why you shouldn’t use counteroffers to prevent employees from leaving

by Alison Green on September 24, 2012

You thought your week was going smoothly, but then one of your key employees walked into your office and announced that she’s resigning. If you’re like many managers, you panic and start thinking about what you can offer to get her to stay.

Stop right there.

Making a counteroffer to stop an employee from taking another job is rarely a good idea. Here are four reasons why.

1. There’s a reason that the employee was looking for another job in the first place.  

While more money is always a motivator, there are generally other factors that drive people to look too: personality fit, boredom with the work, or general dissatisfaction – all reasons that will rear back up once the glow from that raise wears off. That counteroffer will have helped you retain a dissatisfied employee.

2. You were already paying what you thought was a fair salary.

You should strive to paying competitive salaries to all your employees, not just the ones who think about leaving. Your salaries need to be set according to objective market data; they shouldn’t be a reaction to who’s about to leave at any given time.

3. It sends the wrong message to other employees.

If word gets around that what it takes to get a big raise is to threaten to leave, you can be sure that you’ll have other employees in your office resigning too. You don’t want people to start thinking that they need to have one foot out the door in order to get a raise.

4. Your relationship with that employee may permanently change.

If you successfully counteroffer and persuade her to stay, what happens next? At many workplaces, that employee will no longer be quite as trusted as she used to be, no longer part of the inner circle. That’s not good for either of you. And on her side, you’re now the company that she had to threaten to leave in order to get what she wanted, which also isn’t good for either of you. There’s a reason that the rule of thumb among recruiters is that 70 to 80 percent of people who accept counteroffers either leave or are let go within a year.

Now, are there times where making a counteroffer makes sense and works out? Sometimes – but they tend to be the exception, not the rule. At a minimum, be very cautious before making an counteroffer and think through the downsides.

I originally published this at Intuit Quickbase.

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{ 41 comments }

{ 41 comments… read them below }

  2. Kathryn T.*

    The one time I’ve seen a counteroffer work out really well for employee and employer is in my husband’s case; he had a job for which he was an extraordinarily poor fit, and he was underperforming and it was causing him ridiculous stress, to the point where he quit without having another job lined up. The counteroffer they made him was for a completely different job within the same org, one he was much better suited for, and they let him take all of his accumulated vacation in one giant chunk between the two (I think it was something like four and a half weeks) so he could get over the burnout of the bad-fit job. He worked there for another nine years with a lot of success.

    But that’s not really the situation the article is talking about, now that I think about it.

      1. anon-2*

        No, it IS a counter-offer. It did solve problems, to be sure, but that counter-offer never would have come about had the employee

        a) not resigned
        b) been unwilling to entertain discussion.

        Often, counter-offers exist to fix situations that were broken. I could write a counter-article (no pun intended) about this topic….

        1. Ask a Manager* Post author

          I wonder if the employee did or didn’t have a serious conversation about the problems before resigning. I’m betting he didn’t make the level of his discontent clear, which ideally would have been the first step. (Maybe Kathryn can clarify?) If he did, then it’s problematic that it took him resigning to get the company to take him seriously (and in that case, we’re back to the reasons why in general counteroffers aren’t good solutions on either side, despite the fact that it worked out in this case).

          1. Kathryn T.*

            He absolutely did not make his discontent clear.

            To give some specifics, he’s a technical writer/editor, and he had been performing in that capacity on a long-term contract basis at a large software company. He was offered the opportunity to convert to a permanent position, which he took, but when they offered him the position, it wasn’t a W/E job, it was a project management job within the Docs organization. Completely different skillset, COMPLETELY outside his wheelhouse, but he decided that that was the job he’d been given and that was the job he needed to try and do. In his 1:1 meetings with his managers, he only focused on what he could try to do to succeed, not on how poorly suited he felt he was for the job. When he quit, it was apparently a complete surprise to his manager. And when they offered him the writer job he really wanted, plus the extended vacation break to recoup his sanity, it was a complete surprise to him.

            Not great, I know. He’s learned a lot about managing his career trajectory and communicating effectively with his managers since then.

            1. Ask a Manager* Post author

              Thanks for the additional details! I’m going to stick with my original “not quite a counteroffer but more a solving of problems that were initially aired in a rather dramatic way” then :)

        2. Peter*

          It can’t be a counter-offer, can it, if he didn’t have another offer (to be countered) in the first place?

  3. Josh S*

    When I quit at my first job out of college, it was for a variety of reasons–none of them related to money (which I was making a LOT of). I gave my 2 weeks notice, and my boss (and my boss’s boss) both asked “What can we do to get you to stay?” or “Is there anything we can do to keep you?”

