The general tone of comments on this thread is not to follow this path. I completely agree. On a personal level (for me), it's unethical, and more importantly,

The general tone of comments on this thread is not to follow this path. I completely agree. On a personal level (for me), it's unethical, and more importantly, it is a very very dangerous compensation culture they are encouraging in that company. Sooner or later, it will percolate in to other aspects of the company. I, recently, switched jobs from one big company to another. I was seeking opinions from friends (managers) in 2nd company. Their general advise on salary is: Negotiate as high as possible as I can _leverage_ my existing position. I have nothing to loose. So far, I understand. Then they gave examples of good engineers who were fresh grads, or were let go at other jobs and have no backup offers. In those instances, managers tried to low-ball or drive down salary. This attitude is not at all healthy. The 2nd company is not doing well at all (my group is doing great). This is not at all healthy for employee morale. I would not encourage this culture.