For the majority of companies, the most important and expensive asset they have is their employees. As the ambitious goals of these companies inevitably reaches for greater productivity and creativity, the available skilled labor in the labor market will eventually run out. This limitation creates a shortage of labor leading to a competition for your professional services, and could lead to a counter offer being made in a negotiation situation.
What is a Counter Offer and Why is it Made?
A counter offer, strictly speaking, is a rejection of an offer made as well as a new offer that contains material changes to the terms in the original offer. For the purposes of this article and in this context, a counter offer is an offer made by your current employee, which encourages you to reject an offer made by another company.
As a skilled employee, your company has every incentive to keep you on their staff. Hiring a new employee is an expensive process as can be seen in a study by the Society for Human Resource Management. Not only are the costs of finding and hiring a new employee expensive, but there is also a loss of productivity, since the new employee needs to learn to fill your role after you have left. Finding the right talent to drive your business towards success is also a challenge for many businesses (read more on how you can find the right staff). It is often much cheaper and more efficient for a company to present a counter offer than to let an employee leave.
Employees with specialized skills, education, or experience are most likely to receive counter offers. But many employees are often not sure if the extra money included in the proposal is worthwhile or simply a distraction from other issues in the work environment. If that sounds like you, continue reading to learn more about when to accept an offer and when to decline one.
Why Consider a Counter Proposal from Your Employer?
So, in what circumstances should you consider a counter offer? A question like this can only be answered by personally evaluating the costs and benefits. However, there are some important steps that you can take to help you make that choice. Ask yourself, “Why did I decide to look for opportunities outside of my current company in the first place”? For many people, the answer may differ. It could be more money, better opportunities, or a change of environment.
If you have already decided to seek a different job or look for a new opportunity, you may have discussed this desire with your manager. Considering the extra cost associated with losing the productivity of a qualified employee, and then having to find and train a replacement, your employer might consider raising your salary as a solution, in an attempt to prevent you from being lured away.
Many people may find this solution untenable. The sensitive nature of office politics and professional relationships could have a negative impact on the working environment when negotiating for more money. However, if you enjoy your current position and coworkers, perhaps discussing your salary is the best solution to solve the problem.
When deciding whether to accept counter offers, money is usually one of the most simple factors, as it is quite straight forward. The bigger number is better. But deciding to change jobs is typically not as simple as choosing a bigger number.
Reasons You Should Not Accept a Counter Offer
As you probably already know, there are many reasons why an employee would consider changing jobs, besides looking to earn more money. Some of the main reasons that people leave a company include a lower salary, bad relationship with the direct manager, lack of recognition, being overworked, limited career progression, lack of benefits, and change in family situation.
Although money might help ease the tension for some of the reasons listed above, in the long run it might not be enough to overcome some of the challenges these reasons create. This may seem like common sense, and it is, but determining whether to reject a counter offer can be an emotional process that prevents people from making the right choice.
Many people that decide to accept a counter offer may end up leaving that workplace eventually. A survey by Eclipse Software found that around 80% of candidates who have decided to accept a count offer from their current employer had ended up leaving within 6 months.
What this statistic shows is that people who have reasons, other than money, for leaving their current position can be blinded by the increase in pay or benefits, may temporarily mask the main reasons why they initially wanted to leave.
As an employee you should ask yourself how much money does it really take to compensate for a poor manager who micromanages or consistently ignores creative solutions? In the moment, it may seem like a large raise can resolve these kinds of issues. But as the statistic above shows, it is not always the case.
If you are considering a proposal from your employer, remember the main reasons why you decided to look for other opportunities in the first place. Was the issue purely about money? If so, the solution to your problem is simple and a raise can solve your problem. However, if your reason for leaving is not purely for monetary reasons, you should strongly consider if the counter offer can meet your professional requirements.
The Pros and Cons of Accepting a Counter Offer
The pros of accepting a counter offer are fairly obvious. By accepting the offer, you will be able to continue working in a place that is familiar, comfortable and alongside people that you ideally enjoy working with.
