You've Received A Counter-Offer, This Is What To Do Next
22nd August 2023
When you hand in your resignation it can feel flattering to receive a counter-offer, a response from your employer designed to retain you. Knowing what to do next isn't always straightforward and there’s a variety of factors to consider.
In his iconic Channel 4 gameshow, Noel Edmonds asked the same question that everyone contemplating a new career opportunity has asked themselves at one point: deal or no deal?
Picture this: you are offered a position at a new organisation and have handed in your resignation. But after doing so, your employer comes back with a counter-offer, a response to your offer of employment elsewhere, designed to retain you and your skillset.
How do you decide which offer to take?
Reasons Why Employers Make A Counter-Offer
First of all, let’s consider why an employer makes a counter-offer when an employee has handed in their resignation. There’s usually a variety of factors at play including:
• Retaining skilled people and talent in their business. The emphasis on retention becomes even more significant when the employee resigns to go to a competitor business, rather than following a personal vocation.
• The team dynamic changes. Employers tend to focus on the downside to this, rather than considering how a new personality and working style might bring benefits.
• Manager time and company resources will be required for training, even in scenarios when only the minimum onboarding support is provided.
• It’s a time-consuming hassle that necessitates a recruitment and selection campaign and probably a period when work will be reassigned to other colleagues.
• Replacing an employee has financial implications from lost productivity to direct hiring costs.
There’s a false perception that counter-offers are more frequently offered to workers in senior positions, but in today’s competitive job market, retaining talented staff at all levels is a priority. When people are actively targeted who haven’t been looking for a new job counter-offer scenarios can become even more complex.
Cammy Keith, Senior Business Manager explains, “In my technical area we’ve experienced countless counter-offers this year and the pay uplifts are significant, ranging between 5 – 15% of salary. It’s very difficult for most people to turn down offers like this.
“On the flip side though, we know of situations where candidates are using the tight labour market to gain a pay increase. Applying for jobs and accepting an offer of employment when your motivation is only to get a counter-offer from your current employer is a risky tactic. Employers are not naïve and although they fall back on counter-offers to expedite a quick resolution there’s no doubt that in these circumstances trust is eroded, even irreparably damaged.”
HR Business Manager Chris Carr has a thoughtful perspective on why making a counter-offer is the wrong decision:
"If you trust someone enough to work within your team, why does that trust suddenly dissipate when it comes to the employee making decisions about their own career path?"
“In most cases the employee will have thought long and hard about whether to apply for other jobs elsewhere, and during their interview process they’ll have researched the company and learned that they gel with their new manager and colleagues. By countering them, you are essentially saying “ignore your instincts – we know better”.
Why Counter-Offers Are Effective In The Short Term
Money is a powerful incentive and can be one of the primary motivators in looking for a new job.
The “pulling power” of money is amplified during periods like the cost-of-living crisis but there’s another aspect to how much you earn and that’s whether it reflects the market value of your skills and attributes.
Business Manager Colin McKay explains, “When a candidate is candid and explains they are looking for a new job because they want to earn more, we’ll discuss their expectations, current pay rate, and earning potential.
One of my candidates received a job offer equivalent to a 25% uplift in salary, which is huge in real terms but only brought them up to the current market value. Their employer immediately countered, matching the offer and it was enough to retain the employee.
If the employer could turn around such a significant counter-offer instantly why were they happy for their employee to sit on the below-market rate up until they resigned? And with this knowledge of the situation, why was the candidate content to stay?
This situation demonstrates, to me, the complex emotions that counter-offer situations elicit.
There’s More Than Money To Consider In A Counter-Offer
For the majority of candidates we meet salary is important, but it will often be a secondary consideration for finding a new job. People share their frustration at plateauing in their position, lack of training or career development, ineffective work relationships, demotivation, or simply a desire to make a change in their lives.
Counter-offers can create temporary amnesia. People set aside their initial motivators, seduced by financial incentives and the attention of a manager wooing them with compliments about their contributions and how invaluable they are to the business.
You must consider why you wanted to leave in the first place. Whether that be for a promoted post, salary, workplace culture, or any other number of potential reasons. An offer from your current employer may not address your underlying reasons for leaving.
Administration and marketing recruiter Emma Rutherford explains, “I encourage candidates to think carefully about the reasons they wanted to look for a new job and then reflect on whether the counter-offer meets their needs.
It can be brutal when candidates first hear it, but I try to explain that a counter-offer is just a tactic by the employer to deal with a situation they’d rather not face: the process of the employee leaving and then replacing them.
“There’s more to a counter-offer than money. By reflecting on what they need to bring the job satisfaction they are searching for I know several candidates who have renegotiated flexible working conditions, amended and new job responsibilities, and even promotions.”
Cammy endorses this point, “Absolutely. If you work in an organisation that operates a banding system of pay then it is impossible for your rate to go above a certain level for a particular role. However, I have experience of candidates accepting a counter-offer where they have been offered a more senior position and the higher salary that accompanies it.”
Choose The Counter-Offer, Or Don't
A commonly cited statistic used when speaking about counter-offers is that 80% of candidates who accept one will go on to leave their job within 6-12 months, regardless of the benefits included as part of remaining at the organisation.
Our sense is that this is an inflated figure compared to activity in the local northeast market, nevertheless, counter-offers are usually a short to mid-term fix because the work situation with the current employer rarely changes sufficiently to maintain job satisfaction.
By staying with your current employer you retain familiarity and continuity and perhaps opportunities for progression or training that were not available to you previously.
Sometimes though, you can’t paper over the cracks and a change of environment can be just what is needed to energise you and spur on your career progression.
When considering your position:
1. Reflect with a clear head on why you wanted to leave, list the reasons, and consider how much weight they each carry.
2. Do the same with the reasons why you want to accept the new job offer.
3. Consider how the counter-offer improves your current position and compares to your new job.
4. Be 100% sure that the terms you are offered are from someone in a position to make promises and are confirmed in writing. So often candidates come back to us to resume their job search because nothing changes in their job.
5. If you are working with a recruiter, talk to them about your conundrum. There shouldn’t be any bias because every recruiter worth their salt considers success by the longevity of a placement – their candidate has to be committed whether they stay or go.
If your decision to move is focused on salary and the counter-offer addresses that then, on balance, it probably is best if you stay in post. If there’s much more to your decision to find a new job then a good recruiter should offer support to navigate your counter-offer situation objectively.
Be 100% sure that the terms you are offered are from someone in a position to make promises and are confirmed in writing.
Responding to counter-offers must be handled delicately. If you are turning down an offer from your current employer, you must approach this sensibly as you don’t want to burn any bridges. Likewise, declining an offer from a prospective employer to remain at your current place of employment should also be done tactfully; you never know if or when you could be looking to move on again.
Make your decision by:
• Thinking carefully about your motivations for job searching.
• Reflect on whether the counter-offer is a short-term fix or genuinely reflects your value.
• Consider the long-term implications it may have for your career and,
• Prioritise communication and transparency to minimise a loss of trust and to present yourself professionally throughout the experience.