Nick Corcodilos, a headhunter and job search maven I respect, tells readers using a new job offer to generate a counter offer puts the employer between a rock and a hard place. He goes on to list several reasons counter offers may result in career setbacks and starts from the beginning. The employer knows this is not a good time to lose you. Maybe in a month or two when they can prepare for the loss. Read the article for his guidance.
For years, I advised clients to refrain from accepting, even considering, a counter offer. These ransom demands may result in more money, but since that is rarely the reason you wanted to leave, it is not the solution. It is rather like offering a starving man a glass of water. The point Nick makes, which I have never considered, is that when they offer you more money, the funds typically come from the same budget where raises live. When it is time for a raise, often employees who accept counter offers come up with nothing. Net/net? No gain in compensation.
- Damage to your career is inestimable. There are many long reaching affects, not the least of which is your current boss may wind up in another company where you want to work or are employed and she will recall, unfavorably, the blackmail tactic used to extract more money. And that very person is often your most desired reference. What will she say to your prospective employers? Remember, there is that famous, and very real, ‘back channel.’ Just because you did not include your former employer on your references list does not mean they will not be contacted, ‘informally.’
- The reasons for which you started looking for a new spot or were interested in a new job did not change. It is rare that a candidate seeks new employment just for the bucks. It is more the case that they feel under appreciated or have other issues with management or the company. In most cases, the employee already tried to rectify the issue and the employer failed. No reason to believe things will change just because they came up with more money. In fact, you are forced to accept those issues because your threat to leave did not change them. After the thrill of the salary increase wears off, employees often feel resentful and do not do their best work. It is also true that your colleagues know what you did and they are no longer willing to trust you. They know you may leave at any time so collaborating on important issues may seem dangerous.
- Count you out. An issue with the ransom/counter offer is often you are no longer trusted with the big responsibilities, the new budgets and frequently, promotions are now at stake. The company doesn’t trust your loyalty. Consider this: if they valued you at the new salary or title, they had a chance to recognize you in that way before you threatened to leave
- You made your manager look bad. Managers don’t enjoy the fall-out from losing key employees and they resent you for making them look bad to their manager and forcing them to deal with your new demands in order to keep you. Now you have issues with your boss.
- Statistics don’t lie. “Fortune” magazine stated a few years back that 90% of those who accept counter offers leave their employer within 18 months. Remember, companies are made up of people. People have emotions. Your references and even that company who originally started the employment ball rolling on your behalf, are now on your do not call list. A network is a terrible thing to waste.
Don’t do this. There is an employment myth that encourages smart people to use a job offer to generate a bidding war between companies. Aside from the above, whomever wins now knows your ethics and style. The prospective employer will often withdraw the offer because they will not engage in what is often seen as an unethical or at least unpleasant practice to get more money. They value and court people who genuinely want to work for them. It also signals to them your loyalty is for sale. Here’s the rub. If you DO accept the new employer’s offer after the ‘war’ you have damaged your relationship with the hiring manager because, ultimately, that is with whom you are negotiating. It may appear you are negotiating with HR or the recruiter, but your prospective new manager is the person behind the curtain.
How to win. Companies offer and negotiate based on your prospective or current value to their organization. If money truly is the reason you want to leave your employer, first ask for it. If you are worth more, you are expected to point out why and begin a negotiation. To create a bidding war is often viewed as a disreputable behavior. Even if both companies participate, the damage you do to relationships with your new manager or your current one is something that may hamper your ability to perform to the best of your ability. A true truly career limiting event.