Additionally, if the counter offer was able to solve many of the problems that necessitated your search for employment elsewhere, then you can now enjoy the salary or benefits you received from your current employer with the added benefit of knowing that your employer does not want to lose you.
The cons of accepting a counter offer are less obvious and more difficult to measure. If you accept the counter offer, your employer may resent the fact that you used another job offer to advance your career within the company (if your employer is predisposed to this type of work culture). It may further add a negative element to the relationship, depending on the manner of the negotiations.
By accepting the offer, you may have put a limit on your professional development within the company, if your manager places a high value on loyalty. Another aspect of this problem is that it is not necessarily transparent. A manager may fight to keep you there, but personally they feel that you cannot be trusted and as such will limit your professional opportunities.
The Pros and Cons of Rejecting a Counter Offer
Ideally, when you reject a counter offer it is because the offer received by the interviewing company is better than the counter offer received by your current company. In such a case, it makes the decision to leave easier and more straight forward.
When rejecting the counter offer it indicates that the new position and company offers you something that you could not get from your current role. Whether that would be more money, more responsibility and room for development, or a better and more flexible work culture, these benefits will be easy to see.
There may be additional benefits to accepting a new role, like a change of environment, more free time, room to explore new opportunities, taking on new challenges and ultimately progressing through your career.
By rejecting a counter offer you may be cutting off or putting a negative spin on some of your professional relationships. Your current company may consider your desire to change roles and not accept their counter offer as a lack of loyalty and may deem you unreliable or untrustworthy, limiting any future professional cooperation.
Another negative of rejecting a proposal is that your new position may not be as good as it seems from the outside. After rejecting a counter offer, that opportunity may be gone and your path is set. Rejecting an offer may create a feeling of regret that leaves you wondering how your career could have progressed, had you stayed in the role.
Tips to Navigate Receiving a Counter Offer
Here are some tips to help you determine if you should accept a counter offer and how to negotiate it:
- The Main Purpose: Determine what it is about your current position that is driving you to change positions. Be exact and specific when outlining what it is that you expect from your job. Consider the working hours, salary, professional relationships, career opportunities, location, and other aspects that are important to you.
- Discuss your Concerns: Determine if you work for an employer who is opened to discussing these requirements. If they are, it is better to first raise your concerns with them and see if they can meet your professional needs, before going through the long process of finding a position, interviewing, and negotiating your salary. Some work cultures may make discussing these things difficult or impossible, so determine that before opening negotiations with them.
- Make a Decision: If you have determined that your current job is simply not meeting, or cannot meet your needs, then it is time for a change. While professional relationships are important, your overall health and happiness is more important, so looking for new opportunities may be the solution you are looking for. If there is possibility for you to stay, with a few tweaks to your current situation, then try and negotiate for terms that are most favorable for you.
- Review Potential Offers: Now that you have received an offer for a new position, your current company may decide to present you with a counter offer. Review what you decided for the first step (the main purpose for your decision), as this is the most important step. Does this counter offer honestly fix the problems that led to you wanting to leave in the first place? If it does, then make your decision accordingly. However, do not become distracted by a higher salary if the reason you decided to leave was because of something unrelated to money. The money may be exciting in the moment, but in time those issues will resurface, and you are statistically likely to leave anyway.
- Negotiate: Do not forget that entering into discussions with your current company or a new one, you are able to negotiate your position (arguably with more leverage). Negotiate all the terms you would like to change and although you may not got everything you want, it can definitely help you make a more informed decision on whether you want to go or stay in your current enterprise.
- Accept your Decision: Once you have chosen which offer to go with, stay committed and do not worry about the decision. The hard work that made your current company consider you too valuable to lose will likely lead you to greater opportunities in the future.
Finding a Partner That Can Help
Having the right employees in your team can drive your company towards success in a new region. As a global PEO and expansion company, we help you find the right talent, hire and pay staff anywhere, and help you get started in more than 60 countries around the world. Get in touch with us today to learn more about our services and how we can help simplify your international business.