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

October 18, 2016

Think Twice before Reacting with a Counteroffer


Voluntary resignations are increasingly common as job seekers regain control of the market. According to compensation survey data and consulting firm Compdata, voluntary turnover has grown steadily from 9.1% in 2011 to 11.6% in 2015. Therefore, managers should prepare to effectively handle the occasional loss of top-performing employees in Q4 2016 and beyond.

A counteroffer is a common reaction to an unexpected resignation. Every employee is replaceable, but one’s intense feelings of disappointment blur this fact. In addition the expectation that the employee will resign within the next year, a counteroffer is harmful for several reasons described below.

The employee doesn’t want to work for you.

He or she already has grievances with the position—a lack of room for growth, poor management or the wrong cultural fit, for instance—that can’t be rectified with a few extra thousand dollars or a more impressive title.

The employee’s productivity and commitment to excellence will decline.

Per above, the employee wants to work elsewhere. A disengaged employee cannot perform his or her best work because he or she is no longer committed to management, colleagues, and the company’s long-term objectives.

The counteroffer conflicts with the budget and hierarchical structure that you’ve already created.

As a leader, you have already determined your staff’s appropriate market values and levels of responsibility. When you extend a counteroffer, you abandon some of your authority to temporarily satisfy your disgruntled employee.

You will have trouble trusting the employee in the future.

How can you trust someone who works for you, tries and fails to leave you, and stays only for a minor upgrade? The next time the employee calls out sick, will you suspect he or she is interviewing for a new job? When the employee is tasked with a major project, can you expect that he or she will produce high-quality work? It’s hard to say yes to either.

You’ll prolong the opportunity to discuss room for improvement.

The counteroffer temporarily silences the employee’s legitimate disengagement with a quick, desperate fix. As a result, you lose the opportunity to conduct a true exit interview and learn how to improve your processes and managerial style.

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