If you are a valued employee that your boss wants to keep around, another job offer can be a great bargaining chip for you to advance to that next pay level at your current job.
The more your current employer want to keep you, the more willing they will be to give you a raise as an incentive to stay. However, do not get cocky. Just because you have a job offer that will pay better does not mean your current company will be willing to one-up or even match their offer. Your boss might want to give you a raise, but if the company has frozen salaries or there just is not the money available to give you a raise right now chances are no matter how much they want to keep you they will not be able to give you a raise.
Keep in mind that playing the job offer card only works if your company wants to keep you around. If you are not a good worker, slack off, come in late everyday, do not complete assignments etc ... they are not going to fight to keep you. More likely they will breathe a sigh of relief that you will be leaving and they do not have to go through the hassle of letting you go. While another company may offer you a job at better pay, they do not know you as well as your current company. They have just seen the best you on paper and in front of them during your interview. Your current boss knows your weaknesses and has seen how you work with people and how well you do under pressure and deadlines. If your boss does not consider you an asset to the company they will not flinch when you inform them that you have been offered a new position at better pay and they will find you asking for a raise laughable. In the current market jobs are scarce. There are tons of well-educated, skilled people out there looking for jobs that have been laid off. There is not a shortage of workers. Despite what you think you are replacable, especially if you are someone your boss does not view highly or you have made no positive impression on him.
When using the job offer card do not demand more money right away. Also, do not approach your boss with a cocky attitude this is unattractive. Let your boss know of the offer tell them that the increase in salary is attractive to you but that you would prefer to stay where you are if they can match or better the offer from the other company. You do not want to appear like you are only there for the money. By letting your boss know you like your current job and want to continue to stay there if possible they will be more inclined to try and keep you around and give you that extra cash if they can afford to.
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