A Counter offer. An offer made in response to a previous job offer by the other party during negotiations for a final contract. Do they benefit businesses or employees in the long run? Who does it work out for?
If you're a business owner, should you counter offer an employee who has been actively looking for a new job and accepted? An employee who is so unhappy in their current position he or she has decided to look elsewhere - maybe even to a competitor's.
Let's look at some scenarios.
You're Jim the Sales Manager and a member of your team, Kate, has just handed in her notice.
Arguably, your first thought if you didn't have any inkling, is one of surprise, followed quickly by panic. You haven't got time for this!
A replacement will a) cost money b) take ages to get up to speed and c) take up lots of your time sifting through CV's and carrying out endless interviews. So, what do you do? The easiest option - offer Kate more money to stay and not rock the boat. You offer Kate £5,000, that should be enough for her to stay. All sorted.
You're Kate who's just been offered a new sales role at a rival firm. Your current Sale Manager has offered you £5,0000 to stay.
£5,000 - wow. It's a shame they couldn't have offered that to you in a pay rise last year. Still it's flattering. You won't have to move jobs, you won't be the new person, less risk if your new job doesn't work out - it's easier to stay where you know.
A £5000 pay rise from £35,000 up to £40,000 is actually only around £65 extra a week into your bank account. Is that enough to stay and ignore the other reasons why you decided to look for a new job?
What are the reasons in the first place you contacted a recruitment consultant. Was it actually about wanting a higher salary? Or was it because you were under too much pressure, working long hours or not seeing your family as much as you want. Perhaps the commute was too far, or you disliked your manager's style of leadership. . If you take the pay rise - will those issues change? Chances are they won't. And where is the money coming from? They may have strict wages and salary guidelines they must follow.
Kate - Fast forward 3 months
You accepted Jim's offer and decided to stay at your existing company and take the pay rise. 12 weeks on and the reasons you wanted to leave have re-surfaced. Coupled with the fact that your colleagues have been slightly distant and appear less willing to share ideas, since they discovered you'd been offered another position. Even your pay rise didn't seem to go fas far as you thought. You've contacted a recruitment consultant who's looking for a new role for you.
Jim - Fast forward 3 months
Kate accepted the counter offer and for a while everything returned to normal. In the last two months however, she hasn't been hitting her previous high targets. You feel like you can't trust her as much as before. You've also noticed the other members of the team aren't as open with her and their is a trust issue starting to form. The team know Kate's basic salary is more than theirs and this has also caused resentment within the team.
Frequently we see candidates offered various dangling carrots in an attempt to get them stay, including promises of promotions, pay rise or more employee benefits. Usually we'll receive a call in three to six months from the candidate saying they are looking again, as it just isn't working out because the reasons they wanted to leave in the first place have ultimately surfaced again.
Think before you make a counter offer
What are your options if you're Jim? While it may be tempting to counter offer a member of staff, there are a few things you might want to consider first:
Do you know all the true issues why Kate has looked elsewhere for a new job?
Are those reasons you can genuinely fix? If Kate is finding the commute too far it would be pointless to counter offer her. If she is unhappy with her current manager - could you move staff members? Or could you change her hours?
If not, it may be wise to let the person go and start the process of replacing them.
80% of people who accept a counter offer leave within 6 - 12 months
It's estimated that around 80% of people who accept counter offers will leave within 6 to 12 months. So really think it through before accepting. You'll only have to re-start the whole job hunting process again if doesn't work out.
A consultant once described the counter offer situation as: "It's a bit like, being married, having an affair and then going back to the marriage expecting it all to be exactly as it was before."