Handing in your resignation? Be wary about accepting a counter offer based on money alone

In the 1980s, punk band The Clash had the teens of the time pogoing to their catchy track Should I Stay or Should I Go. Four decades on and this is exactly the dilemma facing many employees who have handed in their notice only to find themselves on the receiving end of a counter offer from their existing employer.

Counter offers have always been around, but they have become a more prominent feature of the Irish labour market over the past six months as companies struggle to retain talent. At first glance they are flattering. Being offered more money to do the same job without the upheaval of moving is attractive.

But beware. According to the statistics, counter offers rarely end well. About 80 per cent of those who accept the carrot, end up leaving within six months anyway.

Non-monetary inducements to retain employees as part of a counter offer can include a promotion or a change in role or job title, enhanced benefits and maybe the promise of more challenging/interesting work. Add in a salary increase and staying put is looking good, especially if what had seemed like solid reasons for leaving start being undermined by those who want you to stay.

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Resisting the candy-coated hard sell to stay can be difficult but it’s worth asking if you’ve put yourself through the rigours of the recruitment process for nothing and whether history suggests that the reasons behind your decision to leave will actually be addressed if you stay. Does your boss have a track record of following through? And, if you stay, will you be passed over for promotion because you’ve flexed your independence muscle?

Furthermore, what is the counter offer saying about how your employer values you? Were you not worth the enhanced package before?

There are well documented examples of employees who have successfully used the threat of resignation as a tactic to get what they want from their employer in terms of a promotion or salary hike. But accepting a counter offer changes the workplace dynamic and those who stay say things are never quite the same again.

The volte face can raise a question about your loyalty and can alter your relationship with your boss and your workmates. Some people are thick-skinned enough to ignore this but, for many, the uneasy atmosphere proves too uncomfortable. This partly explains why those who had wanted to leave in the first place often do so within a few months.

Gradual decision

The decision to go is rarely taken overnight and, while job-hopping is an essential part of career progression, people also move because an accumulation of small things or maybe one big issue is getting them down.

Keeping in regular touch with employees or team members and being aware of what’s bugging them can be one way of pre-empting a resignation. It may be that a tweak to working arrangements, recognising their achievements, addressing a particular issue or improving some aspect of their benefits package is all it takes to keep them happy.

“There is no doubt that a salary counter offer can be a quick win in terms of retention but I would urge caution in solely focusing on salary,” says David Collings, professor of human resource management and associate dean for research at DCU Business School.

“We know that high-performing employees equally value the opportunity to work on high-profile projects, to have visibility with senior leaders and to gain personal development opportunities. Plus, the pandemic has given many people cause for reflection on the meaning they get from work and the purpose of the organisations they work for.

“Thus, rather than focusing solely on salary, more progressive firms are trying to reinforce more intrinsic elements of the employment package and reinforcing the value proposition they can offer relative to competitors. Ultimately, if an employee is willing to leave for salary alone, focusing on only that element of their package risks that their price is simply higher when the next offer comes in.”

Writing in the Harvard Business Review in May, Mita Mallick, head of inclusion, equity, and impact at American technology company Carta cautions employers against making counter offers. She points out that while doing so might give a short-term sense of control, it’s potentially storing up trouble as it may disrupt team morale and actually encourage others to start looking for new jobs.

“Ask yourself if a counter offer addresses the issues underlying why the individual resigned in the first place. Is it enough to keep them happy and thriving on your team? Or is it just a temporary Band-Aid to avoid solving a larger issue?” she says. “Oftentimes a counter offer doesn’t address the real reason why the person is resigning. Your job as the leader is to get to the root cause ... [and] if people are ready to move on, sometimes the best decision may be just to wish them well in their next opportunity.”

Prof Collings also warns employers against getting the hump if an employee tenders their resignation.

“Organisations should try to ensure that the exit experience is as positive as possible,” he says. “Former employees can continue to be excellent advocates for places they have worked and in many instances they may realise that the grass in not greener and ultimately end up returning. Our research confirms that boomerang hires can be an excellent pool of talent.”