The Trap of Accepting Counter Offers

The Trap of accepting Counter Offers

As a Recruitment Professional that has worked with individuals at all stages of their careers, and supported both SME’s and International Manufacturers with their personnel needs, I wanted to offer my advice to candidates on the trap of accepting counter offers.

In this post, the term “Counter Offer” is used to describe an offer made by an employer to an existing employee in response to them receiving an external job offer with a new company.

Firstly, I suggest you take the time to list all the reasons why you’re now considering a move. It’s usually a combination of factors; unfilled promises, lack of progression, salary, daily commute, poor management, change in company culture…... these have all been valid reasons given to me by candidates. It’s rare that higher salary is the key reason for wanting a move, but if more money is your only motivation, hold-off speaking with recruiters and clicking apply on those job adverts for the time being.

Instead, a more constructive practice would be trying to negotiate a better package with your existing employer prior to commencing your job search, rather than using an external job offer to force their hand into paying you more. A counter offer from your employer may sound flattering, but acceptance can be risky and damage your professional relationships. Plus, it can back fire, as 40% of employers won’t even entertain a counter offer, so you may be stuck moving to a new job that you didn’t really want in the first place.

Understanding Your Worth

Before approaching the subject of a pay rise with your boss, determine your current worth to the business. Has this change since your last pay review? Which of your achievements and personal contributions saved the company time or money? Have you individually, or as part of a team,  undertaken activities that directly increased sales? Have you completed any additional training or qualifications since starting with them, that will greatly benefit the business?  Use this type of information when justifying the extra pay.

If you’re already in the process of considering a counter offer from your employer, or you’ve received an external job offer and are looking to hand in your notice, it’s important you consider the following before making a decision:

Your motivation for moving

It’s likely your motivations for moving are not all about money, so will a slight pay increase truly rectify the underlying reasons why you are not satisfied in your current position? By accepting a counter offer, you will most likely be working in the same environment, with the same people, and exposed to the same problems. It may even cause tensions and stigma with your peers if it became known that the threat of leaving resulted in you being paid more money for doing the same job as them.

Damaging relationships within the company

By handing in your notice, you are in effect filling for separation from your boss and the company on a professional level, even if it is on “Good Terms”.  From your manager’s viewpoint, the prospect of you leaving his team can cause all sorts of issues. Not only can it question his management skills, after all, why didn’t he know a member of his team wasn’t happy? It can also dampen team morale, increase the workload of colleagues or even cause feelings of resentment and show a lack of loyalty.

Ask yourself, if you were to accept a counter offer today, what would happen the next time an opportunity for promotion comes around, who will your boss choose? The employee that has been loyal to the company, or the person who threatened to leave, but stayed for more money? It can also affect your training development within the business and may reduce the level of involvement your manager will grant you on long-term projects, because he’s unsure if you will still be around in a few months. From the moment you accept the counter offer, your loyalty will always be in question.

The True Reasons behind the Counter Offer

So, your manager has pulled it out of the bag, he’s found the extra cash to stop you from leaving…...fantastic. But why have you suddenly become more valuable to the business? If your manager can afford to pay you more, why wasn’t he doing so before

More often than not, it’s cheaper and less disruptive for the business to give you a small pay rise to keep you around, whilst they figure out what to do next. New hires can be costly with recruitment fees and the amount of time spent training them, and finding the ‘right’ person is difficult with significant skill shortages in almost every profession, especially more technical roles such as Engineering. Therefore, the recruitment process to attract someone with your set of skill and knowledge of their industry can be lengthy, and the biggest cost to your employer will actually be the loss of productivity whilst the role is vacant.

Stealing from Peter to pay Paul

Take a moment to picture this... It’s June 2017 and you’ve received a counter offer that will increase your pay by an extra £3K per year, matching the external job offer you received. You accept the counter offer on the basis that it’s the same money and you’re already familiar with the environment. Everything seems to be going well all the way through to April 2018, which is when you sit down with your boss for the company’s annual pay review, only to hear him say………

“Hi Paul, you’ve been performing really well, but do you remember that pay increase we gave you in June to stop you from leaving? Well because of that we’re not able to offer you anything this time so let’s review it again in 12 months”.

Yep, you guessed it !!!! You actually only negotiated your pay rise early when accepting the counter offer and it will be 22 months from the date you accepted until you will even be considered for another pay increase. The company you turned down also operated annual pay reviews, so if you had only accepted their job offer, you would most likely already be earning more.

We see this happen time and again.  Another common action is for companies to restructure the bonus or commission schemes to compensate for the higher basic salary. They may also increase your annual targets.

If you do accept a counter offer, get assurances in writing that this will not affect your next pay review. Also consider the full remuneration package that’s on offer. Will the extra £3K per year compensate for, perhaps, a shorter commute or the additional employee benefits offered by the new employer? These can include better overtime rates, higher bonus potential, improved pension contributions, private healthcare and increased holiday allowance.

Burning Bridges in your chosen Industry

Figures vary, but it’s generally recognised that 60% to 80% of those who accept a counter offer will leave the employer anyway, within 9 months of accepting the counter offer. Keeping this in mind, when deciding on whether to accept a counter offer, you must also seriously consider your reputation with the other business that’s offered you a new job. They have spent the time discussing their opportunity with you in person, gave you a tour of their facilities and introduced you to other members of the team. They were the ones that realised your current value without being held to ransom, and they may have even turned down other good candidates to enable them to offer you the role. By accepting a counter offer, you may also need to accept the possibility that you will not get another chance to work with that business again.

There are many more reasons why people later regret accepting counter offers, and I’ve also spoken with a few individuals who have gone on to achieve wonderful things with their existing employer after accepting such an offer, so each case has to be judged on it’s individual merits. I would be interested to hear your thoughts on this post and about experiences you may have faced with Counter Offers.