In the June 18, 2019 Ask The Headhunter Newsletter a reader wonders whether it’s ever smart to make or accept a counter-offer.
After I accepted a new job at a better company, my employer brought me in for a high-level meeting with management and made a counter-offer to get me to stay. I politely turned them down, even though the money was higher, because as I said, the new company is a better place to work. As a manager myself, I’ve never made a counter-offer to a departing employee. My view is, if they want to go, they should go. Am I wrong?
I think you’re right. It’s a very rare situation where a counter-offer is made and accepted and the outcome is good.
Counter-offers are almost always made and accepted out of fear. An employer fears an empty position. An employee fears the next unknown job. But counter-offers almost never resolve the underlying reasons for why the worker looked elsewhere for a job, simply because more money doesn’t satisfy other hungers — which linger until satisfied.
A counter-offer delays the inevitable
Headhunters routinely advise candidates who receive counter-offers from their current employers to turn them down. Some keep a sheet with a list of reasons to reject counter-offers handy. It’s of course self-serving — why would you want a candidate you’re about to place for a hefty fee to stay at their old job?
At the point where a candidate accepts a job offer, the myriad factors that led them to consider a new job coalesce to reveal just how potent the desire for change really is. Relying on a counter-offer to squelch all those factors just spawns other problems, or delays the inevitable until it reaches crisis proportions.
Virtually every case I’ve seen where a counter-offer was accepted still resulted in a parting of ways — it was merely delayed. And that’s why in most cases employers should never make counter-offers. The cat is out of the bag. Let the employee go.
There is no better lesson about counter-offers than the very-high profile story of Robert Kelly, CEO of Bank of New York Mellon, that was reported by Fortune magazine in 2011. It’s a case study that everyone should read.
Wishful thinking breeds mistakes
A person can work happily at a job for years before feeling the urge to move on. But as soon as they realize “it’s no longer working out,” the job is a bad match because something’s changed. There may be no fault in that scenario, as long as the match is broken up before the misery begins.
I often counsel overly eager job seekers that they should be very careful what job they take next, because the reason they’re job hunting is probably because they took the wrong job last time. This goes double for employers.
In BNY’s case, it seems clear Kelly was a bad match from the start. The fault seems to rest clearly on BNY’s board of directors, whose wishful thinking led to a bad hire and to ongoing agonies.
The article describes BNY as “a highly conservative, old-line institution that specializes in mundane, grind-it-out businesses and prizes tradition, self-effacement, and loyalty.” In 2006 the board nonetheless hired Kelly, a CEO with a huge ego who craved publicity, courted controversy, and relentlessly pursued “the next new thing — a grander job, more money, and more excitement.”
Kelly lacked the conservative nature that marked BNY’s reputation, but the board “decided that Kelly was just the change agent it needed to revive the fabled institution.”
Right there the board blew it on the match: Change was the last thing the board really wanted. And his urge for change drove Kelly away from the board.
A counter-offer is a mistake
CEO Kelly secretly pursued a bigger job with the bigger Bank of America. When he finally disclosed his intentions, the board of BNY resigned itself to announcing his departure. But BofA soured on Kelly and never made an offer. The premature news about hiring him turned into a public relations disaster for all involved.
According to Fortune, burned and burned out from pursuing BofA, Kelly returned to the BNY board with his tail between his legs and begged to keep his job — just moments before the board was to announce his replacement. You’d think BNY would have sent him packing, but Kelly pleaded and BNY’s board rationalized.
The board should have considered all the reasons they were already dissatisfied with Kelly; all the disconnects between his style and their corporate mission. An overpaid spendthrift wasn’t the right leader for the bank Alexander Hamilton founded on frugality in 1784.
But they took Kelly back — “not wanting to disrupt the bank’s operations and management, and hoping to avoid a potentially messy succession.” Translation: BNY’s board was scared. They made him a lavish counter-offer even though the guy was on the street with nowhere to go. The board renewed its vows for a bad marriage.
Never take a counter-offer*
The BNY board members weren’t the only foolish party in this story. Kelly’s next two years were marked by the board’s growing suspicions, and by the dearth of loyalty between them. Kelly should have rejected the rich counter-offer the BNY board made, because the factors that drove him away lingered.
BNY feared change. Kelly was terrified of being left without a job. But the counter-offer deal did not resolve the underlying problems between them. The rapprochement didn’t last. In the end, the board gave Kelly such a boot that the story became an expose in Fortune magazine. Then the board replaced him with the kind of CEO that BNY should have promoted to begin with — a lifer whose style and values matched the company’s.
Even if you part on good terms, remember that the decision to part company probably stems from a complex tangle of factors that cannot be so easily cut with a counter-offer.
