Why Counter Offers Are Good (except for headhunters)

As headhunters were taught early that counter offers are bad and we need to make sure we explain to our candidates the pitfalls of excepting them. Obviously the time we put into a search can never be replaced or compensated for if one is on a contingent assignment. It might hurt our wallets more then our pride when they are excepted - not all counter offers are bad, and some are really great for our candidates careers and livelihoods.

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Have you been promised a promotion or salary increase? Have you been told that the fresh challenge you’ve been craving – and worked hard for – is just around the corner? More importantly, is it now six months or a year since those opportunities were outlined – but they have yet to materialize?

Many employees find themselves in a situation where their company has repeatedly promised to take care of them, however after months of waiting, it can begin to feel like they’re just paying lip service to the idea.

If this is you, it’s time to consider a high risk-strategy that some career-minded individuals are reaping the rewards from. It’s not for everybody – but worth considering if you are determined to progress your career and want to give the process a kick start. Do you want to live with the frustration of waiting to see if promises come to fruition – or are you willing to do something about it?

Leverage Can Work

If you’re good at your job and you know – or think – you are valued, there’s one sure-fire way to find out. Get yourself an offer. Prepare your resume, apply for opportunities outside your current company and get some leverage. What’s the worst that can happen? If you end up with a great offer on the table from a competitor to present to your boss, it’s crunch time. Either they step up and increase your responsibilities or fulfill that promised pay rise – or they don’t. If they don’t, you’ve got a good opportunity to pursue. If they do, mission accomplished! It’s win, win.

More often than not, its medium sized businesses where this strategy works best. Small companies may not be in a position to boost your role; and large organizations often don’t have as much riding on individual responsibilities, unless you’re already on the management team. Busy – and bottom-line focused – executives will overlook successful individuals over for promotion time and time again. Whether you’re flying under the radar, too good at your current job to move on, or need progression but don’t have anywhere to go, you need a catalyst for change if you don’t want to stay stuck in a rut.

(True story) Nicky Hoffman decided to take this approach last year – and has never looked back. A sales manager at a successful engineering firm, she had long been promised a senior account manager role. She knew she could procure another position, had established a huge book of business and was confident that her clients loved her: “One year after the promotion had been broached; I knew I had to speak to my employer yet again, but it had got to the point where it was unprofessional to keep bringing it up. I felt I had to take control of the situation.” Nicky soon found out if she really was a valued employee, as she had hoped. She secured an offer with a competitor, re-approached her company and the very same day she found herself in front of the CEO accepting the role of senior account manager, along with a 45% increase. “They knew that if they lost me, it could have been a big problem. Some clients would have been unhappy, some may have followed me to the competitor, plus it would have been hard to replace me – or swallow the cost of retraining – in the industry I’m in.” By proactively seeking some leverage, Nicky helped her company realize they’d dropped the ball. She didn’t complain, so she was still viewed as a team player; instead she succeeded in strengthening the respect of her peers for making a strategic move.

It’s true, the majority of those electing to use a counter offer find it doesn’t come to fruition. But it’s a guaranteed way to establish your true worth – and that’s as good a reason as any to give it a try.

Have you successfully procured a counter offer and ended up with a promotion or pay raise? Or did job-seeking help you realize it was time to leave?

Comment by bill josephson on November 17, 2011 at 2:28pm: Depends on how much the employer wants the person. If not they'll be replaced after a period of time. If so they'll still be there years later, as several of mine over the years have.

Comment by Elise Reynolds on November 17, 2011 at 2:29pm: I think Sandra McCartt's post was spot on!   If all else fails wear a power suit!

But also Nicky was not necessarily being a calculating selfish monster either. When someone has a great reputation in an industry many potential employers will leap at the chance to woo and court knowing full well that the Nicky is not planning to jump ship.   They just wanted a chance to court her.

Recruiting is so like dating in so many ways. Not every date for lunch is going to result in a marriage.  We all know this.

Nicky might have gone to the interview with vauge motivations such as "I really like my job and I enjoy what I do, but I feel I should explore other options".   In demand candidates say this kind of thing to hiring managers all the time!.    Because Nicki's reputation proceeds her she probably left that one meeting with her offer in hand.

