The official blog of Abacus Group — a place to share our knowledge and thoughts on trends in recruiting

June 04, 2014

The Dangers of Making an Employee a Counteroffer

We’ve talked before about why accepting a counteroffer is dangerous to employees. A superficial fix to a deep-seated problem, a counteroffered salary increase degrades an employee’s worth, damages professional relationships and exacerbates the job dissatisfaction from which the employee was trying to escape.

In our examination of the risks to employees, we acknowledge, of course, that counteroffers are rebuttals issued by employers.  On the other hand, employee resignations – the impetus for counteroffers – are inevitable drivers of market change.  With median employee tenure reported in 2012 as less than five years, lifelong loyalty to one company is far from the norm; employers can’t realistically anticipate their staff to stay put indefinitely.

Extending a counteroffer in response to an employee resignation is just an option, indicating that the reaction is preventable.  If you’re an employer grappling with the decision to counteroffer an employee, consider some reasons to respectfully handle the resignation. Here are some of the unfavorable outcomes for an employer following an employee’s counteroffer acceptance:

Now you’re just a means to a (small) monetary end. If the employee accepts your counteroffer, you now have concrete confirmation that their only perception of your value is a small bump in salary. Wouldn’t you like to know that your employees regard you just a bit more highly – and are motivated to come to work every day for reasons besides money?

The fix is temporary, so your time is limited. A counteroffer just buys you a little bit of time before the employee leaves for good. An employee who confronts you with their decision to resign is practically already gone; they’ve gone through every step of the job-changing process, from mere contemplation to offer acceptance. It’s only a matter of time before they follow through completely.

The original motivations for resignation aren’t going to magically disappear. Surely the employee had a list of reasons other than compensation that inspired their search. Maybe the salary increase will temporarily appease them, but the initial causes of disgruntlement – whether they include uncooperative coworkers, inadequate learning opportunities or a negative environment – will resurface in due time.

Your other employees will be affected. You’ve spent money to keep an unhappy person on board, and his or her discontent will likely spread to others. Moreover, your staff will resent their peer who undeservingly earns a premium for the same responsibilities, and some may threaten resignation in an attempt to produce the same reaction from you.

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