Managing counteroffers

​You’ve spent your weeknights writing applications, gone through a lengthy recruitment process, snuck out to interviews, and it’s all paid off – you’ve been offered an exciting new job in another company. But before you have time to pack up your desk, your current boss approaches you with a counteroffer, which means you’ll receive more money and a promotion if you stay where you are. 

This gives you pause for thought – what should you do?

Counteroffers can be tempting for many reasons. It’s flattering to feel that your current place of work is willing to put down a bid to keep you. When faced with the unknown, many people will also retreat to the familiar. If you are offered the opportunity to receive the same salary without the effort of changing companies, shouldn’t you take it? 

Not necessarily. Counteroffers can come with many surprising downsides. Here are a few reasons why you should avoid counteroffers and move on to pastures new.

1. They won’t address the reasons you wanted to leave in the first place

Something made you want to search for a new job in the first place. Whether it was limited opportunities for progression, a negative work culture, or a difficult manager, you likely had good reason to want out. Even if your counteroffer involves a promotion or a move to a different area, these large-scale cultural issues will likely come up again later down the line.

If your counteroffer includes an increased salary, think carefully about whether this money will truly keep you satisfied at work. Many people who accept counteroffers end up leaving within a year anyway: surveys show less than a third of people who accepted a counteroffer ended up staying with the company longer than 12 months.

2. You’ll damage your reputation on both sides

While you may think that accepting your employer’s counteroffer would earn you some credit, the opposite might be true. In a survey of U.S.-based senior and HR executives, 71% of senior executives and 67% of HR leaders said that accepting a counteroffer would cause superiors in the current company to question the employee’s loyalty going forward. 

Once you have been branded as disloyal, your boss is likely to view you as a flight risk and may be reluctant to bring you in on important business or longer-term projects, which could have a serious impact on your career going forward.

Accepting a counteroffer may also mark you out as unreliable in the eyes of your colleagues and industry peers. Similar numbers in the survey also cited ‘diminished trust and compromised reputation’ from the spurned company as a negative consequence of accepting a counteroffer. 

In smaller industries, accepting a counteroffer could mark you out as unreliable and a time-waster; not a good reputation to have if you want to progress your career.

3. Counteroffers are not about you

Although it may feel flattering that your employer has made an offer to try and keep you, they are likely thinking of themselves not you: recruiting, hiring, and training up a replacement is a huge time and money outlay for employers.

A 2019 survey conducted by ELMO Software  of over 1,500 HR professionals across ANZ  found the average cost of hiring a new executive is $34,440, compared to $23,059 for senior-level managers and $17,841 for mid-level managers. When you take the cost into account, your employer’s sudden desire to retain you is likely to be as much about saving them money as it is about valuing you and your skills personally.

4. A pay rise could be a short-term fix

If the only way to attain a pay rise from your current employer was to threaten to leave, this could be indicative of a workplace culture that repeatedly underpays and undervalues its employees. If this is the case, your win of a larger salary will be short-lived. Within a couple of years, you may find yourself back in the same position of wanting more pay but having no means to achieve it. Far better to move to a company that values its employees and offers routes for progression.

5. Motivation may be a struggle

Changing roles and moving to a new organisation will naturally expand your opportunities, provide novel challenges in a different environment and allow you to grow – all of which can be incredibly motivating. 

By comparison, accepting a counteroffer and remaining where you are means having to prove not only that you are worth the additional money or promotion that you took to stay, but that you are newly committed to the company – the very same place you were keen to leave not so long ago. 

This is a much less motivating environment to work in, particularly under a boss who may be doubting you. Given these added pressures, moving on to another company could be a much better option than staying put.

If you’ve received a counteroffer, think hard before accepting it. While it might seem innocuous enough to accept, the implications can be more negative than you expect.​