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How to Think Critically About a Counteroffer

Posted by Staffing Advisors on October 12, 2022

Counteroffers are nothing new. But with many organizations asking, “Where did all the employees go?” we have seen a marked increase in the number of candidates receiving them. While accepting a counter may seem like an attractive way to get more out of your working life without the stress of changing jobs, it comes with considerable risk. Our team shares insights to help you think critically when a counteroffer is on the table.

Your Employer’s Motivation: The Bottom Line

Staffing Advisors Founder Bob Corlett encourages candidates to remember, “Counteroffers are about ‘switching costs.’ Employers want to avoid the pain, expense—and frankly the personal embarrassment—of replacing employees who quit.”

In LiveCareer’s survey of over 1000 full-time employees and hiring managers, researchers found that the top reasons for extending a counteroffer were: to retain talent, retain an employee’s knowledge and contributions, and save time and money hiring a replacement—all of which add up.

According to a 2019 Gallup survey, “The cost of replacing an individual employee can range from one-half to two times the employee’s annual salary.” And those numbers don’t reflect the impact on team morale, hiring and training time, perception of leadership, and more.

More often than not, counteroffers are short-sighted attempts at retention that fail to meet the long-term needs of anyone involved. Your current employer may offer you an increase in salary or more vacation time, but that is significantly less than the cost of losing you. And if the organization is financially healthy enough to offer these increases, why wait until you have one foot out the door?

Your Reasons for Leaving Matter More

According to a study from the Pew Research Center, most workers who quit a job in 2021 cited “no opportunities for advancement (63%) and feeling disrespected at work (57%)” among the top reasons why. But childcare, lack of flexibility and benefits, and feeling overworked weren’t far behind.

For most people, it’s a combination of several factors, and a counteroffer is unlikely to address them all. Staffing Advisors Vice President of Client Engagement Aileen Hedden warns, “When they come at you with a counteroffer, it blinds you, particularly if it’s money. You feel flattered, and there is always a honeymoon phase after accepting one. But it is rare for someone to stay for any length of time after that. Or if they do, they are unhappy; they feel stuck.”

From the same LiveCareer study mentioned above, of the 55% of employees who accepted a counteroffer, many “associated some negative emotions . . . expressing fear of change or uncertainty as a reason for accepting the money.”

Of those who rejected the counter, 74.8% left for better salaries, 61.8% left for a better job overall, and 43.9% to try something new—81.6% were satisfied with their new job as a whole.

When your employer offers a counter, revisit the reasons you began searching in the first place. Those reasons will still be there when the honeymoon phase is over.

Breaking Trust Is Risky Business

If you give notice and accept a counter, you have already broken trust, creating long-term risk. Bob shares insights about the dangers of this dynamic. “You quit; you gave notice. That changed everything. Your boss will never trust you in the same way they did before. There will be a subtle tendency not to share confidential information and not to give you choice projects—to trust you less. In my experience, more than 90% of people who accept a counteroffer end up leaving the company within a year.”

In an analysis published in the Harvard Business Review, researchers found that “nearly 80% of senior executives and 60% of HR leaders cited diminished trust and compromised reputation” as negative consequences of accepting a counteroffer. And “40% of senior executives and HR leaders alike agreed that accepting a counteroffer from a current employer will adversely affect one’s career.”

Preempting a Counteroffer

Suppose you would consider accepting a counter from your employer. In that case, Aileen offers this advice, “If you are thinking about leaving because there is something you want to change, ask your employer about that before you give notice.”

If you have a family emergency and can no longer go into the office, ask your employer if they are open to remote work. If you are looking for advancement but don’t see an obvious path, discuss your professional goals. These conversations signal that you value the job, but it no longer meets your needs. And if you don’t feel comfortable talking to your employer, that is a red flag. A counteroffer won’t change that.

Know Your Value and Expect What You Deserve

A final thing to consider is the relative value of your skills and experience in your current role versus the new one. If your current job falls short in support and advancement, it is doubtful that a counteroffer will change that in any lasting way. Project Director Lilly Khan encourages candidates to focus on their future growth, “Your current employer is reacting to the news you want to leave, but your future employer will be excited to invest in you long-term. That value should weigh heavily in your decision.”

Understanding your value as an employee, your reasons for leaving, and your current employer’s motivations, you have the power to make informed choices about your career. You can respectfully respond to a late-in-the-game counter with, “Thank you, that’s very kind of you to offer. But I’ve made up my mind to move on.”


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Topics: Career Advice