The Downsides to Using a Counter-Offer to Keep an Employee

You thought your week was going smoothly, but then one of your key employees walked into your office and announced that she’s resigning. If you’re like many managers, you panic and start thinking about what you can offer to get her to stay.

Stop right there.

Making a counteroffer to stop an employee from taking another job is rarely a good idea. Here are four reasons why.

1. There’s a reason that the employee was looking for another job in the first place

While more money is always a motivator, there are generally other factors that drive people to look too: personality fit, boredom with the work, or general dissatisfaction – all reasons that will rear back up once the glow from that raise wears off. That counteroffer will have helped you retain a dissatisfied employee.

2. You were already paying what you thought was a fair salary

You should strive to paying competitive salaries to all your employees, not just the ones who think about leaving. Your salaries need to be set according to objective market data; they shouldn’t be a reaction to who’s about to leave at any given time.

3. It sends the wrong message to other employees

If word gets around that all it takes to get a big raise is to threaten to leave, you can be sure that you’ll have other employees in your office resigning too. You don’t want people to start thinking that they need to have one foot out the door in order to get a raise.

4. Your relationship with that employee may permanently change

If you successfully counteroffer and persuade her to stay, what happens next? At many workplaces, that employee will no longer be quite as trusted as she used to be, no longer part of the inner circle. That’s not good for either of you. And on her side, you’re now the company that she had to threaten to leave in order to get what she wanted, which also isn’t good for either of you. There’s a reason that the rule of thumb among recruiters is that 70 to 80 percent of people who accept counteroffers either leave or are let go within a year.

Now, are there times where making a counteroffer makes sense and works out? Sometimes – but they tend to be the exception, not the rule. At a minimum, be very cautious before making an counteroffer and think through the downsides.

Alison Green

Alison Green writes the popular Ask a Manager blog where she dispenses advice on career, job search, and management issues. She's also the co-author of Managing to Change the World: The Nonprofit Manager's Guide to Getting Results and former chief of staff of a successful nonprofit organization, where she oversaw day-to-day staff management, hiring, firing, and employee development.

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  • Matthew Soffen

    In one past (17 years ago) position I actually gave my notice on Christmas Eve (“Merry Christmas, I’m leaving in 2 weeks”). The manager actually offered to give me more money. I declined because, he was the reason I left. At times he could be a bit bi-polar and coupled with a 70mile commute (each way) through a highway construction zone it wasn’t worth it. Especially when the new commute was 25 minutes via back roads.

    My logic was that, if I HAD taken the offer, it would only have lasted long enough for him to find me a replacement.

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  • Susan

    I hope my boss doesn’t read this :)

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  • RLTinley

    A couple of times we have been tempted to try and convince an employee to stay, but we feel mutual loyalty between employee and manager should allow the employee to approach management if times get too hard (such as a spouse losing his or her job) BEFORE looking elsewhere. Those who chose the latter do not fit in with management’s vision and are most likely a better fit somewhere else.

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  • NoPizzazzNoMore

    Agree. I tried to give notice to the Pizza place I worked at when I was 19 years old one summer. They begged me, dangling their corporate yacht event before me to get me to stay, promising that I would have the best time (and it wasnt even for another year almost) – I didnt want more money, more praise or a stupid yacht trip. I just wanted to quit my lame Pizza place job with grace. They were so pitiful. I ended up walking out one day and never looking back…until I had to go back and pick up my paycheck. That was awkward. the other workers looked at me with disgust and disbelief like how dare you come back here – if only they knew. I tried to do the right thing. But when you beg someone to stay…who doesnt want to….well, I would just say the best manager is one who Listens. And let people leave for chrissakes if they want to. Cuz they will leave one way or another and it is better to have them leave on good terms that to feel trapped and leave like a cat trying to claw its way out of a bag or something …

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