When a Candidate Gets a Counter Offer

As the job market has heated up, counteroffers have become a routine tactic to retain talent. A counter offer is usually an ego boost for the employee, and the salary increase can be very tempting. But employees who accept a counter offer often regret their decision.

According to a Society for Human Resource Management study, accepting a counteroffer can harm an employee’s career.

The study found that almost 60 percent of hiring managers agree that any employee can be replaced, and 45 percent said they perceive counteroffers negatively. And employees who accept counteroffers are often viewed as disloyal or untrustworthy, making it difficult for them to advance in their careers.

Worse than that, candidates who accept counteroffers from their current employers likely have burned a bridge with the company that wanted to hire them.

What happens when an employee accepts a counter offer?

Extending a counter offer to an employee who has decided to resign can often have negative repercussions. Some of the potential drawbacks include:

• Counter offers don’t solve anything—Employees don’t start looking for new opportunities for no reason; they begin looking when they’re dissatisfied or unhappy with their current job. Employers who extend counter offers have just delayed the inevitable departure.
• The employee gets an inflated sense of their value—An employee who gets a counter offer has leverage and can use threats of departure to negotiate again. This could lead to above-market pay rates.
• Counter offers weaken the team—The employer is now stuck with an employee already disengaged enough to job hunt and interview elsewhere. Their commitment to the company may be permanently damaged.

Why do employers make counter offers?

Given all of the drawbacks to counter offers, why do companies make counter offers? Each situation is unique, but here are some likely reasons.

• Retaining top talent—Losing a highly skilled employee can be detrimental to the professional growth of a company, especially if the employee has a lot of institutional knowledge or is difficult to replace. Employers hope to convince the employee to stay and continue contributing to the company’s success by offering a counter offer.
• Avoiding recruitment costs—Recruiting and hiring a new employee can be costly. By making a counter offer, employers can avoid these recruitment costs and retain an employee who is already familiar with the current company and its culture.
• Maintaining team dynamics—When an employee leaves a company, it can disrupt team dynamics and cause stress and tension among remaining employees. Employers hope to maintain team dynamics and avoid a potentially negative impact on team morale by making a counter offer and retaining the departing employee.

Why do employees accept counter offers?

Accepting a counteroffer from a current employer is usually a bad idea. More money may be great, but there are other reasons an employee thought about leaving in the first place.

The reason why a candidate is willing to accept a counteroffer from their current employer can be complicated, but here are some reasons:

• Fear of the unknown—Sticking with their current job feels “safer” and more comfortable than taking a risk on a new company and a fresh challenge. Change can be scary.
• Loyalty and relationships—The employee may feel obligated, loyal, or have deep relationships with coworkers, managers, or the company itself. Leaving may induce guilt.
• A more attractive salary—If the current employer offers higher pay than the new job, the employee may feel staying is the path of least resistance.
• Lack of confidence—Self-doubt or imposter syndrome may make the employee question if they can succeed in the new role or company, so they stay put.
• Laziness—Frankly, it’s often just easier in the short term to stay put rather than go through the job change process.

While these reasons are understandable, experts generally recommend not accepting a counteroffer for better career advancement and growth in the long run. But the comfort of the known versus fear of the unknown leads many to stay.

Counter offer red flags

Due to the current talent crunch, employers are more likely to make counter offers, often offering higher salaries, better work hours, or promotions, especially once the employee resigns.

There are a few signs that can indicate a job candidate is likely to accept a counteroffer from their current employer instead of taking your job offer:

• They express hesitation or uncertainty about your offer—If a candidate expresses hesitancy about your offer, this may be an indication that they are on the fence.
• They seem focused on getting a raise or promotion from their current employer—They may even be using your company’s job offer as leverage to get it.
• They’ve worked with their current employer for a long time—If a candidate has been in their current position for several years, they may be reluctant to change jobs. Watch for cues about how much they “love” their current workplace and are struggling to let go.
• They make statements about receiving a counter offer— Statements such as “I’m sure my current company will make it worth my while to stay” may indicate that they are anticipating a counter offer.
• Their personal situations make change difficult—Candidates who are facing major life changes such as moving or having a child graduate or get married may make them more receptive to staying in their current role.

Each candidate is unique, and these indicators are not foolproof predictors of their decision.

