First Rule of Making a Counter Offer: Don’t. (3 min read)
Written By: Kenny Natterer
Tell us if you’ve heard this one before: It’s Monday morning. You’ve prepared for the week and ready to start the day. However, this morning doesn’t go as planned. One of your key team members has come to you to tender their resignation. They’ve accepted an offer with another organization and have offered to stay for two weeks to help transition.
As you know, losing a key member of your team is rarely an easy situation to handle. Your gut reaction is likely to find a way to keep them around, most commonly by matching their new compensation or exceeding it. While the fresh sting of losing an important team member may hurt, you could end up hurting yourself even more in the long run if you decide to counter offer.
Below are three points that outline why a counter offer may result in more detriment than benefit.
- A counteroffer is essentially a band-aid for the role. If they decide to stay, you may now have a short-term solution to a long-term challenge. Compensation is often a secondary motivation for seeking another opportunity. By giving them more money, you may convince them to stay a little while longer, but their core reasons for leaving may not be remedied. Not to mention, you may have set yourself up for:
- A “gut punch” to team morale.Think about the precedent set by giving a counteroffer. Others in the organization have now seen firsthand that if they want a raise, they can simply bring an offer letter to you and *voila*, an instant raise, whether it’s from you or the competition. Inadvertently, a counteroffer may have just encouraged others to look to leave, or in a best-case scenario, only ask for the raise at their next performance review, potentially threatening your organization’s overall compensation structure.
- A counter offer often contradicts the concept of loyalty. Someone from your team has been hanging around with the competition looking for another opportunity, and when it is brought to your attention, you essentially reward them for it. This could be a bad look to the person leaving, as it was necessary for them to threaten to leave to potentially receive their full compensation value. Also, this may be perceived as a signal to the rest of the team that they may have to do the same to get what they want. This may be from a compensation, upward mobility, or schedule flexibility perspective. Either way, folks that are actually happy may get the idea that they are not being given full value for their efforts.
There are obviously exceptions and outliers for every situation. That said, it might make sense not to allow a band-aid for a departing employee set a precedent for others that loyalty means little. Instead of being reactive, consider being more proactive and have regular and open conversations with your team members about things that may be improved to encourage a collaborative and communicative environment. This way, hopefully the Counter Offer conversation won’t come up in the first place!
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