Counter-Productive: Why the Most Successful Companies Don’t Make Counteroffers
Candidates are pretty well informed about counteroffers these days. Many have learned through traumatic personal experience, while the rest have listened to stories whispered around the water cooler.
"Counteroffers kill careers." "You'll be fired in six months." "90 percent of candidates end up leaving anyway."
Experienced recruiters teach their candidates the perils of the counteroffer and write exhaustively on the topic.
And yet, companies continue to make these desperate acts of futility as a matter of company policy. In fact, 40 percent of all companies still regularly make counteroffers, and that number is trending upwards. The logic goes: if the counteroffer is bad for "them" (the departing employee), then it must be good for "us" (the employer).
That's just not the case.
Companies and hiring managers make counteroffers for a number of reasons, but the reasons are often bad ones. Here's why smart companies don't make counteroffers.
It's a Morale Killer Nothing has the potential to rip a team apart more than the knowledge that one member of the team wanted to leave them, but decided to stay in return for more money (or more vacation time, a new title, etc.). Seeing that member rewarded for their mercenary actions will challenge even the strongest relationships, and make that employee an outsider for the rest of their time at the company (however short it may be). The overall performance of the team is more important than retaining any single employee.
Superstars Move On The best employees don't work for a paycheck, a fancy title, or vacation time (or anything else easily rectified by a counteroffer). If a true all-star believes their potential is being thwarted, they will find an opportunity that better rewards their abilities. Sometimes this is because of an overbearing boss or a limited pay structure. More often, it's just the job itself. After all, the best leaders want their top performers to move on.
Sets a Bad Precedent It's never "just this once." A company either permits counteroffers or prohibits them. Maybe there really was a top-performing employee who only needed an extra week of vacation to live happily ever after. However, once the precedent has been set, expect it to happen again and again. Permitting counteroffers, even on a case-by-case basis, is draining financially, emotionally, and culturally for a company. The companies that do prohibit counteroffers have the best interest of both their employees and the company in mind.
It can be difficult to part with any employee, and a strong counteroffer might seem like the solution. But, the numbers don't lie. Take the time to fully understand the consequences of the counteroffer, and remember that the most successful companies keep the bigger picture in mind.
How do you feel about counteroffers?