Counter Offer: Think Twice

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So you wanted to change job and finally you got that awaited offering. A new job, a better position and a better salary, all that separates you is the difficult moment where you will have to confront your boss and tell him that you want to leave. He will surely not be happy to hear your bad news you think. However, instead of becoming temperamental and angry as you expected, your boss stays quite calm and friendly. “Whatever problem you have, let’s fix it” he says.

This is the usual scenario in most cases, after an employee quits. Your current boss has a lot to lose if he lets you go, and he won’t mind to give you a counter offer to make his life easier. The fact is that losing an employee is a huge burden to a company, and your boss knows it. Let’s look at the costs he faces by losing you:

  • Replacement Costs: Your company will have extra costs to replace you, both time and money. This includes, posting advertisements, paying recruitment agencies, allocating time for HR to find and interview new candidates among other costs.
  • Time costs: The average time to recruit someone is around 3 months. During those 3 months, position will be unfilled, and HR will be busy working to fill that position. Your job will not be executed, creating extra stress in other workers, overtime costs, inneficiency in you department, and even possible losses of revenue and clients.
  • Change costs: Change always has an unknown outcome and it can have a negative effect on your colleagues. Your replacement will need time to adapt to the job and environment and will need training to reach your previous level of service.
  • Failure risks: The person might not adapt and succeed in your position, leading to another round of recruitment. Imagine a Sales Executive that quits, he might take clients with him after he leaves, or damage the relationship with the company due to change of account manager.

All those risks are considered when you announce that you want to quit. A company faces a lot of risks when someone resigns, and your boss role is to minimize all those risks. The easier and faster way to do it is to counter offer. More money or a promotion are the most common situations but not only. Although it is flattering and tempting to accept a counter offer, the truth is that counter offers rarely work out, and employees end up leaving the company soon after. Here are some of the reasons why you should be careful with a counter offer:

  1. You might be replaced. After you try to quit, you show you are unhappy and your company will start preparing your succession immediatelly. That is just a general HR policy: if there is a risk of losing someone, that employee replacement should be prepared immediatelly.
  2. If you are not happy for whatever reason, and you show it, your loyalty to the company will be in cause. If you stay for more money or promotion, you will also leave for the same reasons and your boss knows it.
  3. You will not be in the frontline for a new promotion or a new project. Your boss doesn’t know how much or for how long he can count on you.
  4. If bad times come, you will surely be one of the first to go.
  5. Will anything change? If you were not happy and wanted to change, will a higher salary solve the problems?
  6. You ethics will be questioned. No one trusts people that accept a counter offer. Later in your career, you might pay for this, either through a bad referal or badmouthing from other executives.
  7. Environment in your current company will change. Your colleagues might get jealous of your higher salary and your boss will question your credibility. You relationships will change.
  8. Your boss might be a great or bad boss, but when he counter offers you, he does because of his own interests, not yours. If you were worth that promotion or money, shouldn’t you have got it already?
  9. If you get raised now, when will the next raise happen? Did it just happen already? Most companies have compensation rules and plans that need to be fulfilled.
  10. Statistics show that if you accept a counter offer, the probability of voluntarily leaving in six months or being let go within one year is extremely high (both above 60%). This has been repeatedly demonstrated by the Fordyce Letter, an industry newsletter sent out to employment agency owners and managers. They quote this statistic in every article they write about the subject of “counter offers” (at least once per year).

 

The general idea is that your boss will give you a counter offer to solve his own problems, not because he cares for you. Counter offers are only a short term solution and do not promote efficiency, in fact most multinational companies even have policies of not giving any counter offers. Counter offer can bring you quick benefits, but in the long term it can also damage your career progression and income.

Our advice is to think very well before you quit. Weight all the factors, personal and professional that the change will bring to you. If you decide to quit, do it properly, handle your written resignation letter firmly and stick to your decision. Remember, counter offers are rarely a Win-Win solution.

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