have the perceived value that presents you with the leverage you may need. Like anything, it comes with possible risks, too, which must be considered and mitigated. With guidance by experienced Legal Counsel, you should consider its use.