It happens. Not infrequently. It's why I never tell my employer when I get an offer. They might just give me the raise because it would hurt to lose me today but they can lose me in a couple months, and then the offer I had at the new company is long gone.
This seems like a counterproductive response if the labor market is tight.
Company: The market is competitive and your market rate has increased, so here's a raise (of more than 2-3%)
I was lucky that my direct manager valued me and guided me through the process of documenting my accomplishments in the right ways to present the case for a substantial promotion.
Apart from this one time, I have always been told the company can’t offer raises or discretionary bonuses beyond whatever the board grants for cost of living, and have to switch jobs repeatedly if I want to earn more.
I don’t get it. I feel like it must be some misaligned incentive problem with HR preferring to make executives believe turnover and constant hiring have to always be the norm, to justify their jobs, instead of cultivating a culture of long tenures by actually offering substantial raises or bonuses.
My direct managers were awesome, but I ended up leaving for other reasons.
I feel I need to at least go through the motion of entertaining the counteroffer, though. Otherwise they'll think I don't like them or be offended and I'll have maybe burnt a bridge. Of course, for the same reason, I was never looking for another job. That offer came to me on its own.
Will a counteroffer change that situation?
Especially in big corps there can be a policy of being stingy with the wages unless there is some scenario like a need for counteroffer for a high performing individual contributor.
Now, you can think the company is cheap and does not really earn you contribution.
However, the psychological reality is that people don't work in their companies - they work inside teams within companies, and the duties and the culture of the team can be great even if the company policy (likely sculpted out of feeling of ficudiary duty towards stockholders among other things) feels cheap.
Great teams and great managers are far more important for a great job than "great companies". Yes, the latent company culture affects team as well, but that's only one aspect of the whole.
If they would pay me what the market says I’m worth (and I’ve done a ton of market research) then I’d be happy to stay where I am for the foreseeable future. But if another company offers me a job and the work and environment seem comparable but they’re willing to pay more... I’d seriously consider that offer and be prepared to leave. However, if my current employer comes back and says, “Actually we will beat that by x%” then I’d seriously consider staying.
It also helps that someone else in the company did just this and is still with the company a couple years later.
Last place I left, I made it exceedingly clear, a year before resignation, 6 months before resignation, and during resignation, that all they needed to do to retain me was to bring me back up to market rate. I would have definitely stayed if they were forthcoming with a counteroffer.
I'm pretty happy where I am right now, but if you give me an offer to an attractive position for 20% more money I'd at the very least entertain the notion.
A) The company didn't value you until it was too late. Their opinion of you hasn't changed, just the pay rate.
B) The company now has painted a target on your back as someone that is "in it for the money" and doesn't have the best interests of the company in mind. It's bullshit, but that's now management thinks. Next time a budget cut or RIF is necessary, guess who is first in line?
In both cases, you need to weigh if that's worth sticking around for.