After negotiating and accepting offers, many of the candidates we have recruited are accepting counteroffers from their current employers. As the market heats up, counteroffers are becoming the primary retention strategy for some companies. But counteroffers are not a win-win for everyone—and especially for the employee who accepts one. Why?
By accepting an outside offer, you’ve essentially blackmailed your boss—at least that’s how he or she may view it. A counteroffer is usually a face-saving tactic that buys time to find someone to replace you and avoid disruption. Even if you aren’t replaced, things will be different. How happy can you be with your old situation once you’ve ramped yourself up to jump? Even if the money is better, the other things that made you want to leave probably haven’t changed.
For the record, some of our candidates who took counteroffers came back to us later and said, "Boy, did I make a mistake. Would they reconsider hiring me?" Statistics show that 80-90 percent of employees who accept counteroffers leave or are terminated in six months to a year. A Wall Street Journal survey put the number at 93 percent within 18 months, with the remainder actively in the market.
Getting back to our scenario, forget about a raise. The counteroffer was probably funded by what would’ve been your next raise. As for a promotion, bosses hold grudges and coworkers may no longer look at you as a team player. When it comes time to downsize again, you may very well find yourself first on the hit list.
Meanwhile, you’ve alienated your potential new employer, which invested time and money in recruiting and vetting you and still has a position to fill. So, the answer to the question our candidates posed is, "In most cases, they will not reconsider you. And you may have damaged your reputation in the marketplace and your industry or field. It’s a small world out there."
Avoiding the counteroffer trap
We are trying to educate our clients and candidates about the pitfalls of counteroffers. When I sit down with candidates, I sound them out—up front—on the subject. And I talk to them about pushes and pulls. People usually change jobs because they feel either an overwhelming push (e.g., negative environment, poor relationship with manager, unchallenging job, uncertainty about the company’s future) or an overwhelming pull (e.g., career advancement, learning a new business, taking on a new challenge). I prefer it when the pulls are the decisive factor, because in those situations candidates can make a more objective, intelligent decision. They’re running to, not from, something.
Unfortunately, clients are all too often looking for candidates to do exactly the same jobs they’ve been doing elsewhere. They know it will take money to lure them away and that becomes the only pull. So when the candidates go back to their employers and receive counteroffers, they stay. Transitions are hard. All other things being equal, why make the jump?
If you’re hiring and want to avoid losing candidates to counteroffers, think about offering incentives other than money. If you’re looking for a project manager, consider hiring someone one level below–a project leader–and offering the opportunity to take a step up. Or, if there’s a candidate who meets eight of your ten requirements, offer training. Be flexible; load up the pulls. No one wants to take the time to train someone, but who has time to restart the recruiting process either?
If you’re an employer and don’t want to have to make counteroffers, fix the pushes. There is no substitute for creating the kind of work environment that makes people want to stay.
The Ayers Group is preparing a white paper on counteroffers, which will be available on our Web site.
