Should I accept a counter offer? 

Should I accept a counter offer? 

“The problem with the best people is everyone wants them” if you’ve ever resigned from my teams, chances are you’ve heard these words.

As managers we sometimes don’t appreciate what we have, and the age old market forces of “look after, or someone else will” applies. People get offered elsewhere and go.

Upon hearing this news, there are two types of Managers.

Those who calmly accept that this is going to happen, and prepare to replace.

…and those who panic a bit, realise they’re losing an asset they haven’t invested enough in and decide to quickly come up with a retention scheme, known colloquially as a ‘counter offer’.

Counteroffers all have one thing in common. They are always made in haste and another market force of “act in haste, lament at leisure” then applies.

The net outcome? Not good. 4 in 5 who take a counter offer are back on the market in a year. I don’t know the stats longer term but within 2 years I bet most others have gone.

Why is this? Well counter offers are problematic because of a fundamental: they don’t address the deeper reasons you were considering a move in the first place.

I speak with people daily about job moves and it’s rarely just money or job title influencing the move.

All the issues you've encountered in the current role influencing the move, are very unlikely to be resolved by staying!

Individuals who take counteroffers do just end up back on the job hunting trail, often having turned the right move down.  

Lets unpack why.

• Firstly if you consider the company side. They weren’t expecting you to resign (taking for granted etc all) and hastily have made a counter offer. It’s a short-term solution, devised in a quick period in response to resigning, they all have that in common. The company can then decide later if they like it once you’ve turned the new job down, this can include changing their mind (redundancy of the new job role for example is an option, or seeking a lower salaried person to do the same role).

• Secondly, they can’t solve the longer term issues that got you seeking a new role. If these are cultural then what is happening in the short period in between offer and counter offer? No, it will be the same you will be slightly higher paid but it’s the same company. It’s a common story and the statistics bear up, hence people are gone within a year. 

The key reasons in our experience are:

• As above, while improvements are for sure going to be a positive conversation, it’s usually not the best sign if an employer only does this upon a resignation letter being received. I’ve heard stories of people being a bit cross/irritated even by counter offers and it leading to mixed feelings. I personally have never wanted to imply any employee’s value to the company, is down to threats to leave. You have to lead things from a higher thought level as what messages does this give colleagues?

• Any counter offer just raises question of why that value wasn’t recognised earlier i.e. is it just back-dated salary increases you should have already had and reflective of prior underpay and loss of focus on development. Again it’s not a great way to be managed! Also if this is how it goes there to 'get ahead', will the conversation will potentially be needed again in the future in order to receive promotion/raises/appropriate salary (i.e. another resignation or hard negotiation). Its not great progression management. Will you need to threaten to resign again to get ahead here?

• 100% of the time this is also going to be your next pay raise brought forward. However a bigger problem is how we assign value to things (read “Priceless” by William Poundstone)  everyone pegs current salaries to old salaries. The new company will then make the argument whether privately in the boardroom or to-you “but you had a massive raise last year so no/less raise next year” or think “we used to pay you £X0,000 less and they were happy”. This will limit future pay increases. In contrast, moving to a new role offers a fresh starting-point with an appropriately set salary and opportunity to progressfrom, without being tied to old salary bands. You will progress further and better in the new company without these biases. Again people discover this all too late.

• Perceived loyalty. Going back to the fact this offer has been made in haste, resigning can also impact relationships, even if unintentionally with management and the team. Some experience a shift in dynamics, as above people do tend to then move on anyway for a number of reasons. Colleagues who you might now be managing if they are conscious of how the promotion was granted, no matter how fairly or overdue, probably will question it.

• While it’s an extreme scenario, there is a possibility that companies use counter offers to bridge the gap in a busy period. Say for a few months they pay you a bit more, or to keep skills in house for project. What is to stop them replacing later for someone available for less? A lot of promotions come with probationary periods, what it given can be taken away.

• Say there are cutbacks needed sometime, you moving into a rapidly planned, and high expense role now. A plain and obvious target should management have no choice but to make cuts in future. Very unstable ground.

I realise it’s a lot to take in and some of this is a bit scary, but that’s the ugly side of business sometimes. There are some minor things that counteroffers avoid for the company which again are short term, mainly they don’t need to recruit and go through the time and expense, but sometimes they just need you for another few months.

Again it’s always a poor management look to offer them and I’ve personally never done it. Accepting that people will move on and while short-term painful it’s best for all parties when that conclusion is reached if we think in the long term.

Ok now lets consider the new job.

It’s been planned over months, having seen the market and made decisions based on your values and drivers.

It is a reset, we all change and the new company matches ‘you today’ not ‘you 5 years ago’ means you’ll be joining a company that’s carefully assessed and appreciated your value upfront in a competitive process, and upon seeing you and a great fit for them, presented a strong offer. 

They see those skills and experience and a big personality match to their organisation you’ll build on in the coming years. This is so much better than someone doing something because they feel they ‘have to’. 

You also join at an upgraded ‘level’ in your career the ‘entry point’ in the new company is higher than the ‘staying point’ in the old company. You are joining on the lowest money they will ever pay you, as opposed to the highest. That’s your position on the future salary track you are on, who is naturally going to pay you more in 3 years? It’s a no brainer.

Lets conclude:  

As a Manager, I’ve never made a counter offer because I know I’d have someone in a different position than, rightly or wrongly, I calmly had strategised. This would impact on culture and mean I reward for the wrong reasons.

Have I lost staff I’d have rather kept? I’m proud to say 90% of the time yes I have. I like that I’ve enjoyed them so much, but if they wanted to go, that was always the end of the journey.

Therefore do I have the culture I want after 10 years? Yes, and that’s the bigger picture. Future team members will enjoy it more here because of this. If I had a team of people I was managing otherwise, it would be different.

Counter offers are bad for everyone. It will be a hard sell, one side of the deal is desperate the other side is in the box seat for it, I get it.

But you wanted this move for way more reasons than can be put into an upgraded contract.

Once the resignation letter is in; you are leaving either for this role or another one once the above plays out. Make it on your terms.