    I was surprised. I hadn’t even considered that they would make an attempt to keep me. In my head, I thought, “Yeah, you can hire enough staff so our team isn’t working 60 hour weeks, and fire the dead weight that is making the rest of us re-do all this work. You can fix systems A, B, and C so that they are functional. You can get the ‘Business Analyst’ team to prioritize the 6 months of back-logged tickets so that we can resolve customer complaints. You can point me toward a realistic career path at this company that gets me out of the customer-service track and into the consulting track (as was promised when I started 2 years ago).”

    I kind of thought that would be a little much, and even if they had promised me all of it, the bureaucracy and changing culture of the place wouldn’t have allowed me to believe it. So I just said, “Nope. Sorry. I need to move on.”

    I really should have waited until I had another job lined up. But frankly, my health was suffering and there simply weren’t hours in the day to work as much as I was (plus 2 hours/60 miles of daily commute) AND do a job search. I’m glad I got out. Good first job, but not where I’d want to spend my career.

    1. anon-2*

      And, another thing — you may have been highly effective in your current position, in your boss’ eyes, even though it was killing you.

      Many places establish their customer-service positions as dead-end ones, by design.

      If you’re good at it, you might never get promoted out of it, unless you quit and your only non-negotiable counter offer stance is into another position in the organization. Then again, they probably won’t do that because it would send a signal to others –” this doesn’t HAVE to be a dead end job, but a vehicle to get you somewhere else.”

      Many employers might not want to send that message. Yes, it’s stupid, but it happens.

      I once worked in a place where they dead-ended EVERYONE — and (back in the 70s) it took the threat of unionization before management acted. The end result, long-term = higher employee retention, and lower costs. People came in at entry-level and stayed through their entire careers, and were still available to train – transition – backfill – and serve a “good examples”. And were happier.

      And Josh S = if you were willing to just focus on YOUR situation – and said “I was hoping that it would lead to a consulting slot, and that didn’t happen” — it MIGHT have happened in a counter-offer.

        1. Josh S*

          Oh, I *tried*. There were several formal reviews, and managers were encouraged to help their people figure out a career path.

          The company had been privately owned, and many/most people were encouraged to start in customer service to get their foot in the door, then move to different departments (IT, accounting, etc). It was a way for everyone to ‘know the business’ in a sense. A year or so before I started, the company went public (hence the ‘changing culture’ I noted above) and they basically went 180* away from that.

          At my 12 month, 18 month, 24 month, etc reviews (and other times as well), I told my manager that my ultimate goal was to get into the consulting side. He basically showed me a career path that was 10-12 years just to get out of the Customer Service side and then start over at entry-level consulting. I kept hunting around, trying to build connections in the other department to see what the track was like for others.

          And the ultimate story was that “Oh yeah, it used to be easy to move from customer service to consulting, but I haven’t seen *anyone* make that transition for a few years now. All the hiring comes from outside.”

          So my manager(s) knew what I wanted. It was simply that the career path no longer existed. I can’t really imagine how they attract anyone decent/stellar to their entry-level call centers any more without any hope of a career path. I’m sure their attrition rates have skyrocketed.

            1. NewReader*

              I think I am stumbling over the definition of the term “counter-offer”. I did not realize it had a definite meaning…
              I thought of in the context- I go into give notice. I have another job offer that pays me x more per year. Current boss responds with x plus $Y to entice me to stay put.

              I’m getting a little confused…

              1. Ask a Manager* Post author

                That’s exactly correct. I was saying that it’s not really a counteroffer if you quit with nothing else lined up (there’s nothing for them to “counter,” just your quitting).

                1. NewReader*

                  Ahhh. So in the case of the employee with no where to go- the offer would just be “an offer” there is nothing for the company to “counter” against.
                  Am making a parallel in my head of selling my car. If a person offers me $1000 and I had not mentioned any price then this would be an offer.
                  However, if I set an asking price of 1000 and a person offers me 900 that would be a counter offer. This is more like negotiation.

      2. Steve G*

        Anon-2 – I agree with the dismay I get from this comment at the lack of respect for the customer service field. I have had 3 customer service jobs in between my “real” job as an Analyst. And it is depressing to say that I did Customer Service as a fill-in to a “real” job, but that is the way all 3 companies made it feel. Even though Customer Service is very difficult – being rated on call times, sales quotas even though your not sales, customer surveys, etc. etc. etc. As an Analyst making 2.5X my customer service salaries, I work just as hard. Yet if I wanted to, I could totally BS working really hard when I wasn’t because my work is elusive to a certain degree. Not fair to CSRs.

        1. Josh S*

          I agree. Even though I was administering benefits for employees of our client, so the majority of people were reasonable or just calling to get something done, it was still a customer service job. And it was *draining* in a way that no other job I’ve had ever was.

