Counteroffers

Many refer to Counteroffers as "Counteroffer Traps" and many view accepting the Counter Offer as “Career Suicide.”

Counteroffer statistics

According to national surveys of employees that accept counteroffers, 60%-75% percent voluntarily leave their employer within six months of accepting the counteroffer because of promises not kept. The majority of the balance of employees that accept counteroffers involuntarily leave their current employers within twelve months of accepting the counteroffer (terminated, fired, downsized, laid off, etc.).
The bottom line- Statistics show that 90% of counteroffers do NOT work out after 1 year.

Ten Reasons for Not Accepting a Counter Offer

  1. What type of company do you work for if you have to threaten to resign before they give you what you are worth?
  2. Where is the money for the counteroffer coming from? Is it your next raise early? 
  3. All companies have strict wage and salary guidelines which must be followed.
  4. Your company will immediately start looking for a new person at a lower salary.
  5. You have now made your employer aware that you are unhappy. From this day on, your loyalty will always be in question.
  6. When promotion time comes around, your employer will remember who was loyal, and who wasn't.
  7. When times get tough, your employer will begin the cutback with you.
  8. The same circumstances that now cause you to consider a change will repeat themselves in the future; even if you accept a counteroffer.
  9. Statistics show that if you accept a counteroffer, the probability of voluntarily leaving in six months or being let go within one year are extremely high.
  10. Accepting a counteroffer is an insult to your intelligence and a blow to your personal pride; knowing that you were bought.

90% of all employees who accept a counteroffer are no longer with the employer after one year.

In today's competitive market, when you tell your manager you are resigning, you are  likely to receive a counteroffer.  While counteroffers may be tempting and even flattering, there can be pitfalls that you need to be aware of.

Ask yourself these questions:

  • Will your loyalty always be in question?
  • If there are future cutbacks, will you be the first to go because of concerns about your loyalty?
  • If you accept the counteroffer for more money, are you just giving your employer the time they need to locate and select your replacement?
  • Will your career track remain blocked if you accept it?
  • Will your responsibilities be expanded?
  • Will you have to report to a person you don't respect?
  • Will you receive next year's raise or bonus early?
  • Is the counteroffer a ploy to avoid a short-term inconvenience by your employer?
  • What are your realistic chances for promotions now that you have considered leaving?
More on Counteroffers

Whether an employee or employer, proceeding with a counter-offer invariably ends in failure.  Read below to see the employers perspective of what happens during the counter-offer process.  Decide for yourself if this journey is for you:

 Counteroffers are often perceived as the knee-jerk reaction to an employee informing his or her employer that they have received a more attractive job offer elsewhere. At first glance, a counteroffer seems like the most reasonable course of action: why hire a new employee when there is a capable worker sitting right in front of you?

Needless to say, counteroffers often lead to a much messier reality, and employees and employers alike should be wary of their consequences. For example, according to leading staffing firms, even in cases where counteroffers are accepted there is a greater than 90% probability that the employee will change companies within the next twelve months. There are many reasons that underlie this reality, but one fact is clear: there is no disputing the claim that counteroffers are statistically unlikely to work out.

 It is important to keep in mind that the relationship between the employee and the employer has been changed forever. The employee has revealed a lack of trust and loyalty towards the company and this cannot be fixed simply by rehiring the employee for slightly more money or a more prestigious title. Beyond irrevocably damaging your relationship with the employee, the counteroffer will also negatively impact the working relationship this employee has with his or her coworkers. This will almost certainly lead towards decreased performance in the productivity of the employee. 

 Additionally, even in instances of an accepted counteroffer, it is impossible to forget the fact that the employee has demonstrated that he or she was having significant issues working with your company that warranted a job transfer. It is unlikely for these reasons not to rise up again in the employee’s future at your company, and you will be left in an even more embarrassing situation. Face the fact that the employee is not a perfect fit for your company, and release the said employee before further complicating the situation. Temporarily increasing the salary or title of the employee is unlikely to be more than a short-sighted band-aid that will hurt even more when ripped off down the line.

 This is without approaching the issue of creating a slippery slope within your company. Word will spread like wildfire that a counteroffer was made to an employee at your company, and soon the entire office will be buzzing. It will not be long before many other employees are devising schemes with the aim of taking advantage of counteroffers, and it is likely that you will be placed in a bind. By offering a counteroffer, you are in effect setting yourself up to be blackmailed in similar situations by all of your employees in the future.

 Moreover, since offering a counteroffer will necessarily involve senior management at your company, you are staking yourself on the employee’s future performance at your company. What if, even after accepting a counteroffer, the employee’s work performance begins to slip, or—as statistically is likely to be the outcome—the employee takes a job at a competing company? You will have not only been embarrassed in the eyes of other employees, but your managers are likely to look down upon your decision-making ability for suggesting a counteroffer to such an employee. Make the safe decision and let the disgruntled employee go, before you get further entangled in the outcome of the situation.

 As an employee, turning down the counteroffer should be a simple decision. You will forever be excluded from the inner circle of your manager’s trusted employees, irrespective of your performance going forward. Moreover, whatever problems existed prior to the counteroffer being presented are likely to reappear in the near future—how will earning slightly more money solve any of the problems that initially led you to apply for jobs at competing companies? It is highly unlikely that you have a future at this company, adding yet another reason to make the move sooner than later.

 Even if the said employee accepts the counteroffer graciously and continues to perform well at your company, your relationship with the employee is likely to deteriorate. For example, think about what will happen during the employee’s yearly salary review. You will likely feel taken advantage of by this employee because of his or her behavior during the counteroffer negotiations, and you will hold it against the employee during performance review. The employee, understandably, won’t feel this way at all, and the likely outcome will be further discord in your relationship. In essence, holding onto an employee by making a counteroffer is doing nothing more than setting the stage for future disagreements.

 When making decisions about the future of your company, always be careful to overlook the quick-fix option in favor of the choice that will pay off higher dividends in the long run. While the short-term expenses of hiring a new employee may seem greater than the relatively low costs of presenting a counteroffer, in the long run it is statistically clear that the more sensible option is to accept the employee’s resignation and hire a new employee.

After a few minutes of reflection, it will be clear that this is the more levelheaded option that involves the least amount of risk to your standing in your company. Keeping your composure and listening to your employee, followed by a simple acceptance of his or her resignation, is undoubtedly the preferable alternative—both in the short-term and definitely in the long-term

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