Counteroffers – Don’t Even Think About Them! 
Newsletter

Your best employee has just announced that they have accepted a new position.  What is your initial reaction?  Will you offer them anything they want to entice them to stay?  It is only natural that your reaction is to do something to hang onto this employee, especially if you start thinking that your company may look bad for losing a good employee.  After all, when someone quits, it may be a direct reflection on the company.  It can also be bad for morale and it may lead to additional turnover.

A counteroffer is defined as an offer of money, or other changes to an employee’s situation, to entice them to stay at your firm after they have announced they will be leaving.  Counteroffers can be stalling devices aimed at giving the employer time to find a suitable replacement or they may be an emotional reaction to a stressful situation.  They can even be an honest intent to change the condition that caused the resignation.  Even if they accept, your employee’s reasons for looking elsewhere will probably still exist, only now conditions may become more tolerable because you have made them new promises.

An employer who is considering making a counteroffer needs to look unemotionally at the situation.  Money will not buy back loyalty.  No matter what you say when making a counteroffer or what they say when they accept it, your employee’s loyalty may be questioned.  Statistics show that this employee will either quit or soon be let go due to a noticeable change in their ability to be a “team player” or a perceived lack of loyalty.

If an employee is unhappy with the current corporate culture, and is looking for a new position, this is probably not going to change just because of a raise or the promise of corporate changes.  Interviews with employers who make counter offers and employees who accept them have shown that offering and accepting a counteroffer can cause havoc.  Studies show that employees rarely remain at the firm more than a year after accepting a counteroffer.

Additional complications arise when a counteroffer is extended.  Why is this employee suddenly worth more money that they were just 24 hours earlier?  In addition, won’t others in your employ resent the fact that this employee has received a special offer?  They may start to think that maybe if they look elsewhere they will receive a counteroffer also.

In conclusion, our advice to both employers and employees is to just say “no” to counteroffers.  In our experience, both employee and employer are happier if they go their separate ways.  Once an employee resigns, the employer/employee relationship will never be the same.