Sullivan said to his manager, "Theo, I need to tell you that I have received an unsolicited offer from a competitor. I've enjoyed my eight years at Smith Enterprises, and I'd like to stay. But the offered salary is 20 percent higher than my current salary. The other firm cited what I have learned this past year on the public works job as a particularly valuable skill." Sullivan is a highly valued employee, and Theo has been grooming him as his successor. If Theo were to consider market rates as an important indicator of worth in responding to Sullivan, Theo would most likely

Question

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Considering market rates as an important indicator of worth, Theo would most likely seek to retain Sullivan by increasing his salary by a similar or higher percent than the competitor's offer. A 25 percent increase would not only match the competitor's offer but also demonstrate to Sullivan how highly valued he is, while also ensuring that he remains a part of Smith Enterprises. Transferring Sullivan to another city, explaining internal resource considerations, contacting the competitor or terminating Sullivan's employment would not address the issue of the competitor's offer being higher, and could potentially lead to losing a highly valued employee.

Sullivan Said to His Manager, "Theo, I Need to Tell