Do Counter offers Really Work?

Employees leaving for new roles at other companies is an everyday fact of life.  They leave for a variety of reasons, such as more money, progression opportunities, a location closer to home, they did not like their manager, or they did not like the company.

Leaving a role to take on a new job is a big decision for anyone to make, and mostly once they hand in their resignation, their mind is made up to go.  So as their employer, is it worth giving them a counteroffer to stay or is it best to let them go?

Counter-offers Rarely Address Why You Resigned in the First Place

We always advise our candidates on their priorities and try to fully understand their motivations before we put them forward for a role. On a few occasions, We have had candidates who accepted an offer and called us back after a few days to let us know that they have accepted a counteroffer from their current employer. While a higher pay can be an enticing factor, based on our experience – it is only a temporary fix.

  • About 80% of candidates who accept a counteroffer from their current employer end up leaving within 6 months;

Furthermore, accepting a counteroffer from your current employer can also subsequently be a sensitive subject as you’ve demonstrated your lack of loyalty towards your organisation. There is also a strong likelihood that your basic reasons for wanting to leave the organisation to begin with, will eventually resurface. If you accepted your current employer’s counteroffer for a higher salary, it may also be worth asking “why did it take me resigning to be paid what I am worth?”

In fact, offering a raise as a counter to your resignation could be a cost-saving exercise as sourcing, recruiting, onboarding and training your replacement can be a significant business investment. If you have had a pay increase request denied in the past, this could be an indication that the employer was trying to avoid paying you the market rate – a trend that may continue in the future.

Currently – we spend a lot of time with candidates discussing their current role, their motivations for leaving and the level of salary they are happy with.  We are very mindful of a small minority of candidates entering into a salary auction via counteroffers – a silly move that most often means the candidate might get a short-term bump in pay, but it is generally at the expense of longer term opportunities.

As an employer – use counteroffers with caution and be very aware that often you have not fixed the real reason why the person wanted to leave.  For employees out there hoping for a quick bump in their salary via a counteroffer – this is a risky business which you need to think through as it is easy to accept more money at the expense of job satisfaction.