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<p>I am currently being recruited by a competitor. I am interested in what they have to offer but at the same time, I am very happy with the company that I am with. How do I explain that to the recruiter so that I don't seem to be leading them on or possibly ruin a future chance with them if this offer isn't a good fit for me?</p>
I think the recruiter is at fault - He has not taken one of the most fundamental points in selling ( of the role to you ) - he's not confirmed that you are able and wanting to buy/move forward to the next stage -
In effect you are a tyre-kicker or taking a bench mark - its not a problem with this as you are entitled to compare your worth with other employers and he would know this if he had asked you " Are you actively looking for a new role" the answer yes or no here would have stopped him in his tracks - he obviously has not listened ( as the best sales guys do ) to your needs and validated your requirments.
He should also be asking you 'How do you see or what would be the benefit to you by joining them?' and by flushing out your objections it will make him realise its a no. I guess he may not be into sales and simply HR so it could be understandable - or just desperate to fill the role under any circumstances.
I would say that you have just settled into the role and would like to successfully develop it to a point where you feel a new challange would be needed in your career. etc etc
A very luxury problem. I believe no one can help you out except you, as you are the only one who is aware of the circumstances. You know the difference between your current job and the the new offer. You know what does your current job offers you to make you happy and whether the new job will offer you that or not.
I think, the only way to reject the offer without closing that door is to to say that it is not ethical to leave your current job at this stage.
You may also tell the recruiter that their offer is not attractive enough to make you leave your current job.
Any function whatever the leadership or management must sound working environment is available and through that know exactly how happy for this job even if I got another job with a salary higher so if you have the occasion I think the work environment there is someone who has the courage of the event about to leave the company or organization