(Almost) Never Take the Counter Offer.

The question from a Quora post was not-so-unusual,

“I am working for a company from last 8 months. I resigned there because i was getting better offer in terms of money anywhere else. My present employer counter offered same salary. Work wise both companies are same. Will things change if i stay in my current company (like perspective of manager and HRs towards me)? Should i stay or leave my current company? Since work wise both companies are good, advantage of staying is i wont have bad resume saying that i left company in 8 months. What should i do?”

The short answer for managing your career wisely is easy peasy; never, ever take the counter offer.

Why?

Over time in your career you develop a reputation, a brand. Negotiating (or niggling as some might see it), for compensation is one aspect of what makes you you. Since work is connected to pay (otherwise it would be volunteering), it makes sense to be paid fairly – more about what that looks like below – for what you do.

There are broadly three types of employers:

  1. Companies (and other organizations) that try to pay fairly (and make adjustments when they make a mistake) based on what they can afford.
  2. Companies that are not so interested in paying fairly (and not so interested in paying more unless they have to – and then they remember who hit them up for more pay), and
  3. Companies who have no good methodology on who or how to pay folks – stuff is ad hoc, which is not necessarily a bad thing but it’s sort of make it up as you go along.

If you have choice work for the first type of company, avoid the second, and accept the third.

You receive offers when you interview with other firms that want to hire you – usually paying you more – for doing a similar or bigger version of your job.

In other words, you’ve been dating, they like you, and would like to make it worth your while. Not exactly adultery, perhaps more like a flirtation bordering on an affair.  It’s not Newt Gingrich’s 6 year affair with now-wife #3, but it’s definitely more than merely browsing.

While I encourage for a host of reasons my exec coaching clients to always take a conversation or two about another opportunity, I also advise them to not to take interviews forward to anything close to an offer stage unless they are ready to move on. You should do the same; ok to talk, but only take it forward if you’re ready to change jobs.

When your company makes a counter offer the  subtext to the conversation is one of two ways:

  • We screwed up and realize that you’re a great talent and we’ve underpaid you; let us make it up by paying you more than the other firm, or at minimum, the same as the other firm. If you stay with us you won’t have to learn a new commute, you get to work with the same folks you know, and life can go on as it has (except your paycheck looks different). Or,
  • We know that we’ve been lowballing your pay but know that you know it we want to be smart and pay to keep you here; if we hire someone else it will cost us more, take us time, and we might make a mistake. If you accept the counter offer we make we know that we can always keep you here by matching or slightly exceeding somebody’s else’s best offer.

Money has a motivator has gotten it’s just do recently; in general, it’s a lousy for anything apart from simple “do this” type of tasks (e.g. sales contests for selling orders within a time period). Listen to Dan Pink’s talk from his research from his book Drive, or Jon Katzenbach and Kia Khan’s article in Forbes.

Money is a great de-motivator though; you find out that your colleague Jan, who does half the work you do and treats 9 AM as if it’s too early for a meeting and 4:30 PM as if it’s too late, gets paid more than you and suddenly money is very important. Paying you more than Jan makes you feel good – or at least until the next time you find out that someone else who   think contributes less than you do gets paid more – maybe a lot more.

When you accept the counter offer from your firm you’re potentially saying one, two or all of three things to your employer:

  • It’s all (or mostly) about money.
  • I’ll date around to see if I can find a better offer.
  • I can be bought. By money.

When time comes for cutbacks, reorganizations and layoffs – conversations and processes that I’ve been a part of dozens of times – the keepers, people who survive the layoffs if there are any survivors – are the people who perform well and don’t grouse about money, and/or the people that you can’t afford to lose. Taking that counter offer just may have made you a marked woman or man.

People who perform so-so (or worse) and paid well? Whacked; you can’t afford to keep them. People who might take another offer someplace else – people like you? Whack them too.

And that firm that made you the offer? Your rep is now that you were just using them as leverage to get a better offer from your old firm; you were never really serious about leaving after all.

Your brand is now tarnished, You aren’t so good for your word, and like the story involving George Bernard Shaw, you can be bought.

Is there a time to accept the counter offer from your current employer?

Yes, provided that it accommodates the other things that aren’t so hot about your job; the ones that you got clearer about when you got mad enough to start looking around. Based on my years of experience (and lots of research), those tend to be bigger things; scope of responsibility, maybe the boss who is not so hot, and maybe career advancement opportunities.

More on how to avoid getting to a point where you feel underpaid in a future post.

For now, my experience is that it’s seldom about (just) money. So if you take a counter offer and stay, make sure you’re fixing all the things that caused you to interview for other opportunities in the first place.

But in general, almost never take the counter offer. If it’s a great place to work – and you’ve handled things well and burned no bridges as you moved on – you can always see about coming back.

This article originally appeared on J. Mike Smith's blog Life Back West, an occasional set of writings focused on ways people, teams and organizations can be both more effective (doing the right thing) and more efficient (doing the right thing well). 


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