Psychology of a Counter Offer – The Trust Issue

We have looked at two different angles of how accepting a counter offer can change or limit your relationship with your current employer. I am now going to try and explain the employer perspective.

So after you bring your new offer to your current employers and they frantically piece together a counter offer, here is how the next few weeks play out in their head.

Stage 1 – Relief
They are happy and relieved that they have averted losing one of their top people. Whoa, that was close, we’re so happy they’re staying.

Stage 2 – Re-Assess
Now that you have negotiated more money for less work (possibly) you are happy, you feel valued as well as having a fair deal.

What your employer realizes is that they have just given a raise to someone without that individual talking on any additional responsibilities, what? That can’t happen can it. You are now the highest paid person in the department and have no additional responsibilities and are possibly working less than everyone else too. You must be slacking. You just got a big raise and are doing less work – you should be doing more work than everyone else.

The highest paid people have to work the most so we can get our “money’s worth!”

Stage 3 – Paranoia
So now you are the employee that makes too much and does too little and paranoia starts to creep in. You don’t work as hard as you used too, you make too much money and what are you doing with all that free time. You have just recently applied to other companies and who’s to say you’re not doing it again. Who are you talking to on your cell phone, who are you emailing – you can’t be trusted.

Behind closed doors management are second guessing what information they can trust you with – are you still thinking about moving to the competition. We should just pull the trigger and move on!

Of course this is all very dramatic and overblown BUT it does have a seed of truth. You current employer may feel betrayed after time and if that happens the trust will be gone. Once the trust is gone – so are you!

Now there is another option here. You employer could honour every aspect of your new negotiated terms and things could be just fine. Then after a few weeks or months you will realize that you are getting paid more to do the exact job you wanted to leave. Sooo, here we go again.

Comment by Brian Meeks on February 10, 2010 at 11:10am: Great post. I don't think most people do this sort of analysis.

Comment by Bryon Abramowitz on February 10, 2010 at 12:11pm: Interesting analysis. Research has shown that the majority of the time a counter offer doesn't retain a employee, it only delays their departure. The same reasons that caused someone to look elsewhere continue to exist regardless of the amount of a counter offer. If they stay only for the money, they'll leave again when more money comes their way.

As a result, counter-offers are a loose/loose proposition.

Comment by Randy Levinson on February 11, 2010 at 12:54am: I agree that a counter offer only delays the inevitable departure. I have known only one person in my career to accept a counter offer AND remain with the company for 5 years or more. I however don't think the company takes the time to analyze the cost to productivity ratio after they've successfully gotten some one to take the offer. Instead, the company is more likely to start figuring out how to do without that person and that they now question the loyalty of the individual. After all, they know they can find some one in this economy who would be happy to have the job at the prior salary, so again, it is only a matter of time until they depart - voluntarily or not.

Comment by Linda Ferrante on February 11, 2010 at 11:37am: I'm going to disagree with this . . . by the time someone has come to me with a counter offer, they have already mentally checked out. They've spent time looking for a new position, interviewed, deliberated over the offer and THEN came to me for more $$? No discussions up front, just made the decision and are now coming to me to for their own reasons. Top performer or not, they have already mentally checked out. It's just a matter of time before they actually leave. If not this negotiation, it'll be the next one.

Comment by Jeremy Snell on February 11, 2010 at 12:13pm: Given the average time someone stays in a job is 3 years these days I am not surprised it is hard to think of anyone who has taken a counter offer and then stayed more than 5 years!!
This post is filled with too many assumptions to make it universal or particularly useful.

Comment by Todd Lempicke on February 11, 2010 at 12:16pm: We have reprints of an old National Business Employment Weekly article that we give candidates to ward off acceptance of counter offers. It always works. The title of it is Career Suicide. Here are some excerpts:

Before you succumb to a tempting counteroffer, consider these universal truths:
♦ Any situation in which an employee is forced to get an outside offer before the present
employer will suggest a raise, promotion or better working conditions, is suspect.
♦ No matter what the company says when making its counteroffer, you will always be
considered 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.
♦ Counteroffers are usually nothing more than stall devices to give your employer time to
replace you.
♦ Your reasons for wanting to leave still exist. Conditions are just made a bit more
tolerable in the short term because of the raise, promotion or promise made to keep
you.
♦ Counteroffers are only made I response to a threat to quit. Will you have to solicit an
offer and threaten every time you deserve better working conditions?
♦ Decent and well-managed companies do not make counteroffers…EVER! Their policies
are fair and equitable. They will not be subjected to “counteroffer coercion” or what
they perceive as blackmail.
If the urge to accept a counteroffer hits you, keep on cleaning out your desk as you count
your blessings.

