Counteroffers: The Good, The Bad, & The Ugly

2020 was a pause on many levels — suspending promotions and bonuses along with much of everyday life — but the story in 2021 is decidedly different. Companies are in a mad dash to understand the post-Covid consumer landscape and eager to hire top research and analytics talent to help decode the way forward. But this talent rush has been made more complex by hiring challenges, particularly robust counteroffers from candidates’ employers.

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Say hello to the budding new normal. The consumer landscape has changed (drastically) — and hiring has ramped up as companies scramble to understand the post-Covid consumer. The need to invest in consumer intelligence is acute — and businesses are looking to secure top talent to chart the way forward. But employers are finding that candidates are juggling multiple options. And even when they get to “yes,” they see that their new hire’s current employer is often upping the ante, creating a new kind of bidding war between the old and future opportunities. If you are a candidate finding yourself in this position, you might be wondering if it is a good or bad idea to accept a counteroffer from your current employer. Let’s dig in and look at the pluses and minuses.

An enticing career opportunity has come your way, and you get an offer you are prepared (and excited) to accept. But then you tell your current employer that you’re planning to leave — and they surprise you with a counteroffer. Should you stay, or should you go? And the answer — well, it’s not that simple.

A recent national survey about best practices when leaving a job showed that nearly 40% of HR leaders and senior executives agreed that accepting a counteroffer from a current employer will have an adverse impact on one’s career. But on the other hand, some 80% of senior executives and 78% of HR leaders shared that it is sometimes all right to say yes to the counteroffer. So, what gives?

Let’s begin with a simple fact: counteroffers are stressful for all concerned. Employers are astutely aware of today’s intense competition for talent, and well-intentioned resignees may find themselves contemplating a counteroffer they did not expect — it’s a recipe for agita. Should you find yourself in counteroffer land, here are some considerations to help you navigate what can be tricky terrain.

Loyalty may come into question.

If you receive a counteroffer as a response to your resignation, no matter how good your relationship is with your employer, the reality is that your employer is responding to an outside offer, and your loyalty is likely to be questioned moving forward. Even if your current role has room for professional growth, you will likely not be the first employee considered at promotion time. Resignation may erode the initial trust that was present and may hinder future success—which adds a hidden opportunity cost to what may seem like a good counteroffer deal.

A counteroffer does not magically solve underlying issues.

There are usually several reasons why someone may want to leave their job beyond money. And while a counteroffer may speak to the financially oriented issues, it does not change the other circumstances. While increased pay will be an attractive option, which may compel many to accept the offer, it will not address the other underlying reasons that spurred a job search in the first place.

Career progression may drift into the doldrums.

When receiving job offers and counteroffers, it may be easy to be swayed by the numbers, but money may obscure a critical assessment of your chances for career development and progression, which may be more personally and economically significant in the long run. If trust between you and your employer has been impacted, you will not be as well-positioned to reap the benefits of your hard work going forward. Jobs require much time, energy, and dedication — it may be best to put your focus into something that will have a greater payoff down the line than to re-invest into a role that is fraught with multiple issues.

Brinkmanship is part of the equation for some employers.

Some employers see counteroffers as a cheap(ish) way to retain talent. Rather than give raises, they wait until they are pushed to the point of brinksmanship, only saying “yes” when compelled to do so by external circumstances.

In this instance, accepting a counteroffer is more about company culture and is less likely to impact career trajectory. However, there is likely a fair amount of disenfranchisement in an atmosphere that does not reward great work and only doles out raises and promotions when the stakes are high — this may not be a place where one would want to stay for long. If employers fail to value the talent they already have (genuinely and appropriately), there are likely deeper problems afoot.

Are counteroffers a better deal for women than for men?

Salary negotiation is not easy for most people but can be particularly difficult for women. Generally speaking, women are less likely to ask for a higher salary when offered a job and more likely to overstay at a lower-paid job. Reasons vary, but some of this stems from discomfort discussing salary and an attendant hesitancy to ask for more.

Research shows that women may need to employ different negotiation tactics as negotiators penalize women who ask for more money during the salary negotiation process. Theories abound; some researchers surmise that perceptions of niceness and being demanding create resistance when women negotiate on their own behalf.

A counteroffer for a woman may act as a “market correction” if she could not secure a fair market value offer initially. The counteroffer may, in this case, be “righting” a wrong but may still carry the same pitfalls that it does for men.

The best advice about whether or not to accept a counteroffer may be to not let it come to that. An article published in the Harvard Business Review suggests giving your employer a “right of first refusal” if you begin to plot a possible move by having a frank pre-quit chat about the upside and downside of the career move you are considering. Before going through an entire interview and vetting process and raising another company’s expectations that they have found the talent they are looking for, engage with your current employer and get a sense of what might be possible beforehand. Ideally, your boss is someone you feel has your best interests at heart and will want the best for you going forward. If not, that may be a sign that the time has indeed come to walk away.