I think the important thing for interviewers and interviewees is to be honest and forthright. Don't create false expectations and don't try to mislead people.     Nicky was perfectly in her right to agree to an interview with the declared understanding that she liked her current job, but wanted to explore her options.

Havent any of you had a hiring manager declare that if you get anyone with this kind of background I would love to talk with them even if they are not looking?

Comment by Sandra McCartt on November 17, 2011 at 2:43pm: @Amos, i agree that game playing is not the way to go. Jerry wrote that post to be funny, which i thought it was. I have seen it happen when someone was not doing it on purpose. Had a candidate i was working with , nothing firm on the board, just starting to interview. She called me laughing saying she had just gotten a big raise so was going to drop the job search. When i asked her how that happened she laughed and said that she had dressed up one day, took a late lunch to go to a friend's baby shower. The next morning her boss called her in and told her that he was not sure if she was looking for a new job but had realized that she was long overdue for a raise and had approved it. Her comment to me was she wished her friend had decided to have that baby 6 months earlier.

Sometimes employers are just trying to hold the line on budgets as long as they can and/or can't get approval from the top until they go to the top and scream that they are losing people. I have had senior executives ready to change jobs themselves because they can't get approval to give their teams raises or promotions because HR is entrenched with top management to hold the line on their salary pronouncements.

Comment by Robert Fanshawe on November 17, 2011 at 5:58pm: Nicky wasn't professional for sure but then again, neither was the company. However, I disagree this is the right action because I was brought up with a value system that 2 wrongs don't make a right. The simpler for everyone solution for this should have been started by Nicky right at the beginning. If her company was not professional or mature enough to promote someone that they clearly needed to and that deserved it because of this lack of corporate discipline i.e. 'managers too busy' or any such excuse Nicky should have taken control (this is the proper 'taking control of your life' part @Amos) and walked into the CEO/Managers office with a plan. Saying you want a promotion and deserve it and being promised "it will come" is not good enough. This plan should have had been a 3 month SMART goals based plan with Results that led to Actions. It would have taken her maybe an hour to knock up. Consequences of not hitting these goals needed to be outlined for both side i.e. Nicky doesnt get the promotion if falling short and the company must promote if hitting or exceeding. Within 3 months she would have reached her goals and either got her promotion or been let down. 9 months before she pulled the plug in your method she would then have had the ethical and moral high ground to look elsewhere. What happens after that is clearly up to her still (which is a good thing) and if she got offered elsewhere and counter offered and stayed, that's her right. However, my aside to her would be she is too good for that company. She knew she had pro-actively presented a planned solution they broke a promise on. So if I was her and the company had rescinded on a clear plan of action that I had brought to the table, I would know whatever the short term benefits of the counter offer, long term the company did not have a belief or value system that I could happily work within and my career would be better off elsewhere.

My advice to candidates would always be to do it this professionally planned way. Nicky's way is far too unplanned, risky and potentially career damaging. Like others I am glad it worked out for her but there are much better ways of getting to that point.

Comment by Robert Fanshawe on November 17, 2011 at 6:42pm: PS:

Risky advice is determined because, statistically six to nine months later, 90% of those candidates who accept a counteroffer are no longer employed with the company that extended the offer (Martin Varnier Research)

Career damaging is determined because of these universal truths.

• Any situation is suspect if an employee must receive an outside offer before the present employer will suggest a raise, promotion or better working conditions.

• No matter what the company says when making it’s counter-offer, you’ll always be a fidelity risk. Having once demonstrated your lack of loyalty (for whatever reason), you will lose your status as a team player and your place in the inner circle.

• Counter-offers are usually nothing more than stall devices to give your employer time to replace you. Your reasons for wanting to leave still exist. They’ll just be slightly more tolerable in the short term because of the raise, promotion or promises made to keep you.

• Counter-offers are only made in response to a threat to quit. Will you have to solicit an offer and threaten to quit every time you deserve better working conditions?

• By accepting a counter-offer, you have committed the unprofessional and unethical sin of breaking your commitment to the prospective employer making the offer.

