Congratulations! You’ve made the decision to look for a new role, or maybe a recruiter called you out of the blue to headhunt you. Either way you dusted off your CV, researched a new company and done so well in the interviews that you’ve got a job offer. You’re excited to be starting a new chapter, and hand in your resignation thinking your work is done.
Your current employer comes back with a counteroffer to tempt you to stay. An instant pay rise seems like a flattering idea – why make all the effort to move to a new job and start all over again?
Why Do Companies Counteroffer?
To avoid the hiring and training costs: It costs a lot of money to hire someone. The average cost is around £3,000. Of course your employer doesn’t want you to leave! It means they have to spend £3,000, along with a lot of time and effort to recruit, onboard and train someone new. And since they can usually solve the problem by throwing some money at you to keep you, they want to take the more cost-effective route.
To retain your knowledge: There’s a lot of important information in that big old brain of yours! The knowledge, skills and relationships you’ve built up during your employment are incredibly valuable, and they don’t want to lose it. Or to be specific, they don’t want customers choosing a new supplier if their favourite contact (you) leaves. They don’t want their sales figures to drop, or the extra bit you do outside your remit to stop getting done. All of that loses them money and makes them vulnerable – which is bad for business. The easier solution is to keep you.
To keep morale up: Are you leaving behind some brilliant colleagues? Your departure might make them question their job happiness, and the company might end up with even more leavers on their hands. Getting you to stay would avoid upsetting the applecart, which is good news for them.
To stop workload overflow: If you leave, someone has to pick up the slack. It takes time to hire and train someone new, and so the work is usually divided among your colleagues. Which, inevitably, will go down like a lead balloon. After all they’ll be doing their job, plus more, for the same salary. Managers know the strain this will put on their team and the business, and would do all they can to avoid it.
To keep you from competitors: Regardless of if you have a non-compete clause, at some point in the future you could take all of that knowledge and skill (and maybe some customers) and use them down the line in your new role. This is a big threat to the company, so they want to keep you to protect their interests.
Why Shouldn’t You Take The Offer?
Know your worth: Why has it taken the treat of you leaving for your employer to sit up and take notice? To fully value your contribution and pay you what you’re worth? Or to offer you a promotion, a pay rise or new opportunities? It reeks of ‘too little, too late’ to me, and if they were a respectable employer, they would have been paying you what you’re worth from day 1.
Higher expectations: Let’s say your company throws a sizeable counteroffer at you, and you decide to take it. For example, a £5000 per year increase in your basic salary (which, by the way, is less than a recruiter would charge to replace you), you’re now probably on a higher basic salary than the rest of your peers. If you were your boss, would you expect you to continue performing as normal? Or would you expect a higher output and more results now you’re on a higher salary? I think I would.
Job insecurity: Loyalty is important to any business. By looking elsewhere and putting in your notice, you’ve raised a big red flag for your employer. This means your job isn’t going to be as secure as it once was. Imagine down the line the company has to make redundancies, or promote someone from your team. Would you choose the person who threatened to leave? Or the people who had been more ‘loyal’ to the company.
Do Counteroffers Ever Work Out?
The biggest piece of advice I always give is – don’t take the counter offer. Sure, if your only motivation is money, then ask for more and stick around. But for 99% of people money isn’t the only reason they want to leave their job, and if they do accept a counter offer, it often doesn’t play out like the happily ever after they’d hoped.
Let’s look at a scenario. Around 50% of all people who hand in their resignation are offered a counteroffer, and around 57% of those people will accept it. Now fast forward:
- 80% of those people won’t be at that company in 6 months’ time.
- 90% of them won’t be there in 12 months’ time.
That leaves you with 1/10 people who are perfectly happy with their pay rise, getting on with things. But the other 9 will leave their company within a year! In my experience everyone thinks they’ll be in that 1%. It’s an easy option and looks good at first, but more often than not it doesn’t last. And I’m genuinely gutted when I get calls a few months down the line from people who accepted the counteroffer and regretted their decision.
So here’s the question: why did you consider moving in the first place? What made you want to leave?
Remember, counteroffers are never about you. They’re about protecting the company, and they won’t change the original reasons for you wanting to look elsewhere. So don’t be part of that 90% who fall into the trap! If you’re wavering or not sure what to do with a counteroffer, give me a call and I’ll happily talk it through with you.