How to counter a counteroffer

What’s your price for staying in a role you don’t enjoy? $10K, $20K, $30K? When it comes to managing counteroffers, it’s not just about the money.

The rise of the counteroffer

Managing counteroffers has always been part of the job-hunting process, but during an ongoing talent shortage, many organisations are getting a lot more serious about convincing workers to stay.

According to a 2021 survey by CMA Australia, 6 in 10 Australian bosses are willing to extend a salary increase when making a counteroffer to retain an existing employee, with the average increase being around 9% of their current salary.

A 9% increase may sound impressive when compared with the average annual pay rise of 3% Australians can expect in 2022, but it is still lower than the 10% to 20% increase most people negotiate when changing jobs.

That being said, it’s a good idea to take the time to give proper consideration to a counteroffer. Is the money enough to convince you to stay? Could you make more if you found a new job? Does the counteroffer address the reasons you handed in your resignation?

Should you ever make a career decision based on money?

Compensation is a powerful motivator, so there’s nothing wrong with considering your options if your current employer offers you a significantly higher salary. Nonetheless, it’s important to consider all the factors that made you want to quit your job in the first place. Will you be happy to stay put in your current position if there are no meaningful changes? Will the increase in salary be enough to negate the reasons you were choosing to leave in the first place?

Being the recipient of a counteroffer can be flattering and can make you feel valued. But keep in mind that for your employer, it’s about the money: the cost of raising your salary will most likely be less than the significant cost of replacing a star performer.

If you are quitting because you simply want a higher salary, accepting a counteroffer may make a lot of sense. But if you have resigned for more complex reasons – say, a toxic team culture or a poor relationship with your manager – then it’s unlikely these problems will be addressed. Other reasons for quitting may be a need for more flexibility, better opportunities for career progression, or improved benefits. Unfortunately, very few employers think outside the box and offer anything more than a salary increase when making a counteroffer.

As a result, counteroffers only work about half of the time. The CMA survey quoted above found that 52% of employees who accept a counteroffer leave within 12 months or earlier, while 19% of this group leaves in fewer than six months.

Facing a major career decision like this one is really tough. The wrong choice could leave you dusting off your resignation letter a few months down the track, while getting it right could be the making of your career. To help you through the process, here’s our four-step guide to successfully navigating the counteroffer process.

Step 1 - Understand What Decision You Need To Make

This might seem like an obvious one, but it can really help to sit down and properly process the decision you need to make. Seeing things written down in this way can help provide some much-needed clarity when you are feeling confused or overwhelmed.​

Grab a notebook and write all the details down plainly. For example:

Option A - Stay in current role

Salary and bonuses:
Flexible working arrangements:
Other benefits:
Career progression opportunities:
Notice period:

Option B - Accept new job offer

Salary and bonuses:
Flexible working arrangements:
Other benefits:
Career progression opportunities:
Notice period:

Step 2 - Write a pros and cons list for each option

Once you’ve gotten your head around the facts, it’s time to delve a little deeper into the benefits of each option.

For each role, write a detailed pros and cons list. This should include everything from “higher salary”, “office location is close to my house” and “remote working up to three days per week” to “I don’t like my current manager”, or “this role promises more development opportunities and career progression.”

Step 3 - Rank your priorities

Next, consider your top priorities.

Perhaps the pandemic has made you realise how much you value being able to work remotely. You want to spend more time with your children, juggle your personal and work commitments as you see fit and spend your lunch breaks doing yoga in the living room. If these things really matter to you, it may not be worth picking a job option that requires you to be in the office 9-5, five days a week.

Maybe the top reason you went looking for new job opportunities is because your current employer can’t offer you any meaningful career progression. While a salary increase might sate these concerns in the short term, you’ll likely end up feeling exactly as you do now in a year’s time or even sooner.

Other factors to consider are your commute time, your employer’s brand reputation, your existing team members and manager, long-term career goals, office perks and facilities, and access to the latest technologies.  

Step 4 - Follow your gut instinct

No two employees share the same priorities, ambitions or circumstances, which means it’s impossible to provide a formula that definitively tells you what you should and shouldn’t do when it comes to managing counteroffers.

Trust your gut instinct, but be cautious of being seduced by a hefty counteroffer from your current employer. If you are unhappy in your role for a myriad of reasons, a higher salary won’t necessarily be the solution. Ask yourself if the salary increase is enough for you to “put up with” any underlying problems.

In addition, if your manager seems to be offering you the world (career progression, flexible working, etc.) can you be sure they will follow through with it? Will they change your contract or put their promises in writing? And why did you have to threaten to resign to produce a response from your employer?

The safest or most familiar course of action is not always the best one. In most cases, counteroffers only work when the role itself has shifted significantly

In conclusion, accepting a counteroffer may make sense if you are only looking for a salary increase, but it is important to review your other motivations for leaving. Even with more money in the bank, the underlying reasons that drove you to resign will still be there in six to twelve months’ time. A better career choice may involve finding/choosing a brand-new role that truly meets your requirements.

Talk to a specialist recruiter to kickstart your next career move.