Why Counteroffers Are Lose-Lose Propositions
by R.Gaines Baty
reprinted from the National Business Employment Weekly
from the publishers of the Wall Street Journal: Dow Jones & Company Inc

Before accepting a counteroffer from your employer, consider whether you'll be the winner or the loser in this employment maneuver. 

Although no statistics are available, many employees who give notice are receiving counteroffers from their current companies to encourage them to stay. These proposals can include one or more of the following:

• A pay increase.
• A promotion and/or added responsibility.
• A promise of a future raise, promotion or other incentive.
• The creation of a new, more appealing reporting structure or organization.

An employer may accompany its offer with an added motivator, such as a special call or visit from the vice president or CEO and other flattering gestures. Or it may try to manipulate a departing employee by heaping on a sense of false guilt.

In business, your reputation can be your most valuable asset. By backing out of a commitment to a prospective employer, a candidate loses all respect from the firm's leadership.

It's Never The Same Again

The current employer who gains back its staffer may seem to be the big winner. Initially, it may appear to lose ground because of the pay increase or promotion it extends. However, these costs are minimal compared to the loss of momentum on a project or the expense of recruiting a replacement.

Still, winning back an employee is only a short-term fix, and the move may ultimately cause worse personnel issues. First, the company's relationship with the employee is never the same. Most employees who accept counteroffers leave within six to 12 months, merely deferring their inevitable replacement.

Mentally the person is 'out-the-door' and it's probable that he or she will leave in the not-too ­distant future.  It may be perceived that the company will never quite trust the person, and immediately begin contingency planning for a replacement -- on their timeframe.

Second, the line of previously loyal employees threatening to leave to gain a raise begins forming at the door. "If someone isn't committed to being here, it compromises our team and causes broad, negative ramifications far greater than losing that person," the former partner says. Ultimately, the integrity of the employer, manager, and indecisive recruit can all be irreversibly damaged.

What Should You Do?

It's naïve for executives to be surprised by counteroffers these days. In fields where talent is at a premium, the offers are a popular retention tactic. But why would a company wait until the eleventh hour to keep someone it claims to value so highly? Obviously, the move is purely defensive. You may feel flattered, but don't be fooled. A counteroffer isn't about what's best for you; it's about what's best for the company.

If you expect to receive an offer to stay with your firm, how should you deal with it? First, don't allow a counteroffer discussion to occur. Leaving the door open for discussion induces the company to invest time and resources into enticing you to stay. This can make you feel guilty, which makes it more difficult to stick to your decision to leave, even though you know you should honor it.

A counteroffer isn't about what's best for you; it's about what's best for the company.

Take an active part in your own career management. If your company is interested in your progression, you'll know it before you decide to resign. If you change your mind and stay, your motives and methods will always be suspect. Keep a steady course and don't look back.

Submit a courteous, positive and final resignation letter that leaves no room for discussion. By behaving honorably, you may have the option or re-employment with the company or to join a former boss elsewhere later on. You'll also have the chance to start a promising new role with additional challenges, an expanded network, an untarnished reputation, and a clear conscience. Everybody wins.