If you have a candidate you think might be inclined to accept a counter offer, the best thing to do is to address the situation directly. By having an open and transparent conversation during the interview process, you can find out what the candidate is thinking and formulate your best approach.

Understanding a candidate’s motivations, career goals, and concerns can be the first step in countering a counter offer.

It’s also essential for employers to focus on offering competitive compensation and benefits, a positive work culture, and opportunities for professional growth to attract candidates genuinely invested in the organization.

How do you respond when a candidate gets a counter offer?

When a candidate receives a counter offer from their current employer, it can be tempting to simply try offering them more money. However, this rarely works and may be counter-productive, especially if you have any issues with parity at your company.

Stay calm and professional. Try to find out how the candidate feels about the counter offer. This will help you find the most effective response.

No one wins in a bidding war

When an employer engages in a bidding war with a candidate’s current employer, they risk driving up the candidate’s salary beyond what the position is worth. This can lead to resentment from other employees who may feel they are being paid less than a new hire with similar qualifications.

Another problem with getting into a bidding war is human resources. Your HR department is likely very concerned with salary scales and maintaining parity.

The value of a thorough hiring process

One way to avoid a bidding war during a job search is to have a thorough hiring process that ensures the candidate is the right fit for the position and the company culture. This can involve multiple rounds of interviews, skills assessments, and reference checks.

By taking the time to fully understand what the candidate can offer to your company and to ensure that they are a good fit, the employer can be confident that they are making a sound hiring decision and not just reacting to a counter offer.

It’s also important to know the value of your candidates by using performance-based assessments. Performance-based assessments can help ensure that your company is focusing on the most capable candidates.

Review your talent pool

If an employer is faced with a counter offer from a candidate they are trying to hire, it may be a sign that they need to review their talent pool and their hiring process, compensation packages, or company culture.

By addressing these issues, they may be able to attract and retain top talent without getting into a bidding war.

Decision point

Ultimately, when faced with a counter offer, the employer needs to make a decision. They can either engage in a bidding war and risk overpaying a candidate, or they can stick to their original offer and risk losing the candidate.

However your company chooses to respond, it’s important to remember that a counter offer is not always a sign of a candidate’s ultimate goals. They may be using your offer to negotiate a better deal with their current employer or get a better offer from your company.

The best strategy at this point is to take a moment to re-evaluate the situation objectively. P pausing makes it more likely that you’ll make the right decision for your department and the company.

Even if that means possibly losing the candidate.

Countering the counter offer

Whether or not your company should counter the counter offer is a complicated decision.

How deep is your talent pool? Can you replace the candidate quickly with another candidate or even a contractor?

You should talk with the decision makers and with your leadership before making a decision, but remember your decision isn’t made in a vacuum.

Consider parity with current employees

When evaluating how to respond to a counter offer, one important factor is to consider how your initial offer ranks with those of their potential colleagues who hold similar positions.

If the offer ranks low or even below their potential peers, increasing the salary may be a good idea. However, if the offer is on the high end or even above the pay of their potential peers, you might be risking pay equity by offering even more money.

Creating pay disparities among team members is a great way to create conflict where it doesn’t exist.

To avoid a potential issue with parity, consider other ways to improve your offer.

Using non-monetary compensation

Non-monetary compensation is another way of paying someone that doesn’t involve actual money.

Paying an employee in ways that don’t involve money requires some creativity, but it can be well appreciated. Examples of non-monetary compensation include flexible work arrangements, additional vacation time, or opportunities for professional development.

These benefits can be particularly attractive to employees who value a better work-life balance, career growth, or other non-financial rewards.

When developing a counter offer that includes non-monetary compensation, it’s important to consider the employee’s point of view and try to offer benefits that will be valuable to them. For example, if a candidate is a new parent, they may place a high value on flexible scheduling.

When should a company withdraw its offer?

Companies may withdraw their job offer for various reasons. Some of the common reasons why companies withdraw their job offer are:

•   The candidate failed the background check
•   The candidate provided false information on their resume or application
•   The candidate has a poor work history or references

It is perfectly reasonable for a company to withdraw their job offer if the candidate tries to negotiate too aggressively or makes it clear that they are trying to use the offer to get a better counter offer from their current employer. It is common for candidates to negotiate salary or benefits.

Excessive negotiation, however, is unusual and is often a sign that the candidate is unwilling to compromise or work collaboratively with the team. Getting them to agree to accept your offer might be possible, but you may be setting yourself up for trouble down the road.

