On the wisdom of accepting counter offers
Keeping existing talent is always cheaper and easier than recruiting new talent, and so it is no wonder that counter offers are everywhere at the moment. More often than not, candidates are countered by their current employer when they resign, and the financial uplift can be substantial. But is it a good idea? The short answer is mostly no. In our experience most countered candidates are on the market again a year later. In fact, research from Eclipse shows that 80% of countered candidates leave within 6 months. Here’s why:
A sticky plaster on the problems
Staying put is the easiest choice for candidates too; less upheaval, no change or new environments or working practices to get used to, no need to build new relationships, less perceived risk. Everything is as it always was, but therein lies the problem. Candidates look for a new role for a reason, even if they were headhunted, and those reasons are rarely purely financial. A counter offer can sometimes address those reasons too, offering a new role, more flexibility, more responsibility etc. However, the underlying issues are unlikely to be resolved this way. Leaving within six months happens because that’s roughly how long it takes for underlying issues to resurface gain.
Career progression is better achieved by going to a firm and a role which offers a clear path forwards. If you want a role with different focus and responsibility, take a role with a firm who needs someone to do that role, rather than staying with a firm who has created it just to keep you happy. And if flexibility is what you want, are you not better off going to a company whose working practices are based on flexibility, rather than one who begrudgingly creates it just for you?
Even if salary is the motivation, if you need to resign to be paid what you are worth, what does that say about how your employer values you?
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The importance of trust
Flexible working has made trust a buzzword, and trust goes to the core of the problem with counter offers. A candidate who resigns and then stays, is an employee who has demonstrated their lack of loyalty. Resigning and leaving is something that is understood and respected, but resigning and staying has a different flavour altogether, even if this wasn’t the original intent. It is sometimes seen as a form of blackmail, having essentially forced the employer to offer more in order to stay. There is a relationship analogy here. If your partner cheats, what does that do to your trust in them? As they say, things will never be the same again.
This is a problem both with management and with your colleagues, who may perceive you as having one foot out the door. How will they feel?
Having said that, it is good to note that sometimes you can receive things by asking for them. This is true of both your current employer and your prospective new employer, but there are nevertheless good and bad ways to ask. Resigning is the latter.
Career progression, redundancies and salary raises
Another reason counter offers rarely last, is because the salary increase is essentially coming out of your next pay rise. To achieve a higher salary or a promotion again, you would likely have to leave, or wait longer, as your current employer has ‘locked’ you in at a level they’re unlikely to be able to move from any time soon. If career progression is important, the new employer is likely to be able to offer you a better and faster route.
There is also a potential issue with being overpaid, lovely as it may be, as it could make future moves more difficult.
Research also shows that job security drastically reduces after a counter offer. If redundancies are made, you will probably be top of the list. After all, you have demonstrated you are less committed and loyal, and you are also possibly overpaid. In some cases employers make counter offers in order to buy time to find your replacement.
Flattery makes friends and truth makes enemies
A counter offer is hugely flattering. Does your employer value you so much they are willing to pay this much, do all this to keep you? Do they now recognise how significant your contribution is, how irreplaceable you are?
The truth is a often a little more commercial in nature. In a candidate short market counter offers are everywhere, in a candidate rich market less so. The truth is that it is expensive to recruit and train and new employee, and increasing your salary is often the cheaper and certainly the easier option. Before making a decision, try to see the situation from your employer’s perspective and work out what their motivation is.
How to handle a counter offer
First of all, communicate! Many people feel uncomfortable asking for or discussing pay rises, and this often translates to avoiding conversations about counter offers too. A recruiter knows what is happening when a candidate goes quiet. However, ghosting your potential new employer can leave a bad taste. Leaving a good impression always matters, and you never know when you might come across the same people again, and so whatever you do, always be honest and keep communication open.
Secondly, ask yourself what you wish to achieve and what you are willing to risk. It is possible that you can use the counter to negotiate a better deal with the new employer, whether in salary or other benefits, but it is also possible that they might pull the offer. Your recruiter will be able to help with the negotiation and advice on your position.
Lastly, if you do decide to stay, send the other firm a thank you note for the job offer and their time.
About Fram Search
Established in 2010 by Simon Roderick, a recruiter with 20 years City recruitment experience, Fram Search is a specialist financial services recruitment consultancy. We focus on permanent and interim recruitment in the UK & internationally.
We provide high quality contingent and retained recruitment to boutiques and global brands. We have long established relationships and access to deep talent pools. Fram takes a highly consultative approach, and we have a quality over quantity ethos. We are proud that our contingent fill rate is nearly three the industry average and we augment our retained search methodology with rigorous psychometric testing. Champions of diversity & inclusion, all staff have undertaken unconscious bias training.
Please contact us on 01525 864 372 / [email protected] to learn more.
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