Should you counter offer when a top employee resigns?

Young business man with a shocked expression

She can’t leave! I must win her back!!!

Your best employee, the one you can’t live without, the glue that holds everything together, just told you that they have a job offer. Your first reaction: what can I do to win them back! Maybe if I double their pay and get them seasons tickets for the Raptors.

If you are really honest with yourself you have to admit that the minute they said they were leaving, their value to you increased tenfold.

Reality Check

The first thing you need to do when a valued employee tells you that they are leaving is get a clear picture of the reality of the situation. What are you afraid of?

  • Are they bringing your trade secrets to the competition?
  • Do they have skills and knowledge that needs to be transferred to other employees at your company?
  • Are they leaving in the middle of a critical project?
Young business man with a worried expression

Where did I go wrong?

Why are they really leaving?

You also need to get real about the reason this employee is leaving. Naturally they want to leave on good terms so they may not tell you the real reason they are jumping ship. Do your best to figure out if their motivation is about more than money.

  • Was there a management issue that made it difficult for them to do their job?
  • Are there problems with the group dynamics?
  • What could you have changed that would have made them want to stay

To Counter Offer or Not to Counter Offer

Before you offer them a promotion and 10 per cent ownership of your business, consider this:

Balance of power. Your counteroffer is changes the balance of power between your company and the employee. You may be setting yourself up to be managing the whims of a person that could leave at any moment. If you offer them equity, they will feel entitled to give guidance on corporate strategy.

Their motivation for staying. If they accept your counteroffer, are they staying for the money or the job? If they are only staying for the money then you know they will resign again the minute they get a better offer.

Your counter offer may upset the balance of the team. When you offer them more money to stay, others may expect to get more money to retain them.

Are you prolonging the inevitable? If they accept your counter offer offer, its a temporary situation at best. Now that you know they are unhappy enough to entertain other offers, how can you trust their commitment. Even if they accept your counter offer, you better start planning to replace them right now anyways.

The Classy Way to Say Goodbye

Let’s look on the bright side for a minute. You have a lot to gain if you let this employee go with your best wishes and full support. Let’s look at the benefits of taking the high road:

  • Now you have an ally at a competitor.
  • They will be more likely to help you with the transition and transfer their knowledge to back to you.
  • When you replace them you have a chance to introduce someone with a fresh perspective and new ideas
  • When a superstar leaves, it creates a space for someone else in your organization to move up and become a superstar

Don’t Burn Bridges

I own a small business, so believe me, I completely understand how difficult it is to lose a great employee. But I also know that former employees often become great friends and business allies that will last for decades. It’s very satisfying to know that I helped someone build a great career. It might be difficult in the short term, but you will find another superstar eventually. It might even be through a referral from a past employee.

Bottom line: Never burn your bridges.

Do you agree? Is it better to let a great employee go, or should you offer them whatever it takes to get them to stay?

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  1. Tim – totally agree…counter offers almost never work. If/when you get to that stage – it is too late. Keep the relationship intact, wish them well, and move on. Your point re. upsetting the internal balance of power is key – it sends the wrong message and your create more internal upheaval. Personally, I hate the message counter offers send, whether it is more $$ or opportunity…it is telling your current employees that they are more valuable to you when someone else wants them!

    • Hi Scott – Thanks for the comment. Counter offers are band aid solutions at best. I would agree with you they are poison to a company culture.

  2. Comment from Steve Jones via LinkedIn: Great article Tim. Nice job! I think you are right. Think twice before you make a counter offer and then think again. The only time that a counter offer typically works is when “timing” is in your favour. For example, if you know they are quitting a job because there is little room for advancement but you also know that a job is coming available that they would have won anyways…. or there is a real problem that needs to be fixed and its time to fix it. Otherwise, you are right, bribing people to stay is an expensive temporary patch job. And really! Who wants Raptors tickets anyway? People usually don’t quit companies… they quit their supervisor.

    Tim Collin’s reply: Hi Steve – Thanks for your comments. I suspect you have seen a few counter offers in your career. I love your comment about people quit their supervisor. Counter offers really upset a company culture and send the wrong message in my opinion

  3. Comment from John Dugasz via LinkedIn: Never give or accept a counter offer – period. If an employee isn’t happy they should be able to talk to management, try and rectify the situation beforehand. Throwing money at them tells them they were underpaid all along or you are desperate. Any person who renegs on a deal will also lose in the eyes of the new firm – and HR in firms do communicate between each other so it may haunt them quite awhile.

    Reply from Tim Collins: Hi John – Thanks for you comment – I have only seen a counter offer work once in 20 years in this business. I agree with your comment that they do not work. I think taking the emotion out of a superstar leaving is important. A counteroffer is a band aid solution and once the band aid comes off the person will leave or others will leave.


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