A Counterpoint to Counteroffers

A Counterpoint to Counteroffers

When an employee reveals their intention to quit in favor of a better job at a different organization, it’s not unusual for an employer to try to persuade them to stay by offering them a higher salary. Indeed, such counteroffers are so commonplace that unhappy employees will occasionally solicit outside job offers just to pressure their current employer into giving them a raise. Yet new research from the global staffing firm Robert Half finds that while most US employers make counteroffers to departing employees at least some of the time, they usually fail to retain these employees for the long term.

In an online survey of over 5,500 senior managers in a variety of professional fields across the US, 58 percent said “yes” when asked whether they ever extend counteroffers to employees to keep them from leaving for another job. However, when asked how long employees who accept counteroffers typically remain with the company, the mean response was 1.7 years:

“Counteroffers are typically a knee-jerk reaction to broader staffing issues,” said Paul McDonald, senior executive director for Robert Half. “While they may seem like a quick fix for employers, the solution is often temporary. When employees accept a counteroffer, they will likely quit soon afterward.

Professionals should avoid these offers, McDonald advised. “Money doesn’t solve everything. If you accept a counteroffer, your employer may question your loyalty to the company. And, more importantly, the root causes of why you were looking to leave in the first place may still exist.”

The staffing firm cautions both employers and employees against counteroffers for several reasons, noting that they can cause morale to suffer by sending “the message that threats of leaving are a means of climbing the ladder, rather than outstanding performance and dedication.” An employee retained with a counteroffer will often be distrusted for the remainder of their tenure with the organization, while their performance is unlikely to improve, knowing that the firm was willing to spend money just to keep them around a little longer.

The clearly superior alternative to counteroffers is to proactively identify employees at risk of quitting and give them reasons to stay before they go out looking for a job somewhere else. According to our research at CEB, now Gartner, this means creating compelling career paths for employees, including ample opportunities for learning and professional growth, so they can see a long-term future for themselves as part of your organization.

Employees will inevitably want to explore new roles and challenges; marketing opportunities for internal moves to them encourages them to seek those new experiences within the organization. Some employers are framing these conversations as “stay interviews” for high performing and high-potential talent to make sure these valuable employees’ career needs are being met. (CEB Corporate Leadership Council members can learn more here about career pathing and designing internal mobility programs to retain talent.)

An effective retention strategy also means being cognizant of the triggers that compel employees to think about making changes in their careers and timing career conversations thoughtfully to coincide with these moments. (Corporate Leadership Council members can also use this tool to identify these “career risk triggers” and offer new internal opportunities to employees when they are most primed to take advantage of them.)

Sometimes, despite your best efforts, an employee is going to quit no matter what (and in the case of disengaged employees, you might want them to). Even then, it pays to make departures as friendly and orderly as possible, both to minimize disruption and to preserve a relationship with the exiting employee. When, how, and why employees quit can determine how their leaving affects the organization and its relationship with them, so it is in a manager’s interest to prevent abrupt, unexpected, or acrimonious departures from their team.

After all, you might work with them again someday. While some managers are still hesitant to re-hire a former employee who wishes to come back, employers today are increasingly open to these “boomerang employees,” especially when the organization has changed in ways that make talented ex-employees want to work there again.