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Counteroffers: Are They Benefit or Detriment?
Have you ever been approached by your current company with a
counteroffer to keep you from jumping ship? What did you do? Take the
money and be glad to get it? Wonder why you had to "leave" to generate
some financial appreciation?
Counteroffers are mixed blessings. While the executive who really
enjoys bargaining might be wary of anyone who automatically gives him
what he wants, the "call-them-as-I-see-them" professional is likely to
be offended by even a hint of gamesmanship.
How you decide to deal with a counteroffer will have a lot to do with
your perception of the individual suggesting it, your personality, the
history of your relationship and the overall package that comes along
with the offer.
Let's take a look a typical counteroffer scenario and consider the
questions and thought process it poses. While Bill isnít a real person,
his situation may sound familiar to you.
Bill Johnson has been a manager with a successful hospital chain for
about six years. He's a savvy, hard worker who can always count on a
good review. While he knows he's made an important contribution to his
company, he thinks his boss has taken him for granted and is laissez
faire about promoting his career. Consequently, Bill has been looking
for other employment where he can tackle new challenges and have the
active support of his management team.
Several months into his job search, he is offered a new position,
which includes a 10% raise over his current earnings and promised
advancement in no more than two years. When Bill gives his two-week
notice, he is surprised at the impact it makes on his manager. Two days
later his boss offers him an immediate 15% raise and a spot on a
company-wide task force that will dramatically increase his visibility
and showcase his ideas.
Questions Bill Should Be
If I'm so valuable, why has no one
acknowledged my contribution before?
Is this counteroffer a harbinger of
things to come or just a stop-gap measure to keep me around for a
Which offer is the best overall match
with what I want in my career?
Should I take the new opportunity or
stay where I have established relationships and a good track record?
Is there anything I should do
differently to solidify and promote my position either in my current
job or the new one?
Bill's Thought Process
It seems that Bill has jolted his management into recognizing how
tough things would be if he left the company. Apparently he has a lot
more leverage than he thought. Why didn't he already know how important
he is from his boss' perspective? He and his manager are not
communicating. Probably his manager is so busy putting out fires, he
takes Bill's contribution as a comfortable, reliable constant. Maybe it
never occurred to him that Bill is unhappy, because he never asked for
the opportunity to expand his horizons. If this is the case, both
parties are guilty of perpetuating the status quo without considering
Before Bill decides to stay, he must be sure his manager has seen the
light and will assume the mentoring role he's abdicated for so long.
Bill will also have to take more responsibility for his own career and
be prepared to ask for what he wants. Should he doubt either his
ability to become more proactive at his current company or his boss'
commitment to promoting his career, Bill should change venues and start
fresh with a new persona and new management.
The task force is an enticing bird-in-hand that could give him the
visibility he's been wanting while maintaining his current support
system. If he decides the immediate exposure to task force
participation is more promising than a promotion two years down the
road, he should take the counteroffer and get rolling.
In evaluating whether to go through with the move to a new employer,
Bill must decide both if his new boss will keep his promise of
advancement within the next two years and how important that promotion
will be to his long-term future. If he is fully confident of the
integrity of his new employer, he can devote himself wholeheartedly to
making a major contribution and preparing for the increased authority
waiting on the horizon. But if his gut is telling him something isn't
right, he may want to get more information on the specific process for
moving up and the relative importance of his new position within the
company before making his final choice.
Stingy Offer from a Great Company: What to Do?
Jan has been job hunting for several months since a
bank merger eliminated her position. After surviving several industry
downsizings, she's decided to concentrate her search efforts on finding
a CFO or controller position with a fast-growing local company (far away
from banking) in need of her management expertise.
Before long, she receives an offer from a nearby
high-tech firm that fits her criteria. She likes the job description,
the people, the culture and the opportunities for growth. The only
problem is the compensation. The company is offering $12,000 less than
she deserves. When she tells the CEO about her disappointment with the
salary figure, he says he'll review it. He later calls to offer her
$6,000 more, "the most he could afford," which is still $6,000 short of
In the meantime, an executive recruiter arranges a
telephone interview for Jan with the CEO of another attractive high-tech
company. The conversation goes well, but the position requires a distant
relocation, which Jan wants to avoid. The CEO has invited her to fly in
for an interview, and the recruiter is awaiting her response.
Questions Jan Should Ask Herself
local populated by engineers, naive about what a seasoned financial
pro can demand on the job market, or does the CEO just want to hire
her "on the cheap"?
discounting her expertise because it's different from his own and,
consequently, not very important?
unwillingness to meet her number a sign of future Scrooge-like
behavior? Or, is he just concerned about holding down expenses and
keeping her salary in line with others already on board?
takes the lesser amount, will it be a constant thorn in her side? Or
is the position sufficiently exciting that the opportunity outweighs
the loss of income?
she doesn't want to move, can she afford to reject the local offer?
Young companies run by entrepreneurs often have
tunnel vision about issues such as compensation, especially for staff
personnel. Couple this with the tendency for engineers to be more
interested in developing and producing the product than putting together
effective management systems, and you have a recipe for
under-compensated, under-appreciated administrators.
The issue is whether the company's CEO has the
vision to realize that technological expertise alone won't make his
company a success. If he genuinely believes his firm needs good
financial management to move forward, he'll do whatever it takes to find
and keep the right people. He may not be financially or psychologically
able to grasp this all at once, but with some educating, he should learn
Perhaps Jan doesn't have to settle for his second
offer. If money is tight, she could concentrate on negotiating for other
rewards, such as an extra week's vacation, stock, an annual bonus,
health-club membership, professional dues and fees, etc., that would
hold the line on salary while boosting her total compensation package. A
little creativity may be all that's needed for her counteroffer to
Because Jan is changing industries and job
descriptions, the CEO may want proof of her performance before he feels
justified giving her the income she seeks. If so, she can request a
review and an increase in six months based on her ability to reach
pre-set goals. This approach will give Jan the track record she needs to
qualify for her requested income.
She should pose more questions about the company's
goals and spending policies before making a commitment. The CEO's
resistance to meet her salary requirements might be a signal of future
penny-pinching. Installing new systems, hiring more people and keeping
the best talent may be a struggle not worth her effort.
There's a good chance that $6,000 won't make that
much difference in Jan's lifestyle, but it can have a tremendous impact
on her attitude as part of the firm's management team. If she thinks the
principle of the issue is more critical than the paycheck, she should
reject the offer and accept the distant company's interview invitation.
On the other hand, if money is less important than
the opportunity to build a company with a committed team of respected
colleagues, she should go for it. Corporate success will breed personal
success and satisfaction.
The worst scenario for Jan would be to accept a
mediocre position at an insufficient salary. Doing a job she doesn't
like for less than she's worth can have a tremendously negative effect
on her self-esteem and long-term career options. She may start
discounting her expertise because she won't be using her best skills.
This is a no-win situation for everyone involved, including the company.
A Last Word
While the decision to accept a counteroffer may
seem to be no more than a money issue, it's often a lot more
complicated. Job satisfaction, corporate culture, personalities,
personal responsibility, history and potential opportunities should all
play a role in making the right choice.