How to negotiate a higher salary

Dear Evil HR Lady,
I have a co-worker who has the same position as me. We are key personnel in the organization. Losing either of us would be a devastating blow. She approached a competitor and went through an interview process. They offered a substantial salary increase. My co-worker told me she had no intention of leaving, she just wanted to increase her salary. She did not threaten to leave, she just told our manager that she had a competing offer. My current employer did not hesitate and matched the increase, and offered $5,000 on top. My co-worked accepted our company's offer. This puts her way ahead of me in salary. I know this because she shared all the details every step of the way.

I really like my current employer and have worked here for over 10 years. I have seen many in our company do this in the past, with positive results and little ramifications. In fact, my company is notorious for giving very meager pay raises at review time. Salary increases outside of an annual review are NEVER discussed except when someone threatens to leave.

How do I approach the situation? I felt slightly underpaid before this happened, and now I feel grossly underpaid. I let it slide because I like my job, the people, and the work is secure and steady. I just had my review a month ago, so waiting until review time will be an 11-month wait. Do I seek out my own offer and pull the same trick? I am 100% sure they would counter offer me as well. Or do I approach my employer now and just flat out ask for a raise on the heels of this affair? Should I tell our manager that my co-worker told me of her raise and I want one too? I feel like anything I do should wait until this situation cools down.

Your company is engaging in a phenomenally bad compensation strategy. Instead of judging the employees based on the worth to their company, they judge them based on their worth to another company. That's just stupid and cheap.

But, you're not the policy maker, you're just stuck with the situation. It is absolutely unfair that you are being paid substantially less than a co-worker for doing the same job. (Not that salaries between co-workers shouldn't vary, they should and they do, but that should be for internal reasons, not because someone got a job offer.)

More on Money Watch:
Why it doesn't matter that your coworker makes more money than you

My question is, you know that your employer is treating you unfairly and that another company would offer you more money, so why stay? I know you are going to say that it's because you like your job, but that's a lie because you don't like being treated this way.

Many people who claim they are underpaid couldn't get another company to pay them more than they are making now, which means they are not underpaid at all. But you can (presumably -- I'm taking your word for it). So, what is it that is keeping you there?

If it's the length of service, nowadays long tenure isn't as appealing as it used to be. It used to show loyalty, but now people tend to think that you stayed for so long because you couldn't get anything better. Doesn't matter if it's true or not, it's the general mindset. (Movement within the company, however, can counteract that "couldn't get a job elsewhere" attitude.)

So, figure out why you are really staying and then decide if being treated poorly is worth it to you. It may be. For instance, if another company would require a longer commute, or you get lots of vacation here or they allow you the flexibility you need for your family, the low salary may well be worth the tradeoff.

If you decide that it isn't worth it to stick around, then look for a new job, find one, take it, and resign. Don't ask for a counter offer because you've made the decision to leave already and don't let them woo you into staying for 10 more years of bad increases and not being recognized for your hard work. No point.

If you decide that you do want to stick around, go head and approach your boss. Don't bother getting a new offer and don't say that your coworker never had any intentions of leaving. First of all, the new offer is silly and secondly, never tattle on your coworkers for things that aren't problems.

Try this: "Boss, I know Dianna just received a large increase as a counter offer. Our jobs are very similar. I have no desire to leave this company and I like working here. However, I am a very valuable asset for this company and especially this department. I'd deserve an increase to $X. What do we need to do to make that happen?"

Now the reality is, it may be senior management or HR (and probably both) who don't allow increases without a competing offer and your boss may say that. Or it may be that it's your boss who is cheap. Or it may be that your boss will say, "Gee, you're right. Let me see what I can do," and you'll bet a raise.

If the response comes back that they won't give you a raise without an offer from a competitor, then I strongly suggest you go find a competitor (perhaps the one your coworker turned down) and get a new offer and leave. Because this company will never have respect for its employees and you really don't want to spend the rest of your life working for a company and a boss who does not respect you. Your coworker has a raise now, but if she sticks around, she'll have to go through the same rigamarole again to get another raise in a few years.

Have a workplace dilemma? Send your question to EvilHRLady@gmail.com.