Some counteroffers make the news. In the summer of 2015, several basketball players renegotiated their contracts. DeAndre Jordan of the Los Angeles Clippers had verbally agreed to join the Dallas Mavericks, in part because he didn’t have a good relationship with one of his teammates. In the end, Jordan changed his mind and stayed with the Clippers. We’ll have to keep an eye on him to see how this plays out over the next several years.
But most counteroffers go unnoticed. They don’t make the news. They might sound like a good idea, but generally speaking, you shouldn’t make counteroffers when an employee wants to further his career.
Counteroffers Are Bad
Yes, counteroffers are bad, even for you, the employer. Consider this story.
Nathan loved his superintendent job. He was responsible for building Walmart stores all across the nation. Over time, he grew tired of his job. Tired of the traveling. Tired of being in charge over the same project over and over. He started looking for another job. Got an interview. The company offered him the position. He was finally excited about working again.
When he gave his current employer a notice, they came back with counteroffers. They told him he would get promoted, not have to travel, and get a nice pay raise as well. So he turned down the offer from the new company. With the opportunity to stay local and work on a variety of projects, he agreed to stay put.
A few months later, his employer shipped him off to some city to build yet another Walmart. He questioned their actions and they replied that the local projects had ended and he had to travel to stay employed. The man kicked himself for taking the counteroffer instead of the other position and called his recruiter back to see if the position was still available. It wasn’t.
We always tell our clients and candidates the same thing. Counteroffers are bad. They don’t work. It’s not good in the long run, as seen in this example, and it’s not good for employers either.
We don’t want to tell you what to do, but our experience definitely proves a point. Do you really want to keep a disgruntled employee who is unhappy with his job? Think about how it will affect your company culture. And this story is just one of hundreds. If someone puts in a notice, let them work it, and then find a worthy replacement.
Prevention Equals Retention
Don’t let your employees get to the point of unhappiness to begin with and you should never have to think about making a counteroffer. If a counteroffer is accepted, it’s only a Band-Aid. The level of unhappiness felt beforehand goes a lot deeper than money, or even a promotion. Long term, it won’t work.
We maintain our vehicles, construction tools, and machinery. They are serviced on a regular maintenance schedule to help prevent unhappy engines. Broken cars and blown engines can be prevented for many years with regular service. Same with employees. Counteroffers might hold off a major breakdown for a week, a month, or maybe even a year, but in the long run, a blown engine can’t be fixed by replacing the transmission.
Know your employees. What makes them happy? Why did they want to work for you when you hired them? Have regular chats with them. Keep them happy about their work and motivated to grow – and they’ll be happy to stay.
A counteroffer isn’t good for either party though. The employee will likely be gone in a year anyway, whether by personal choice and another job offer or by a future layoff. When that happens, you’ll have to start looking for a replacement. Why wait? Let them work a notice. He might be willing to help find his replacement as well. Don’t wait until you’re stranded on the side of the road to think about how you should have gone to the shop six months ago to get the engine checked out.
Think about it. You are in a happy partnership with your employees. Until one of them wants to divorce you and you’re left wondering why.
Betty and Jim happily get married. They have a great relationship for years. One day, Jim says he wants a divorce. Betty is sad to hear the news, but offers to make things work out. He stays. It works out for several more months, but they eventually separate.
Though things were a little smoother for a while, the heartache was not only postponed, but also prolonged. Both parties felt it. Is he loyal? Is she loyal? Are we happy? Will this partnership work out? As the employer, just let Jim work his notice and move on. You’ll both be happier in the long run.
In the mean time, take a closer look at your other employees. Listen to them. If something isn’t working right, find a way to fix it. Listen to your employees. They will let you know when things aren’t working out. Prevent those divorce papers from ever being signed in the first place.
Don’t force Jim to stay by promising to hold his hand every night. A forced promotion, extra vacation time, or salary increase is merely a mask for the broken loyalty. He’s already stated his loyalty intentions. You should have gone to a marriage counselor to get everything fixed a long time ago.
Don’t let it get to the point of unhappiness where Jim is ready to give up and move on. But if the time should ever come that he does want to move on, know that he has carefully weighed his options and feels that a move is a change in the right direction to further his career. It’s okay to be sad, surprised, or shocked by it, just don’t be selfish by trying to change his mind.
The Final Pros and Cons
If your employee takes one of your counteroffers, what are the pros and cons? For you? For him? What about if he doesn’t take your counteroffer? Yes, there are cons for you and pros for him, but there are also PROS for YOU. So your employee decides to go for more money and stay put. Here’s the breakdown.
PROS for him. He’ll be in his comfort zone and he won’t have to change jobs. He will get more money and a possible promotion.
CONS for him. He’ll never know what the dismissed opportunity could have done for his career. He’ll eventually feel “stuck” again and his unhappiness will likely resurface.
PROS for you. You don’t have to look for a replacement right away, which allows you to maintain your presence with projects and you don’t have to face the music of explaining to others that a key player is leaving.
CONS for you. You had to give him more money just to keep him. It postpones the hiring process. You’re postponing the inevitable.
And what do you do when the counteroffers you made weren’t quite good enough to lure your amazing employee back to the comforts of familiarity? You rejoice! After you have a good cry, that is. Take a look at this list of PROS when your employees fly the coop.
Having someone leave that doesn’t really want to be there will help solidify your company culture.
Dismissing a stressful situation allows everyone else the freedom of not having to walk on eggshells.
Think about how you are treating your employees. Are you fair, kind, and honest? Do you challenge them enough? Do you follow through? Paying attention to how you treat your employees will help you retain them for years to come.
You’ll save money in the long run. Let’s say Jim was making 85k and his new job offered him 100k, but you offered him 105k. When you get ready to hire his replacement, you can offer the new person 95k. That’s a savings of 10k!
So, dry up your tears. Be happy for Jim. Roll up your sleeves, and get to work. It’s not the end of the world and chances are you really will find someone better suited for the company and the salary without the hassle of dealing with counteroffers. Learn from this experience. Find out why they are leaving. Do your best to address those concerns before they decide to leave. But the next time someone else does want to leave, don’t even make a counteroffer. Wish them well, let them work a notice, and start looking for qualified candidates who are chomping at the bit to work with you.