Should you really accept that counter offer?
When you accept a new job offer and hand in your notice, it’s possible that your current employer will make a counter offer to incentivise you to stay. This typically comes in the form of an increased salary and benefits package and is often a substantial increase on your current remuneration.
In today’s competitive job market, counter offers are becoming more common as companies strive to keep their valuable talent. However, in many cases the counter offer benefits the company more than the employee. Accepting a counter offer can seem appealing if it means a higher salary at your current firm; however, 70 to 80 percent of people who accept counteroffers either leave or are let go within a year.
While accepting a counter offer may be beneficial in the short term, you may still be better off moving on to a new opportunity.
Why do companies make counter offers?
Hiring new employees can be challenging and expensive.Research has shown that it can cost as much as 213% of annual salary to replace a senior executive.Replacing staff with new employees is more expensive than retaining existing staff. The time taken to find, interview, and on-board new hires is widely underestimated, and there is also no longer someone in that position. The actual recruitment of a new employee can be expensive and uses valuable resources; but, the lost productivity of the previous employee can be even more costly.
Existing staff have the specific skills and business understanding to carry out the job. In particular, for positions requiring niche skills, it can be arduous to find and train new team members. Some industries have a candidate-led market due to a limited talent pool, making finding someone to hire with the relevant experience for the role in hand even more difficult.
Many employees, especially those in leadership roles, have a wide impact on the business, causing an increased loss of productivity across multiple employees if that leader were to leave. A counter offer can be a way to avoid this widespread cost to a business in the short term.
Assess their motives
Although on the surface, a counter offer may make you think that your company is finally pulling out the stops to make you feel appreciated, this is not usually the case. A counter offer is not about the business reaching out to meet your needs, it’s about meeting the needs of the company at that point in time.
Counter offers are frequently used as retention tools, in particular for times when a particular employee leaving is inconvenient. This could be for a multitude of reasons, perhaps because a significant project is yet to come to fruition, or because several other team members have recently departed. Equally, in special circumstances, such as hiring freezes, a manager could be keen to retain you rather than have a gap in their department.
Although on the surface it seems by increasing your salary the company is taking a financial hit, in actual fact they are saving money overall.
Often counter offers are delivered alongside emotional leverage about your value to the team and your time spent there. Perhaps your manager will insinuate that elusive promotion was in fact imminent or that the team would struggle without your expertise. While many of these comments could be genuine, a good business that values its staff would have made you feel appreciated before you felt the push to leave.
In simple terms, because you have the skills and experience for the position already, your value as a commodity is now higher.
There are some important factors to take into account before accepting a counter offer:
Understand the value of new opportunities
It’s not just about assessing the potential pitfalls of a counter offer, but about considering the value of new opportunities. Will staying at your current company offer you the same long-term personal career development as moving to a new role? Your new employer has likely shown by their job offer and salary that you are valuable to them – could they offer opportunities and experiences that your current employer cannot?
While your existing employer might have offered you more money to stay, these small gains in the short term might not pay off in the long run. From an advancement perspective, you may be better taking a new role that can offer you the progression you are looking for, which may have not been offered in your current role.
Twelve Reasons for Not Accepting Counter Offers
- Broken trust - You have now made your employer aware that you are unhappy. From this day on your commitment will always be in question.
- The grass is greener - A phrase I hear all the time is “the grass isn’t greener”, but in reality you have taken the time to carefully select the company you are going to, you have met the new team and done your due diligence to ensure the new opportunity will fulfil your goals.
- Accepting a counter offer is an insult to your intelligence. You didn’t know what was best for you.
- Accepting a counter offer is a blow to your personal pride, knowing you were ‘bought’.
- Accepting a counter offer rarely changes the factors that drove you to look for a new job in the first place – it papers over the cracks
- Where is the money for the counter offer coming from? Is it your next pay rise early?
- Statistics show that if you accept a counter offer, there is a 70-80% chance you will be out of the job within six months.
- What type of a company do you work for if you have to threaten to resign before they give you what you’re worth?
- Why didn’t they pay you that before? It was because they didn’t think you were worth it.
- Why are they paying it to you now? It’s because it’s easier and cheaper for them to keep you for the time being, while they sort the problem out.