The Best of The Fordyce Letter 2011, #4 — Why Counteroffers Don’t Work

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Dec 27, 2011

Editor’s note: Tony Beshara’s article was the 4th most popular article on The Fordyce Letter in 2011. It originally ran in March.

Two or three times a month we get a call from a person who wants to leave their job primarily because the counteroffer that he or she agreed to three or four months earlier had, agonizingly, not worked out. Their approach is usually accompanied by an attitude of anger, disappointment, and disgust that they are back looking for a job with more determination than ever. The perceived promises in the counteroffer they accepted didn’t materialize and they are really committed to leaving their job . . . this time.

“Buying” an employee back when they try to resign, a counteroffer, rarely works out, even in the short run. Ninety-eight percent of the time, the employee leaves within six months, and often with more acrimony than the first attempt. Counteroffers rarely work out because:

  1. Management makes a counteroffer to solve an immediate problem. You got caught with your pants down. It couldn’t have come at a worse time. You had to do something quickly. You put your finger in the dike. Later, you realize you were blackmailed. You were held up by an employee who was unhappy and leaving. You needed them more than they needed you. You wake up and realize you were “managed!” And you are damn mad about it!
  2. The relationship that you had with this employee is not the same anymore. This employee, in essence, fired you and the company. Or, at least, tried. You and your company, as with anyone else, don’t like being fired. It dawns on you, a few days after your counteroffer was accepted, that this person doesn’t give a flip about you or your company. You did what you had to do to hang on to them, but, we are not “all in this together” any more.
  3. Money and title, the two most popular tools used in a counteroffer, are temporary. Most of the time, the adjustments you made to keep this person are cosmetic and will rarely overcome the underlying reasons as to why the person wanted to leave in the first place. Your company, the job, personalities, etc., may have been given a couple of minor changes, but the underlying nature of your company hasn’t changed. After the “glow” of the importance of money wears off, your employee is mentally and emotionally right back where they were before.
  4. Now that the “tail” has wagged the dog, everyone in your company, in spite of what you think, knows what this person did, and it is just a matter of time before others are going to try it in their own way. You and your company have lost the respect of the employees who are aware of the counteroffer. The fear of this happening again is driving you nuts.
  5. The emotion of the moment forced you to make this person feel special. But, how long is that feeling of euphoria going to last? What is going to happen when it wears off?
  6. An employee leaving never comes at a good time. Here is what you will eventually say to yourself: “How could he/she do this to me? . . . It couldn’t have come at a worse time. . . . What am I going to do if they do it again? So, when (not if) is this person going to do it again? If that happens, I’m gonna look like a real schmuck and nobody is going to respect me as a manager.”
  7. Normally, for the counteroffer to be successful, you had to involve other managers, including those one or two levels above you. What are they going to think of you if this happens again, not only with the person you just bought back, but also with others in the organization? Even though they all bought into it because they had to, you are going to be held responsible for all of the problems this has created. When/if this person eventually leaves anyhow, your management acumen will be questioned.
  8. Good companies don’t buy people back. In your heart, you know that. So, the insult to injury is that, not only were you blackmailed, but you know that you and your company are not considered to be well managed.
  9. The employee that you bought back probably got a significant increase in salary. That fact is going to eat at you, and when the salary reviews come around again, you’re going to remember how you were leveraged. You are going to feel like the employee already got a raise. The employee doesn’t feel that way at all. He or she is going to expect a raise like everyone else. It is a “no win” deal.

Counteroffers rarely work. It seems like a good idea at the time. If you have to do it for sheer survival, start looking on a confidential basis for your employee’s replacement. We know because we work with hundreds of “confidential” searches every year. Many times they are “successful” counteroffers being replaced.

This article is from the May 2008 print Fordyce Letter. To subscribe and receive a monthly print issue, please go to our Subscription Services page.

This week we are counting down some of the most popular articles from in 2011. We hope you enjoy revisiting these articles as we look ahead to 2012!

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