How to handle a counteroffer situation

• 10 Nov, 2024

Congratulations you've passed every step of the recruitment process and wowed your new employer, all you need to do now is hand your notice in. But then your employer comes back with a counteroffer designed to tempt you to stay with the business

Counteroffers are a very common tactic for employers, around 50% of employers will try and tempt current employees to stay with the business. However, according to the stats up to 80% of employees who accept the counteroffer end up leaving the business within six months, with 9 out of 10 leaving within the first year. Why is this? Because often the original reasons why you wanted to leave don't go away just because you end up increasing your salary.

Why do employers make counteroffers?

Employers tend to make counter offers for the following reasons:

• to retain the employee’s knowledge of the company, customers and processes (so they can't be taken to a competitor)
• to minimise the costs of hiring and training a replacement
• to avoid overloading the team with extra work
• to minimise the impact on staff morale and culture caused by an employee leaving the business

The potential pitfalls of accepting a counteroffer

There are a variety of reasons that the best option might be to accept the new job offer, these could include:

• Work culture. No amount of salary increase or training and development is going to change the work culture if the culture is not a fit for you
• The only offer on the table is an increase in salary. Although an increase in salary is great in the short term, this may impact on you getting another salary increase again soon, and future growth opportunities are more important and equate to higher salaries in the future. Don’t limit yourself for the short-term!
• You do not have a good relationship with your manager or leadership team. The relationship still remains and now you have alerted the business that you were considering leaving. This may cause resentment in the team and a lack of trust if you choose to stay, which can result in you being passed over for job promotions and training opportunities if your manager or senior leadership team feels you're not fully committed to the business.
• Often the reason the counteroffer is being presented is to avoid the hassle of finding a replacement for you in that role. It costs a business less to offer a salary rise, over training a replacement. If you feel this is the reason, it demonstrates that the business is not seeing value in you personally, which signals it’s time to look at new opportunities.

What to consider when presented with a counteroffer

• Analyse your initial reasons for leaving

Prior to deciding whether to accept a counteroffer, it's important to reconsider your initial reasons for leaving your job. If the counteroffer addresses and resolves your concerns, then perhaps the counter offer is worth considering. However, rarely do these reasons resolve upon being offered a higher salary or alternative role in the business.

• Consider how your decision to accept affects your work life

By accepting a counteroffer and continuing working with your current employer, your colleagues and managers may view you as less dependable because you were willing to leave. Receiving a pay rise could also inspire some envy amongst colleagues and encourage them to renegotiate their own terms with the employer.

• Consider your personal happiness

It's likely that the decision to resign and to accept another position was not entirely because of your salary. Study all the elements that made you look for another job in the first instance. This could be your professional responsibilities, opportunities for development/barriers to career development in your current role, future prospects, size and reputation of the new business, interoffice relationships or a combination of these factors. Often a change is as good as a rest and a new role can provide new opportunities and reenergize a person in their career.

An example of how to reject a counteroffer from your current employer

Thank your current employer for the opportunity and the counteroffer, but explain that you've decided to pursue another opportunity. Avoid getting into details or comparisons and focus on the positive aspects of your experience in your current employment and that you are looking forward to stepping into a new phase of your life now. Hold firm on your decision and keep your mind focused on the next step in your career journey.

If you would like some more support in this area, please speak to your consultant at Talent Solutions Australia.