Be Careful With Counteroffers: Weighing the Pros and Cons

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How should you handle a counteroffer? Read on to learn how to negotiate, understand the recent statistics, and other considerations in the hiring process.

Picture this: after working with a recruiter, you’ve received a great offer from a new company and now it’s time to tell your current employer. After all, the number one tip for transitioning out of a job gracefully is to first speak with your direct boss. You’re expecting them to be upset but understanding.

Instead, you walk out of your meeting with your boss feeling even more confused about what to do next. When you explained your situation, they made a counteroffer to have you stay with your current company, and now you’re not sure which offer you should accept.

So, what should you do if faced with this type of situation?

Employer Extended Counteroffers: What Do They Want?

Perhaps the number one reason employers are so quick to present a counteroffer when their employee expresses their desire to leave is the importance of talent retention.

Talent retention is an important part of any organization’s business model, as high employee turnover significantly increases the time and money required to hire a replacement. After all, hiring talent from outside of the organization can be a long and involved process, not to mention the additional time and effort that will be required to train this new hire.

Retaining an employee’s knowledge, especially when they have been an instrumental part of the organization, is a strong reason behind why employers will provide a counteroffer. And if your employee is headed to a competitor, there is always a realistic fear that your loss will be their gain.

Beyond all these reasons, there are other crucial factors to consider when discussing the nature of talent retention – namely, the impact on company morale.

Voluntary Turnover: Understanding the Different Types of Loss

Companies often shudder at the thought of undergoing talent turnover, but when it comes to this idea, it’s important to differentiate what is known as “regrettable turnover” versus non-regrettable turnover.

Regrettable turnover refers to when an employee’s departure from the organization negatively impacts the team or overall company. After all, organizations have been known to spend a significant amount of their budget and energy attracting and hiring talent but fail to retain these employees over time. It’s crucial for employers to be strategic about the perks and benefits they offer to show they care about the employee both professionally and personally.

Still, not all voluntary turnover is regrettable turnover. Sometimes, an employee’s decision to leave turns out to be a blessing in disguise. In these situations, the exit process won’t lead to a significant disruption to the team’s overall productivity or morale.

When Should You Present a Counteroffer?

As the employer, you should ask yourself the following questions to see whether it is a worthwhile effort to present a counteroffer to an employee who has recently given notice:

  1.   Is this employee one of your high performers or is their performance often lackluster or unimpressive?
  2.   Do they get along well with other co-workers or do they often seem to be in conflict with other team members?
  3.   How long has this employee been with the organization?
  4.   Does this person have intellectual capital that would be difficult to replace or harmful to the company’s productivity?
  5.   Will this turnover severely disrupt your business or damage company morale?

While these questions just begin to scratch the surface on things to consider when determining if you should present a counteroffer to hopefully retain an employee, they help to form an opinion on the matter. In the end, use your best judgement to determine if this individual is a worthwhile asset worth keeping – or if it would be best for the company if they moved on in their career.

Seeing the Statistics

When it comes to the numbers, studies have shown that many senior executives and human resource leaders feel strongly that accepting a counteroffer from a current employer will adversely affect one’s career. According to this recent survey, nearly 80% of senior executives say that trust is diminished when an employee accepts a counteroffer.

Still, others strongly feel that, depending on the given situation, accepting a counteroffer can be the better option for an employee. However, it’s important to note that 80% of candidates who accept a counteroffer from their current employer have been known to leave within just six months.

And it’s not always the boss’s decision when it comes to whether or not they can extend an offer: nearly 67.5% of managers will extend counteroffers to their employees, but more than 52% reported that their organization has a formal policy regarding counteroffers.

Should You Consider Your Boss’s Counteroffer? 

While it’s not wrong to consider a counteroffer (especially if it is a competitive offer), there are a few things you need to ask yourself before seriously considering accepting it.

  1.   Has trust been diminished? Will your employer be able to trust you again over time, or will they feel you always have the potential to be disloyal to the organization?
  2.   Has your credibility as an employee been injured? Will your employer start to view you as an unreliable investment in the future?
  3.   Will an increase in pay, title, work life balance, or management responsibilities compensate for any other issues you may have encountered that made you look for a new job in the first place?
  4.   Do you think accepting the counteroffer will cause morale issues within the organization or affect your performance on the job?
  5.   Are you only accepting this counteroffer because you want to stay secure and comfortable in this same job or maintain a workplace friendship?

If you answered “Yes” to any of these questions, you should think very carefully about whether or not you’d be accepting this counteroffer for the right reasons. Remember, there was a reason you once contemplated a move away from your current company, so be sure to weigh all of your options carefully before making a decision you may regret.

One thing you must realize is that not every situation will be fixable. If your company doesn’t offer a chance for career progression, it’s only a matter of time before you feel the need to look outside of the organization for your next role.

Here’s How to Negotiate a Counteroffer

If you’re still unsure of whether you should accept the counteroffer, but the counteroffer is not quite strong enough to accept, you can still renegotiate with your employer if you feel so inclined.

Since there may be underlying issues that won’t be solved by this counteroffer, it’s important to address that and make it clear what would need to change for you to stay. This might be a higher salary or title, an increase in paid time off, professional development opportunities, or a shift in your current role to focus on something you are more passionate about.

Be sure to discuss what type of an offer you would need to be in place in order for you to stay with the organization and have a list of talking points ready as to why you are a strong member of the team.

If your company values your work and skillset, they should be amenable to hearing your requests and potentially granting some, if not all of them! And if they decide to forgo your requests, you have your answer as to whether you should accept and stay at your current employer versus moving on to the new role you were recently offered outside of the organization.

Looking for a Better Hiring Process?

In the end, this conversation comes down to whether an employer is willing to put forth the time, effort, and resources necessary to fill their role/s. Since the hiring process can be a daunting task with these open roles leaving a gap in the workforce, many look to recruiters and executive search firms to assist.

PeopleSuite approaches the hiring process in a unique way, by asking the right questions with the right language, so you can retain the right talent for your roles. We understand that these hiring decisions you make can impact the growth of your business, so we want to ensure that its outcome is successful for both you and your new employee.

Is it time to start exploring your next hire? Connect with us to see how we can help!

Looking  for your next career change? Start by visiting our job board!


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