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Counteroffers: the risks, rewards and realities.

Counteroffers spark keen debate regardless of which side of the table you’re sitting on, and I frequently field questions on the subject.

While I see more evidence of counteroffers delaying the inevitable than resolving underlying issues, I can understand a company’s commercial rationale for wanting to make a counteroffer. After all, we all know that the estimated cost of replacing someone is several times their annual salary.

For companies

From an employer’s perspective, there are some critical questions to ask when making a counteroffer:

◾️What commitment is there to change the underlying issues which have initiated the resignation in the first place? What expectations have you set if a counteroffer is accepted? Can you deliver on your commitments?

◾️ What repercussions are there for the wider business? Do you risk disenfranchising colleagues with the sweeteners you have offered someone to stay?

◾️ Remember, data shows that most employees who accept counteroffers still leave their positions within a year. But buying yourself some time to implement a more viable succession plan may be the right call.

Some companies have a strict policy of not making counteroffers. Still, they typically pay above market rate and have developed a strong bench, making succession planning easier after a resignation. These companies believe that it quickly becomes known when someone has resigned (despite your best efforts to keep it confidential), and making counteroffers sets a precedent for others to engineer better pay or promotions.

For individuals

Whilst feeling valued with an offer of more money or a bigger job is flattering, there are some serious considerations before deciding to stay. Not least, why has it taken your resignation for your boss to recognise you with better pay or a more senior role? A decision to resign in the first place is usually more profound and extends well beyond compensation and job size.

Instead of succumbing to the allure of a counteroffer, I encourage individuals to reflect on their initial reasons for seeking a new opportunity. Write down your rationale for resigning, but also think about your values and how those align with the company’s. Some people accept a mismatch between their values and company culture for superior rewards. That’s a personal decision, but I rarely encounter executives who believe they can be successful in a toxic culture. The situation usually becomes untenable.

Even though agreeing to stay at your company may please your boss, accepting a counteroffer can erode trust and dilute your relationship. It can still label you disloyal or easily swayed by financial gains. Such perceptions can impact prospects within the company and even hamper your professional reputation in the long run.

I am not suggesting that accepting a counteroffer is universally the wrong choice, but in my 25 years of hiring senior executives, the vast majority of people who choose to stay at companies following a counteroffer live to regret the decision.

What’s your position on counteroffers?

About BartonRock: BartonRock is the executive search partner for high-growth consumer and retail businesses

We manage the careers of executives whose know-how and commercial acumen steer the strategic direction for companies to thrive.

Our assignments search for executives who understand how to operate in dynamic and entrepreneurial environments.

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