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Counter-Offers: What You Need to Know

14 Dec 15 by Jason Bishop

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The technology job market as it stands is ripe for counter-offers, as employers compete to secure and retain the best IT workers available. These offers can be tempting for some employees, but for others, this can be seen as too little too late when they’ve felt undervalued in the years beforehand.


For employers, counter-offers can be a last-ditch attempt to keep a quality team member or a way to avoid having to go through a new recruitment process from scratch.


So, what do we need to know about counter-offers? Are they a bandaid solution or a valuable retention tool that every tech manager needs in their arsenal?

Advice for Candidates

Although counter-offers can seem flattering and play up to your ego, it is important to not allow this feeling to steer your decision. In nearly every situation, a counter-offer is a short-term, knee-jerk response to an unexpected event – you submitting your notice. 


This is because employers are often oblivious to the fact that you aren’t happy in your current role, and it takes an event such as this for them to realise something isn't right. It is then both logical and economical to attempt to retain existing talent, rather than go through the costly and time-consuming exercise of finding a replacement.


Your employer is clearly using their head (and their wallet) when making this decision, so you should do the same. Many employees have already checked out long before receiving their offer, so wouldn’t even entertain the idea of staying with their current organisation.


However, sometimes job changes are simply a way to gain access to more money, different experience or a step up the corporate ladder. If that’s the case, and you generally enjoy your job and the company you work for, try to evaluate the offer objectively and without emotion.


You can write out a simple pros and cons list for both offers, taking into account the components of the job that are most important to you. These days, it’s not just about who has the best salary on offer but also who aligns to your personal values both in terms of the company’s purpose and how they treat their employees. Do they value flexible working conditions? Are there solid policies around diversity and inclusion, CSR and mental health? Do you see yourself being developed and trained to reach your career goals?


If your reason for seeking a change was a fundamental problem with your employer, then it is likely that the counter-offer will simply paper over the cracks. Taking an offer like this will invariably result in you being one of the often-referenced 80% of employees who leave their role within six months of accepting a counter-offer.


It’s also worth noting that accepting a counter-offer can put you in an awkward situation with the employer that has offered you a new job. In some tight-knit industries, this can negatively affect your personal brand and potentially impact your future chances of securing a role.

Advice for Employers

As an employer, when you’re chasing a candidate and they’ve accepted your offer in principle, at some point they will have to hand their notice in to their current employer. If they are valuable employees (and they should be if you’re trying to hire them!), their employers will likely counter-offer.


There is no way to prevent a company from presenting a counter-offer, but you can prepare the candidate for it. For example, here at Sourced, we make sure that all of our candidates are aware a counter-offer could be made, and give advice on how best to deal with it during their first interview with us.


Sometimes a counter-offer is simply too good to turn down, or it genuinely addresses the candidate's key reasons for leaving. In these situations there is not much that can be done, so providing you have put your best offer forward in the first instance, it’s best to move on.


If you’re in the unfortunate situation of having one of your employees hand their notice in, it can often feel like you have very little time to react. This is largely true as the employee will expect you to accept their resignation almost instantly. If you would like to retain them, simply ask for 24 hours to come back to them with a response. There is no need to mention a counter-offer – simply ask for the time so that you can carefully evaluate your options.


Many accepted counter-offers only prolong the employee's decision to leave, so ensure you are clear on whether a counter-offer is to avoid short-term pain or if you truly would like the employee to remain with your business. The worst case scenario is to retain talent only to have them become increasingly demotivated with the situation.


It pays to also look on the positive side of an employee leaving. Though it may result in additional costs and stress, it provides the opportunity to bring fresh, new, motivated talent into your business. It also gives you the chance to conduct an exit interview, which you can use to gain some valuable insights into how your business could be improved to retain other talented employees.

Summary

There is very little fact-based data around this particular subject area. We believe this is because each and every situation has a different set of variables. In short, our advice is:

  • Employees – receiving a counter-offer is a highly probable scenario, so be ready to handle it when it occurs and go with whichever opportunity truly appeals to both your head and your heart.
  • Employers –  review both the long and short term benefits and also be prepared to acknowledge that every now and then, an offered candidate will change their mind. It's human nature!


Here at Sourced we’re committed to getting the best solution for our candidates and clients. We have considerable experience negotiating offers and counter-offers within the tech recruitment space right across New Zealand.


If you find yourself faced with a counter-offer scenario and would like some independent advice feel free to get in touch.