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A counteroffer is an offer typically made by companies to retain a resigning talent. As an employee, receiving a counteroffer from your current employer can be flattering and make you feel valuable. It’s as if you hear your boss tell you, “Don’t leave. We value you and need your expertise”. That’s music to one’s ears! On the other hand, a counteroffer can make you rethink your initial decision to resign from your current job. Should you stay or stick with your decision to leave?
It can be tempting to choose to give in to a counteroffer during these uncertain times rather than risk a move. But how do you know if the counteroffer is the better choice? What if the grass is greener on the other side of the fence? Deciding whether you should accept a counteroffer or not can be confusing. So, we’ve put together some tips to help you make an informed decision.
Why do employers make counteroffers?
The cost of finding the right person to replace a resigned employee can be hefty. It goes beyond paying for the new hire’s compensation. The training, time, and expenditures required to integrate new staff into the organization can also be costly. In fact, replacing an individual employee can cost a company an average of 33% of the staff’s annual salary.
For example, you are a Business Development Manager who earns an annual salary of $83,000. It will typically cost the company $27,390 to replace you. So, for obvious reasons, it’s a more practical option for employers to attempt to retain a resigning employee by presenting a counteroffer.
Although replacing an employee can be costly, a counteroffer is not automatically offered to all resigning staff. If you received one, then it’s either you’re a rock-star employee, and your position is critical to business needs or hard to fill. On the other hand, if a resigning employee is underperforming or the role is no longer required, a counteroffer may not be offered.
What comprises counteroffers?
A counteroffer doesn’t automatically equate to a salary raise. It can take various forms depending on the company’s counteroffer policy. When it’s not possible to offer a raise, other incentives are typically provided. Some of them include the following.
- Additional company benefits
- Sought-after promotion or new job title
- More involvement in projects that interest the employee
- Flexible working arrangements
Tips and Tricks for Dealing with a Counteroffer
Dealing with a counteroffer can be challenging. It’s not a simple yes or no decision, as it can impact your career. Here are some tips and tricks you can apply for better decision-making.
1) Think about your initial reason for leaving
When you’re contemplating whether to accept a counteroffer or not, it’s always a good idea to go back to your “why”. Why did you make a decision to leave in the first place? Are you feeling underpaid or undervalued? Is there limited growth at the company? Does the company culture no longer fit you?
In some cases, a counteroffer will address one or more of your reasons for leaving. Based on this, have a think if this is enough to make you feel fulfilled in the long term. Whether you’re accepting or declining the counteroffer, always remain professional and don’t burn bridges. Lastly, don’t forget to thank your employer for the opportunity.
A counteroffer may help improve your compensation or other elements of your current role. However, if your reasons for leaving are due to a bad boss, a damaged working relationship, or a culture that doesn’t fit, that’s a different story. No counteroffer can help resolve these. In such a case, it may be best to be firm with your decision to leave your current employer and just accept the external offer.
2) Create a list of pros and cons
Making a list of pros and cons can help you weigh the counteroffer on the table. It can provide you with a fuller picture of what both job opportunities can offer. When you have a snapshot of the offers, you are more likely to make an objective decision without letting your “gut feeling” impact your choice. Below are steps you can follow to create a meaningful pros and cons list.
- Write the decision you have to make at the top of a paper.
- Create two columns and label one side as pros and the other as cons.
- Evaluate the terms of the counteroffer.
- List all the positive effects of accepting the counteroffer in the pros column and all the negative consequences in the cons column. If the list has already provided you with the clarity you need to make a decision, you can stop at this point. Otherwise, you may proceed to the next steps.
- Consider what’s important to you and assign a value to each based on this.
- Add up the scores in each column. A higher score indicates that you should go with that decision.
Now, what if the result doesn’t seem appropriate? In this case, take time to identify any factors you may have not initially considered. This exercise should help you gain more clarity, enabling you to make a better decisions.
3) Consider an open discussion with your current employer
Unless your manager is a psychic, don’t assume your boss knows exactly what you need or want. If the counteroffer is not in line with your needs, let your current employer know. If you’re planning to reconsider your resignation, think about discussing the matter further or negotiating the term. This increases your chances of getting a better offer. Additionally, it can provide you with an idea of your value at your current job.
If you feel like you deserve more, communicate your thoughts to your manager and negotiate the terms. Be honest while remaining professional. However, make sure that your expectations are reasonable based on the industry and position. Avoid giving ultimatums as this can do more harm than good.
But what if you’re unable to reach a mutually beneficial agreement? Should you stick with whatever is on the table? In this case, you must be prepared to decline the counteroffer. At the end of the day, what’s important is that you tried.
4) Take a step back
When you receive a counteroffer, don’t feel compelled to make a decision on the spot. Rushing to decisions without fully considering all aspects of the offer can lead to poor outcomes. So, if you’re unsure about whether to accept the counteroffer or not, ask for some time to think about it. Envision your future and consider every argument. If you’re still having challenges making a decision on your own, discuss it with a trusted friend, mentor, or even a career consultant. In most cases, a different point of view can be helpful.
A counteroffer is clearly an indication of your current employer’s interest in retaining you. However, this doesn’t automatically equate to a brighter future for your career in the company. Before making a decision, ask yourself, “Does this counteroffer truly address my reason for leaving?”. This can help you visualize whether it’s worth staying or not.