* I can think of only one case where a counter-offer turned out very well for both the employer and employee. Maybe you’ll get lucky!
Have you ever made a counter-offer to keep one of your employees who already had both feet out the door? Have you ever accepted a counter-offer yourself? Did the counter-offer change any factors that triggered the departure?
I got to thinking, what if the reason someone left wasn’t a bad company but a bad manager or problems in a particular department? If, say, they offered you a position in another department away from the problem people and also it was an improvement on pay and perks from what you had, I wouldn’t automatically throw that in the rejection bin.
@Mongoose: I wouldn’t argue with you. But here’s the test. Why wouldn’t the employee go talk to management about correcting that problem, rather than go out and get another job offer? Perhaps more important, why isn’t the management aware of the bad manager or problems to begin with?
See my example below. I did that, exactly. Senior management was blocked from moving me since my “bad” boss was allowed to intervene and not allow my transfer to the person and projects I wanted to work for. By getting an offer from a competitor (where I would have gone IF I had not gotten the offer I wanted from the company I worked for, where I much preferred overall to work for), I allowed the senior manager to reassign me to the much better boss. I understood the politics of the situation – and did it with my eyes open on the goal.
I generally agree with not offering or accepting a counter-offer, although similar to Nick, I’ve seen it work once at a client. In that quite-recent situation, the employee had been with the employer for just over a year and wanted a promotion sooner than the company typically promotes people.
He had initially joined that company because he was recruited by a senior manager with whom he had previously worked, but then saw that a promotion would not be forthcoming, so he accepted another job when he was recruited away.
The senior manager convinced the owner to take a risk and offer the promotion as a counteroffer in a new position they added due to their growth. It’s now been 18 months and he has thrived in that position, brought enormous value to the company, and it seems it all ended well.
@Annette: The one success story I’ve got is virtually the same, except the employee had been at the firm for many years. I think it worked out because both she and the management have a lot of integrity. No one was trying to get over on anyone.
@Nick: Exactly. There were decent reasons for the previous actions of both parties and, when they came together, they found a mutually beneficial solution to which both sides were committed. Integrity!
I’m actually a counter-example, but it’s probably a function of where I work (IT, major university hospital). I’ve had several gigs there working for different groups doing very different work, but one thing they have all had in common is what seems to be this place’s default policy RE career growth: you get promoted when somebody leaves, somebody dies, or you get a job offer elsewhere.
I’ve tried my darnedest to promote career development by civilized means several times: doing my job really well, scheduling talks with management to discuss long term plans and salary, etc., and suchlike to absolutely no avail.
My first counter-offer and promotion came when a project for which I was a lowly code-monkey fell apart and everyone was sacked but me. I proposed a solution and said I’d make it succeed if I were in charge and paid properly, otherwise I’d leave (I had no alternative offer at the time). The director met my conditions, the project was successful, and this led to another 7 years of related work.
Another time in a different group, I was hired first on a contingent basis since the administrative head didn’t want to commit, then on an underpaid basis because, well, they’re cheap, and I needed the gig. A few months later, I received an offer from another university, and I was ready to leave. I spoke with my immediate boss (who was a good guy) to let him know, and before I knew it I had a counter-offer of a very reasonable salary. I accepted, partially because I knew my boss was in favor of the raise in the first place, and because accepting the other offer would have meant relocating. That led to another 5 years of related work.
So I guess I would say that my experience with counter-offers is atypically positive.
@Rick: Your experiences may be atypical but they’re also good lessons about how to approach a willing/interested employer. My compliments on how you handled both!
My previous employer was a small oil company which ran with red numbers for years in row, and the reason was an obviously failed strategy. I had also started looking for a new job, when, TL;DR, the company was raided by a local “Wall Street” guy, who basically butched it.
Two of four offices (in four different towns) were closed; mine was one of them, but I was offered to stay another six months to help the transition. I considered it because, well, money, but managed to land my current job instead. When I handed in my resignation, the acting CEO said he was disappointed, and that he actually expected my office to continue.
I did not take the bait; eventually all the four offices were closed, and today the company remains only a small investment vehicle for the raider.
I’ve accepted a counter-offer before. ONCE. And based on my own experience, I would never do it again. My employer was the owner of a child care center. When I handed in my notice, she made a lot of promises to get me to stay that I now know she had no intention of keeping: letting me work 40 hours a week instead of 60, outsourcing part of the job, giving me more of a chance to use my writing skills. Guess what? None of those promises ever materialized. I ended up quitting a year later on the advice of my doctor, with my physical and mental health seriously damaged and no other job lined up.
