Sunday, May 01, 2016

The Year of the Counter Offer

When I meet a recruiter, I always ask how business is. This week at a local networking event I was surprised to learn 2016 is the year of the counter offer.

This recruiter, who works for a national placement agency, told me recruits are receiving and accepting the counter offer so often (more frequently this year than ever before) her firm has named 2016, “The year of the counter offer.” Seeking new employment as a way to force an employer to give you a raise is so popular this agency is calling it a trend.

She stated despite the great recession having ended a few years ago, many companies continue to be apprehensive about the economy, are reluctant to convert temporary employees to permanent and have not given employees a decent raise in years. Millennials who accepted jobs below normal starting salaries are tired of waiting for a fair wage and are using the counter offer as a salary negotiation tool. 

Companies are well aware of how much it costs to hire and train a new employee:

According to Zane Benefits:
Some studies (such as SHMR) predict that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $40,000 a year, that's $20,000 to $30,000 in recruiting and training expenses.

But others predict the cost is even more - that losing a salaried employee can cost as much as 2x their annual salary, especially for a high-earner or executive level employee.
I learned this the hard-way after one of my employees left last year. I now realize it is cheaper in the long run to figure out how to keep employees rather than having to endure the time and cost of recruiting and training someone new.

If you do threaten to leave your job be aware of the potential risks:
You may not receive a counter offer:
You or your position may not be as valuable to your employer as you think it is. Also, some employers think everyone is replaceable and have a policy to never give a counter-offer. 

Accepting the counter offer could hurt your reputation:
Most employers have good memories; from this day forward you may be known as the employee who resigned to get a raise.

My company has this employee – he actually accepted a counter offer on two separate occasions. When he was seeking a promotion last year he came very close to not getting it because of reservations as to whether he was management material. Similar to my friend who is known as the 4:00 and she's out of here employee, he is known as the counter offer employee. As he struggles to adapt to his new management role, several managers site his counter offer history as an ignored warning sign.

You are burning bridges:
I accepted the counter-offer when I was in my 20’s. Very similar to the scenario above both a co-worker and I accepted counter-offers after finding new jobs with the same placement firm I referenced above. We had both been warned of the disadvantages of accepting the counter-offer (if we are unhappy now, we will most likely be unhappy six months from now just better paid). We both had liked our jobs, but needed and thought we deserved more money. In both cases, our employer matched our new salary as an incentive to keep us. Unfortunately, a year later we were both out of a job when our entire department was relocated to Chicago. My co-worker regretted her counter-offer decision as she struggled to find another new job. I never regretted mine because I easily found a job on my own, but the agency I had worked with never worked with me again. I am sure there was a "don't work with" note attached to my file.

You may be fired in the future:
If our entire department had not been downsized, I wonder if our jobs would not have been in jeopardy in the future. Assistants were hired for both of us shortly after our counter-offers were put in place without our permission or request. My co-worker’s assistant didn’t work out and left a few months after she was hired. I struggled to keep mine busy (would you train an unwanted assistant to do your job). He was the first person to leave when the department lay-off was announced.

My recommendation:
My company’s economist projects 2016 as a year of slow but steady growth, but 2017 to be a year of contraction. My recommendation is instead of 2016 being the year of the counter-offer make it the year your find a great new job especially if you have a few years of experience. If you wait and are underpaid, underemployed or your company still hasn’t hired you permanently you may be stuck in an undesirable work situation for several years to come.

Have you ever accepted a counter offer? Was it a good decision?


  1. I've never threatened to leave my job, but it would be important to consider the risks.

  2. The first raise I ever got with the first company I worked for was when I had an offer elsewhere. They usually had a policy of giving small raises for each successfully completed contract (about every 6 months), but I worked there for 2 years without getting one and learned that several less qualified people were making a lot more. When I got the other job offer, I told them I'd love to stay, but I couldn't afford to stay at what they were paying me. So I finally got the raise.

  3. Really interesting! My hubby hasn't done this, but he does put in tough negotiations when it comes time for raises. He usually can prove that he's earned it, and he often comes out with a better raise than he would have automatically gotten.

  4. Very informative post. It's funny, this exact situation just happened to a friend of mine. His company found out he had been offered a position with a competitor. They gave him a raise and more vacation time to stay.

  5. Very interesting read. I just retired from a very large organization and it always amazed me the turnover we had, but still they continued to give very small raises and no other perks.

  6. Millennials have realized that bouncing around jobs is one of the best ways to get a salary raise. Wages have been stagnated for so long it can be hard to keep up expenses which makes this new trend popular. I am only now about to enter the workforce but I know that I plan on using this technique should I feel stagnated.

  7. This is the only way some managers and employers will ever, and I mean ever, pay someone what they are worth, in my experience. I had to apply for different jobs and present my old boss with other offers to get him to actually give a crap about keeping me. I think it's sick and sad and obnoxious that this is what the corporate world has come to, employees scurrying about to prove their worth and get paid what they are actually worth instead of simply doing a good job and getting paid a good salary - it made me so angry I vowed to never work in a corporate environment again. Here's hoping I never do! :)