The counteroffer conundrum

By Jesse Sanchez.

Properly weighing the risks and rewards of counteroffers is crucial for both employees and employers.

When a valued employee hands in their resignation, a counteroffer is often the employer's knee-jerk reaction. But is it truly a solution or just a temporary fix? In this episode of Roofing Road Trips®, host Karen Edwards sat down with Kristin and Tony Case, co-owners of High Peak Staffing Solutions, to discuss the complexities of counteroffers and why they often fail to retain talent in the long run.

“A counteroffer is the company's response to an employee’s decision to leave,” said Kristin. “If an offer is made by an employer to an employee who has received another job offer, they’re going to try to come up with a counteroffer or a better offer.”

On the surface, this strategy may seem like a way to retain key talent. However, as Tony  pointed out, counteroffers are often driven more by desperation than by a genuine commitment to change. “We are seeing a lot more counteroffers, but a lot of the root causes don’t necessarily change,” he explained. “Counteroffers that are happening are more from desperation than they are from ‘I had an eye-popping moment, and I understand that I’m going to lose good talent if I don’t change my ways as a leader.’”

One of the major pitfalls of counteroffers is that they rarely address the fundamental reasons an employee sought a new opportunity in the first place. According to Kristin, the root issue is often more than just compensation. She explained, “Why 80% of people leave within the first six months of accepting a counteroffer is because money doesn’t solve all problems.” Usually, there is a reason — whether it’s a toxic work environment, long hours or lack of leadership — that money alone can’t fix.

Tony expanded on this, stating that counteroffers can even create long-term trust issues. “The trust that comes out of that — now you may or may not have a target on your back. You might leave a bad taste in your mouth with other people on your team,” he noted. “Let’s say there are five project managers on your team. They might find out that you’re getting $5,000 more than they are.” That can create a morale issue.

So, how should employees handle a counteroffer? According to Tony, they should ask critical questions before making a decision. “Does this counteroffer come with any contingencies? Is it dependent upon something else? Are any of these things going to change?” he advised. “If they’re not, an increase in pay is not going to fix your work environment.”

Read the transcript or Listen to the podcast to learn more about the real impact of counteroffers and how they affect employee trust!