@Marisa: Unfortunately, what happened to you is a common experience. The employer makes concessions to avoid leaving a job vacant, but nothing really changes. That’s all the more reason to judge an employer very carefully before accepting a job.
One day I quit my job (after receiving another offer AND after the background check was completed and passed), was given a counter offer and left anyway.
A couple years later I found out that I would have been laid off had I stayed.
I accepted a counter offer once – but my search for a job was strategic. I had a boss who was stealing my ideas and claiming them as his own (including a patent application which later the lawyer said he had no business putting his name on it) and wanted to move from working for my boss to work in another group (who wanted me – but had been rebuffed by my boss for transferring me). I searched for and got a job offer from another company doing the work from the other group. I used that offer to be able to transfer groups to work for the boss who wanted me. I stayed at the company and was promoted 3 times before leaving 7 years later. It was a great decision for me.
Years ago, I had a friend who worked for a steel company for 28 years in Detroit. Despite receiving consistent stellar evaluations, they were cheap, and wouldn’t give him merit increases, promotions, or any other monetary incentives. He found another job with their competitor, and for #13,000 more annually in compensation. As he was under no non-compete in those days, he accepted the competitors offer and gave 2 weeks notice. His employer matched the $13,000 annually with a counter offer. He refused, and was escorted out the door immediately. His words “why was I suddenly worth $13,000 per year more when I turned in my notice”?
@Antonio: BINGO! That’s exactly the question to ask if your employer offers you a big counter-offer. If they really valued you, it would not take a better job offer for them to pay you what you deserve.
Two thoughts on this
1 What about the $13000 they owe you for the previous 2-3 years work previously? Make that check payable to Employee , due on receipt of invoice, please.
2 Uh oh, The employee ‘matched’ the counter offer. How did they know the counter-offer?
You need to buy a copy of Nicks “Never disclose your salary’ pdf , available here.
“How to Say it”
You: Ive received an offer from a new firm and have decided to take it, here is my two weeks notice
Ex Employer – How much more is their offer?
You: Enough to motivate me to make me excited about this change, thank you for your enquiry.
Counteroffers by management just drive home a point that attrition isn’t about leaving, it’s about looking. If someone(s) on your team feels a need to seriously look elsewhere, including listening to outsiders who reach out to them…retention is as good as over.
In my experience as a manager and a recruiter..counter offers don’t work for both sides of the table. At best they are a knee jerk reaction, with suspect sincerity.
Assuming best cases…that management is sincere, they really don’t want the person to leave…and the person leaving really regrets it…let it go and move on anyway. The business relationship is tarnished and weakened
There’s a better approach.
Because..If you turn down a counter…you can gain more & better paid, experience, technical, cultural or whatever motivated you to look, and in that context be in a much better position to assess that counteroffer and the company that made the offer. And possessed with all the internal contacts & company info, you can easily test their real sincerity. if you still think the offer attractive, you can revisit it later.
And if the hiring manager et.al sincerely wanted someone leaving to stick with the company…the day they leave is the 1st day of their efforts to recruit them to return. If they are that good today, they’ll be even better a year from now as they’ve added more experience to their toolkit.
I had a distant relative that was a Wall Street broker and decided to move to a competitor, when he told his manager how much more he would be earning, he counter offered with a higher salary. My relative replied that if he was worth that much why didn’t he pay him that from the start?
So he turned down both positions and went to OK to seek his fortune in the oil fields. That was 1925…… He never looked back and earned several fortunes!!!
Unfortunately, by the late 1960’s he had a lot of dry wells and lost most of it, but never regretted his choice.
I’ve been job hunting for the past year after making the decision to leave my current employer and am looking forward to finding a better job. In talking with a trusted friend who works at my company recently I was surprised to learn that he was offered a job for a very high salary at another company that he had turned down. When I asked why he stated that our company gave him a counter offer than was close to the new offer. He accepted and stated that he now feels very secure and happy and wouldn’t want to leave.
However, I think he’s lying to himself but that is his decision to make. The hard truth is that he is one of the lucky few to be working for a manager that actually cares about their employees. That is a rare bird where we work these days and given how many employees (upper management included) that seem to sail out of our ever revolving doors these days, that wonderful manager he has for the moment could be gone tomorrow. And once that happens, his days too will be numbered. I’ve seen it many times and so has he, but I guess he has forgotten that.
With one exception, every colleague of mine who has left our sinking ship of a company has told me the same two things happened after they left. One, they got a huge salary increase, and two they are much happier at their new job. The one exception being a guy who didn’t get much of a salary increase but found a really good job that he is extremely happy with. I wish my previously mentioned friend would consider this, but for now I can only hope that his decision to accept the counter offer doesn’t come back to bite him in the rear.