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Counter Offers: Road to Ruin or Great Negotiating Strategy?

Lesson 27 Module 7

Introduction

Counteroffers often get in the way of great career moves and the subject deserves some additional consideration, especially when resigning and working through your notice period.

Most often, a counter offer involves an increase in salary as an inducement to stay. A salary increase won't permanently erase the reasons you accepted a job offer with a new employer!

Counter offers should never be accepted....EVER!. 

Why? If you've done what is taught in earlier lessons when laying down your leaving foundation, there is no reason to accept them and plenty of reasons NOT to accept them as you'll discover in this lesson.

What You Need to Know About Counteroffers

The 7 Forms of a Counter Offer

Counteroffers usually take one or more of the following forms.

This is why you should have explored these options BEFORE considering a job change. If one or more of these reasons are what caused you to decide to change jobs, they will now be meaningless because you know ONLY by resigning was the company willing to address them!

  1. More money - "Your raise was schedule to go into effect next quarter, but we'll make it effective immediately."
  2. Promotion/more responsibility - "Aw, gee, I've been meaning to tell you about the great plans we have for you, but it's been confidential until now."
  3. Modified reporting structure"As VP, I'll just have you report directly to me from now on."
  4. Promises of above or future considerations - "The V.P. has you in mind for some exciting and expanding responsibilities."
  5. Disparaging remarks about the new company or job - "You're going to work for who?"
  6. Guilt trips - "I'm really shocked. I thought you were as happy with us as we are with you."
  7. Don't make a hasty decision"Let's discuss it before you make your final decision."

What Happens When the Counteroffer Begins

Here's what happens.  You attempt to resign from your current company. Oops! It doesn't go as smoothly as you planned. Your boss is upset about losing you and presents you with a counteroffer. Your current boss asks you to stay.  This appeal is known as a counter offer, or buy back. It's an attempt by your current company to persuade you to stay.

But take care not to fall into the trap, or be blind-sided to your own detriment.  You should understand what's about to be cast upon you. Counter offers are typically made in combination with some form of flattery.

"You're too valuable, and we need you."

"You can't desert the team/your friends and leave them hanging (guilt trip)."

"We were just about to promote/raise you, and it was confidential until now!"

"What did they offer, why were you leaving, and what do you need to stay?"

"Why would you want to work for that company?"

"The President wants to meet with you before you make your final Decision."

You can find these tempting gestures inevitably create confusion and buyer's remorse. Career changes are tough enough as it is....leaving a comfortable job, friends, location, etc. for an unknown and challenging opportunity in which one must reprove oneself.  These anxieties frequently cloud the best of logic.  But just because the new position is a little scary, does not mean it's not a positive move.  It is just initially feel more comfortable to stay.

What is Really Going Through Your Boss's Mind?

It is often the case that what you boss is thinking and what they are saying are two different things. This doesn't mean your boss is doing anything untoward, he/she is likely just acting human. Nevertheless, one or more of the following they are probably thinking...

"This couldn't be happening at a worse time."

"This is one of my best people. If I let him/her quit now, it'll wreak havoc on the morale of the department."

"I've already got one opening in my department, I don't need another right now."

"This will probably screw up the entire vacation schedule."

"I'm working as hard as I can, and I don't need to do his/her work, too."

"My review is coming up and this will make me look bad."

"Maybe I can keep him/her on until I find a suitable replacement."

Do Counteroffers Work?

It's true: counteroffers very, very rarely work. There are several reasons for this: 

  1. Trust. No matter what the company says, you will forever be a "marked" employee. You have demonstrated your lack of loyalty by considering another opportunity. People will feel jilted, even if you accept a counteroffer and stay. Trust and acceptance among your immediate colleagues may be irrevocably lost.
  2. Managers, too, have long memories, and won't forget your lapse in loyalty --no matter how brief it may have been.
  3. Most likely, your basic reason(s) for thinking of leaving will eventually resurface. There are a myriad of reasons why you may have considered a change: perhaps something in particular bothered you about your position, or maybe you were presented with an irresistible opportunity.
  4. In any case, changes made as a result of a counteroffer may appease you in the short term, but rarely last for the long run. Statistics show that if you accept a counteroffer, it's still extremely likely that you'll voluntarily leave or be terminated within 6 months to a year.
  5. Think about it. If you were worth "X" yesterday, why are they suddenly willing to pay you "X + Y" today, when you were not expecting a raise for some time? Remember you checked this out before ever deciding to change jobs!
  6. The reality is that bosses/companies do not like to be fired. Your boss is likely most concerned they may look bad, and that this could jeopardize their career. One of the key things they are evaluated on is by their ability to retain staff. 
  7. Further, your leaving might jeopardize an important project, cause a greater workload, or foul up a vacation schedule. It's never a good time for someone to quit, and it may prove very time consuming and costly to replace you, especially considering search and relocation expenses. It's much cheaper to keep you even at a slightly higher salary. And, it would be better to fire you later, on the company's time frame.

Final Thoughts

Some representative comments made to my over my 40 year career on the topic of counteroffters.

One executive candidate told us "It was exactly like you said it would be....they butter you up, give you more money, but nothing really changes.  In fact, they can get worse."  He went on to say "My immediate boss was really agitated, since his boss interceded.  At raise time he told me that none had been budgeted (since I'd already gotten a raise), and that if I wanted, I could negotiate with the President as before."  This gentleman, by the way, left the company within months.

One client executive who preferred to remain unnamed, commented that "90% of the time, accepting a counter offer is the wrong thing to do. And, if the business is so dependent on one person, it's a weak business."

Apart from a short-term band-aid treatment, nothing changes with the company.  After the dust settles from this upheaval, you'll be in the same old rut.  In fact, statistics indicate that more than 80% of those accepting counter-offers leave, or are terminated, within 6-12 months anyway.

One executive search consultant said, "Although counter-offer acceptances are discouraged, 50% of those who did succumb had re-initiated their job search within 90 days.  In fact, one candidate called us back in 5 days!"

Accept a counteroffer at your own peril!


Learn About Executive Coach Jonathan Flaks

Jonathan is a pioneer and an expert in the executive career coaching profession. He authored “Income Double – Half the Trouble” and created the audio program “Who Are You, Inc., Bringing Out Your Best In Business.”

In 21 years he's helped thousands of people confidently get hired faster. His clients have come from or been hired at Disney, Morgan Stanley, Goya Foods, Goldman Sachs, The Riverside Company (Private Equity), The NBA, Wells Fargo Home Mortgage, IBM, LEGO, The United Nations and many more!

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