Every candidate and situation is different, but companies must have a clear policy on when they will withdraw a job offer. This policy should be clear, well-documented, and shared with hiring managers and recruiters.

An offer withdrawal policy should take into account legal considerations, such as anti-discrimination laws, and should be applied consistently across all candidates.

Companies should be aware of the impact that withdrawing a job offer can have on the candidate and must handle the situation with sensitivity and professionalism. However, if there’s a legitimate reason to withdraw the offer, and if it’s in the company’s best interest, the job offer should be withdrawn.

How can companies protect themselves from counter offers?

When an employee is given a counter offer, it’s both flattering and tempting. After all, everybody wants to feel appreciated.

But that doesn’t mean that a counter offer will be accepted.

Companies can’t stop a current employer from making a counter offer, but they can take steps to make it less likely a counter offer will be accepted by a candidate.

Have a strong recruiting program

A strong recruiting program is one of the most effective ways to protect your company from counter offers. This means actively seeking out and attracting top talent to your company.

With a pool of talented candidates, you can quickly fill any gaps left by candidates who don’t accept your employment offer. This will also help your company build its employer brand.

Follow market trends on compensation

Another way to protect against counter offers is to stay current on employee compensation market trends.

If you give candidates a competitive offer, they will be less likely to leave for a higher salary elsewhere. This can also help you attract new talent to your company.

Increase candidate engagement

Engaging with candidates throughout the hiring process will also help protect against counter offers.

When you improve your candidate experience, your company will not only improve its reputation as an employer, and you will make it easier for your recruiters and hiring managers to build a relationship with candidates. This understanding will help you see potential bumps in the road.

Why you need a strong preboarding program

Finally, having a strong preboarding program can help protect against counter offers.

By providing new employees a positive preboarding and onboarding experience, you can help candidates feel valued and invested in your company from the start. This can make them less likely to be swayed by a counter offer from their previous employer.

Frequently Asked Questions

When it comes to counter offers, both employers and employees have a lot of questions than just the salary amount.

Should an employer make a counter offer to an employee who has resigned?

It depends on the situation. You may want to make a counter offer to keep a valuable employee, but it’s important to consider the reasons why they are leaving in the first place. If the employee is leaving because of issues that can’t be resolved with a higher salary or better benefits package, a counter offer may not be effective in retaining them. Additionally, making counter offers to all employees who resign can set a precedent that may be difficult to maintain.

How should an employer respond to a counter offer from a candidate?

Employers should consider the terms of the counter offer and decide if they can meet the candidate’s demands. If the counter offer is reasonable and within the employer’s budget, they may consider accepting it. However, if the counter offer is outside of the employer’s budget or would set a precedent that may be difficult for a future employer to maintain, they may need to decline the offer and continue their search for a candidate who is a better fit.

Should a candidate use a job offer to negotiate a counter offer from their employer?

Using a job offer from another company to negotiate a counter offer with your current employer can be risky. It might result in a higher salary or better benefits, but it can also damage your relationship with your employer and make you look untrustworthy. Also, the employer may feel like they’re being held hostage and may choose to rescind the job offer altogether.

Conclusion

Counter offers can be a useful tool for employers to retain valuable employees who are considering leaving the company, and they can be a pain for employers who want to hire them. However, it is important for all; parties to carefully consider the potential downsides and benefits of a counter offer or response before making a decision.

One of the main benefits of a pay raise or a counter offer is that it can help to retain talented employees who are valuable to the company. By offering a higher salary or additional benefits, a new employer can show appreciation for the employee’s contributions and encourage them to work with a new company.

However, there are also potential downsides to countering a counter offer. For example, it can create resentment among employees who feel they are not being treated fairly. Additionally, if the employee ultimately decides not to come to work for the company, it can be costly and time-consuming to find a replacement.

Ultimately, how to respond to a counter offer is a decision that should be carefully considered by both the prospective employer and the employee. Both parties can make an informed decision in their best interests by weighing the potential benefits and downsides.

Jodi Mai began her career as a recruiter after college. She moved into an HR Generalist role and later, into HR management, working on such topics as employee relations, benefit administration, and payroll. Over the last 15 years, she has worked in the talent acquisition and management industry, and since 2018, Jodi has expanded to HR consulting and writing on HR and recruitment topics.