The Dreaded Counter Offer
Have you ever been presented with a counter offer after resigning a position? Or, have you presented a counter offer to an employee who resigned?
Let me clearly state that one should (almost) never accept a counter offer, and why companies as a policy should (almost) never make them. None of the CFOs I’ve placed have accepted a counter offer. This dreaded possibility is always discussed prior to my making an offer on behalf of my client.
I was recently interviewed by FierceCEO for an article about counter offers, and as is frequently the case, the reporter only used a few of my words, so I’m jumping on this soapbox as a public service and as a refresher on this important issue!
Explore Your Motivation
It’s easy for a company to make a counter offer. Much easier than trying to get the work done without you and experiencing the pain that would be felt in your absence. But the truth is, as soon as you walk into your boss’ office and resign, a critical line of trust has been broken and will most likely never be repaired. Typically, counter offers include an increase in pay and perhaps a title boost. In my many years of recruiting CFOs and C-level executives, it’s clear to me that people don’t change jobs merely for money. There are a whole host of other reasons. Usually it’s because they don’t like their direct boss, they don’t agree with the strategic direction of the company, they don’t see a route up the ladder, they are bored with the work, they hate their commute, or their benefits are lousy and getting worse. Or a combination of some of these factors.
If you accept a counter offer for more money, the root cause of your unhappiness will still be in place. And, your increase in pay could be an annual increase just given early. Calculate the after-tax value of that increase. Is it really worth it? My cynical side also says that if you accept the counter offer, you’ve just provided cover time for your employer to start looking for your replacement!
Most counter offers only put a band-aid on the wound. They usually start with praise about your important contributions or they present some big project that is coming up they plan on giving you. They almost always include some increase in pay. I don’t have research to back this up, but conventional wisdom says 80-90% of people who accept counter offers end up leaving within a year. I made that mistake myself once and missed out on joining my next company when the stock was much cheaper. I was fairly low level and the counter offer included a call from the CEO. Talk about being swayed to stay! I stayed ten months after accepting a counter offer. Lucky for me, the offer I accepted and turned down was still available!
People make a change because they’re moving away from things, or moving towards something — a better company, a better role, a shorter commute, etc. Usually people have some items on each ledger, a combination of moving away and towards. If you’ve lost trust in your current company and considering an offer elsewhere, think through what accepting a counter offer really means. If you take the counter offer, you have to tell your new company that spent weeks/months getting to know you that you will not be joining them. Good luck going back to them when your root problem returns in your new role! Making decisions is largely what executives get paid to do. If you second guess your decision to leave, what does that say about you?
I can think of one instance where a head of engineering resigned to the CEO having accepted a large role as division general manager in a new company. The new role was bigger than his current one and paid significantly more, but the company was not as exciting or successful as the company he was working for. This savvy CEO got to the root cause of this executive’s motivation for change — he wanted a more strategic rather than an execution role. The CEO didn’t make a counter offer to keep this exec in his role, he actually created a new position as head of strategy that fully enabled the potential deserter to remain with the company, reputation intact! So this was not a mere title change, it was truly a new job. (The reason I can tell this story is that the executive is my brother. He stayed in the new role for several years and later retired.)
If and when you do resign, do so with dignity and thanks to your current employer. Make a good hand-off and leave as quickly as you can without burning any bridges. Back up your verbal resignation in writing. You will need your references down the road. We are in an incredibly tight labor market, so be sure-footed and clear about your reasons for moving on. To steal from the Kona Brewing ad, “One career bro, don’t blow it.”
I invite you to share your experience with being offered or offering counter offers. Or if you’d like to learn more about our process and how it supports successful career decisions, email me at firstname.lastname@example.org.