Dealing with a Counteroffer

First, let’s define a counteroffer: a counter is when your current employer offers to improve your remuneration, and terms of employment (e.g., status) or undertake to change something such as management style following the submission of your resignation.

In many ways, a counteroffer can be very flattering – it shows your employer might value you more than you expected or that they are genuinely looking to change things for the better now that they realise you’ve been unhappy. However, here are some reasons why you should think twice before accepting a counteroffer:

1. Does the counteroffer address the real issues?

Whilst remuneration and status are very common reasons for someone to decide to leave an employer, there are often other reasons which enter the equation. Reasons such as culture, quality of work, reputation, management style, and work/life balance are often a factor and are sometimes more important and profound reasons for someone looking to move on. The counteroffer nearly always addresses remuneration and status, but all too seldom does it address those more profound issues (how can it?). As such, counteroffers deal with superficial reasons but not deeply held ones.

It’s for this reason that studies show that most people who accept a counteroffer end up leaving their employer in any case within 12 – 24 months. The counteroffer merely saw that you were paid more for tolerating issues which were becoming intolerable – ultimately, time catches up and those deeper set reasons for leaving come to the fore again.

2. In whose best interest is the counteroffer made?

Whilst you are valuable to your firm in so many ways, you are also a profit centre – harsh, but true. Your resignation has a negative financial impact on your employer in terms of lost fee income and the cost to replace you. Furthermore, your resignation may hurt your Line Manager in terms of their career development – it may impede them from hitting their target, and it may show that they have a problem with staff retention. So, whilst there may well be some valid and noble reasons for counteroffers, given the above, ask yourself if the counteroffer is being made in your best interest or in the best interest of your Line Manager and your firm.

3. Is the counteroffer you’re getting just an early pay rise?

Let’s say you earn £60,000 and you resign 5 months prior to the pay review. Let’s say you were offered £63,000 by your potential new employer and that a counteroffer comes in at £65,000. Is it realistic to expect that you will get a further rise in 5 months’ time when the salary review comes around? If not, you may have sacrificed an opportunity to move to a firm whose offer was good enough to make you resign for an extra £166 a month before tax. If the suitor’s offer ticked all the boxes in terms of the non-financial aspects, then one must question if it was worth accepting the counteroffer.

4. Your cards may be marked.

No one likes having a gun put to their head. In some ways, your resignation, if you do accept a counteroffer, is putting a gun to your Line Manager’s head (metaphorically speaking!). So, if a situation like a promotion or a round of redundancies were to come up and you are being compared to peers who did not resign and have remained loyal, they may be viewed more favourably due to their perceived loyalty.

5. You were being deliberately underpaid.

If your employer can afford to offer you improved terms following your resignation, they could afford to do so beforehand; they just chose not to do so and, in that light, you were being deliberately underpaid. Now one could say “So what? The situation has been remedied now.” However, it might be worth questioning what kind of employer you have if it takes your resignation to get the remuneration you merited.

6. They are buying time.

This takes us back to the first point. Opinions and surveys vary, but something like 75% of people who accept a counteroffer ends up leaving anyway within 18 months (Why? Because the counteroffer did not address the deep-seated reasons for your original resignation). Your Line Manager may know this; HR will almost certainly know this. Many counteroffers are made in the full knowledge that you will leave soon, it simply buys your employer time to build a contingency plan for when that happens.

So, what should you do?

Plan your resignation – plan what you are going to say, keep it simple and do not let the resignation become emotionally charged or a forum for recriminations. Plan so that you cannot be derailed from your intended course.

Most importantly, get it clear in your own mind why you are leaving and recognise that many of those reasons will not be rectified by a counteroffer (perhaps it’s quality of work, the firm’s standing, or management style). Also, clarify which positive aspects of the firm you are joining really resonate with you and make you feel good about moving on. It might be an idea to write these down and keep the document.

The reasons for you leaving may be like gaping wounds; a counteroffer is merely a sticking plaster used to cover them up when what is really needed is surgery!

In the final analysis, the cold truth is that counteroffers are not about you. They may be about your current employer protecting the revenue they gain from you; they may be about your firm not wanting to hand an advantage to a competitor; they may be about your Line Manager’s professional and personal needs, but they are probably not about you and your career development.

If you need a helping hand when resigning, then speak to your consultant at HCP Automotive to help and guidance when the time comes for you to move on to your new opportunity.