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Navigating Counteroffers: What to Know as an Employer and Employee
Jarboe, Emily
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Navigating Counteroffers: What to Know as an Employer and Employee

By: Jay Meschke & Omar Davis

As an executive search firm with over 44 years of history, counteroffers were rarely an issue. It seemed as though a candidate would, upon accepting an offer from a new employer, walk in and resign and that would be the end of it. Employers would never even consider issuing a counteroffer and might even show the employee the door that very day.

More recent entrants into the industry have encountered a markedly different landscape, as this scenario has changed drastically over the last decade. Social scientists may have a better understanding of the changing dynamics, but it is now a fact that employees are not only susceptible to counteroffers but will actually take them and stay with their existing employers more often than not, especially in this hot market of 2021. Plus, rather than showing the departing employee the door, employers themselves are readily willing to issue counteroffers because they understand the cost of backfilling a key position.

It's also interesting that people nowadays are swayed to stay at their present employer when that organization showers them with more money, more responsibility, a bigger title, a visit from the CEO, and other perks that were not offered just moments ago. We have seen a multitude of candidates who have signed or verbally accepted an offer from a new organization only to renege on their promise without a second thought.

Counteroffers: Tips for Employers

For employers, especially those actively recruiting, anticipate the counteroffer. It should come as no surprise – top talents are in high demand. Therefore, it is dangerous not to be planful for this situation. Here are a few other tips to consider when combating counteroffers:

  • Prepare to Counter the Counteroffer

Be prepared to stretch your compensation ranges and have a counter-to-the-counter offer. Ask candidates specific questions in the interview process that provide you with insight into their biggest motivation for leaving. Leverage their answers and remind prospective employees about why they decided to seek a new position in the first place.

  • Evaluate Your Existing Hiring Processes

Also, employers would be well served to evaluate existing hiring processes from beginning to end to portray their organization as an exciting and welcoming place to work with loads of upside opportunities. 

Have you seen our latest infographic The Road to Recruiting Executives? Use the data to quickly evaluate your hiring process and ensure it’s on the right track!

  • Offer Comprehensive Compensation Packages

Culture, innovation, and impact are all incredibly important factors behind attracting talent in a candidate-driven market, but compensation is the determining element. Organizations must stay competitive with their compensation structures.

This requires due diligence and market research. Know what your local and national competitors are paying and seek guidance from a compensation consultant. Run a compensation analysis on base pay, annual performance bonuses, retention incentive bonuses, stock options, retirement plans and contributions, health and life insurance benefits, and miscellaneous perks. If your total package doesn't live up to market standards, you are in for disappointment and frustration.

Counteroffers: Advice for Employees

For employees, we issue some words of caution. If one accepts a counteroffer and remains at your existing employer, that relationship is forever changed. Next time there is a promotion opportunity or a plum, sought-after project to be divvied out, you may be subliminally removed from the roster because you held your employer ransom. People remember disloyal employees, especially if you consciously or subconsciously used an outside job offer to improve your situation. People have long memories.

Despite employees’ increased willingness to jump on the counteroffer carousel, there is growing evidence that things do not go as expected after a counteroffer is accepted. It has been estimated that 80 % of people who decide to accept a counteroffer and remain at their employer end up leaving in the next 12 months anyway. Why? It is not always about the money. Many times employers make promises at the counteroffer stage that they do not keep. No amount of money can change a loss of trust; a poor workplace environment; or a toxic boss.

Loyalty is loyalty, promises are promises, good faith is good faith, but talent acquisition has evolved into a Free Agent market – just like professional sports.

Welcome to the new normal.

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1 comments on article "Navigating Counteroffers: What to Know as an Employer and Employee"

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Horst Kisch

I could not agree more with the statement that "No amount of money can change a loss of trust; a poor workplace environment; or a toxic boss." Also, going back on your promise, in this case the future employer, is a bad way to start a very important relationship.

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