The grass really is greener… Why you should never accept a counter-offer
50% of employees receive a counter-offer from their existing employer when they resign. With their new offer matched or bettered many are tempted to stay where they are rather than take a step into the unknown - but that is generally a short-term fix. According to one study, 80% of candidates who accept a counter-offer leave within 6 months and 90% within a year. Our experience backs that up. So why are counter-offers so rarely effective? And given their ineffectiveness, why are so many made?
Why counteroffers rarely make employees happy
Counter-offers typically involve the employer giving (or at least promising) a pay rise and/or new responsibilities. But these are given under duress and it frequently changes the dynamic within the team, often causing resentment. Promotions and pay rises are usually made within a structure and counter-offers break that structure begging the questions: “Why did it take another company to recognise my value before my employer would?” and “Why is somebody worth something today that they weren’t worth yesterday?”
Even if the employee doesn’t resent that they needed to force their employer’s hand to get what they deserve, going forward they may be left with a lingering doubt as to whether they are being fairly rewarded. Colleagues’ attitudes can also change if they perceive the company has been held hostage rather than a promotion or pay-rise being given on merit.
Why employers counter-offer
While employers know counter-offers are rarely a long-term solution, a pay rise, promotion and/or bonus is nonetheless often a sensible business decision. An employee leaving is generally both expensive (a US study put the cost of replacing a senior employee at up to 213% of salary in terms of the recruitment process, lost productivity and training costs) and disruptive.
Delaying an employee’s leave date both pushes back the hiring costs and provides more time to prepare for and minimise disruption – a win-win for the employer. However, keeping in mind that eight out of ten “successful” counter-offers still result in the employee leaving within 6 months, most employers will assume they are on borrowed time and look to minimise knowledge loss and process disruption should the employee subsequently leave. The employer will naturally invest in and turn to employees perceived to be more committed to the organisation. At the same time, the employee who was tempted to stay will be expected to justify their increased cost.
Changing jobs can feel daunting but that is a bad reason to accept a counter-offer. Our experience (and wider survey data) shows that if you felt the need to look for a new role before you resigned, the chances are that even if the counter-offer affords temporary happiness it will only be fleeting and you’ll soon need to start your hunt all over again.
The other company believe you’re worth what they’re offering and haven’t had to be cajoled into it. They made you an offer because you’re the best person for the job. So believe in yourself, go for it.
Clare Wight is managing director of Clarity Appointments, a fellow of the Institute of Recruitment Professionals and a regional director for The Employment Agents Movement (TEAM). Her email is: firstname.lastname@example.org