Counter Offers are Psychological, Don’t be tempted.

Very few people can resist temptation. Even when we know that yielding to it may not be the best thing for us, we feel compelled to take the risk.

In the world of work, a counter offer is one made by an employer as an incentive to keep an employee who has indicated he or she wants to leave. The counter-offer usually means the employee gets a raise or a promotion, and probably some other benefits on top. It can be very tempting.

It is not just the physical reward that makes us feel compelled to yield to temptations. An emotional curiosity attracts us to what new experiences we will undergo if we yield. Even though our inner voice tells us that things are unlikely to change, we cannot resist the urge to explore. We love to hear that we are “worth” something, that we are “valued”, that we are “appreciated”. These sentiments play to our intuitive psychology and relate to one of the most important of all human motives, the need for ‘relational value’1.

“Relational Value” was a term created by social psychologist Mark Leary and it lies at the root of self-esteem. Our internal emotional barometer is guided by our experiences of relational value. We want to feel valued by significant others (in this case a boss, a director or a manager or anyone within your professional sphere of influence). So, when your current employer tells you that you are “valued” and they “don’t want to lose you” it elicits a state of high psychological well-being within us. We thrive on positive feedback and knowing we are valued and appreciated reinforces a positive sense of self-worth. We then tend to deny the negative issues that brought us to this employment crossroads in the first place. Hence, many candidates will go ahead and accept a counter offer on the basis that they believe that "now things will change".

Herein lies the problem with a counter offer.

The reality is that when the short term high of feeling valued evaporates, we begin to realise why we made the decision to seek a new position in the first place. The problem is; we tend to hold on to negative emotions more than we do positive ones. In the book “The Man Who Lied to His Laptop: What Machines Teach Us about Human Relationships” (Penguin 2010) Professor Nass, states that “The brain handles positive and negative information in different hemispheres. Negative emotions involve more thinking, and the information is processed more thoroughly than positive ones.  Thus, we tend to ruminate more about unpleasant events — and use stronger words to describe them — than happy ones”2.

Managers rarely recognise this, and so fail to appreciate the importance of maintaining positivity; of crediting employees’ good work; or listening to employees when they try to express a grievance. You may think the reason you were initially tempted by new position was not management related at all but salary-related or promotion related? The reality is, don’t these reasons all surmount to the same thing? Until you received this now new, glossy counter offer, the management either failed to pay you what you were worth or failed to recognise your potential to promote you and therefore it is still management related.

When your company is highlights your irreplaceable value when you hand in your notice, it shouldn’t come as a surprise!

Why? Because you leaving the business will be a burden for the management team. They will need to pay to re-recruit. More likely, they will also have to pay a salary at least commensurate with what your new employment offer. Finding a replacement can be tricky too, and it is almost impossible to find one that will be able to fit in immediately. They will need to re-train, and of course, there is no guarantee that this recruit will work out. Hence, the counter offer.

A counter offer is a risk averse business decision that makes sound commercial sense for any management team.

So, you receive a counter offer. Suddenly you find your employer values your work. In my view, it is too late. Don’t be tempted to take it. I see it all too often and almost every time we see the same candidate who accepted the counter offer back on the job market seeking a new role a year later. The problem is, that’s a year lost. Had the same candidate been brave a year ago and not accepted that counter offer, where would they be now…?

Thus, perhaps not immediately, but over time, the very same reasons that caused you to seek a new position in the first place almost always rear their head again. Subsequently, candidates regret not taking the offer received all those months before.

Imagine you are in a relationship and you want to get married, you want your partner to commit. You explain that marriage is something extremely important to you; that value the vows that confirm lifetime commitment. But they won’t. You don’t know why, but they just won’t do it. As a result you become unhappy. The small things in the relationship that shouldn’t matter, irritate you more every day. Eventually you decide you have waited enough, you need commitment and you are no longer happy so you say you are leaving the relationship. Suddenly, the offer of marriage comes by way of trying to save the relationship. It is too late. Who wants to receive a proposal like this? Would this make you feel valued? No.

A new job offer with a new employer has made a commitment to you. They value you from the outset. It’s a great start to any new relationship.

The reality is that counter offers are not an expression of appreciation of the value of the employee. Instead, it is a corporate way of diverting a potential problem.

Once an employee accepts a counter offer, his or her standing in the company will have irrevocably changed. He or she will have succeeded in showing the company the risk of departure. It will also demonstrate that perhaps you are not 100% satisfied or committed to the long-term objectives that the business is trying to achieve. The position of the employee is therefore undermined by accepting the counter offer. It may also affect opportunity to advance in the future, after all promotion is usually reserved for those that show long-term commitment.

If you are unhappy with pay or status in your current company, I, therefore, recommend you always negotiate with your employer for better terms BEFORE you start looking elsewhere.

Speaking to your current employer before seeking new employment allows time for reasoned discussion to take place. Any improvements you then receive are built solely upon your contribution. You are not putting a proverbial gun to the head of your employer. Instead, you are having a reasonable and rational conversation where you can assess how much your company values you within the business. That is so much better than a salary increase or a promotion that comes about because the company feels it has no choice.

A compensation specialist at Chicago law firm, Vedder Price Kaufmann & Kammholz, says that in about 50% of CEO hires, counter offers are a factor. Ben Slick, CEO of PeopleScape, corroborates this by stating that 40% of job offers with a salary range of ï¿¡75,000 to ï¿¡100,000 will draw a counter offer.3

The message seems to be quite clear.  

1. If you have an issue with your employer, address it now.
2.  If they fail to provide an adequate response and you feel your role has become untenable, seek new employment.
3. If you secure an offer with a new employer who values you, accept it.
4. If you get a counter offer; do not give in to temptation by accepting it, you are likely going to regret it in the not too distant future

I will finish with this. A survey of 200 professionals by the firm WSJ shows slightly more than 50% of employees who accepted a counteroffer left the company within the next six months.4 This in line with figures from Martin Varnier Research, which show that 90% of those who accepted left within nine months. A spokeswoman for ClearSky Business in the UK says that 60% of those who accept counteroffers will "be gone within six months".5

- What do you think?
- Have you ever accepted a counter offer and regretted it?
- Have you been made promised that were never kept?
- Have you accepted a counter offer and been happy that you did?

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This article was written by Nick Day, Managing Director of JGA Recruitment - the leading Payroll, HR & Reward Recruitment Specialists.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please reach out for a 15 minute ignition call and I would be delighted to discuss how we can help.

Nick Day
Managing Director
James Gray Associates Ltd
Payroll, HR & Reward Specialist Recruiters
Email: nick@jgarecruitment.com
Tel: 01727 800 37701727 800 377
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Credits & Sources:
1. https://www.psychologytoday.com/blog/theory-knowledge/201206/relational-value 
2. "The Man Who Lied to His Laptop: What Machines Teach Us about Human Relationships” (Penguin 2010)
3. rcsearch.com/candidate-coaching/78
4. https://www.eremedia.com/fordyce/counteroffers-are-you-kidding-me/
5. https://www.theguardian.com/careers/what-to-do-if-employer-makes-counter-offer
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