2023, Counteroffers: pros & cons

Have you ever accepted a counteroffer?

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A counteroffer is a response to an initial offer made in a negotiation or business transaction. It is a proposal made by the party who received the initial offer, which modifies some or all of the terms of the original offer. The purpose of a counteroffer is to open further negotiations and to reach a mutually acceptable agreement.

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For example, if a person is offered a job with a salary of ￡50,000, but they believe they are worth more, they may make a counteroffer for a higher salary. The employer can then either accept the counteroffer, make a new offer, or reject the counteroffer and end the negotiation.

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It's important to note that a counteroffer effectively rejects the original offer, and the parties involved must negotiate until they reach a mutually acceptable agreement or decide to end the negotiation altogether.

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According to a 2019 survey conducted by the recruitment firm?Robert Walters , more than half of UK professionals (56%) had received a counteroffer from their current employer when they handed in their resignation. The survey also found that?40% of those who accepted a counteroffer ended up leaving their jobs within a year anyway.

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Another study conducted by the job site?Glassdoor? in 2021 found that?62% of UK employees who received a counteroffer accepted it, and nearly a third (31%) said they regretted accepting it.

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The?Robert Half 2023 Salary Guide ?found that the current economic climate in the UK is putting pressure on both employees and employers. With the rising cost of living and inflation, employees may be seeking higher salaries elsewhere, leading to a challenging hiring landscape for businesses.

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In this context, employers may feel the need to use counteroffers as a means of retaining their top talent. However, it's important to approach counteroffers with caution and consider the potential consequences.

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While a counteroffer may initially persuade an employee to stay, it may not address the underlying issues that led them to consider leaving in the first place. Additionally, offering a counteroffer to one employee may create expectations among others in the company, leading to potential resentment and dissatisfaction.

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It's important for businesses to have a broader strategy for attracting and retaining top talent, which may include offering competitive salaries and benefits, creating a positive work culture, and providing opportunities for growth and development. By investing in their employees, businesses can create a more sustainable and fulfilling work environment for all.

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Let’s have a look to some?pros and cons of using counteroffers in the context of employment negotiations:

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Pros:

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1. Retain top talent: One of the most significant advantages of a counteroffer is that it can help a business retain its most valuable employees, especially in a competitive job market where attracting and retaining talent can be challenging.
2. Avoid recruitment costs: When an employee decides to leave, it can be costly for a business to recruit, train, and onboard a replacement. By offering a counteroffer, businesses may be able to avoid these costs.
3. Improve employee morale: Receiving a counteroffer can make an employee feel valued and appreciated by their employer, which can improve morale and job satisfaction.
4. Gain time to prepare for a replacement: If an employer offers a counteroffer and the employee accepts, it provides the employer with more time to prepare for a potential replacement, which can be especially beneficial if the position is critical to the business's operations.

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Cons:

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1. Risk of resentment: Offering a counteroffer to one employee can create expectations among others in the company, which can lead to resentment and dissatisfaction.
2. Potential turnover in the future: Research has shown that employees who accept counteroffers are more likely to leave their job within a year. Therefore, a counteroffer may only delay the inevitable departure of an employee.
3. Questions the employee's loyalty: Offering a counteroffer may make an employer question the employee's loyalty, which can lead to a strained relationship and distrust in the future.
4. May not address underlying issues: A counteroffer may not address the underlying reasons why an employee was considering leaving, such as lack of growth opportunities or a negative work environment.

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Here are some pros and cons of accepting a counteroffer as a candidate:

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Pros:

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1. Increased salary: One of the main advantages of accepting a counteroffer is that it can result in an increased salary, which can be tempting for employees who may be dissatisfied with their current pay.
2. Improved benefits: Along with a salary increase, a counteroffer may come with improved benefits, such as additional vacation time, a better retirement plan, or a more comprehensive healthcare package.
3. Demonstrate value: Accepting a counteroffer can make an employee feel valued and appreciated by their employer, which can improve morale and job satisfaction.
4. Avoid job search: Accepting a counteroffer can allow an employee to avoid the stress and uncertainty of a job search, which can be time-consuming and challenging.

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Cons:

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1. Questions loyalty: Accepting a counteroffer can cause an employer to question the employee's loyalty, which can lead to a strained relationship and distrust in the future.
2. Career growth: A counteroffer may not address the underlying reasons why an employee was considering leaving, such as a lack of career growth opportunities or a negative work environment.
3. Risk of future layoffs: Accepting a counteroffer may not necessarily protect an employee from future layoffs or job cuts.
4. Burn bridges: Accepting a counteroffer and then leaving shortly after can burn bridges with both the current employer and any future employers who may learn about the situation.

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Overall, while accepting a counteroffer may seem like a short-term solution to job dissatisfaction or salary concerns, it's important to consider the potential long-term consequences. Candidates should evaluate the reasons why they were considering leaving in the first place and weigh the pros and cons of accepting a counteroffer before making a decision. It's also essential to maintain open and honest communication with both the current and potential employer throughout the decision-making process.