Counteroffers – Are You Kidding Me?

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Nope, it’s true…they are making a comeback!

At the 2010 Fordyce ForumJenifer Lambert led a great presentation on her research based on client needs and satisfactions.  One of the topics that came up in that discussion was the resurgence of counteroffers.  I remembered an article I had used in 2005 as we were experiencing incredible competition for talent.  I often gave this to candidates as I conducted their initial interview to try and head off counteroffer acceptances. I want to offer that to Fordyce Readers as a downloadable pdf to share with their candidates as the situation arises (and it will!).

Counteroffer – Just Don’t Take It!

Picture this scenario:  After working several years for your current company, you feel your job has become stagnant.  The working conditions have declined, or were never what you expected, your company or position has not been challenging to you, and there is little room or opportunity to reach your full potential.  Fortunately, you have secured a new position at another company and you are looking forward to a better environment, management, salary, commute, promotion potential, flexibility, or whatever the benefits may be that will be an improvement over your current situation. When you inform your manager of your decision to leave, s/he may give you an offer to entice you to stay, even promising to match whatever benefits your new position may be offering. It could be a higher salary, better benefits, more responsibilities, or a job title to make your colleagues green with envy.  This is too good to pass up, right?

While this may seem like a no-brainer, when you accept a counteroffer from an employer after you have announced your intention to leave, what you have really done is accepted an offer to stay and endure the same problems you were trying to leave behind including worse issues arising from identifying yourself as a dissatisfied employee who could leave at any moment.

A counteroffer is a proposal from your current employer prompted by your indication or announcement to leave the company.  If you have consistently demonstrated you are a competent, productive, and well-liked employee who has not caused major issues in your department, your departure may reflect negatively on your supervisor and their management capabilities.  To prevent their own career downslide, your manager will likely attempt to entice you to stay by making attractive offers focused on bringing your loyalty back to the company. The beginnings of a counteroffer may be similar to the following phrases:

  • “You’re one of my best workers. The team will be demoralized by your decision.”
  • “My performance review is coming up and this may not reflect well on me as a manager.”
  • “I’ll be honest with you; this is actually the worst time for you to tell me you’re leaving.”
  • “This comes as quite a shock, is there anything in particular you are most dissatisfied with?”
  • “Our executives have mentioned to me they were thinking of having you lead a challenging project coming up the pike. Would it be possible to discuss this opportunity with you before you make your final decision?”

The truth is, counteroffers will rarely benefit you.  Managers understand the difficulties of career changes and are going to do their best to offer a primed deal to make you stay, but don’t take it!  Consider these points before yielding to a counteroffer:

  • If your manager counteroffers with a better salary, bonus, benefits, and responsibilities, this will not change the current working environment which may be a large part of your reasons for leaving.
  • Having already demonstrated your desire to depart from the company, after accepting the counteroffer, your loyalty will be scrutinized and your reputation as a “team player” will be lost.
  • Counteroffers are often used to buy time for managers to find a replacement, so do not expect to be employed there for much longer regardless of what was promised.
  • Conditions may improve from the counteroffer, but it will only be temporary and is not worth the stress to remain in a company you do not enjoy working for. Don’t expect your manager to treat you consistently better simply because you have indicated you have another job lined up.
  • If threatening to quit prompted these offers, will you now have to repeatedly use this tactic to get a better working environment each time conditions are not what you feel they should be?  If so, it’s not worth your time and effort to improve your current employment situation.
  • Truly well-managed companies will never need to resort to counteroffers to retain their employees as they will already have reasonable and fair policies in place.

There’s a good reason why employees leave their current companies.  Don’t let a short-term fling with counteroffers stop you from improving your career.  Continue to clear your desk and look forward to a fresh start with your new career.

Please click here to download this post as a PDF document.

These ideas stemmed from an article titled Counteroffer Acceptance Road to Career Ruin written by Paul Hawkinson. The article was originally published in National Business Employment Weekly in 1983 and later published in The Wall Street Journal in 1998.

About the Author

Carolyn Thompson resides in the Washington, D.C. area and has been an executive recruiter since 1988. She is Director of Human Resource Services Dixon Hughes Goodman, one of the largest CPA firms in the US. A creative entrepreneur and a certified career coach, she is frequently called upon by national news organizations such as The Washington Post, The Wall Street Journal, NPR, CNN, MSNBC, and AOL Jobs among others to contribute content on a variety of topics. Her articles on career development and the employment industry have been published in various national magazines, trade journals, and on the Internet. An enthusiastic motivational speaker, she is a member of the National Speakers Association, The Pinnacle Society, and The International Coach Federation. She is certified by both the National Association of Personnel Services (NAPS) and the American Staffing Association (ASA) as a continuing education provider. Carolyn is an alumnus of Kansas State University and author of TEN EASY STEPS TO A PERFECT RESUME and TEN STEPS TO FINDING THE PERFECT JOB, and TEN SECRETS TO GETTING PROMOTED available in select bookstores and on Amazon.com. Her blog can be found at www.JobSearchJungle.com.
  • Thom

    Not sure this works with candidates anymore. This is my 14th year and I don’t see candidates buying into the stigma of “counteroffers are bad” liked it used to be. We have lengthy discussions about new ant-counteroffer tactics and the truth is it rally all depends on the reason they are leaving and we try to curtail the counteroffer prep around that.

