Robin Throckmorton President of a HR firm located in Cincinnati, OH.

However you choose to handle the situation, consider your response carefully. Yes, consider his contribution to the organization. Is the raise deserving? How are raises determined in your organization? Is this something you need to consider changing? Are you comfortable making an exception? Are you willing to make an exception for the next person that asks?

No employee is irreplaceable. Bottomline, an employee is trying to force your hand. In my experience, counteroffers rarely work. If an employee is already considering leaving, this is likely what he will do at some point, even if he accepts your counter now.