Should You Make a Counteroffer?

Dec 30, 2005

Katherine Spencer Lee

Talented employees are critical to your firm’s success. So, when you receive word that a valued member of your IT staff has accepted a job offer at another company, your first inclination may be to do whatever it takes to change his or her mind—including extending a counteroffer.

However, before you rush to prepare a proposal, give careful thought to the best course of action.

A counteroffer may help you retain the employee, but the move could be only a short-term solution; doing little more than delaying the person’s resignation. That’s because the individual likely considered multiple factors before initiating a job search, and money may not have been the leading one.

What follows are some key considerations when making a counteroffer:

The real reason the person wanted to leave: People don’t quit jobs they love, so speak to the employee to determine what prompted the decision to leave.

Can you make the necessary changes to keep the employee satisfied over time? For instance, if the person wants more challenging job responsibilities, you may be able to easily accommodate the request by offering him or her a wider range of assignments.

However, if he or she desires greater access to cutting-edge technologies, and your budget will remain limited for the foreseeable future, extending a counteroffer is unlikely to address the individual’s concerns.

How the salary change might affect your team: Before you try to match or exceed the salary offered by the other company, consider the potential impact on your team.

If you start paying one member of the group beyond the typical range for a position, you could disrupt your firm’s compensation structure and damage employee morale. Word may spread, and those in your group could begin questioning their own pay levels.

The potential impact of the person’s departure: Take into account the individual’s value to your team. For instance, does he or she possess hard-to-find network security skills? Has the person made notable contributions to your department during his or her tenure?

Make sure the employee’s abilities and achievements warrant additional compensation or other special accommodations. If the person would be difficult to replace, a counteroffer may be appropriate.

How morale might be affected: Once an employee accepts a counteroffer, the dynamic of the group may change. Co-workers and managers may be unsure of the person’s loyalty, which can affect professional relationships.

In addition, other IT staff may wonder why someone who searched for another job is being rewarded with enticements to stay.

Larger issues at play: The fact that a valued employee was pursuing other job opportunities can signal problems within the department or company.

Listen carefully to the explanation given as to why the person is considering another offer: Is there a pattern with others who have left the firm recently? For instance, if several people have complained about communication problems with a particular manager, you may be able to address the issues with the supervisor and prevent this and other resignations.

Counteroffers are risky but appropriate in some situations. Just be sure to carefully evaluate all of the pros and cons before extending one. Regardless, use the information gathered during the process to make improvements within your department and reduce future turnover.

Katherine Spencer Lee is executive director of Robert Half Technology, a provider of IT professionals for initiatives ranging from e-business development and multi-platform systems integration to network engineering and technical support. Robert Half Technology has more than 100 locations in the North America and Europe, and offers online job search services at


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