Should you accept a counteroffer?

The topic of counteroffers is often cast in a negative light, especially by recruiters who have lost commission payouts at the last second due to candidates staying put.

While recruiters like to describe themselves as talent agents who represent candidates, the reality is candidates are the products that recruiters sell to customers. The real customer is the hiring company paying commission to the recruiter for successful hires. In that framework, it makes sense why recruiters often ghost or ignore candidates (the product).

This customer vs. product distinction is important in framing the discussion around counteroffers. A recruiter has everything to lose by a candidate taking the counteroffer, so their opinions on counteroffers are expectedly biased.

Used correctly, counteroffers are an effective way to obtain raises. Even small raises have an outsized impact over time. Just a $5,000 bump in salary along with a 4% raise every 3 years equate to a million dollars in additional career earnings according to the math done by Tanza Loudenback.

The reality is that counteroffers are far more nuanced and situational.

Instead of looking at counteroffers as either good or bad, it's important to consider multiple factors. Here are some of the the common reasons recruiters give for why one should not take a counteroffer along with counterarguments:

A higher salary won't solve the problems you have with your current job

A higher salary is one of the main reasons why many look for a new job. However, if your reason for looking elsewhere is unrelated to money, such as wanting a title, or role change, you can often negotiate for that as part of the counteroffer package.

Always document agreements in writing, along with monetary stipulations in case the role change is not met within a specified time period, as verbal promises are rarely kept. Ultimately, it comes down to how much you trust your company and manager to follow through.

Also note that one of the first questions recruiters ask you during the intake call is "why are you thinking of making a change?" This is helpful for them to qualify candidates but is also leveraged later in the sales process to dissuade the candidate from taking a counteroffer.

Do be careful about communicating your reason for leaving. Revealing negative aspects of your current role reduces your ability to negotiate later on. If a hiring manager knows that you're desperate to leave due to a toxic work environment, they really don't need to beat your current offer by much to motivate you to accept. Therefore, focus on pull statements around the exciting new opportunity as opposed to push statements around issues with the current employer.

Finally, if the driving reasons are cultural, such as a toxic work environment, a subpar manager or workplace bullying, a counteroffer is unlikely to fix these issues. One can't negotiate culture.

A loss of trust by your current employer (you could be replaced by someone cheaper)

This really comes down to the quality of your manager. Good managers understand this is a normal part of doing business, and will not hold a vendetta against someone for exploring the market.

However, make sure that the counteroffer is sustainable and logical for the company. Unsustainable counteroffers are more likely to be stopgap measures until a replacement is found.

You'll burn bridges with the new company if you take a counteroffer

Not if you obtain the counteroffer before agreeing to the verbal/written job offer. Hold off on accepting the job offer and immediately open the conversation with your current company by leveraging your new offer.

The counteroffer can then be used as leverage to ask the hiring company to increase their offer. It's not unheard of for the hiring company to get into a bidding war with your current company, thereby driving up your salary further. 

The vast majority of people leave soon after taking a counteroffer

A common referenced statistic by recruiters is "80% of people leave within 6 months of accepting a counteroffer". I've yet to find the source of this or an actual study of any kind. Most references point to marketing material that in turn point to other marketing material, kind of like a bullshit ouroboros. 

Even if the statistic were true, it doesn't necessarily portend a negative outcome for the candidate. It's possible that the candidate took the raise from the counteroffer and then found another job with an even higher salary within 6 months. This would be a superior outcome in terms of salary.

Your current employer should have found ways to demonstrate their commitment to you before you got the job offer

Very true, it was a mistake to wait until you received an offer elsewhere. If this is unforgivable and you don't believe more money would resolve your feelings then you should consider leaving. If you believe that it's something both parties can move past then consider staying. Again, it's situational.

The sad reality is that even if an employee doesn't want to leave a company, a competing job offer is still one of the best leverages to get a salary bump. Hiring managers who say "it may take a few months before we can push a raise through" will invariably find ways to get that raise within days if it becomes clear the employee has a foot out the door. Is it frustrating and unnecessary? Yes, but it does work and the payoff is almost always worth the effort.

Do consider asking for a counteroffer even if you're set on leaving. A counteroffer effectively improves your BATNA in salary negotiations with minimal effort. To the hiring company, a counteroffer can reinforce their decision to hire this candidate as it validates the value that the candidate creates for an employer. Your current company knows you best and if they're willing to match or beat the offer, then you're likely worth every penny.

The amount of money you're able to get with your counteroffer also gives you a rough idea of your real value to the company. The counteroffer stage is when the candidate has the least to lose by bluffing and the company is most willing to meet their theoretical max salary for your talent. It's certainly a good reference point to have for future salary negotiations.

To summarize, here are some factors you might consider as you mull your counteroffer:

• Do you trust your current manager and company?
• Are you able to effectively negotiate for the changes and improvements you want?
• Is the counteroffer mutually beneficial and sustainable for the company?
• Are you capable of moving past any negative feelings by taking this counteroffer?
• Is your current company able to move past any negative feelings associated with your exploring the market if you stay? This is something you can talk about with your manager.
• Does the new company offer something that the current company is incapable of providing? Some things can't be negotiated, such as a better work environment, having the new company's name on your resume, or a more mature design team to work in.