• Decent and well-managed companies don’t make counter-offers….EVER! Their policies are fair and equitable. They will never be subjected to counter-offer coercion, which they perceive as blackmail. (Source: Wall Street Journal)

The last one is the crux of my main point in previous comment. If you want to develop your career in a decent company with a good value system where you yourself will therefore grow in the right way they should respond to a decent plan (even if they're too busy to come up with one themselves) which see everyone prosper without "leveraging" threats to accept other offers

Comment by Robert Fanshawe on November 17, 2011 at 11:13pm: Forbes article on the same subject

Comment by Stephen Booth on November 18, 2011 at 7:47am: Applying for another job in good faith but then accepting a counter offer from your current employer is one thing. Applying for another job with the aim of getting a bigger counter offer from your current employer is something else. Something less than completely honest. Whatever your reason for applying your expectation must be that if offered you will take the other job. If you apply, with the intent of getting a counter offer, but present it to your boss and just get a "Well, we're sorry to see you go but can undersatand why you'd want to take up a chance like that" then you're stuck. If you don't take up the offer then you'll be forever marked as someone who uses 'underhand' tactics, who is dishonest. If you do then you will probably be taking up a role you didn't research proiperly and may land up worse off (didn't you realise you'd now have a 3 hour commute?). Yualso have to bear in mind that if you're offered and don't take up the offer you now have two companies annoyed at you. Your current employer who thinks you tried to hold them to ransom and the new company who think you were using them and wasting their money to get a better deal for yourself.

Comment by bill josephson on November 18, 2011 at 8:31am: I believe most candidates unhappy about an aspect of their present employment situation, but otherwise really wanting to stay if resolved, lacking confidence to confront it begin the interview process unsure if they're going to receive an offer or how their present employer will react if they do. They're prepared to leave the company if they're not important enough to the organization for them to resolve the issue.

There are some who are mercenary wanting more money. They would be the ones, IMO, most at risk of being axed by their employer 6-9 months. But the ones with a personal/career business issue......promotion, undesireable client support, travel schedule, etc... often times the company really doesn't want to lose them so since they'd prefer not to leave the company with all they have vested they're susceptible to that counter.

Everyone, including us, are looking out for their best interests. Forget about morality. Think self-interest. And be surprised if your candidate behaves in a "moral" manner. Working with passive candidates has its pitfalls. And counters are it.

Comment by Dennis on November 18, 2011 at 9:24am: I don't know how much time has passed since Nicky did this but I would be interested to see if she is still with the same company 12 months later.

Comment by Amos on November 18, 2011 at 11:49am: I dont think "Nicky" needed to come back for a third time to broach the subject after her management team assured her she would be promoted imminently. I think waiting 10 months with only verbal reassurance is not enough for top talent.

it was quite simple for her to get reassurance from and an external source, within the last 3 years she had 3 recruiters try to headhunt her - but she stayed loyal and never submitted a resume to another company.

Think about it this way (as the company might have): she managed 3MM of business. its a 30MM operation - that's not talent that is easily replaceable, re-trainable and some of her clients relationships (50%) might go with her.

Leverage can be used for the greater good - I think what Nicky decided to do with her leverage says more about her character and that she really understands her self worth. All that sweat equity ( 80 hour work weeks+) came to fruition.

Bill - I think you nailed it - its all self interest. Even the counter offer is in the best self interests of the company AND now its part of their retention process!

Robert - Martin Varnier Research - you mentioned is an article not really shows any real numbers. Maybe you can add the link ?

A plan is only good if your manager does it and your company doesn't reassure you constantly that you are getting a promotion. I think that's good advice to be proactive and walk into your managers offfice and say" here is my 3 month promotion plan" BUT now they might think of their own 3 month plan to get you out or worse: give you unrealistic goals. not every company is decent and well managed.

Like i said this is a risky strategy - I would ASSUME (because i haven't found real numbers to back it up) that less then 5% of people get to stay and thrive.

BTW she went from earning 45K to almost 80K - and no ceiling on commission's.. Nicky is thriving in her new role - also introducing the company to new avenues of revenue via social media. its been 6 months and all is good - but I will update if there is a change. I can see her staying with the company for another 3-5 years before moving into a senior role - or...who knows.