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Accepting A Salary Counter Offer From Current Employer

Should one accept a counter offer from his/her current employer after securing another offer? 

Answers

Anonymous
(Director of Finance) |

My first feeling is no.
You have to consider a few things.
1) What attracted you to the new offer in the first place? Are these thing present in the same way/form at our current company?
2) If the new offer came because you were looking, what caused you to go looking? Was it the environment/situation at your current company not living up to your expectations or meeting your needs? If these things don't change, will you be looking again in 3, 6, or more months?
3) What is your relationship with those in your current company? Will They feel betrayed that you were considering outside offers? The problem is not how things have occurred, but how will current management feel and act going forward? If they feel you are a "flight risk", will this compromise you current career path at the company?
4) Will your current company feel that you are "blackmailing" them into higher wages or better projects? This could come back to bite you in the future.

I would consider long and hard what the future would be like at your current company.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

There is a study and article going around LinkedIn (Try Liz Ryan and Human Workplace) that says 80% (not sure of exact number but relatively high) of those who accepted counter offers resigned (or it eventually did not work out) after 12-18 months. Liz also points out the pros and cons of considering/accepting a counter offer.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I've read similar type studies. Either don't use another offer as a bargaining chip during a raise negotiation or leave for new job.

If they try hire you back (after a year or so), then I believe you have a winning situation. Emerson?

Gennady Shenker
Title: President
Company: GDS Solutions
(President, GDS Solutions) |

Thank you for quality thoughts. What about using counter offer to improve original offer? How to accomplish this tactfully, skillfully?

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

I would advise against this.

Nancy Heet
Title: President
Company: Workforce Management Strategies
(President, Workforce Management Strategies) |

Typically compensation structures have been built with market and experience differentiators. Overall range adjustments may affect individuals by taking them into lower quartile a their salary grade. Make the case to your manager by comparing your current range placement (pay rate) to a hypothetical new hire offer that would include an experience credit when determining range placement. Typically managers value the experience and intellectual capital of a current employee and may be willing to adjust vs risk a valued employee leaving or becoming disengaged.

Anonymous
(VP - FInancial Planning and Analysis) |

I would think long and hard before doing so. What options does the company have for getting it back, i.e. no increases for the next few years. Why were you looking to leave in the first place? Was it really all about salary? Is it prove they were underpaying you to start with? How did that happen?

Having said this, I have heard of companies (Fortune 500) that no longer give merit increases. They tell their employees that if they think they are underpaid: "Prove it. Go get an offer and we will decide if we want to counter." So the day maybe coming where we all need to play that game.

Anonymous
(Director of Finance) |

I was in this situation. I was laid off from a private for-profit industry position, took a position at a not-for-profit for just over 50% of my former pay. I worked for about a year, and was uncomfortable enough due to the lower pay to start looking. I was offered a position, resigned, and my not-for-profit job countered with a significant increase. I stayed because I felt the new rate was appropriate for my contribution to the company.
It's been about 16 months since then. I've gotten 2 additional raises during those 16 months. I feel like they brought me in based on the type of financial manager they'd had in the position before, but I elevated what the position was capable of contributing and they have recognized and rewarded those efforts.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

There are always exceptions to the rule... and you found the exception... good for you! (with sincerity)

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

So you are working for a company that low balled you at 50% of your pay because they knew you needed a job. That my friend is taking advantage of your situation. Doesn't speak well to the ethics of your employer.

I would be very uncomfortable knowing that they did that to me, if I was in your position.

Gary Johnson
Title: IT Audit Project Manager
Company: Colorado PERA
(IT Audit Project Manager, Colorado PERA) |

I was in a similar position 3 years ago. I had an offer, and discussed with my current company, who made a counter offer to match the salary. I took the counter back to the company I had applied to and was able to get a small bump from the offered salary. I ended up taking the new job, with very happy results.
In conversations with former co-workers, they confirmed that I had made the right choice for me. (I won't go into the details, but the situations that started me to look did not change after I left). The new situation has been truly a "breath of fresh air" and stimulated improvements in performance, attitude and a renewed desire to excell in my profession.

Anonymous
(CFO) |

Gary:

Exactly why I'd generally not recommend accepting a counter offer.

People in management seldom leave over compensation. Or, at least not compensation alone. And, the increased compensation of the counter offer will not make up for whatever it was that incited one to leave.

Money is not a motivator above the safety level in Maslow's hierarchy.

Too often, accepting the counter offer is selling one's soul to the devil. The standard pattern is: At first, one is happy with their success in gaining greater pay. But, that soon fades as the other reasons for the lack of job satisfaction remain and overshadow the increased pay. That is exacerbated as time goes on because the employer/boss/owner increases their demands based on the counter they gave you. i.e. they start acting like they own your soul.

Then, the job dissatisfaction returns with a vengence.

You've heard of "golden handcuffs"?

Anonymous
(C2C Specialist) |

In my experience "no." The question to ask is why are you suddenly worth more money? Are you only worth more because someone else is interested in hiring you?

