You thought your week was going smoothly, but then one of your key employees walked into your office and announced that she’s resigning. If you’re like many managers, you panic and start thinking about what you can offer to get her to stay.
Stop right there.
Making a counteroffer to stop an employee from taking another job is rarely a good idea. Here are four reasons why.
1. There’s a reason that the employee was looking for another job in the first place
While more money is always a motivator, there are generally other factors that drive people to look too: personality fit, boredom with the work, or general dissatisfaction – all reasons that will rear back up once the glow from that raise wears off. That counteroffer will have helped you retain a dissatisfied employee.
2. You were already paying what you thought was a fair salary
You should strive to paying competitive salaries to all your employees, not just the ones who think about leaving. Your salaries need to be set according to objective market data; they shouldn’t be a reaction to who’s about to leave at any given time.
3. It sends the wrong message to other employees
If word gets around that all it takes to get a big raise is to threaten to leave, you can be sure that you’ll have other employees in your office resigning too. You don’t want people to start thinking that they need to have one foot out the door in order to get a raise.
4. Your relationship with that employee may permanently change
If you successfully counteroffer and persuade her to stay, what happens next? At many workplaces, that employee will no longer be quite as trusted as she used to be, no longer part of the inner circle. That’s not good for either of you. And on her side, you’re now the company that she had to threaten to leave in order to get what she wanted, which also isn’t good for either of you. There’s a reason that the rule of thumb among recruiters is that 70 to 80 percent of people who accept counteroffers either leave or are let go within a year.
Now, are there times where making a counteroffer makes sense and works out? Sometimes – but they tend to be the exception, not the rule. At a minimum, be very cautious before making an counteroffer and think through the downsides.