Counter Offers: Know the good and the bad

You’ve been nervous about telling your boss that you are leaving. You have thought hard and long about leaving your company for a better opportunity, and you finally have found it. This new position offers you many things that your current position does not - work that is more interesting and upward mobility. Plus, a better base salary. You have your resignation letter written, and you give it to your boss. Then, instead of getting a thank you for your service and good wishes for your further success, you get something that you did not expect...a counter offer.

Counter offers are more common when there is low unemployment, but it can happen no matter the economy if you are a valued employee. Strictly speaking, a counter offer is a response to an offer. In the case of an employment situation, your current employer counters an offer made by a future employer. Generally, as in the above example, the employee does not solicit the counter offer. Though rarer, a counter offer can also happen when an employee solicits one to assess his/her options.

Why would a company provide you with a counter offer?

There can be several reasons for a company to offer an employee a counter offer.

1. Counter offers happen when the employee has skills that are currently hard to find in the market place. A developer for a proprietary software may have skills and knowledge that would be difficult to replace. Another example might be an account executive who has deep relationships in the industry.

2. The employee may have significant company knowledge that is highly valued. Perhaps the employee has been with a company through an acquisition. If others in the department were let go, this employee may be the only one left with institutional knowledge that could be valuable.

3. There are significant costs in hiring and training a new employee. Plus the costs incurred by having an employee covering that is not proficient doing the work or work not getting done.

4. If there are significant deadlines looming, such as for the release of a new product or update, there simply might not be any time to focus on recruitment.

What you might hear from your current employer

Your boss may or may not be surprised to hear that you are planning to leave. If you have been talking about your career regularly, the boss may know from your conversations or may have sensed from your questions that you were a flight risk. In this case, the counter offer may be something that has been prepared in advance. Likely, though, it will be something that your boss will put together quickly upon hearing your news.

What you initially will hear from your boss or HR are words that indicate you are valued by the company. These may be truly sincere words and hopefully, this is not the first time you are hearing this. You may also hear words that may play on any guilt you have over leaving your team. Maybe there is a heavy workload that will only mean more work for your co-workers. Maybe there is a deadline that won’t be met that may cost your peers financially. Whatever the case, you may hear appeals to not go and cause issues for those that you have worked with.

You may also hear from your boss that s/he had no idea that you were unhappy. This may be coupled with a desire to know what can be done to make you happier so that you will stay. Perhaps a promotion, a new assignment or a change of team may be dangled in front of you. If your salary is an issue, there may be an offer for more money, more vacation or a higher commission rate. You may now be given opportunities that you thought were unavailable to you.

How should you evaluate a counter offer?

Now you may have a dilemma. Should I go with the new employer or stay at my current employer? There is no one right answer to this question. A lot of this will be in the “it depends” category.  One thing you must do is go back and assess the reason(s) that you decided to look for a new job in the first place. Will your issues be addressed by the counter offer?

1. Change in job content. If you were bored with your current work but like your company/boss/co-workers, a change in job duties may get you re-engaged and address career development concerns. Be careful, though, that this is not just a temporary change. No sense being put on a new project only to go back to your old work when it has been completed.

2. Change in compensation. Were you feeling underpaid? Would the new compensation bring you in line with the industry? Ask yourself if they wouldn’t/couldn’t do this before, why now? Is the money be taken from other programs (or raises for your co-workers)? Will this mean that you will not see a raise for a while?

3. Change in job level. Have they offered you a promotion? Does the promotion come with new responsibilities or just a change in title? What is the career path with this new promotion?

4. Change in the boss. Do you need to work with a new manager? If so, what does this mean for your relationships within the company (old boss and peers)? Will this mean any sort of set-back for your career, as you will be known as the person who could not work with the old boss.

5. New information about your future employer. Maybe your boss has information about the new employer that you did not know before accepting an offer. Is the information true or just gossip? How may it impact your career at this new employer?

Having been in HR as long as I have, I have rarely seen a counter offer work out in the long term. For this blog I tried to find statistics about the success of counter offers, both in the accepting and long term retention of the employee, and I could not find anything definitive. Generally, the advice is that it should not take threatening to quit to get some of your needs in the workplace met. Your employer should have been working with you all along to create a mutually beneficial environment. If you do take the counter offer, know that there may be some long term impact to this decision.

1. You have now shown that you are no longer “loyal.” While you may not care (and even like that this is not assumed), this could mean that you will be looked at suspiciously. If you take time off unexpectedly, your boss may suspect your are interviewing.

2. Your relationship with the boss may deteriorate. If you expressed issues with management, your boss may feel that you are critical of everything that s/he does. There may also be concern that you will express your dissatisfaction with the team.

3. If some of the issues were addressed but not all, are you okay with this? Will all your unaddressed concerns start gnawing at you and make you disengaged again?

4. If you were given more money or other added compensation or benefits but nothing else changed, will this make you happy? While compensation is important, it usually is not the only thing that makes work engaging. Can you stay if other areas of your work life are lacking?

5. If the company knows you are a flight risk in the future, nothing is stopping them from looking for your replacement. It is not unheard of for a company to try to retain you only to let you go at a later date when they have found someone else that may work more cheaply.

Many recruiters and HR professionals will say never take a counter offer. I think that blanket directive is not helpful to the job seeker. I think a more nuanced answer should be to think through why you wanted to leave in the first place and see if the counter offer addresses all of your concerns. If it does, great! You will have to let the new employer know you wish to stay which may be an awkward conversation (and they could counter the counter offer), but you need to do what is right for you. If all the stars do not align, though, and the new job offers more of what you want than the old job, stick with your plan. That is my best advice.