The Wall Street Journal recently surveyed nearly 50% of professionals who indicated that they’d accepted a counter-offer by a previous employer and it’s unsurprising to me to learn that 93% of them left the company within 18 months. As a long-time recruiter I’ve always known that taking a counter-offer is a bad idea.
Why it’s bad for the Candidate
No matter how much easier it may seem to accept the higher salary and remain in the same job with the status quo, the reality is, it’s never going to be the same again. In effect you’ve given the employer notice that you’re not happy and are willing to ditch them for something else and this will no doubt impact on the relationships you have with both colleagues and leaders and create concern for your future prospects.
Many individuals who have accepted counter offers realise that the primary reasons they were seeking new opportunities have not been addressed by the additional money, no matter what promises might have been made in the heat of the moment, and a significant proportion reignite their job search within three months.
In a tough economy additional money cannot simply be ‘found’ by organisations and almost always ends up being an advance on your next salary review. Too often I’ve heard tales of woe from candidates who felt cheated when their first review post counter-offer is often a 0% increase, based on the fact that their salary was ‘adjusted’ during the year.
Why it’s bad for the Organisation
It seems logical, counter-offer your best talent because you can’t afford to lose them. After all, how easy will it be to find a replacement, never mind one that has the benefit of institutional knowledge and existing relationship?
The process of offering, and having acceptance, of a counter-offer may seem smooth enough, after all the employee is worth keeping and you have a great relationship. However, the relationship will not be the same going forward. In a very short time you will begin to feel resentful about the fact that the candidate put you into a position of countering them, and you will no doubt begin to get negative vibes from his/her colleagues who assume that s/he is now earning more than them and being ‘rewarded’ for disloyalty, and so it begins.
The realisation that the increased salary needs to be off-set will mean you’ll be forced to cut budget in other ways within the department, and likely disappoint the employee when it comes to annual review time and you’ve got nothing more to offer.
In skills short markets and small industries the trend of counter-offering has also led to an inflation of salaries for certain skilled individuals causing problems for every organisation in the space who is forced to make ever increasing offers in an attempt to secure the talent they need.
You’ll also undoubtedly begin to wonder how long it will be before s/he resigns again and will inevitably shy away from spending money on growing their skills or considering them for promotion. The vicious cycle that will probably cause the candidate to consider resigning…
Accept and move on
It is natural for individuals to feel the need to grow and expand, especially if their current employer organisation is unable to offer this internally. Accept that people will leave and let them go. As careers lengthen with people living longer, it is not inconceivable that great talent may return to your organisation, better equipped and more knowledgeable having had the benefit for seeing what else is out there, learning from the market (and your competition) and bringing with them fresh, new ideas
Next time you’re faced with a counter-offer…think hard. Is this really going to be good for you, your business and the candidate long-term? If not, don’t do it. Wish them well and move on, you’ve probably got someone great waiting in the wings who’s dying to take the next step up in their career.