what is a counteroffer? the pros, cons, and everything in between.

Millions of workers quit their jobs recently, sparking what many call the Great Resignation. This led to a labour shortage as employers scrambled to fill positions within their businesses. 

Many employers are turning to counteroffers to persuade current employees to stay because of the lack of talent in the workforce.

If you are one of those jobseekers moving on from your company, you may also receive a counteroffer. 

While the larger salary and benefits might seem appealing, is a counteroffer the best option?

Dive into this guide on what a counteroffer is and factors to consider before accepting or declining a counteroffer.

what is a counteroffer in employment?

When a job seeker receives an offer from a potential employer and then gets a better offer from their current employer, that second offer is a counteroffer. 

Employers use counteroffers to persuade talent to stay by offering a better package than a prospective employer’s.

job counteroffer examples

Counteroffers usually include a pay raise. However, it can also be:

• Promotions
• Adjustment in job duties
• Job bonuses
• New benefits or perks

why jobseekers might receive a counteroffer

Businesses worldwide are struggling to fill their company with talent. 

According to one report, 69% of businesses experienced a talent shortage, a 15-year low. However, while employers struggle to fill positions, more opportunities open up for job seekers as recruiters compete for talent.

Employers don’t want to lose their current talent, leading to counteroffers. Even companies that generally don’t make counteroffers feel pressured into providing one to retain their most valuable employees.

Talented employees are difficult and expensive to replace. Even if a company finds a replacement, the new employee will need time to adjust and learn the position. So, businesses are forced to retain their experienced employees.

For most jobs, your current employer will make a counteroffer within a week of informing them of a job offer.

should you accept a counteroffer?

Initially, counteroffers might appear to be a good thing. Who doesn’t want to make more money? 

However, counteroffers can have a negative side with a ripple effect down the road.

Carefully consider these pros and cons before accepting a counteroffer.

pros of counteroffers

Counteroffers have some benefits, especially for employees who prefer their current jobs but want to leave because the pay isn’t competitive.

receive higher pay

Counteroffers usually result in higher pay. According to a global survey, 71% of employees say higher pay is the top reason for quitting their current job. So, an employer can resolve that issue by offering better pay than the new job offer.

boost your benefits

Sometimes, benefits can be more valuable than a salary. For example, paid time off and bonuses can make one job more enjoyable than the next. 

Your current position might be more comfortable if your employer offers to adjust your benefits.

feel valued

Nearly a third of employees say their bosses never recognised their achievements. 

Interestingly, 80% of employees say feeling appreciated motivates them to work harder. 

When your boss makes you a counteroffer, it can help you feel valued within the company and understand how irreplaceable you are. This can help you be more productive and satisfied in your current role.

cons of counteroffers

Despite counteroffers' positives, they aren’t usually the best course of action. Here are a few reasons you should reconsider accepting a counteroffer.

employer trust is impacted

While your employer might appear to welcome you back with open arms, there will be lingering doubt. 

For example, they might think you might do it again since you threatened to leave once. This may lead to them starting to look for your replacement. 

It could even impact your career advancement opportunities since employers won’t want to promote someone they feel might leave soon.

money doesn’t solve underlying issues

Before accepting a counteroffer, consider why you were leaving in the first place. 

For example, a toxic workplace is one of the leading reasons employees leave their jobs. A higher salary won’t make the workplace less toxic or solve non-salary-related issues.

Other factors that commonly influence an employee’s choice to resign include:

• Poor leadership
• Workplace conflict
• Lack of progression
• Feeling undervalued or disrespected
• Poor work schedule

If your reason for seeking other employment is listed above, you will most likely want to leave again at some point, even after accepting a counteroffer.

rejecting an offer can impact future job opportunities 

Counteroffers usually happen after you receive a new job offer. Therefore, you must reject the new employer's offer before accepting the counteroffer. 

Employers invest many resources into recruitment. So, when candidates go through the employment process only to reject the offer, this may leave your potential new employer with a negative impression. 

This might mean that over time, a job seeker may gain a negative reputation among recruiters and hiring managers, which could impact your future attempts at switching jobs.

your employer isn’t recognising your value

A good employer wouldn’t wait until an employee is leaving to compensate them for their valuable work. 

When an employer waits until you resign to raise your salary, the employer is telling you that the business had the resources for their higher salary and recognised your true value through your great work, but effectively chose not to raise your pay.

While some employers have a good reason for not raising your pay sooner, this situation may show that your employer may not proactively recognise the value of their employees.

how to respond to a counteroffer

Before accepting a counteroffer, ask yourself why you’re leaving your current job in the first place.

• are you looking for new opportunities or bored with your job?
• Is the work environment healthy, or are you escaping a toxic workplace?
• is your motivation for leaving purely for a better salary? 

While a counteroffer might seem appealing at first, sometimes a fresh start is the best answer. A counteroffer, while delivering a short-term sugar hit, won’t address the deeper reasons that motivated you to find a new job in the first place. Therefore, accepting a new job gives you a chance to start afresh with a new employer and enjoy new experiences and opportunities. 

Should you tell the prospective employer about the counteroffer? Yes – even if you don’t plan to accept it, you can let the recruiter know about the counteroffer as it might impact their offer in your favour. But be careful that you don't use the counteroffer as a negotiating tactic with a potential new employer - this could backfire and leave a prospective employer with a negative impression - not the best start to a new and promising employment relationship.