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What You Need To Consider With Counteroffers

What You Need To Consider With Counteroffers

26 days ago By Emily Harris
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You finally make the executive decision to leave your job. You begin the search for new opportunities and after reaching out to your network and endlessly scrolling on Linkedin and Seek, you're presented with an exciting opportunity and receive an offer you are fully prepared to accept. ​

However, the tables are turned at the last minute. On informing your current employer of your plans to leave, they present you with a counteroffer. What do you do? Is it ever a good idea to accept a counteroffer or is it a decision you'll live to regret?​

What is a counteroffer and how common are they?

Traditionally, a counteroffer is a salary raise or promotion that an employer offers to an employee in response to their employee’s resignation announcement. 

There are varying statistics available on how frequently counteroffers occur, and particularly within the public sector, they can be less common. But –especially if the employee is highly valued and they’ve been in a permanent or long-term contract role – they can still happen. In fact, they could become more frequent over the next 12 months. After last year’s pandemic and the uncertainty it brought to the job market, many employees were increasingly reluctant to change jobs or organisations and job security became paramount. However, because of so many professionals staying put, when employees have decided to take the risk and jump ship, employers have realised that there is a shortage of good candidates to replace them, particularly for roles that require specific skill sets or experience. 

This can be especially true in local government, where most councils will require a candidate with previous council experience. As a result, counteroffers are becoming a more common technique for organisations to try and retain staff. 

Which leads back to the original question- if you are presented with a counteroffer by your current employer, what should you do? The short answer is it depends on your particular situation. But before you accept any offers it is important to remind yourself what the key motivation for leaving the organisation was initially. Was it purely salary-related, were there limited opportunities to progress your career, did you feel the need for a new challenge, or did you feel it was a toxic workplace? 

When we asked our own Linkedin network what type of counteroffer would convince them to stay with their current employer, 33% voted for a salary increase, 19% voted for a promotion or title change and 11% said a role change. Interestingly, however, a further 37% said they would never consider a counteroffer. A U.S staffing company found similar results when analysing the results of a number of exit interviews across both the public and private sector. Their findings revealed that the reason people left an organisation was often rarely due to one factor, like salary. It was often the combination of workplace culture, feeling restricted in their role or not valued enough-which is where salary can come into play (Lee, T. (2018)[1]. The issue with counteroffers is that they can be a short-term solution for these more in-depth problems – for example, a pay rise or job title might satisfy an employee for the next 12 months, but what happens at their next performance review? They’re not necessarily guaranteed to experience more progression. Alternately an organisation might be able to grant an employee more workplace flexibility, which could satisfy them in the interim but this won’t fix a culture that rewards workaholics. Therefore, it is important for employees to consider carefully if the counteroffer will truly achieve the resolution they seek. If they wanted to leave the organisation purely due to salary for example and then their employer offers them a pay rise, this counteroffer might be the resolution they need. Then they don’t need to put themselves through the additional stress of starting a new job, with brand new colleagues and processes to adjust to. However, if there are additional reasons an employee wanted to leave and they are interested in a new challenge- while a fancy title change or a higher salary is tempting, are these things really going to resolve your sense of dissatisfaction in the long term? Not likely. 

It's also important to remember that while counteroffers within the private sector usually resemble a salary increase, many organisations within the public sector – especially government – are limited on how much additional money they can offer due to set procedures and budget restrictions. Consequently, it is important to consider that your current employer might not be able to match the starting salary of any additional offers and if you were using a counteroffer as a bargaining tool to get a pay-rise, it might not work. 

A big part of weighing up a counteroffer is considering all the possible repercussions of accepting the counteroffer. If you’ve informed your manager or supervisor that you intend to leave the organisation and then taken their counteroffer, your loyalty could be questioned going forward. A company might not consider you a ‘safe’ option when considering future promotions etc, as what’s to stop you from leaving again? An American survey conducted by global technology & services practice Heidrick & Struggles which interviewed over 600 senior executives, reinforced this belief. Within the survey, 71% of senior executives and 67% of HR leaders said that their trust in an employee would be diminished once accepting a counteroffer[2] Cullen, M. & Kay, K. (2019).

On the flip side, if you accept a counteroffer you need to consider how this will look externally, particularly to the third party who have also offered you a job. One of the respondents in the Heidrick & Struggles survey – a chief operating officer for a major division of a global bank-said “You’ve got to watch the reputational damage that comes with accepting an offer and then reneging on it.” Going back on a job offer you’ve previously committed to comes at a significant cost and inconvenience to that company and could potentially eliminate the chance of a future relationship with them. Is the counteroffer you’re accepting worth burning bridges with others in your professional network?

Ultimately, you know your work situation better than anyone, so the final decision is up to you. But before jumping to accept a counteroffer, it’s important to remember why you initially sought out new opportunities in the first place. Don’t feel pressured to give an answer right away and carefully consider if the offer your current employer is providing, will truly be able to satisfy your professional goals in the long term. And if accepting the offer will be worth the potential damage to your professional relationships – with external organisations you’ve been interviewing with and the managers within your current organisation.   

Contact Us

Resigning isn’t always an easy decision. If you are considering a counteroffer or wanting to make a career transition within the public sector, but would like to discuss your options confidentiality, you can reach out to the public sector team below:

Email: info@publicsector.com.au

Phone: (03) 8535 3111

[1] Lee, T. (2018). The Pros and Cons of Counteroffers. Career Cast. Retrieved from: https://www.careercast.com/career-news/pros-and-cons-counteroffers 

[2] Cullen, M. & Kay, K. (2019). If You’re About To Take A New Job, Should You Consider Your Boss’s Counteroffer? Harvard Business Review. Retrieved from: https://hbr.org/2019/01/if-youre-about-to-take-a-new-job-should-you-consider-your-bosss-counteroffer