From the Employer's point of view, what happens the next time you need something, will you threaten to quit?

This occurred at one place where I worked. I will admit that I did not have direct contact with the person this happened to, but to one of their friends. Persona A was at the firm, they decided to change jobs. They were due to earn, lets say $7K at the new firm. The existing firm said, "don't go" and offered a $5K increase in base pay. This person decided to stay, from what I hear the firm did not deliver on the $5K. This person basically ruined their chance of working with a headhunter and their reputation at a competitor.

Don't use an offer as a negotiating tool. If you're going to take an offer be sure you are ready to move. There is nothing wrong with saying that you aren't interested in a role.

Anonymous
(CFO) |

After a previous response I wrote here, I was thinking about this whole topic of pay and counteroffer. And, something important came to mind. Something we have not touched on: Total compensation.

This whole discussion has focused on an offer of a higher base salary and a counteroffer to that. There has been no mention of fringe benefits or other components of a compensation package.

This is a mistake!

One must consider the entire compensation package. Not just the amount put to one's paycheck. This is something that young people - including myself when I was younger - frequently do. It's everything, pay and fringe benefits, that must be taken into consideration for an apples to apples comparison.

For instance, I have reviewed more than a few positions I would be interested in elsewhere, that pay 20% more than I currently make. That is more than $20,000 per year for reference. However, my employer picks up 100% of the health care premiums for my spouse and I which run, at our age, $24,000 per year! Many of those tempting positions with pay increases, have very limited employer paid health care. I could actually be losing money.

I think many younger people tend to not take this into consideration because the value of many fringe benefits is "hidden". They aren't thinking about health care costs or retirement contributions because that just isn't part of their daily life. It is "hidden" or worse, unfunded, in their compensation package.

My advice is to think before you leap. It may not be so great as far as escalation of overall compensation. And take indirect personal costs into consideration as well. Many opportunities where I live require that I pay three bridge tolls and parking daily, or take public transit. Either of those would add considerably to my annual transportation costs. And, moving closer would double or triple my housing costs! (SF Bay Area).

We are finance people here. We should be able to understand fully loaded costs. :-)

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

My advise is to not accept. Most people leave a job for more than just pay.
Additionally, as mentioned earlier, studies indicate it will only be for a short time.

Many times, a counter offer is just buying time for the Company to find your replacement. Some companies see acceptance of another job offer as being disloyal. You will never get past that perception if you stay with this type of a company.

Anonymous
(Manager) |

Jobs are hard to come by these days. Any job can be gone in a flash. Each of us, must manage our career...and be job ready at any time. Does the new job make you more marketable? Are you exercising more skills or independent judgement?

I agree with looking at total compensation not just salary. Make sure you know where you stand on any employer match to 401K, etc. before you make the switch. I'd sure make sure the new firm is stable too...(or try to). Don't assume pay raises, etc will happen the same at the new firm, either.

If given a counter offer, before you stay, remember you are burning a bridge to the prospective new employer. You may be giving up the opportunity to work there.

Salary wise, there may have been little your boss could have (easily) done to get more compensation, so the counter offer, could be a tool. Instead of simply getting MORE money in your current role, if you decide to stay, make sure you are doing more for the current employer to earn the money. Ask to take on a new task. Get around the stigma by working it out equitably. Ask what you can do to be of more value. What problem you can solve for your employer.

Rich Robins
Title: Accountant
Company: Tec
(Accountant, Tec) |

You applying for new work: Is it about money? Or is it about wanting a new place to work/change of duties? how you answer that determines what you should do.

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

If it's only about money, take the counter offer from your current company. It seems rare that it is only about the money. I often ask individuals that took a counter offer; "So when are you going to leave?" as they always leave, the money just delayed their departure. From a company perspective, I will make sure I have appropriate back up to back fill positions that these individuals have held.

Alan Ehrlich
Title: Turnaround Specialist
Company: Self-employed
LinkedIn Profile
(Turnaround Specialist, Self-employed) |

As others have already asked, what was your motivation for looking for a new opportunity, was it just the dollars, or were there other factors. Change can be scary, even when we initiate it. Many of us will stay with the poison we know rather than the poison we don't.

Many moons ago I faced this situation. While interviewing, and before accepting the offer, I contemplated how I would respond to a counter offer from my current company. I had determined that the money was not the only factor, but also the size of the company, advancement opportunities, commute, life work balance were also important. For me, and this may not apply in your situation, I decided that if I received a counter that was equal to the new offer, I was still out the door. I wanted at least 5% above the counter, plus changes related to the other factors, particularly advancement, if I were to stay.

Sure enough, I received a counter equal to the new offer. I believe my manager was more shocked when I turned the counter down then he was when I told him I had accepted an offer from another company. Now he did not know what to do and asked me what it would take for the company to keep me, so I discussed the other factors with him. It took 2 - 3 days going through HR and other higher ups to get the necessary buy in and approvals, but in the end it worked out well for both sides. I was with that company another 7 happy years.

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