The Pitfalls of Accepting a Counteroffer

So, you’ve received a good new job offer.  Sure, you’re a bit nervous, but also excited.  After much thought, you decide to take the offer and turn in your resignation.  Then your current employer surprises you and makes a counteroffer.  Should you take it or even consider it?  It’s a difficult decision that many of us have had to face and the correct answer isn’t so clear-cut.  There is a lot to consider with regards to counteroffers but, with the proper thought process, you should be able to recognize the pitfalls and make a wise decision.

Regardless of whether you take the counter or not, someone is going to be disappointed.  The prospective company will have invested time (and money) into recruiting you and they may perceive it as a complete waste of effort if you accept the counteroffer.  This could close the door for future opportunities with that company.  If you don’t accept the counteroffer, your current employer needs to figure out how to replace you and move on.  You may even wonder for a good long while if you made the right move or if things have improved with your former employer.


Reasons People Consider Leaving Their Employer

The first thing you need to do is reflect on why you were seeking a new position in the first place.  I’ve learned through the years that people explore leaving an employer for a variety of reasons, but it typically boils down to a few likely motives.

  • Poor leadership or cultural fit
  • Quality of life improvement (this includes location and/or work-life balance)
  • Concerns about stability
  • Compensation or earning potential
  • Lack of advancement opportunity
  • Not excited or feeling challenged with the work

Of course, I realize people are recruited; especially for executive, leadership, and technical positions.  Even if this is the case and you didn’t initiate your candidacy for a new position, there is still very likely a strong reason you invested the time to interview and receive an offer.  So, let’s examine how a counteroffer might address each of these concerns.

considering a counter offer

Corporate Culture, Quality of Life, and Stability

Counteroffers can rarely fix these three issues.  Even if your current employer offers to address them, follow-through is rare and actual change is often short-lived.  Change of leadership or corporate culture typically follow after employees leave, not because they stayed.  It’s also difficult for an employer to help improve your quality of life.  Especially if it will appear you are receiving preferential treatment over other employees.  There is usually very little an employer can do to alleviate your concerns about stability.  Time and again I have seen organizations guarantee change to retain an employee, only to receive a call from that person within a few months expressing regret that they accepted a counteroffer based on empty promises.


Earning Potential as a Motivating Factor

Just how important is compensation and earning potential?  It’s important, but it may surprise you to learn how far down the list money is when making a decision to stay or leave a company.  Most people guess it’s the number one decision making factor, but it usually isn’t.  When exploring a new job, most candidates believe it is… until it becomes time to accept the offer they negotiated.  That’s when people start to realize the other factors they should have been considering.  Tony Lee at CareerCast does a great job illustrating how compensation plays into a counteroffer.  The truth of the matter is I’ve seen very few people accept a less desirable job for more money.  The reverse actually happens more often than people realize.  I have been surprised countless times by a candidate accepting a lateral move (or even a slight pay cut) for a more appealing position.

counter offer

Don’t get me wrong.  Earning potential is important, but it rarely provides career satisfaction by itself.  You should keep this in mind if compensation is the main reason you are looking to leave a company or accept a counteroffer.  You should get all that you’re worth, but it won’t fix other problems within a company.  When I work with candidates who express earnings as their biggest motivator for leaving, I recommend they ask for a raise first (it’s part of Executek’s AccuSearch process).  You just might get one if it’s warranted.  If your company provides a good reason why they can’t or won’t,  they will have a hard time justifying a counteroffer with a pay increase.  Any reason they give why they can’t offer a raise is probably your best reason to decline a counteroffer, when you receive one.

Lack of Advancement or Challenging Work

The two remaining reasons people consider changing employment are lack of advancement opportunity and not feeling challenged or excited about the work. These are usually connected, as growth and development often generate excitement and more challenging work.  If you feel this way, I recommend the same course of action as I do for compensation.  Have a sincere, open dialogue with your employer before you seek another career opportunity.  Let them know you’re feeling stagnant, capped and/or unchallenged.  If they don’t address your needs, I suspect they will have a hard time explaining why they can after you’ve given your notice.


The Ramifications of Accepting a Counteroffer

There is one last thing to consider when presented with a counteroffer.  What happens if you accept?  You’ve let your employer know you are dissatisfied.  Will they be comfortable paying you more than they had budgeted?  Will they start looking for your replacement?  Many candidates have told me they were let go just months after accepting a counteroffer.  Sometimes companies panic and do what it takes to retain a person, just long enough to make contingent plans.  Then, after they have a solution, they cut that person loose.

Also, will your boss and coworkers think of you differently? Will your commitment to the team be in question?  What will you do if they renege on the changes promised?  It will likely be too late to regain the offer from the other company.  You may have even burned a bridge.  Finally, your reputation may be tarnished.  Backing out of an offer after acceptance demonstrates how your word isn’t always binding.  Good managers and recruiters have networks.  There is a good chance other companies will also know you didn’t follow through after acceptance.  Biron Clark of Career Sidekick did an excellent job explaining these counteroffer situations in greater detail.


The Way to Avoid the Counteroffer Trap

At the end of the day, you should probably ask yourself, “Do I want to stay at a company that offers what I need only after another employer recognizes my value?”  I believe transparency is key.  Give your current employer fair and ample opportunity to address your concerns before you examine a new opportunity.  If they won’t meet your expectations, your whole perspective will change if and when they present you with a counter that magically addresses your needs.  You will be able to move forward and negotiate with a new company, armed with a clean conscience and the knowledge it’s time to move on.  This course of action will save you and your potential employer a significant amount of wasted time and effort.  You’ll also save yourself the embarrassment of having to break your word at someone else’s expense.


Still having difficulty deciding whether or not taking a counteroffer is the right course of action?  Feel free to contact Executek Recruiting Partners.  We’re always happy to consult discreetly and never charge a fee for a phone call.

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