Does higher pay offer on exiting a job reveal employee's real value?

To answer your question, no it doesn't.

Generally it is never that simple and there are a variety of factors that go into this.

Let's assume the company gives Orion that offer, it could be that Orion's true market rate is 200% (or more) or it could be that Orion's market rate is really 160% but they value the employee and can't afford to lose them so they are trying to make it attractive.

Almost always Orion's accepting of the counter offer from the existing employer is a mistake. Many employers that make the counter offer will be less trusting of the employee in the long term and will be looking for a way to reduce the employee's value. There are exceptions on both sides of course, but rarely is accepting a counter offer from an existing employer a good idea. I had an employer offer me 1.5x one time to stay, I left for a job paying me only 1.3x. More money doesn't change the situation generally why you are leaving, and if an employer lets you get that far behind market they aren't valuing you properly and are just waiting for you to call them out.

What I usually suggest to people is they need to negotiate every year for more money as a matter of process. This reduces the need to get a competing offer to just get a raise. Then the only reason you leave generally is because you find at the first year the company is cheap or over time you just don't want to work there anymore because of whatever other issues. Employers see this method much differently than an employee that job shops and tries to bend them over a barrel with an ultimatum.

It primarily reflects how hard it is and how much time it costs to replace the employee. The employer needs the employee to stay on until they've hired a replacement, and can afford to pay extra for a limited time.

If you accept this offer, prepare to get fired as soon as they've found your replacement. If you think this might be your actual value to the company, ask them to make that raise retroactive from a year ago.

Marxists make a distinction between "value" and "worth." The words are synonymous in English but etymologically different. Value is of French (or Latin) origin and is related to valew and valour. Worth comes from the Germanic words wert and werd. You can hear when you pronounce "value" and "worth" how different they sound.

To Marxists, "value" is extrinsic and subjective. "Worth" is intrinsic and objective.

Did Orion's worth increase by the threat of quitting? Clearly not. He or she didn't suddenly become a better developer, thus his or her work output didn't suddenly become worth much more. Did Orion's value increase by the threat of quitting? Clearly so. The valuation of his or her work output suddenly increased by 80%!

Marxists then make the point that our society focus way to much on the "value" of things, which often is nonsensical, when we instead should focus on what things are "worth."

It's really hard to gauge value in the software industry. A company may make $0 on some code today, $5000 on the same code next year, and $50 mil 10 years after that. Assuming Orion is writing this code, is he worth $0, $2500/year, or $5 mil/year?

It's part of a team effort - testers, marketing, management, investors, HR, finance, even the janitor who keeps Orion from taking a day off to vacuum the office and clean the toilets.

I think freelancing comes as close to true value as possible. You abstract out a portion of work to someone, who handles it for a certain value. That someone also mops their own floors, does their own taxes, registers a company, deals with regulations, deals with their own insurance, manages their own motivation, and so on. They often outsource this too - maids, co-working spaces, plumbers, personal health insurance, etc.

Freelancers request about 1-10 times the average rate. This varies by location, e.g. companies with good public healthcare and lower taxes might have a lower multiplier.

But if you live in a location where full time freelancers normally request 4x wages, it's likely Orions max value is closer to 4x his total compensation.

Value is decided by the market. If Orion is leaving due to monetary reasons then it would seem that Orion has already been made aware of an opportunity which places a higher value on their work.

In this example, there are two markets to consider; RapidData and everyone else.

We know that Orion is worth more to everyone else, but that's no guarantee that they're worth 180% of their current pay. RapidData may be willing to pay out more in the short-term because of the opportunity cost associated with replacing Orion and keeping the business running in the interim.

So, I'd say it's mostly #2.

In practice though, if you wanted to leave before the raise; then you'll probably still want to leave after. The only difference being, that now your company is actively making sure they're not caught in this situation again. You will be judged more harshly and in the event that 180% does exceed your "everyone else" market value, you will eventually be let go or made to quit.

There are many possible reasons:

1.) Orions value rose because he is about to walk out the door with all sorts of important information in his head. Often times, a counter offer is made to lessen the risk of information loss, with longer term plans to move Orion out of the company, or lessen his impact.

2.) His boss looks really bad if he quits, especially if he is a high performing employee. So the boss has every incentive to keep him on.

3.) Short term high profile project has a huge business cost if not completed, Orion is not worth that much, except for in the next few months