  • Thom

    sorry Anti-Counteroffer and really

  • Amybeth Hale

    Thanks for sharing, Thom. Do you find that, after these conversations with your candidates, they are less likely to accept a counter-offer? I’m interested in hearing what some of your new tactics are – would you be willing to share one or two? Would be great tools to add to our arsenal!

  • Pam

    I’m not sure of the exact numbers, but studies have shown that something like 90% of people who accept a counter-offer are back on the market in less than a year (actually think it’s more like six months).

    The counter-offer conversation needs to happen when you first interview (or recruit) a candidate. If they don’t have a strong reason to leave (other than just wanting more money), then they are more likely take a counter-offer.

    Counter-offers are rarely an issue if they are addressed throughout the process and if the candidate has a valid reason for looking. I always ask if the candidate has had conversations with management about raises, or promotions. If they have (and usually that’s the case) and been told that there’s no money available or promotion at this time, I tell them that they shouldn’t be surprised that when they give notice, the raise or promotion will suddenly materialize. The company is looking for a ‘band-aid’, and throwing money or a promotion at someone to keep them around is common…but you have to ask yourself why were they not able to do it before?

    By giving candidates this information early in the process, they have time to think through their decision and to be sure that they really want to move on. So, when the counter-offer comes, they are anticipating it and instead of being flattered, are angry that what they were told ‘wasn’t possible’ is suddenly available to them. They see the counter-offer for what it really is, and it’s easier for them to move on and accept their new opportunity.

    I’ve only had a few candidates take counter-offers over my 16+ years of recruiting, and each time, they’ve regretted it. Promises were not kept, situations did not improve, and they were back on the market looking again.

  • http://www.SkrentnySPEAKS.com Jeff Skrentny, CERS

    First, my thanks to Carolyn for posting her rewrite of Paul Hawkinson’s classic article, Counter Offer Acceptance – Road to Career Ruin, it is an article we still share with every candidate we bring into our process. It is still great stuff.

    And I agree with what Thom and Pam have shared in their comments.

    BUT…I want debunk one MYTH that still lingers in our profession, it is the 90% figure that Pam refers to as a statistic “studies” have proved.

    Few search or placement professionals seem to know where that statistic comes from though they LOVE to quote it. The actual study was done in the 1970’s when the employment market was VERY, VERY different, by one of the first trainers in our profession.

    That number is no longer valid…the last time I did a comprehensive survey of over 200 candidates who took a counter offer, with research that concluded about 9 years ago, 55% of those who took a counter offer left their job usually in much less than 6 months, but 45% remained SUCCESSFULLY EMPLOYED after accepting a counter offer for at least a year, the time frame after which my research concluded on the participants.

    I know, no one in search or placement wants to hear this, but it is true as of this last research I did on the topic, and I know of no other research that has been done more recently. But should this really surprise you in an era where quality talent is hard to find and companies have a strategy for delivering a counter offer that WILL be accepted? I think not.

    If anyone is interested in my decade long work to understand counter offers after I had 6 taken in a row, please check out my webinar on the topic which can be found at:

    http://skrentnyspeaks.acumentor.com/Torpedoing_Counteroffers_in_a_Competitive_Candidate_Marketplace_TD101.aspx

    And if not, just know that candidates still don’t like the 50/50 proposition that counter offers hold today, that is still too risky for them, and most, when educated in a manner that Pam outlines above, choose wisely with your guidance, and don’t take a counter offer.

    -jrrs
    Jeff Skrentny, CERS

  • Todd Rogers

    I’ve had only one or two counter-offers collapse a “deal.” I learned my lesson about these early on. While I won’t get in to a lesson about how I now know with 100% confidence that I will never have to deal with one again, I will say this: if you haven’t separated the candidate’s intrinsic motications from their extrinsic motivations and choose only work with someone who’s got intrinsic challenges, then you’re leaving yourself open and powerless to potential counter offers. Once I learned this little difference, I never ever worried about them because the candidate isn’t receptive to them.

    Tip: people who only have extrinsic reasons to change jobs can be bought by you or their employer. Walk away. No, RUN AWAY.

  • http://www.mcnultymanagement.com Neil McNulty

    The way to ensure that you never lose a deal is you make a “contract” with the candidate before you introduce him/her to a company. You ask them: “Is your word good?” They always respond “yes”, (of course!). You respond…”That’s good to know…Then you won’t be concerned that I want your word that if you accept an offer from a company I introduce you to, and do not report for work, or fail to last at least 90 days, that you will reimburse my expenses.” I have yet to have anyone say “no”, not show up, or not last 90 days. (Two people quit on day 91…and I replaced them, but had been paid). Collecting a fee from a candidate is not legal in most states, collecting “expenses” is. By pure “coincidence”, the expenses usually end up to be about 70% of the amount of the fee…a big enough hit to make them think twice before accepting a counteroffer.