5 Reasons to Think Twice About Extending a Salary Counteroffer

By Robert Half July 17, 2018 at 6:00am

In today’s job market, skilled finance and accounting professionals are hard to come by. So it’s very likely you’ll find some of your employees being wooed by the competition. If they are particularly valued staff members, you might consider making a salary counteroffer to convince them to stay. Sensible reaction, yes?

No, but that doesn’t mean it isn’t happening. In fact, new research from Robert Half shows 58 percent of senior managers — across a variety of professional fields, including finance and accounting, technology, legal, marketing and advertising, and human resources — extend counteroffers to keep employees from leaving for another job.

Of the respondents who are financial leaders, only 39 percent said they don’t extend counteroffers to keep employees from leaving, which is a drastic change from the 78 percent of CFOs who said, “No,” in a similar survey in 2015.

Although it may seem like a solution to retain employees when the accountant unemployment rate remains low, statistics show the counteroffer rarely ends favorably for managers.

Here are five reasons making a counteroffer is counterproductive:

1. A salary counteroffer isn’t a long-term remedy

Making a counteroffer is like taking aspirin for an impacted wisdom tooth: It might make the pain go away for a bit, but it’s not a long-term solution. The survey shows staff members who accept counteroffers typically end up leaving the company in less than two years.

“Counteroffers are typically a knee-jerk reaction or in desperation to keep a star performer,” said Paul McDonald, senior executive director for Robert Half. “They are most often a tool to help the employer and not designed to help professionals advance their career. When employees accept a counteroffer, they are likely to quit soon anyway.”

2. It can have a negative ripple effect

If the word around the water cooler is that you made Jen a counteroffer, Simon may start to wonder why his salary isn’t increasing. Then, if Simon really wants to drive a hard bargain, he may start his own job search so he can use job offers as leverage for salary negotiation.

We specialize in providing businesses with skilled finance and accounting professionals on a full-time basis.

3. A counteroffer can cause a dip in morale

When the news of Jen’s salary increase gets around — and it will get around — your team may start to point the finger of favoritism. By tendering a counteroffer, you also send the message that threats of leaving are a means of climbing the ladder, rather than outstanding performance and dedication. And what about Jen? She might find her coworkers giving her the cold shoulder, which probably won’t make her want to stick around in the long run. The result? The overall mood in the office will suffer.

4. It could cause a rift in trust

Say you do make Jen a counteroffer. At first you might be happy and relieved she’s still a member of the team. After all, she makes your life easier getting through tax season. But once your relief starts to wane, you may start to feel less positive. Now not only do Jen’s peers not trust her, you don’t either. Questioning an employee’s loyalty is hard to bounce back from, and though you may still emanate professionalism, Jen probably feels the bad vibes.

5. Counteroffers don’t improve employee performance

You may think that Jen owes you one, considering you just bumped her salary or gave her a few extra vacation days. On the flip side, she may feel like you can’t live without her, and the notion of being indispensable doesn’t give her much motivation to boost her performance. In either case, the counteroffer is making waves beyond your original intention.

While you should avoid making counteroffers, you don’t want to lose your best talent to the competition, either.

What alternatives are there to counteroffers?

Robert Half offers this advice to employers:

  • Consult resources such as industry reports and the Robert Half Salary Guide for Accounting and Finance Professionals.
  • Conduct regular salary reviews to ensure your firm’s compensation is competitive, and continue to offer attractive compensation so employees don’t look for greener pastures.
  • Offer employee recognition on a regular basis. Give people reasons to stay.
  • Focus on professional development, mentorships, and defining career paths for up and comers.
  • Make sure you have someone you can promote should an employee resign.
  • Perform exit interviews to get to the bottom of why employees leave — and then work to address those concerns.
5 Reasons to Think Twice About Extending a Salary Counteroffer Infographic

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