The Truth About Counteroffers

Counteroffers are a dime a dozen these days. Many sectors are still experiencing talent shortages. As executive recruiters, there is no better feeling than hearing the excitement when we call a candidate to extend them an offer on behalf of our clients; only to get our hearts broken a few days later when we get that call from the candidate to let us know they have accepted a counteroffer.  Let’s take a look at two true stories about counteroffers. (Names have been changed to protect privacy.)

Case Study #1

Nicolas has been working as an HR Director for a large, global medical device manufacturing company for about two years. He’s given the job his all, but he’s becoming dissatisfied with the company culture—some organizational changes have altered his job responsibilities to the point where he no longer feels challenged or particularly useful. He feels well-paid, but he’s no longer happy.

After activating his search and reaching out to his network, Nicolas was referred to our firm, Barbachano International. After an in-depth evaluation, we presented Nicolas to a small, high-growth life sciences client company with many challenges. Nicolas interviewed with the client who needed his skills and even offered him a small raise. He’s excited at the prospect of being a “big fish in a small pond” and the learning and growth the new position promises. However, when he notified his employer, they immediately proposed paying him a bit more than his prospective employer had offered because they were shorthanded and “couldn’t afford to lose him.”

Case Study #2

Amanda has been a senior vice president for a well-established bank for 10 years. She has a loyal team, a large client base, and a great relationship with the rest of the executives. She enjoys the company culture and is happy with her work/life balance, but she feels a little underpaid.

After a short job search, she was offered a position for significantly more pay.  When she gave notice, her employers told her they simply couldn’t do without her and made her a counteroffer that exceeded the offer she accepted from their larger competitor.

In both cases, the employees can make more money if they accept the counteroffer. In the first case, Nicolas isn’t particularly happy with his job; money wasn’t the reason he looked to leave in the first place. In the second case, Amanda enjoys her job, so money is the impetus for her prospective move.

What would you do if you were Nicolas? Amanda?

Sometimes counteroffers seem attractive—they can gratify your pride and potentially pad your wallet. Another reason some employees choose to accept counter offers is that “the devil you know is better than the devil you don’t know.” In other words, they’re hesitant to leave their comfort zone and everything they’re familiar with for a job where they might fail, especially when their current employer sweetens the pot to get them to stay.  Fear of the unknown is a common human foible, and it can rear its scary head in this kind of situation.

However, before Nicolas or Amanda (or you!) grasp at the counteroffer straw their employers offer, they should consider the following truths and cautions.

Factors to Consider

You will change your boss’s perception of you. No matter how loyal and indispensable your higher-ups may have considered you before, their perception will change when you tell them you’re leaving (LinkedIn). Your loyalty will surely come into question, and you will have planted the seed in their minds about if/how/when they could replace you.

 Statistics are not in your favor. National statistics reveal that 89% of people who accept counter offers leave their employers within six months. This almost inevitable exodus could be because the reasons the employee wanted to leave in the first place (remember Nicolas) are never resolved. Or, perhaps their employers will reward their “disloyalty” by placing them first on the chopping block during downsizing or layoffs.

You may be overlooked for future promotions/raises. If your employer offers you a promotion and/or a raise to get you to stay, chances are you’ll be passed over next time because a) they resent that you forced their hand, b) they feel like they’ve already done enough for you, or c) they see you as a flight risk and don’t want to invest any more in you than they already have. Although it may sound counterintuitive, you could stall your career progression by accepting that pay raise (see next point).

It may hurt your professional growth. Think back to Nicolas’ situation. If he lets the almighty dollar dictate his decision, he’ll be stuck in the same job that has started to feel like a dead end. Yes, it’s familiar, but that familiarity has started to breed contempt for him. Never let familiarity cloud your judgment. If the new role helps you grow in your career or take a step forward, then, by all means, accept the new job.  Familiarity will come soon afterward. 

The truth is, as we’ve seen, every situation is different. The context will determine whether a company makes a counteroffer and whether an employee accepts it. However, both parties will be much better off considering all the facts before deciding. Surveys point out that up to 80% of candidates who accept a counteroffer from their current employer leave within six months. To that end, check out the following telling counteroffer statistics.