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Why Counteroffers Do Not Work

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“Buying” an employee back when they try to resign, a counteroffer, rarely works out, even in the short run. Ninety-eight percent of the time, the employee leaves within six months to a year and a half, and often with more acrimony than the first attempt.

Counteroffers rarely work out because:

  1. Management makes a counteroffer to solve an immediate problem. You got caught off guard. Management had to do something quickly. Later, when the realization comes to mind you were “blackmailed”, held up by an employee who was unhappy and leaving, and you were taken advantaged of, this will cause resentment.
  2. The trusted relationship between management and employee is broken – it is not the same anymore. In essence, the employee fired management and/or the company or they at least tried to do so. No one likes to be fired.
  3. Money and title, the two most popular tools used in a counteroffer, are temporary.  Most of the time, the adjustments management made to keep an employee are cosmetic and will rarely overcome the underlying reasons as to why the employee wanted to leave in the first place. After the “glow” of the importance of money or title wears off, the employee is mentally and emotionally right back where they were before.
  4. Others in the company will know the “tail” has wagged the dog.  Management and the company have lost the respect of the employees who are aware of the counteroffer. The fear of this happening again will cause riff within the organization.
  5. The emotion of the moment forced management and the company to make this counteroffer; to make the employee feel “special”. However, how long is that feeling of euphoria going to last? What is going to happen when it wears off?
  6. An employee’s leaving never comes at a good time. Management will eventually say to themselves, “How could he/she do this to me? … It couldn’t have come at a worse time…. What am I going to do if they do it again? So, when (not if) is this person going to do it again? If that happens, I’m going to look like a real schmuck and nobody is going to respect me as a manager.”
  7. Normally, for the counteroffer to be successful, management had to involve other managers, usually including someone above them. What are they going to think of the manager should the employee (or another similar employee) do this again? When/if this employee eventually leaves anyhow, the manager’s acumen will be questioned – the manager is at risk and the manager is not going to feel comfortable with the employee.
  8. Good companies do not buy people back. So, the insult to injury is that, not only were the management and company blackmailed, but others in the company know the company is not considered to be well managed.
  9. The employee bought back probably got some increase in salary (perhaps a significant increase). That fact is going to backfire – when the salary reviews come around again, management is going to remember how they were leveraged. Management is going to feel like the employee already got a raise. The employee doesn’t feel that way at all. He or she is going to expect a raise like everyone else. It is a “no win” deal.

Counteroffers rarely work. It seems like a good idea at the time, and the company or management might believe they have to do it for sheer survival.

However, in short order, on a confidential basis, management is going to start looking for that employee’s replacement. We know that because Mitroff Consulting & Associates has been retained, numerous times, by many companies to do a “confidential” search to replace the “successful” counteroffer employee.

Mitroff ConsultingExpert Editorial 

by Norman MitroffMitroff Consulting & Associates

Mitroff Consulting’s Mission is to deliver the highest level of client service attainable in retained executive search. First and foremost, we are specialists in search, so we purposefully do not limit our practice to a narrow industry focus. As a boutique firm, we can minimize “blockage” issues. That is, because our work spans many industries, fewer companies in any given industry will be off-limits to us.

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