Comment by Mat von Kroeker on February 11, 2010 at 12:25pm: I don't understand the "getting paid more, but working less" part of your analysis. Isn't that grounds for dismissal in any organization or company? How stupid does a company have to be to let a person abuse the system like that?

Comment by Peter Sewall on February 11, 2010 at 12:38pm: This article greatly underestimates how WE are used by candidates to obtain a counter offer. Those who typically accept counter-offers know that they are undervalued for the current work that they do and their lame suggestive attempts to receive the raise they know they deserve have not worked. What's more is that they know their company has a history of proposing counter-offers. So we call them with our great opportunity for more money and they know just how they will take us for the ride. The candidate will swear they would never accept a counter-offer and play along with you as you discuss this issue in detail. They will interview with our client, create as much value as they can to obtain the highest offer. The candidate now has the leverage he/she needs to confront his/her boss with the "I really love this company, I really like working for you and I really enjoy my team, however, this recruiter called me and strong-armed me to interview with ABC company. I never realized that ABC paid their directors so much. ABC offered me a salary that I could not pass up. With Billy and Sally entering High School, I really need to start saving for their college. Again, I really like my job here but ABC has offered me 15K more a year and I'm sorry but I am turning in my resignation at this time. I really feel awful about this, it hurts me to know that I will leaving X company after all of these years." Bingo! The employer who has given counter-offers in the past knows that he/she has maintained this employee far below market value for years. The employer thinks of the stress and dysfunction it will cause and take to replace this employee and since the real issue seems to be money, will match the offer given by ABC company. In such a scenario there is not a lot of distrust residue because the employer knew they were getting away with underpaying this valuable employee for several years and they know it would cost 15K more to get someone at his/her skill level. So its really seen as a win-win situation. Experienced recruiters who have lost deals to counter-offers will typically talk about the candidate's "career wound" as being underpaid but really liking their job. We sense it happening yet at the same time want to deny this is happening. Today, whenever I have a candidate at high risk for counter-offer, I will not give them my client's offer until he/she agrees to sign a contract giving me a flat fee of 5K or half of the counter-offer, whichever is more. I've used this four times. Interesting enough 3 out of 4 signed it. I knew that the one who refused to sign was trying to use me for a counter-offer and I feel some redemption for the few I've lost to counters.

Comment by Corey Harlock on February 11, 2010 at 12:40pm: Keep the debate going - great comments all.

Of course there are a lot of assumptions and the examples are over blown as stated in the conclusion. But the reality is and I believe Todd said it best "you will always be
considered a fidelity risk" and that is the point I was making.

I do also want to point out that this is the 3rd article in a series of 3 about Counter Offers. The first being "Get Ready to Counter Offer - or not" and it addressed the fact that overt 50% of current employees are looking once the economy strengthens - or now. The second was about "Fractured Relationships" and how taking an offer back to your current employer can damage your reputation and chances long term.

So this post addresses the "employer perspective." Its intended to be overblown and provoking but I do beleive that the message is true as again supported by Todd's article.

Comment by Barbara Goldman on February 11, 2010 at 1:37pm: I don't think that your post is overblown. I know that what you are saying is correct. It is interesting to note that the people who might disagree with you are corporate, not third party recruiters.

Third party recruiters are very close to their candidates. The candidate is more likely to confide in us. We ask the questions that might be considered too rude, or probing.

I have personally replaced people confidentially who have accepted counter offers. I have also had people call me six months later after taking a counter to tell me that they were fired. The bottom line is this: we don't work for corporations, we work for people. People are jealous, petty, resentful,
and don't like to be duped. Corporations are emotionless. And, if a corporation decides to make a counter offer, it is an emotionless type of thing. But, mix people, and emotions in and, well just never take a counter offer. If you don't take a counter offer, you can always go back to the company later. But, if you take a counter offer, your days are probably numbered. This is the truth.

Corporate recruiters might not be as well versed in this because sometimes counter offers are received during the interview process, before a new offer is even extended.

All recruiters: If a candidate falls off during the interview process, or doesn't take your very good offer, chances are, they took a counter, whether you know it or not.