Counteroffers: Do they work and should you use them?

Approximately 40% of employers have made counteroffers to retain staff tempted by higher wages in the past 12 months, yet nearly a third (29%) of employers believe counteroffers are unsuccessful in retaining employees any longer than 12 months.

Getting a counteroffer

You’ve scored a new opportunity with an increased salary elsewhere, but all of sudden your current employer is providing you with a flattering counteroffer, finally telling you they can give you what you’ve been looking for! But is this really the case?

A pay rise feels great! It can be a flattering incentive to stay put with what you’re used to, rather than head towards the unknown by accepting a new job offer.

It’s no surprise that counteroffers can be effective in the short-term, especially with the current economic climate and the cost-of-living crisis impacting us all.

But is this really a successful strategy for retaining employees?

So, what is the real problem here?

With salaries expected to increase by an average of 5% across the following year, businesses are increasingly fighting back with counteroffers as they try to retain talent.

But offering a higher salary in the form of a counteroffer doesn’t tend to fix the real problem, it just delays the inevitable.

Almost a third (29%) of employers believe counteroffers as unsuccessful in retaining employees any longer than 12 months.

In the short term a higher salary as part of a counteroffer may retain an employee, but they may be lacking something else in their role.

Whether it’s job stability, employee appreciation or company culture, looking elsewhere for job opportunities is usually a sign of a bigger problem!

Not only can counteroffers fail to fix the problem, but they can also cause bigger tensions and inequalities amongst other employees.

Therefore, operating with your employees in mind is very important!

When to accept a counteroffer

As an employee when you should accept a counteroffer?

Before accepting a counteroffer, you should stop and consider:

  • Have you reflected upon your reasons for leaving, will a pay rise really fix your problems?
  • Has the business offered concrete solutions to the problems that made you look for another role in the first place?
What to consider

As a business, what should I consider before providing a counteroffer? 

As a business it’s up to you to understand how to retain your employees!

Rather than trying to come up with the perfect counteroffer for your employees, adapt what you do day-to-day to prevent you from being in the situation where you need to provide a counteroffer in order to keep your staff.

This can make or break employee retention.

You should not only focus on your employees’ financial needs but fulfil their other needs too!

This is not only for your own company culture, employee satisfaction, and team wellbeing, but it’s much more cost effective than re-hiring and onboarding!

So, what can you do as a business?

How can we prevent employees moving on, even with a salary increase counteroffer?

  • Create an environment in which employees feel valued and fulfilled.
  • Encourage communication – create a relationship with employees where they feel comfortable expressing their role challenges and concerns.
  • Develop and integrate strategies for employees to see changes in the business and roadmap steps you can take, to make them feel valued and appreciated.

As an employee counteroffer’s can be hugely appealing, offering both appreciation and value.

But they may not fix your reasons for leaving a role in the first place!

Therefore, it is crucial you take time to reflect thoroughly upon the decision.

Counteroffers: do they work or not?

Perhaps in some cases counteroffer’s can be an effective way to retain talent. However, at T2M we believe further solutions are needed for the long-term retention of employees.


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