Should you consider a counteroffer to retain talent?

In the dynamic landscape of today's job market, the trend of counteroffers, or "buy backs," has become increasingly prevalent. As an employer, should you consider a counteroffer to retain an employee? This is usually a direct financial offer with the intention of preventing a valued person from pursuing opportunities elsewhere. 

When companies go to great lengths to keep talented employees, this short-term fix can lead to various issues. According to the Chartered Institute of Personnel and Development (CIPD), over 40% of UK employers have made counteroffers in the past 12 months.

Additionally, 51% of companies that actively use buy backs as part of their employee retention strategy have increased the level of counteroffers. Are buy backs here to stay, and should they be an essential part of an employer's talent retention strategy?

Over the past two decades, I have personally seen this increase over time, and it remains a tough, competitive market out there. Since COVID-19 hit, employees are more cautious than ever about changing firms, with job security and career progression taking top priority.

While the practice of counteroffers may seem like a lifeline for employees facing tempting job offers externally, it's important to avoid any knee-jerk reactions. We look at the underlying factors and implications of employee buy backs.


Counteroffer by current employer

Let’s start from the employee’s perspective. If you are considering a counteroffer from your current employer, it’s important to assess your reasoning. Think about your original motivation for leaving. How will things be different if you accept your employer’s offer?

Counteroffers can often be a response to a short-term personal crisis. This reaction from the employer may not truly reflect your long-term prospects within the company. Be aware that counteroffers are typically a reactive response, rather than a proactive plan for career development. 

If you are an employer, you should consider why an employee wanted to leave and the possibility that they could come to regret their decision.


Regret within 6 months

Some research suggests that most candidates who decide to stay with their current employer after receiving a counteroffer often regret their decision within 6 months. The reasons they wanted to leave in the first place remain unchanged. It's essential to realise that a slight salary increase doesn't always address the core issues that led to their original desire to leave.

Recognition of work

Why is it that many companies only recognise an employee's value when they decide to resign? Offering a salary increase or a new role only at the point of resignation could indicate a lack of awareness from the employer. Employees need consistent recognition and career development opportunities throughout their employment.

The stigma of disloyalty

Once an employee decides to resign and receives a counteroffer, they may find themselves being labelled as disloyal or uncommitted. This stigma can impact their standing within the organisation and future career opportunities. Employees should consider how they will be viewed internally when promotional opportunities.

Salary alone doesn't solve everything. 
Staying with a company solely for a salary increase can be a shortsighted decision. Issues with the job, work environment, or career progression may persist. Usually, these become evident within 3 - 6 months. Employees are left wondering “what if they had taken that external job”. Once the initial excitement of a pay rise wears off, the employee is left in the same unsatisfying situation that led to their original decision to leave.

Long-term vision for career and company


When an employee chooses to stay with their current company, this needs to align with their long-term career vision. While it might be the easy way out in the short term, it may not align with someone's career aspirations. Career development and job satisfaction must be taken into account. Therefore, an employee’s decision to stay with their existing employer should be based on long-term career goals, not just financial incentives.

From an employer perspective, reactive counteroffers could signal deeper workplace issues. It's essential to recognise and reward talent consistently, rather than only when employees threaten to leave. Cultivate a workplace culture focused on recognition, professional development, and open communication. Rather than relying on counteroffers to retain talent, it is far better to create an environment where employees feel valued for their efforts.

For employees, our advice is simple: never engage in a job search process or entertain counteroffers unless you are fully committed to making a move. Time wasted not only reflects poorly on you as a candidate, but it can also lead to reputational damage.

In an era where the job market is highly competitive and talent retention is crucial, employers and employees should prioritise their long-term strategies. Companies need to have a clear process when considering counteroffers. This should form part of a fair and transparent strategy that looks beyond pay. 

So, let's not be swayed by buy-backs and short-term gains. Instead, let’s focus on building careers that align with the employee’s aspirations and the company’s objectives.


Mandy Turpin
Director - Teare Executive Search

Our in-depth knowledge of employee recognition and reward initiatives give us a leading edge on other recruiters. Get in touch today for Executive Recruitment with board level insight. Call 01625 315 017 or email: mandy.turpin@teareexec.com

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