The Curse of Counter Offers

You’ve done it! You’ve found the PERFECT person for the role. They have all the skills and experience you are looking for, they have accepted the proposed salary, you think they’ll be a great fit, and the team are super excited to have them joining you in a few weeks time.

And then your email ‘dings’. Thinking noting of it you go check your email, see it’s from the new employee, but as you start reading your enthusiasm turns to uncertainty, disappointment, anger or frustration.

Their email is informing you that their current employer has made a counter offer, an offer that is too good to pass up, and they can no longer accept your offer to join your team.

Ever been in that situation? Frustrating is an understatement isn’t it?

Counter offers are one of the trickiest things to navigate, do you go back and offer more? Do you negotiate? Or do you just let them go and decide that it wasn’t meant to be?

Conversely, what do you do when the shoe is on the other foot, when one of your team comes to you to resign, do you make them a counter offer in order to entice them to stay?

Here’ the thing, counter offers can be a curse, they can be a short term solution, but quite often they are nothing more than a band aid over a much bigger pain.

No matter which side you find yourself on, the one making the counter offer or the one dealing with a new employee being offered one, you need to tread carefully and really think through what you want to do next. What are the implications of not only extending a counter offer but having it accepted, for you, the employee in question, and the rest of the team? There is really a lot to consider.

Studies show us that close to half of all employees who accept counter offers, don’t stick it out long term anyway, within a year many have moved on to another organisation, but beyond that, counter offers have a significant impact on the implicit trust that exists between you and the employee, and also the rest of the team. When trust is eroded it’s a slippery slope to broader workplace issues, including a direct impact on engagement and ultimately productivity.

Before considering making a counter offer to an employee, I’d suggest considering a few key things.

Firstly, what is their motivation for actually moving on? More often than not, it’s not about the money, they might say it is, but it’s usually not. It could be about leadership, career opportunities, flexibility, culture, or any number of things, but until you can address those things, a counter offer is never going to be a long term solution. All you are doing is throwing money at a problem that is not a money problem. Instead, I’d talk to the employee about their real reason for leaving, and truly consider what you can do, if anything at all, to address those issues.

If you’re the one who has a dealing with your new employee being counter offered by their current employer, I’d be talking to them about the reasons they told you they were leaving their current employer, and asking whether those issues have all been addressed. This is where robust interview questions can be so important. If you’ve really got into their motivation at interview, you will have all the intel you need to have a solid discussion with them at this stage.

The second thing to consider is the ripple effect has on your team. What message does this send to the next person who might consider resigning? Whilst you can certainly try and keep it confidential, the likelihood is word will get out. So, when someone isn’t happy, thinks they deserve a pay rise, or just gets greedy, they’ll come to you saying they’ll resign, or actually do resign, in order to get a counter offer. It can create quite a challenge, conditioning people to demand more or they’ll resign.

The final thing to consider is what are you actually gaining by extending a counter offer, or getting into a bidding war with a new employee? Yes, in that moment you just want to solve the problem and have the person stay – but think more long term. Are you making this counter offer out of desperation or desire? Do you really, really want this person in your business because they are a star performer, amazing team fit, and critical to your business, or is it out of desperation that refilling the role might be hard work?

If someone has reached the stage of actually resigning, they have generally checked out of the business psychologically already, so keeping them around doesn’t mean you’ll be getting their previous best. Really think about what you’re actually gaining by making this person an improved offer to stay, and ask yourself whether the trade off is really worth it.

No one likes losing a team member, it’s stressful, sometimes sad, and often creates a little more work for everyone. Likewise, finding your next super star team member only to have them change their mind and stay with their current employer at the last minute can be upsetting, but if they are not 100% with you, then maybe you’re better off without them.

If you have questions about navigating counter offers, I’d love for you to join us inside our free Facebook Group where you can connect with other like minded business owners, leaders and managers to discuss all things HR - https://www.facebook.com/groups/hrsupportaustralia