          I respect those who have Customer Service as their profession, just because I know what it’s like to deal with. If companies would pay the good ones what they’re worth (ie their weight in gold), perhaps they’d keep some of them. But as it is, customer service is usually seen as a cost center, so the cheaper you can get ’em, the better. Attrition/turnover be dam*ed.

  4. AnotherAlison*

    I had a similar situation as Kathryn’s husband. I was going to leave for a different position, but they countered with a similar position & let me help define it. Money wasn’t an issue for leaving/staying. I hadn’t discussed job dissatisfaction with them before, because I was relatively new and it seemed to be too soon.

    I think the reason it doesn’t normally work out it because the person is really leaving due to job dissatisfaction, and the employer counters with money. Or they promise changes to the position that don’t actually happen, while my employer did make the changes.

    However, I can also say monetary counteroffers could be appropriate (the exceptions) in situations I’ve seen where people are brought on at higher salaries than the incumbents in the same positions, and the incumbents might have been perfectly happy until they learned Steve-the-new-guy got a 20% pay raise over their own salary. If they resign and get a counteroffer, money really does solve their primary complaint.

    1. Ask a Manager* Post author

      But in those cases, the employee should make a case for a raise before they resort to quitting. You don’t want to be an employer where people only get raises by threatening to leave.

      1. anon-2*

        Sometimes a front-line manager has no choice in that matter. I worked in a place that had a “don’t bid against yourself” stance.

        If you were good – and most people there WERE good – a resignation almost always resulted in a counter-offer. I would guess that around 1/3 to 1/2 of those offered accepted the counter.

        It’s often said that most of the “countered” employees leave within 12 months. Two things never mentioned in the management notebooks / “Dilbert’s Managers’ Seminars” =

        1) a good counter-offer, when accepted, not only might fix a bad but correctable situation, it sets up the countered employee and buys him more time — to seek a BETTER position, at a higher salary. His/her resume now indicates a recent promotion and likely a substantial pay boost. The counter-offer increases his/her marketability.

        2) even if the countered employee leaves in due time, the departure is more peaceable, less contentious for all, and more workable.

        A counter can often help both sides, even if it means the employee will eventually leave on his own terms. But he leaves happier (and happily).

        1. Ask a Manager* Post author

          Hmmm. That’s often not the case.A lot of managers are really angry when they go to bat to get someone a counteroffer, using their own capital to do it, and then the person leaves within a year anyway.

          Sorry to keep arguing with you :)

          1. anon-2*

            Not arguing with you — it’s a different point of view. During “normal times” — and these times aren’t normal, it becomes a battle of wits between an employee and his/her management. This was very common in the IS/IT field, for a long time.

            Sometimes, managers are very happy to retain an employee another six-eight-twelve months. And if that person should leave, it can be on very good terms.

            And quite often, as it happened in one instance in my career, my manager’s hands were tied until I gave my resignation. Then the counter-offer came. In fact, it had been prepared! I stayed another seven months there, and left – not in anger, but on happy terms. And my experience helped others — and the “don’t bid against yourself” rule finally dissolved.

            And if the promotion/raise had come WITHOUT a resignation, I likely would have stayed. I think the theory here is for managers — pay your employees fairly, treat them with respect, and you’ll never get into a counter-offer situation.

  5. Judy*

    I had a co-worker who resigned because his wife was offered a promotion in her job, which included a move back to their home town, about 4 hrs away. My management countered with an offer of working from home, with up to 1 week a month travel back to our office. It’s been 5 years and he’s still going strong.

    1. Ask a Manager* Post author

      Again, I’m going to say not a counteroffer in the sense that it’s normally discussed. He wasn’t out looking for another job and resigned when he accepted a better offer.

  7. some1*

    I worked at a company that ALWAYS counter-offered people who put in notice, so then when it didn’t happen when one co-worker resigned, she took it very personally.

    2. LouLou*

      Ugh. That happened to me. Just after Christmas, a co-worker put in her resignation after maternity leave, citing childcare costs and the lack of flexibility in the company for her to work the part time hours she wanted to. The company moved heaven and Earth to get her to stay, giving her a payrise, promotion and more flexibility than they would usually allow.

      When I handed in my notice I explained the (main) reason. I won’t go into details, but it was an issue I had bought up several times before with management and even provided them with a solution that would be of benefit to the company, but had been ignored or brushed away at every turn. I handed in my notice and not one person said to me “is there anything we can do to encourage you to stay?”. I was basically told “off you pop, then” and that was that.

      I was seething inside – a (poorly performing) co-worker had everything moved for them to stay. I got “see you around”. If anything confirmed my decision to leave the company, it was that.

