Should you accept that Counter Offer?
In today's tight labour market, with many employers struggling to retain employees, and companies competing for talent, counter-offers are increasingly common with the announcement of resignation.
This is not surprising, with job vacancies in the UK economy at a new record in March 2022 of c1.3 million an overall increase of c500,000 compared to the pre-coronavirus (COVID-19) pandemic level. This is further exaggerated in the high technology, electronics, and engineering sectors, with many specialist skill requirements, degrees being mandatory for many jobs, and prior experience being a top consideration, ideal candidates are in high demand.
In the UK, IT vacancies have doubled in the past year, with job postings in the technology, media, and telecoms (TMT) sector growing by 119% year on year. The latest KPMG tech monitor report found that tech sector employment is growing "at a record pace" in the UK.
So, with nearly 40% of employers counter-offering or at least having the conversation about such action when employees resign you should be prepared to address this possibility before it happens. Counter-offers are very common in candidate-driven markets, where skills shortages make it difficult to find talent and recruit new employees. Remember, counter-offers are rarely about the employee but about protecting the business.
Employers tend to make counter-offers for the following reasons:
- To retain the employee’s knowledge of the company, customers, and processes.
- To minimise the costs of hiring and training a replacement.
- To maintain employee morale and team relationships.
Counter-offers are part of an employer’s toolkit to entice you to remain. A counter-offer can be tempting and is almost always flattering, they are designed to convince you to stay, thus benefitting you more from staying than leaving -- but that does not necessarily mean taking one is the best option for you. It will always be easier to stay. But does your employer value you so much? Are your managers recognising your significant contribution and will they pay you more than you thought was possible?
Are the reasons behind the counter-offer in your best interests?
It is usually cheaper to keep an employee by offering a pay rise or a promotion than it is to hire and train a new employee. Replacing employees takes time and money. Not only that but if you are in a role that is challenging to fill because of skills shortages, your position could be open for many months. Consequently, a counter-offer has nothing to do with your value and how much they like you, but it is a cost-saving exercise.
What does a counter-offer often look like?
There are predominately two types of counter-offers you are most likely to have presented.
Financial: When you resign and confirm that you have accepted a new job, your employer presents you with an offer to increase your current salary. Sometimes, if they know your new remuneration terms, their offer might match or beat this level; otherwise, it could be a ballpark guess at what salary and benefits package might retain you.
Emotional: This is a tough area as it often relies upon your sense of loyalty and can really tug at your heartstrings. This occurs, not in the form of a formal offer, but in a reiteration of your value and sometimes suggestions or promises of better things to come. Your employer might ask you to stay, with a reminder that things are going to improve at work, a renewed promise to find new resources, an agreement to promotion, or even an appeal to your sense of loyalty by asking you to stay until a project is delivered.
Unfortunately, there is more reason to turn down than accept a counter-offer. A counter-offer usually requires some careful consideration before a final decision is made and you jump for the new terms immediately.
1. Why do you really want to leave?
If it is just that you could make more money elsewhere, the counter-offer could mean problem solved but studies generally show that only 10-20% of employees resign due to money. So, it is likely that you were looking for a new job for other reasons and these do not vanish with a higher salary.
But there are some things money cannot buy: work-life balance, opportunities for career advancement, a sense of excitement, and challenge at work. Think about the difference the higher take-home pay would make in your day-to-day life–enough to offset job stress or boredom? If not, it may not be worth it.
2. Why a pay rise now?
If you have asked for a salary increase and been turned down, a counter-offer should raise a few red flags. An employer that does not know what they have got until it is (almost) gone is not a company that values its employees in the long term.
This may not be true in every case. Maybe an increase was outside your line manager’s budget when you first discussed the subject, and funds are now available. Maybe the counter-offer comes with a sincere apology for overlooking your value before.
You know your employer best, especially if you have worked there for years.
Think about the consequences, Forbes says 80% of employees that accept a counter-offer leave within six months and even more within the year. Proving that money is not always enough to overcome the original reasons you considered leaving.
3. Are you prepared to prove yourself again?
Even if you take the money and stay, you are likely to be under more scrutiny as your employer seeks to justify their choice. So do not assume you have escaped that new job hustle if you turn the outside offer down. When you receive a counter-offer, your previous employer has in essence “hired” you all over again.
A company that recognises the value of its employees is essential. So, if it takes a resignation to get you noticed, and deserve, then maybe they are not the kind of business you want to work for.
4. Are you ready to take on more? And if so, what was the holdup?
If your employer offers you a promotion, it is usually worth turning a critical eye on both yourself and them. Are you ready for more responsibility? Are they ready to give it to you? Or is the new role just a last-ditch bid to retain you? If it is, you may find yourself in a worse position than you started, which is why it is important to ask yourself – are you ready?
5. Does the role you are being promoted to actually exist?
It is an all-too-common practice: a good employee wants to move on, and to keep them on board, the employer creates a new senior role for them. This rarely goes well for the employee, who has no standard practice or senior mentorship to fall back on.
If you are offered a new role, ask about the responsibilities in detail. Do not let an employer set you up to fail with the promise of a step up the corporate ladder. Case studies show that after accepting a counter-offer, your job security drastically decreases.
6. Is this just a salary review in disguise?
Many candidates who accept counter-offers find themselves excluded from standard pay raises when annual salary reviews are conducted. It may help to talk to colleagues about their counter-offer experiences, or even (diplomatically!) ask outright if you will be included in later raises if you accept this one.
7. How will you be treated if your employer knows you were ready to leave?
This has more to do with industry and company outlook than the individuals involved. If accepting a counter-offer is likely to make you first in line for redundancies in the future, it may be best to leave the money on the table.
8. It may change workplace dynamics
Accepting a counter-offer may affect your relationships with colleagues upon hearing the news. You may lose some of the acceptance of your peer group.
9. Will you be left wondering what could have been?
Sometimes, the best thing to do in your career is to take a chance on something new “there is no reward in life without some risk”. If the only thing keeping you in your old position is fear of the unknown, it is time to move on.
Your new employer may offer better career development opportunities or, at least offer you a chance to tackle a new challenge and/or new technology.
Ultimately, when and if a counter-offer is presented to you this decision is all about you – not the project, not your loyalty to the team, your manager. It is about YOU and what you want to achieve in your career and what is best to cement that development.
It may be helpful to take a few days before making your final decision. Any career step is likely to influence your long-term future, so make sure you analyse every aspect of both offers before deciding, try and visualise your future in both scenarios.
Do not wait until you have received a counter-offer to decide how you will react. Have a plan – broken down by amount, if necessary. Then, if you are put on the spot, you can still be confident you made the right decision for your long-term happiness.
Top Tips:
- Do resign professionally and in writing. Handling your resignation with professional confidence will leave little doubt in your decision and avoid conflict.
- Do not buy into emotion. This is a business and a career decision.
- Do keep your end goal in sight. Remind yourself of all the reasons that drove you to consider leaving in the first place.
- Moving jobs is stressful, often difficult, and never straightforward. The best thing to do is try and work with genuine and trusted recruiters who have your interest at heart.
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