Why you may want to think twice before offering a counter offer

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As an established recruitment business within the finance and accountancy market, we have become aware of a growing trend where candidates are receiving counter offers from their employer when resigning from their current role.  It’s an interesting topic, so let’s discuss: as an employer, should you think twice before offering a counter offer?

Candidates are increasingly being offered multiple job offers thereby boosting confidence and a sense of their market worth in a candidate-driven market.  Quality finance professionals know they have options and can leverage their current employers by entertaining opportunities elsewhere.

Employers are finding themselves on the back foot when faced within employee resignation.  Before reactively proposing a counter offer to retain talent or buy time, pause to consider what this may cost you over the long-term…

Financial incentives vs. impact going forward

Counteroffers in accountancy and finance are at their highest level in recent years, with the average offer now a 20% increase in annual salary in 2014.  With the rise in counter offers being given, this has to have a big impact on any business faced with this situation.

If there wasn’t money in the budget in the first place to offer an attractive counter offer with an increase in salary, both parties must be cognisant of the impact down the line – where is this extra money coming from?  Will this mean cutting the resources elsewhere, no compensation of overtime or flexi-time?  Or perhaps this additional income will result in the employee received an increase immediately but no further increase in the next few years?

A bandage to appease more deep-seated issues

Whilst the counter offer culture may be back, caution is called for.  Recruiters find that many candidates who accept counter offers soon return to the job market viewing the tact as "too little, too late” and an admission that their present employer had been underpaying them.  Candidates who change their mind quickly may realise they’re still frustrated or dissatisfied but by the time they realise their mistake, it’s too late. 

If the original reasons for leaving had nothing to do with money the issues tend to surface again despite how flattering the package that persuaded the candidate to stay.  When someone resigns, it will seem easier and more expedient to make a counter offer and hope the problem will go away but may instead complicate issues going forward or create a feeling of distrust.

If the real motivation is a desire to be promoted or relocated or wants to move to a different team, then a higher salary alone will not solve the problem.  By tackling issues that the business can reasonably address such as a lack of support or recognition, training, or an evaluation of opportunities within the business for career progression may prove more fruitful than the short term fix of a monetary counter-offer and be more beneficial in the long-term


UK firms are spending a huge amount on counteroffers – often expenditure that is unplanned and not budgeted for and any pay increases must come from somewhere. 

Counter offers are rarely effective and may only scratch the surface of reasons motivating employees to look. Switching companies is nearly always a deep-rooted decision, it comes down to opportunity, ethics, and the working environment - none of which can be fulfilled by a simple pay increase.  More than 60% of employees who are successfully counter offered ultimately leave their employer within six months.

Keeping disengaged talent in house that bit longer may buy an employer time on a critical project or to make the necessary alterations to the team structure but at the potential cost to morale, productivity and loyalty. Counteroffers can also breed instability as employees think they can secure a pay rise just by handing in their notice.  Thus, in the long run it costs far less to let resigning employees go and secure ambitious talent from elsewhere.

As an employer, we are keen to hear your thoughts on this subject…