Are job counter offers ever a good idea?

Without question, a job counter offer can be a useful tool if the situation fits. Under the right circumstances it might save a key employee from leaving—at least temporarily. However, in most cases they may create more problems than they solve, so employers should take care in assessing whether a job counter offer is truly the right way to go when an employee advises his or her intent to leave.

Job Counter Offer Considerations

When an employer is considering making a job counter offer, there are several things to consider:

• What is the competitive offer? Ask the employee for the details. Be sure to ask the employee why they were looking for something new – try to find the root of the dissatisfaction. This is what actually needs to be addressed, and it may not even be pay. Alternatively, it may be discovered that the new offer is more than can possibly be matched or exceeded by the current organization.
• If a counter offer is to be made, it must be done quickly. “If you’re going to go down the counter-offer pathway . . . you’ll have to be fairly quick about it. You have a window of opportunity to work with, starting with the announcement itself.” Chuck Csizmar told us in a recent CER webinar.
  
  While the current employer can’t be sure of the end date to their window of opportunity, the further from the actual resignation the greater the likelihood that a job counter offer will be turned down. This is because the employee has had a longer time period to become mentally comfortable with the new situation. Additionally, the closer to the new job start date, the less likely someone is going to go back on their word to the new company.
• While the job counter offer is under discussion, the employer also must work on developing the backup employee. In this unpredictable moment, the job counter offer is not the only problem for the employer – the employer also must work on ensuring that work continues smoothly, with or without the employee in question. Ideally there will already be a retention or succession strategy in place, making this transition much simpler.
• Any choice will come with internal criticisms. Regardless of whether an employer chooses to make a job counter offer or not, others will be watching and critiquing the choice. This is true regardless of whether it is publicly discussed, so it is best to have answers prepared to address these criticisms. It is also important to confront the critiques head-on to stem the flow of rumors or falsehoods and minimize the damage (to morale, to reputations, to company perception) in the situation.

Are Job Counter Offers Ever a Good Idea?

“In my view it is generally not a good idea to counter-offer an employee unless your back is really to the wall. There are too many downsides to this strategy, both for the employer and the employee.” Csizmar summarized. The downsides for the employer include setting a precedent and the question of whether the employee will stay even after such an offer is made. For the employee, there’s still the matter of the potentially unresolved dissatisfaction that prompted the job search, the exposed disloyalty, possible mistrust of management, and the emotional angst of the situation to contend with.

In short, “these offers don’t tend to work. Either they’re declined, or perhaps accepted but the employee doesn’t remain very long after.” While there are exceptions, they’re the minority, and they may not be worthwhile in the big picture. While in theory counter offers can work, especially in the short-term, the costs may be too great.

The above information is excerpted from the CER webinar “When and How to Counteroffer: Keys to Effective Retention When Employees Threaten to Leave.” To register for a future webinar, visit CER webinars.

Chuck Csizmar is a Global Compensation Consultant and the founder and principal of CMC Compensation Group, a professional services provider specializing in analytic, project management, and consultative services for US and international clients.