February 2022
Why Counter-Offers are a Waste of Time and Money
The engineering and infrastructure market is more competitive than ever, with skilled professionals, particularly those experienced in emerging technologies, in incredibly high demand. So, when you receive a resignation from a valued team member, the immediate reaction might be to send a counter-offer to retain them.
While this might feel like a quick fix, the reality is far less encouraging: research consistently shows that most employees who accept counter-offers end up leaving within 6 to 24 months. Why? Because counter-offers rarely address the real reasons people resign.
Here are five key reasons why counter-offers are more of a short-term solution and often do more harm than good:
When an employee hands in their resignation, trust has already been compromised. By interviewing elsewhere, they’ve signaled dissatisfaction with their current role.
Even if they accept a counter-offer, this lack of trust lingers; managers may feel hesitant to assign them key projects, fearing they’ll leave again and employees may feel undervalued, realizing their worth was only recognized after a resignation threat.
Once trust is lost, rebuilding it can be near impossible—and it’s often best to part ways professionally.
Salary is rarely the main reason an employee decides to leave. Common causes include lack of career growth opportunities, issues with management or company culture, and an unmanageable workload or poor work-life balance.
A counter-offer might temporarily satisfy the employee, but these issues will resurface, leading to renewed dissatisfaction and disengagement. Instead of fixing the problem, you’re simply delaying the inevitable departure—and potentially harming team morale in the process.
Counter-offers rarely remain a secret. When one employee is offered a salary bump to stay, it creates a ripple effect within your team—colleagues may feel undervalued and question their own worth, others may start demanding raises, creating salary imbalances, and morale and trust in leadership can decline, leading to a toxic work environment.
Rather than retaining one employee, you could inadvertently damage your entire team’s productivity and cohesion.
While recruitment can be costly and time-consuming, counter-offers are rarely a cost-effective solution. Employees who accept counter-offers are highly likely to leave within months, forcing you to restart the hiring process anyway.
By focusing on a strategic replacement plan instead, you can hire a motivated, engaged new team member, align your workforce with long-term goals and fresh perspectives, and minimize disruption by implementing an effective handover period.
The short-term pain of replacing an employee often leads to greater long-term gains.
In competitive markets, savvy employees may leverage external offers to negotiate higher salaries. While their skills may be valuable, their loyalty to your organization can be questionable.
According to a Jobvite survey, 21% of workers admitted to threatening to leave just to secure a raise. By entertaining counter-offers, you risk encouraging this behavior and undermining your workforce’s integrity.
Instead, focus on retaining employees who are genuinely committed to your organization’s success.
Rather than relying on counter-offers as a last-ditch effort, invest in long-term employee retention strategies like create clear career progression opportunities, foster a culture of open communication and recognition and address work-life balance issues with flexible arrangements.
By proactively addressing the needs and concerns of your workforce, you can avoid reactive counter-offers and build a more engaged, loyal team.
At LVI Associates, we specialize in connecting infrastructure companies with the best talent in the market. Explore our insights and learn more about hiring and retention trends today.