The Value of a Counteroffer: Is It Worth It?

Published:02/08/2024 | Posted by Juan Moreno, Managing Director - International - Executive Search

Over the last year, we have seen several senior executives turn down offers at the final stage of the recruiting process – when it’s time to sign their offer letter and provide notice to leave their current post – due to a counteroffer. Even when the short-term gain seems worth it in the moment, what is the real long-term value of a counteroffer?

As we followed up with these executives and ask them how they feel about their decisions the consensus is that they wish they had taken on the new challenge. The decision to leave one’s current position is something that needs to be considered very carefully, and that’s why is very challenging to decide what to do when your existing employer makes a competitive counteroffer.

In my experience, around 50% of employers make a counter offer each time an employee hands in their resignation particularly when there is a skills shortage. However, over 80% of HR professionals say that accepting a counteroffer could negatively impact a candidate’s future career opportunities. Glassdoor’s Hiring Sentiment Survey (2022).  Also, 60% of managers perceived counteroffers as more negative than positive according to a 2023 Wall Street Journal survey.  This brings us to the following question…

Is a Counteroffer Worth It?

Accepting a counteroffer poses numerous challenges. It raises concerns about loyalty, altering the relationship with your manager and potentially hindering future success within your current company. Despite the initial appeal, the prospect of advancing in a new company may offer more lasting benefits. As well as one will have the opportunity to be exposed to a new culture, new challenges and the benefit of making a first-time impression, which in some cases can be more valuable in the long-term at a new company.

While a counteroffer may promise improvements in various aspects, statistics show that the initial allure often fades, with many individuals leaving within 12 months. Crucially, the underlying reasons prompting the desire to leave may persist, as increased pay may not address deeper issues like workplace well-being. Counteroffers also raise questions about the acknowledgment of your value, necessitating research to ascertain your market worth. Accepting a counteroffer may leave your employer uncertain about your long-term commitment, increasing vulnerability to future cuts. Beyond financial considerations, counteroffers may involve stalling tactics to avoid addressing organizational issues. Lastly, accepting a counter-offer promising promotion and increased fulfillment may introduce unforeseen challenges, as well as an increase pressure to show your worth, potentially resulting in a workload leading to burnout.

Finally going through an executive search process and carrying interview with the Executive Recruiter as well as the Potential employer (meeting senior people with the organization) and embarking on an 8-week process to accept a counteroffer will hurt your reputation and future calls from future employers within the industry.  Accepting a counteroffer can be tempting, especially when your current employer makes efforts to retain you. However, here are 10 reasons why a candidate may reconsider accepting a counteroffer.

10 Reasons Counter Offers Lack Value

1. Trust and Commitment: Accepting a counteroffer might strain trust between you and your current employer. They may question your commitment to the company, suspecting that you might leave in the near future despite the counteroffer.
2. Unresolved Issues: Often, the reasons prompting your decision to explore new opportunities might not be fully resolved by a counteroffer. Issues related to career growth, company culture, or work-life balance may remain unresolved, leading to dissatisfaction in the long run.
3. Future Promotions and Projects: Your decision to accept a counteroffer might affect future opportunities for promotions or involvement in critical projects. Your loyalty could be questioned, potentially impacting your chances for advancement.
4. Company’s Perspective: From the employer’s standpoint, a candidate who considered leaving once might be perceived as a flight risk. This could lead to exclusion from future confidential projects or initiatives due to concerns about loyalty.
5. Retention Tactics: Accepting a counteroffer might mean your employer is only trying to retain you temporarily. They might use this time to find a replacement or phase you out once they find a suitable replacement or when the need for your role diminishes.
6. Cultural Fit: The initial decision to explore other opportunities might be due to cultural misalignments within the organization. Even with a counteroffer, these cultural discrepancies might persist, leading to continued discomfort or dissatisfaction.
7. Professional Relationships: Your decision to accept a counteroffer could strain relationships with potential new employers or recruiters you’ve engaged with during the job search process. It might affect future opportunities or the way they perceive your commitment to making career changes.
8. Stagnation in Growth: Staying with the same employer after accepting a counteroffer might result in stagnation in personal and professional growth. The issues that prompted your desire to explore new opportunities might resurface, inhibiting your career development.
9. Trustworthiness: Your decision to accept a counteroffer might affect your credibility and reputation in the industry. Other employers may be wary of considering you for future roles, perceiving you as someone who might be easily persuaded to stay.
10. Long-term Satisfaction: While a counteroffer might offer short-term benefits, the underlying reasons prompting you to explore new opportunities might not align with your long-term career aspirations, leading to continued dissatisfaction.

It’s essential to thoroughly evaluate both the short-term and long-term implications before accepting a counteroffer. A deeper understanding of your career goals, values, and the reasons behind your decision to explore new opportunities will help you make a more informed decision if you want more guidance on a counteroffer situation, reach out to me anytime at 954-385-8595 or [email protected].

About the Author:  Juan Moreno leads the Latin American Executive Search practice at StevenDouglas, providing clients with quick access to in-country talent in Latin America across different industries including: manufacturing, natural resources/mining, banking and wealth management, and power/alternative energy. He’s an expert in international employment needs, specializing in expatriate placements as well as successfully recruiting Heads of Latin America that are based in the USA and Canada.  Juan brings significant experience in recruiting and executive search in Latin America and Europe, where he built successful management teams in IT, Operations, Finance, Marketing and Government Relations.