The problem: Counteroffers are popular but ineffective responses to the resignation of a valued employee.The solution: Counteroffers are a coin toss, yielding a mere 54% success rate. Instead, employers should focus on engaging employees well before resignation is on the table.The result: A more engaged workforce with fewer reactive pay decisions and a culture built on recognition.
Five reasons why counteroffers won’t improve employee retention, and how they can negatively impact your team:
Counteroffers are job offers made by an employer to retain an employee who has received a contract or position at another organisation. They can take many forms, including a salary increase, improved benefits, a promotion, a new job title, additional responsibilities, greater flexibility, more annual leave, or access to more desirable projects. According to research conducted in October 2026 by Robert Half, 85% of Australian businesses have made a counteroffer in the past twelve months. Of those counteroffers, 46% successfully kept the employee, while 7% were declined immediately and 32% were accepted, only for the employee to leave within 12 months. Instead of resorting to counteroffers, employers should focus on proactive retention strategies before an employee reaches the point of resignation, here's why.
Your employee has already checked out
Once an employee commits to finding and securing a new role, they’ve already mentally checked out of their role at your organisation. Presenting staff who are practically out-the-door with more money or improved benefits might keep them at your organisation, but for financial reasons alone. If employees have emotionally and mentally departed your organisation, it is unlikely that a counteroffer will restore their enthusiasm and commitment. From their perspective, if they truly were valued, more should have been done earlier to keep them.
They might leave anyway
Many employees look for new jobs because they want further career growth, greater acknowledgement for their work, or just a new environment. Counteroffers may temporarily succeed in keeping an employee at your organisation, but without meaningful skills development opportunities or a strong employee recognition program in place, then within a few months, they may return to the job market. If they commit to leaving, you’ve lost time and money that could have been invested in securing a new and more engaged staff member.Related: How to counteract high staff turnover in leadership positions
You neglect new talent
Find new talent nowEmploying new staff members means bringing in new knowledge, experiences, and fresh perspectives to your organisation; this is invaluable for growth and remaining competitive in your industry. While experienced staff may be knowledgeable and reliable, counteroffers imply that there are no better candidates in the market.Counteroffers may also lead you to pay an employee significantly more than the industry standard for skills or experience that are not any more advanced or unique— always check the Robert Half Salary Guide. Search the market and explore your networks for capable and enthusiastic candidates before considering a counteroffer. If your organisation is successful, inclusive and rewards staff adequately, then you should have no trouble finding a suitable replacement.
Counteroffers can set a dangerous precedent
If one staff member can secure an elevated job title or more flexible work arrangements through the employment counteroffer process, then other employees may start to demand the same. Counteroffers then become a bargaining tool for workers who have seen what can be negotiated when they flag their interest in another role.
Relationships with staff deteriorate
Perhaps one of the most damaging effects of a counteroffer is the impact it can have on the wellbeing and morale of the wider team. Counteroffers can cause tension and distrust, and previously strong relationships can deteriorate as a result. If a staff member returns to the workplace with known frustrations for company policy, limited engagements, or a difficult working style, team morale may suffer. Colleagues may become less willing to speak openly or work transparently, making for less confident and productive staff members. A counteroffer might also make existing staff feel undervalued and dissatisfied, particularly if they believe greater rewards are only offered when someone threatens to leave. Over time, this may eventually drive them to look for a new job where they feel more appreciated.
Managers may then face the added challenge of leading a team where trust has been weakened. They may need to spend valuable time rebuilding morale, managing dissatisfaction, and re-engaging an employee who may no longer be fully committed. This can take focus away from other important work and business priorities.Related: How to improve corporate culture
A counteroffer is rarely a permanent fix. Counteroffers delay departure without solving the root cause, all while risking serious damage to wider team morale and trust in leadership. If it takes a resignation letter to trigger a raise or promotion, your retention strategy is already broken. To keep top talent, businesses need to be proactive by building a culture of fair pay, clear growth, and genuine appreciation long before an employee considers leaving
Frequently Asked Questions (FAQs)
Do counteroffers actually work for retention?Counteroffers can be an effective temporary solution, but they are usually not a long-term retention strategy. A counteroffer may work if the employee’s reason for leaving can be genuinely addressed. However, though they may persuade an employee to stay, they do not guarantee the employee will remain engaged or committed over time.In many cases, a counteroffer does not address the underlying reasons the employee started looking elsewhere, such as limited career progression, feeling undervalued, workplace culture, or lack of development opportunities. If those issues remain unresolved, the employee may continue to consider other opportunities and may only stay for a few months.Is accepting a counteroffer a bad idea?Accepting a counteroffer is not always a bad idea, but it should be considered carefully. If your reasons for leaving were linked to career progression, feeling undervalued, workplace culture, management style or lack of development opportunities, a pay rise is unlikely to resolve the underlying issue.If salary was your main reason for looking elsewhere, a counteroffer may be more compelling. Even then, it is worth asking why your employer only increased your salary after you received another offer. This could point to broader retention issues that may affect your long-term satisfaction in the role. Can employees still leave after accepting a counteroffer?Yes, accepting a counteroffer does not mean your employee will stay for good. In fact, according to our research, 40.8% of employees that accepted counteroffers left within 12 months. Although a higher salary, improved benefits, or new job title may convince them to stay initially, these do not always resolve the issues that led the employee to seek employment elsewhere.What can I offer instead of a counteroffer?Instead of looking for alternative incentives to retain an employee, you should attempt to grasp the underlying reason for their departure. It is often better to respect their decision, and use it as a catalyst for improving your retention strategies around career growth, flexibility and engagement, before another resignation is on the tableHow often do companies counteroffer?According to recent research by Robert Half, in the past twelve months, 85% of Australian businesses have made a counteroffer to an employee. However, only 46% of these successfully kept their employee, while 7% were declined immediately, and 32% were accepted, only for the employee to leave within 12 months.
