It seems like the ideal situation – you have an offer from a new employer and your current boss makes you a counter-offer. However, this situation may not be as ideal as it seems. Talent management professionals educate candidates on counter-offers, but they are still tempting. To get a better sense of counter-offers and their implications, let’s consider the pros and cons from two perspectives: the candidate and the employer.

Candidate Perspective

Before accepting a counter-offer remember this statistic from SocialHire.com: 80% of employees who accept a counter-offer leave the company in six months and 93% are gone within 18 months. This supports the theory that once you make up your mind to leave you should remember the reasons that pushed you to start your search for new employment. Keeping this statistic in mind, let’s review the pros and cons of accepting a counter-offer:

Pros

Informing your current employer that you have a competitive offer in hand can reinforce your perceived value with your boss if you present it professionally. Some very skilled negotiators can use this tactic to get a raise or promotion. Be warned – this high risk scenario can result in shutting the door on that employer forever.

Cons

Accepting a counter-offer from your current employer is best described as putting a band-aid on a bullet hole. It may seem as if you just increased your compensation or position but, in reality, you are likely being used as a temporary solution for your employer. Here are a few other things to consider:

• Your Reputation – Once you accept the counter-offer your current employer will always question your loyalty and commitment. Additionally, the employer that made you an offer will think you were playing them for leverage with your current boss and is highly unlikely to be open to future discussion with you. In some instances, your reputation with co-workers may also diminish. If they are aware of your transition plans they may look at you in the future as a climber that is only concerned about yourself.
• Trust – Even though you may have been promoted or had a bump in compensation, you are placed on an unwritten list of those that cannot be trusted. Your boss may have placed you outside of the inner-circle.
• Same Old Issues – If you had to use the offer-in-hand tactic to get a raise or promotion then you should question if this is the long-term company that you want to build your career with. Your reasons for wanting to leave in the first place still exist. They will just be slightly more tolerable in the short term because of the raise, promotion or promises made to you.
• Value – Unless your counter-offer is backed up by something of tangible value like vested stock options, equity, or an employment agreement with upfront cash, you should seriously consider the motives behind the counter-offer.

Current Employer Perspective

Let’s call the counter-offer what it is for the employer – a stall tactic. When employers extend a counter-offer they are almost always buying time to backfill your position. As soon as they do, you become an easily expendable asset. Here are the pros and cons of a counter from the employer perspective:

Pros

• Time to staff – The time and money it takes to recruit, hire, and train a new employee can be extensive. The longer the employee is retained the easier it is to accomplish this. Think of it this way… if you were recruiting for an open position or territory that was vacant you would have to answer why when questioned by candidates. Bench strength or developmental hires are much easier to explain to potential candidates.
• Self-Promotion – When someone quits, it can be a direct reflection on the boss. Too much turnover and the manager will be dinged on their performance review. It is better for them if they were the one making a termination decision due to the employee’s performance. Some companies measure multiple components of a leader’s effectiveness, including their subordinate’s tenure and satisfaction levels. The manager could be afraid that their competence as a leader will be in question, which could damage his own chances for advancement. The flight of the employee could therefore damage the leader’s own compensation and career progression.
• Penalty Avoidance – Some corporations impose penalties on managers that are not staffed, have open territories, or have a voluntary turnover rate above a benchmark. In these situations, counter-offers are tools to keep people until the replacement or backfill is achieved.

Cons

If employees communicate about compensation with each other (of course that never happens) then the employer could be setting a precedent of offering compensation for retention. Once the word is out there will be a line at the manager’s door with employees threatening to leave unless they are presented with a better deal.

In Conclusion

Objectively, while there are exceptions, counter-offers are heavily skewed to ‘Con’ for the Candidate and toward ‘Pro’ for the Employer. Every situation is different so make sure you consult with a competent, reliable business coach or recruitment professional to discuss all the possible ramifications prior to making your final decision.

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CognITek Group is a veteran owned, full-service professional staffing, solutions and recruitment firm. CognITek’s network of associates connects daily with a client base of small startup and Fortune 500 companies to provide world-class service across their business. With the resources and experience of a large agency and the personalized approach of a small firm, CognITek brings hands-on service to employers and professionals alike.