The Truth About Counteroffers in Today’s Candidate Driven Market

In Season 2 of the Netflix hit, “House of Cards”, the President’s chief of staff tendered her resignation. The President consulted with his Vice President, the wily Frank Underwood, who advised against refusing to accept her resignation and thereby calling her bluff.

Frank gave him the following advice.

He reasoned that the President should stand firm and let her leave. Refusing to accept her resignation at a tumultuous time in his presidency “sends a signal that you can be leveraged.”

Further, given that she was prepared to leave, “even if she stays, she's already gone.”

That’s the same psychology in play with counteroffers in business. Entertaining counteroffers is playing with fire for all parties involved.

Google the word “counteroffer” and you will receive over a million results, the vast majority of which say one way or another: bad idea.

Here’s why, from several angles – the current company, the candidate, and the hiring company.

From the Current Company’s POV

Agency management may attempt to counter a job offer of an employee for one of several reasons. They may not want to lose an especially valuable employee. They may want to buy some time so as not to upset an important client and deal with the employee later. Or it might be an emotional reaction or fear of losing a candidate to a competitor.

Whatever the reason, remember Frank Underwood’s advice above. Word will get out among the rank and file at your agency that employees can use a resignation to manipulate you. Importantly, too, an interesting psychology takes place when candidates entertain a job at another agency. A little door opens in their brains about leaving and sooner rather than later they do.

I’ve seen it again and again in my practice. Perhaps the most dramatic example was a candidate who had his heart set on working for a particularly creative shop. When he ultimately was eliminated as a candidate for a senior level position there, he was stricken. His current agency didn’t even know he was looking. But sure enough, he left his job within a year, without even having another job!

From the Candidate’s POV

Sure, who doesn’t want to be courted by a new suitor and have his or her current lover re-up their love and commitment to you? But an employee should ask himself: why do I have to put a gun to the agency’s head to extract from them what I’m obviously worth in the market?

Unfortunately, accepting a counteroffer isn’t really a long term commitment. Data shows that even when counteroffers are accepted, overwhelming odds are that this employee is gone within twelve months.

This is because of one of several reasons. Perhaps that little door in the brain that was opened in the first place causes the employee to pine for something new. It could be that the agency was truly just buying time before finding a replacement because the employee was “already gone” mentally. In any case, the agency will always view this employee somewhat suspiciously for having the gall to consider leaving in the first place.

From a Hiring Company’s POV

It’s devastating to travel all through a hiring process with several interviews with management at all levels, flying in from out of town, working out details of the offer, negotiating to acceptance only to have a counteroffer appear out of nowhere and blindside you. You can’t manage a counteroffer from the company where your candidate is working. But you can take several measures to safeguard against one.

Here are five best practices we use for avoiding counteroffers and securing a hire:

1. Cover counteroffers early and often with the prospective candidate. This is the first and perhaps most crucial point. We uncover motivations for candidates’ interest in leaving their current agency right from the beginning of the getting-to-know you process. We then ask if they’ve discussed their issues with management. At this point, we transparently and openly cover the likelihood of them receiving a counteroffer and ask what they would do if they received one.
2. Don’t be afraid to eliminate risky candidates from consideration. Depending on their answer to our question about accepting a counteroffer, we may not want them as a candidate. It’s often not the wording of the response but the gap of silence before it. Better to cut it off now than delude yourself in the hope of securing this person.
3. Discuss the good, the bad, and the ugly of counteroffers. Much of this has been discussed earlier, but the truths about counteroffers are seldom known by candidates. I didn’t know them when I worked for my former agencies.
4. Steel their commitment along the process to accepting an offer if it’s a satisfactory and competitive one. I want to make sure the candidate can be gotten in the first place so as not to waste anyone’s time. So we discuss current salary and benefits up front in the process and what it would take to make a move, making sure that this is within the hiring agency’s range. We often test that commitment by exploring “what if” scenarios about salary and benefit options.
5. Walk candidates through the resignation process. Assuming you’ve done your upfront work and the offer letter is signed, next we coach candidates through a firm resolve to resign. This is not the time for fishing for a counteroffer, so we have them prepare and sign a letter of resignation. We ask them to present it to the boss, tell him or her that after much thought and consultation with friends and family that I’ve accepted an offer (as opposed to merely received one leaving the door open for negotiation). Accentuate the positive feelings you have about the company you’ve worked for. Cover start date and ask for support in this decision for a smooth transition.

With these practices in mind, even Frank Underwood would be pleased with the results.