Why do companies make counteroffers?

Employers often make counteroffers in a moment of panic. (“We can’t have Joe leave right now! We have that new, big project coming in next month.”) They extend counteroffers because they know it will take time to find a replacement and have them trained. It’s not necessarily about wanting to keep you, but more about the inconvenience they will be in to find a replacement. It’s easier for them to throw money at you to save them time in finding someone else (or to pay overtime to people that will fill in for you.)

  • Once your boss receives your resignation, many managers will ask, “Where are you going and how much are they offering you?” At this point, the auction begins. The question ceases to be one of career development and becomes one of the material enticement.
  • Be prepared for your boss to entice you to stay on with promises of more money, new benefits or responsibilities. “Would you stay for an extra $5,000? $10,000? An additional week of vacation?” You don’t want to be flustered and find yourself saying yes, because he/she is being so nice and generous, and you have a tough time saying no to his/her face. If this happens, simply tell your boss how much you appreciate the kind offer, but that the new opportunity is something you just can’t pass up.  Seriously, why are you worth the merit increase now, but you weren’t 5 minutes before you resigned?
  • You also have to ask yourself, “Are you running to something or running from something?” If they offer you more money in your current situation, will that solve your complaint and how long will that satisfy you? Also, if you’ve already committed to your new employer, then you’d be dealing with rescinding an offer that you’ve presumably already accepted. You need to consider your reputation carefully.  Consider if this is worth ruining your reputation with your would-be new employer that may feel burned that you wasted their time and effort.
  • Recognize why your company wants you to stay. If your old company has extended overtures to entice you to stay, keep in mind those overtures have little to do with your value to the company and more to do with the employer’s most-present need. It’s just a good business policy to prevent an immediate vacancy and stave off the immediate need to find your replacement. Your job is to protect your interests, and likewise, your employer has the same motive, to protect their interests.

Outcomes of Accepting a Counteroffer

  • Problems are still there: Besides an increased salary, the same issues that made you start looking for a new job are still there. Those initial motivators are not going away for a few thousand dollars more.
  • First to get downsized: If the company goes through a rough patch or loses business, you might be at the top of the list if your company needs to make cutbacks in the future.
  • Flight risk: You’ve now exposed yourself to your company and your co-workers as a flight risk. As mentioned, that counteroffer you just accepted might just be your boss’s effort to buy time to conduct a full-fledged search for your replacement before unceremoniously giving you the boot. Even if it’s not, you’re a marked person, you’ve basically told your employer that you’re going to bail or leave in the near future as soon as things change again so if you accept a counteroffer, they’re going to keep an eye on you. And even if they don’t try to replace you, you’ve still shown yourself to be undependable.
  • Promotable opportunities: Career advancement opportunities will dry up or get awarded to someone else. Surveys show that career progress can grind to a halt for those who accept counteroffers.
  • Co-worker relationships: Relationships with co-workers deteriorate and productivity falls among employees who agree to stay. Co-workers also learn that you accepted a counter at more money, become jealous and petty and start wondering why you are now worth more money than they are. Your relationships with them will never be the same and often becomes awkward.
  • Money: The question you have to ask yourself is why were you only worth “X” yesterday but after you turn in your notice, you are worth “Y”? If you think about it, why are you worth more money after you turn in your notice? Even if you get more money out of your company now, think about what it took to get it. You needed to have one foot out of the door to get paid the wage you wanted, and there’s no reason to think that future salary increases will be any easier. The next time you want a raise, you might even be refused altogether on the grounds that, “we just gave you that big increase when you were thinking about leaving.”
  • Band-aid: Often companies offer a counter to buy time to search for a replacement, figuring that it’s only a matter of time until you start looking around again. You might turn down your other offer and accept your employer’s counteroffer only to find yourself pushed out soon afterward. In fact, the rule of thumb among recruiters is that 70 to 80 percent of people who accept counteroffers either leave or are let go within a year.

Remember Why You Were Considering Leaving

Overall, you have to remember the reason(s) you started job-searching in the first place. While more money is always a motivator, more often, there are also other factors that drove you to look: personality fit, small company, no room for growth, dislike of your boss, boredom with the work, lack of recognition, insane deadlines, long work hours, lack of family work-life balance…  whatever it might have been. Those factors aren’t going change, and will likely start bothering you again as soon as the glow from your raise wears off.

Below are links to two important articles in Forbes & US News on resigning and counteroffers. Please take the time to review:

WHAT TO DO WHEN YOUR BOSS BEGS YOU TO STAY

WHY YOU SHOULDN’T TAKE A COUNTEROFFER

Things To Do After You Resign

  • Do Not Bad Mouth Your Previous Employer or Use Social Media for Revenge

    Once you have left, do not blast your former employer on social media. We have actually seen people leave their former company and they take to Facebook or other social media sites to write up a status update about how thankful you are to be done with that “terrible company” or “awful boss.” Don’t give in to the temptation. Stuff like that very easily gets around, and it not only looks bad for your former colleagues but raises red flags for your future ones as well.

  • Remove Your Resume From All Job Sites

Make sure you remove your resumes from CareerBuilder, Monster, Indeed, etc. Also, be sure to update your LinkedIn profile the weekend before your start so people will know you made a career change.

  • New Employer / Manager

Be sure to stay in contact with your new manager and keep him/her updated on your status. This will make sure everything is moving forward and they are ready for you to start in the next week or two.

– Mark Simonetti, Director of Business Development

Professional Direct Placement