Should you be blackmailed into matching a competing offer?

"Come in," you beckon upon hearing the knock. As the door swings open, Lisa, the vibrant head of marketing, steps in. Lisa is the best marketer you have been working with and is a great contributor to the management team. Her usually radiant face appears tense, and her slight fidgeting makes you anxious, especially considering the major campaign launch scheduled for tomorrow. Swallowing hard, Lisa requests, "May I sit?" Granting her permission, you watch as she takes a deep breath. "I genuinely love everything here — the projects, the team, and working with the rest of management." A sinking feeling grips you, sensing an impending storm. "However, Pink Cow, another firm, has approached me with a leadership role," she continues.

Your heart races, anticipating the worst. "They've offered me a salary of $120,000," she states, locking eyes with you. Doing the math, you realize it's a staggering $20,000 more than her current package. "I love it here, but the difference in pay is huge, and with the new house, expenses are everywhere," Lisa articulates, her voice wavering slightly. Digesting the news while looking at her, you manage, "Could you delay your decision by a day?" Her lips curve into a smile as she exits.

You are the CEO – what would you do?

Expert 1: Let her go if that is what she wants.

Increasing Lisa's salary significantly might disrupt the pay levels and set a precedent for others to demand raises. This could lead to salary inflation, affecting the company’s overall compensation strategy and morale. Ensuring a balanced pay structure across departments is critical for maintaining harmony. While salary is important, her motivation should go beyond financial compensation. Appealing to her sense of purpose, professional growth, and work-life balance may outweigh the economic benefits she could gain elsewhere. Emphasizing the non-monetary benefits of her current position could help retain her. The CEO can offer non-financial benefits such as leadership development, flexible working arrangements, or performance-based bonuses to keep Lisa engaged without compromising the budget.

Expert 2: Do what you can to keep her

Lisa is described as the best marketer you’ve worked with and a critical contributor to the management team. Losing someone of her caliber, especially before a major campaign launch, could significantly negatively affect the company’s momentum and ability to execute strategic initiatives. Matching her offer would ensure continued leadership in a vital department. Remember that hiring and training a replacement for Lisa will likely cost more in the long run, both in terms of direct hiring expenses and the time it takes to onboard and bring a new person up to Lisa’s level of expertise. The delay in projects, coupled with the potential dip in quality, could end up being more costly than simply offering her the raise. The offer from Pink Cow reflects the current market demand for top marketing talent. Failing to match the market rate could leave the company vulnerable to losing other key employees. The company can remain competitive and attractive to high-performing employees by aligning with market trends.

My opinion

I would tell Lisa how much I appreciate her and how I would personally work with her to develop her career. I would tell her that we never match competing offers, but we want to offer fair compensation for top talent. If she continues to deliver, her salary would be raised in 6 months to a minimum of 12.000 USD and a maximum of 22.000 USD.