The Double-Edged Sword of Counteroffers

In the recruiting business, an accepted counteroffer is obviously catastrophic! In most cases, it means the end of salary negotiations for our very best candidate, back to the drawing board for the hiring company, and the employer knows their employee is at risk to resign, so they begin a transition plan.  But what is the true impact a counteroffer has for all parties directly involved?  

LinkedIn says that 9 out of 10 employees who accept a counteroffer leave within six months. For our clients (employers), it means that their employee was unhappy. So unhappy, that the employee sought other opportunities to address culture or management issues, increase either their pay, benefits, or PTO, or advance their position. They have probably spoken to a super seductive recruiting team that attracted them with hybrid work models, a better title, more money, and an overall better culture. Recruiters encourage these key candidates to go through interviews and escalate them to the point of being offered a position with a new company.   

Soon, candidates will have a written offer in hand as they approach their employer with their resignation. Quickly, the employer must position a matching or slightly better offer to their employee. Why do they do this? Because they want to retain that employee until they can either train or hire a replacement. The employee’s resignation confirms that the employee is “at risk,” soon to resign, again.   That means that for companies who successfully position a counter offer with candidates; it’s merely a band aid until they can replace that person permanently.

Needless to say, the damage to the employee/employer relationship is not likely to be repaired.   For the candidate was wooed by another company, accepted the recruiter’s calls, attended multiple rounds of interviews, put on their best suit, visioned their new position, and agreed on a start date; they return to the same “old” company and feel more burnt out from the process. While they may have slightly better pay and/or title, employees have ignored the other things they were seeking. This could be feeling undervalued, overworked, unappreciated, or not being utilized to their full potential. These are the the true things that led them to look elsewhere. Unless the issues are addressed immediately, they’ll be looking again.  

When a counteroffer is extended by their current employer, it is flattering, but eventually the reality of their unhappiness settles back in. They’ll continue to feel undervalued, underutilized, or generally stuck. Employees reflect on the offer and ask why didn’t they have just given me a raise before I resigned? Did I just reconfirm that they only value me when I threaten to leave? Do I need a cooling off period before I ask what my career potential is? Is my growth potential capped?  

Other than the salary and title, employees are likely asking what will change now that they’ve aired their issues with their employer? Typically, they will still have the same boss, team, dysfunction, and responsibilities (maybe even increased responsibilities to justify the pay).   

What will change is an employer’s view of of an employee. Going forward, an employer knows how the employee will navigate issues and question how they’ll manage career conversations. An employer can’t help but question an at risk employee’s long-term potential. Can an employer count on this employee in difficult times, does the employee believe in the employer’s purpose, and will the employer keep this employee through layoffs? Probably not.    

It seems to me like a counteroffer for all sides is equally terrible. If you are an employee seeking change, there are two avenues we suggest: have the tough conversations around barriers, culture issues, compensation, benefits, and your career goals with your employer. The other is to be sure you’re ready for a change, find your next employer, and stick to your plan.  

If you are an employer that recently learned your employee has resigned, contact NextOne, right away. We can work with you on your transition and swiftly! We can support you with conducting an exit interview, providing you with feedback, and finding qualified candidates quickly.

 

 

Author

Ryan has worked in staffing for the last eight years. Two years ago, he took the leap to develop a firm whose mission was to elevate staffing to a professional service that treats our candidates as well as we treat our clients. He is very proud of his team and constantly seeks to celebrate their victories together while quietly learning from their losses. 

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