What is a counter offer and why do they happen?
A counter-offer is when your existing employer reacts to your resignation by offering you something seemingly better. This typically comes in two forms
More money – This is the most common counter-offer as it’s very easy to forget the issues you’re having at work when you’re offered a sizeable pay rise – at least temporarily!
Promotion – It’s surprising how quickly you can be promoted following a resignation. It may have been the title you have always wanted, and lets face it’s good for our ego’s to be offered a promotion and feel valued!
As well as the ‘you don’t know what you’ve got ‘til it’s gone’ mentality, there are many reasons as to why an employer may counter-offer. Including:
The cost of recruitment and training – It’s estimated that training a new employee can cost anywhere from 20% to 40% of an employees yearly salary. This combined with any potential recruitment fee on top, makes a counter-offer a much more cost-effective option – which is why so many employers do this at the eleventh hour… Often though the question a Candidate should and will ask themselves is 'why didn’t you pay me what you thought I was worth initially' ?
Loss of income – If somebody isn’t doing your job, there’s a reduction in output which can delay projects or production. Your employer will most likely want to retain you to avoid this happening.
Pride – How would you feel if one of your best employees wanted to leave your business for another, or even worse, a competitor? There can definitely be an element of ego involved in counter-offers.
The downside of counter offers …
Counter-offers are frustrating for both the new employer and for you the Candidate, as it can often feel like an impossible task to compete with a generous pay rise or promises of promotion.
If our 50+ years of experience has taught us anything, it’s that the counter-offer scenario rarely has a happily ever after. We have seen a large number of Candidates looking for a new job again within 6 months of accepting a counter-offer, and this is typically for the following reasons:
Back to the status quo – The short-term gain doesn’t last forever, and the reason you were looking for a new job in the first place creeps back in, resulting in frustration.
Promises aren't kept – Sometimes, despite the best intentions, businesses can’t follow up on the promises made during a counter-offer for a multitude of reasons.
Hostility – Although less common, accepting a counter-offer can result in hostility from colleagues. No matter how much discretion is involved, they’ll often know that you received a pay raise or a promotion because you resigned.
We are not claiming that every counter-offer situation ends badly, but more often than not, Candidates we talk to have experienced one or several of the above and when they choose to stay they then re-start their whole looking for a new job again! ….and let’s face it looking for a new job isn’t something that anyone really loves doing!