  8. Diane*

    AAM, can you address how to determine whether it’s a good move to lay frustrations on the line and when it’s better to be quiet and look elsewhere?

    I work in a place where the leadership values being liked over solving problems, especially those that include confrontation. Frankly, I believe if I say anything about my dissatisfaction and suggestions, I’d be met with shock, promises, and inaction–again. It will all be forgotten until the next time budget cuts come around.

    Answered my own question. Crap.

  9. NewReader*

    Alison’s advice here parallels an article I read a while ago. The article was written from the employee’s perspective: “My boss has offered me more money to stay- should I?”
    The answer was no. What caught my attention is that like Alison is saying usually the decision to quit is based on more than one reason. Many times the employee that stays concludes that “Yes, I have more money, but I am STILL dealing with XY and Z.” Those issues are bad enough to be deal breakers for the employee. And the article ended by saying the employee might last one more year.

    It looks like an employee who seriously thinks about quitting is probably done with the job, no matter what happens next.
    It was interesting to me to read this post because this gave me the management perspective to compare to the employee perspective- and both perspectives come to a very similar answer.

    1. Jamie*

      “It looks like an employee who seriously thinks about quitting is probably done with the job, no matter what happens next.”

      I don’t think just thinking about it means that. I spend half my life evaluating situations – it’s healthy to sometimes weigh options and take stock of where you are. Sometimes that means seriously thinking of making a change, and after all is fleshed out realizing that you’re better where you are right now.

      Now if you mean thinking about it out loud, to your boss, even then…sometimes you can raise issues and they get resolved and it doesn’t mean you’re done. Sometimes it does – that’s a huge ymmv depending on the situation.

      None of this is related to a counter offer though – I’m firmly in the camp of counter offers being such a bad idea the vast majority of the time I’d never entertain one.

      One reason would be my ego, to be honest. If I had issues at work and brought them politely and professionally to my bosses (and I would – quietly festering isn’t something I tend to do) and they didn’t address the problems until I threatened to quit that would be a problem for me.

      If it was about money, and full disclosure – things are usually about money for me – I don’t see how a counter offer would ever work. If you want to pay me more now, to keep someone else from paying me more it’s for one of two reasons:

      A. You don’t think I’m worth it, but it’s inconvenient to have me leave on my timeline, so you’ll bump the salary and resent it and we’ll both be miserable.

      B. You do think it’s fair and you just didn’t want to pay me what you felt I was worth until you absolutely had to. Now there aren’t even words to express my resentment, and we’ll both be miserable.

      For me personally there is no way a counter offer works out in my favor.

      1. Jamie*

        “(and I would – quietly festering isn’t something I tend to do)”

        Anymore. I used to do this – because I used to think the problems were so clearly obvious that the reason they weren’t being resolved was deliberate. I’ve actually had the whole “this isn’t working for me” conversation twice with bosses and both times they did fix the issues because they were unaware of the severity of the impact on me.

        Now that I’m a little older and a lot wiser I would advise anyone against festering until you get to the point where it would be a relief to quit or get fired. It’s a lot of drama for nothing, as it can be resolved earlier before you’ve lost half of your stomach lining to stress. And if they won’t resolve it at least you’ll know that early enough to make a transition plan on your time line, before you just want to toss your phone and keys on the table and run away.

  10. Sam.i.am*

    This goes hand-in-hand with advice I got from my dad: “Don’t just leave something. Go somewhere.”

    About nine months go, I had a Come to Jesus with my old boss about my frustrations–no career development opportunities, not earning what I was worth, poor benefits plan. I told her that if she couldn’t fix them, I’d look elsewhere. I don’t know how much she went to bat for me (it was a huge, multi-national corporation) but I put feelers out and landed an offer from a job I’d been chasing for years. So by the time I resigned, a counter-offer would have been fruitless.

  11. Lydia*

    We had someone who resigned a year ago and my recommendation to the manager at the time was that once someone has decided to leave, you’d only be buying time – a maximum of a year – with a counteroffer, and it’s never something that I would personally pursue.
    They decided to do just that, we got 9 months of extra time, but a much longer notice and handover period the second time, and it came at a better time in terms of recruitment.
    I did however take the opportunity to say ‘I told you so’!

  12. Tmm*

    I have often counseled my clients never to counteroffer an employee who resigns because in most cases they end up leaving eventually.
    An exception would be when the company needs time to get someone else in the position because it’s a critical job. Then go ahead with a counter, but train or hire someone else as back-up so when the employee does leave, you are ready for it.

  13. Anonymous*

    I’ve found that employers usually resent you when you take a counteroffer. Your relationship is never the same. Plus, I think they often wonder whether the other job even existed when you decide to stay for more money.

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