
Never Make Counter-Offers (2011) - 127001brewer
http://bramcohen.com/2011/12/04/never-make-counter-offers
======
mdkess
The way the industry views raises is bizarre. In my mind, there should be an
automatic say 3% raise to everyone's salary every year, performance review
aside. If someone's not worth 3% more to you after a year, they should be
fired. After that, give performance based raises to everyone. I know so many
people who have quit because management never bothered to give out raises
(hey, they make $150k a year, they don't need a raise), yet their employers
could have kept them for a couple thousand extra a year. After the person
quits, the company happily spends $40k on a recruiter to find their
replacement.

I started working at a company out of college, and a year in, after a good
performance review, got a 2% raise. I found out that this put my salary at
slightly less than the company was offering new college hires for the current
year.

So I confronted my boss about this, and asked for a 4% raise (including the 2%
I was offered). While my boss agreed (or at least said that he did), HR
blocked it, and so I was left with my 2% raise.

I did what most people would do - I found a new job and gave a generous 3
weeks notice. The counter offer was $20,000 on my next paycheck, if I promised
to stay for at least another year. The raise that I had asked for was $3500
over a year. Naturally, I turned this down.

~~~
m104
It is bizarre when companies operate this way, but, without defending the
practice, you need to understand that few middle managers have the power to
change this situation. Moving up the ladder, owners and executives will simply
say "this is how we do things" and leave it at that.

Personally, I think this situation exists because many corporate leaders have
simply decided to preserve their compensation/authority pyramid at the expense
of keeping their best potential employees. There is less short-term risk and
disruption to the pyramid, the theory goes, to hiring a new wave of employees
than to augment the more experienced staff.

Remember all of this, though, for when you have the power to influence the
compensation of others! This understanding can become a competitive advantage
when you're building teams of your own.

------
mikeash
This makes no sense to me. The initial environment of using counter-offers as
a substitute to raises is, of course, crazy and must be avoided. But never
making counter-offers is _also_ dogmatic and crazy. When something is bad, the
answer isn't to do the opposite. Maybe 90% of the time, doing the exact
opposite is _also_ bad.

It only seems right to me that counter-offers should be made when the
situation warrants, and that they should in no way be made to substitute for
proper compensation and raises in the first place.

Ideally, you never have to make counter-offers, because you pay your people
properly. But mistakes will be made. If a really good employee gets a job
offer with a better salary, and suddenly you realize that _this guy is worth
it_ , why _not_ make a counter offer, if you think he's honest and isn't going
to just leave three months later anyway? If the situation warrants it, _do
it_. Take the situation as a sign that you screwed something up, but that's no
reason to not even bother to try to fix it. Likewise, if a guy gets another
offer and he's clearly _not worth it_ , wish him well and let him go. Don't be
dogmatic.

~~~
michaelochurch
Counteroffers usually fail. The employee is usually in a different company in
12 months, either by getting fired (as soon as a CO is made, the boss is
working on a replacement plan) or taking another offer elsewhere. Only if the
counteroffer involves a move to another team or up the chain of command does
it work.

Money has a surprisingly small effect on employee happiness. Most people who
leave do so because they outgrow their role. Giving them more money to do the
same stuff isn't going to have a long-term effect.

~~~
rhizome
_either by getting fired (as soon as a CO is made, the boss is working on a
replacement plan)_

Does this actually happen? Has it happened to you, or have you gotten rid of
someone as a manager in this way?

~~~
ryguytilidie
Head of Talent at a few different startups here. I have seen this happen
multiple times.

~~~
rhizome
"Head of Talent" sounds pretty third-party HR, sorry. The fact remains is that
this kind of conventional wisdom persists without examples.

~~~
potatolicious
Used to work for a Fortune 100 tech company everyone has heard of - and have
heard this confirmed from multiple members of first-party HR.

You're under no obligation to believe me, but I've heard this corroborated by
people in the know.

~~~
rhizome
So, "friend of a friend" is all we have for this? Hearsay? I'd think that if
this was anything more than received wisdom that there would be more concrete
stories about it.

~~~
tptacek
Hey, cut it out. Multiple people have now told you they have direct experience
with this issue. If you have a real argument against the idea that
counteroffers are risky, marshall it.

------
trustfundbaby
I dunno about this one. If one of my top engineers wants to leave and there's
a chance that I can get him to stay by offering him a decent raise ... then
I'm going to try to give him a raise after thinking through a couple of things

1\. Did the ground shift underneath me overnight in terms of engineer
salaries? This can happen very easily ... a couple of startups move into town
and start trying to poach devs ... guess what, salaries are going to go up and
if you don't play, you're going to lose your best guys. that one engineer
leaving might just be the beginning of half of your team coming to you going
"Hey man, these guys just offered me $140k ... you guys are paying me $95k
..."

2\. What does this guy mean to the team ... and not just in cranking out high
quality code? What would the effect of his departure on morale be. If he's
very well liked and looked up to as a mentor/leader by younger developers, I'm
inclined to try and come up with something to get him to say.

That being said, I'm not a fan of trying to do an exact match, just because,
it feels too much like being held hostage. What I'd do is try to find out what
they like about the new offer so much and see what I can do ... things like
health insurance, shares, flex time and even process changes seem to get far
more mileage out of developers than cold cash. I'd try to put together a
package for them (with increased salary of course).

If that got them to stay. I'd re-evaluate the current package of my entire
team and see about extending the same deal to everybody, to (hopefully) pre-
empt another situation like this in the near future. That way, if I got
another engineer wanting to leave, then I know that there isn't that much more
I can do to get them to stay.

PS: Learn to be distrustful of the the words "always" and "never" ... because
in real life its usually more like "it depends"

------
glabifrons
Unfortunately, this is nothing new. I saw this all the time back in the '90s -
it was a running joke where I worked (which really wasn't a joke at all) that
to get a raise, you quit and come back. Seriously - people would quit, work
for another company for 6-months to a year, then they'd come back making
massively more than before they left. This company also had percentage caps on
how much you could get as a raise, even when changing positions into something
completely unrelated - or at least that's what they told me when I changed
positions, twice, over the 8 years I spent there. When I finally got fed up
with the minuscule raises and ridiculous politics, I had my choice of job
offers (was flown halfway across the country for interviews) and got a 50%
salary increase with the change in employers (I could have more than doubled
my pay, but liked the low-politics in the company I picked). When I submitted
my resignation, my boss said to me "I know what you can make out there, so I'm
not even going to insult you with a counter-offer." Those words shocked me and
proved to me they knew they were underpaying me and didn't care (I made my
case multiple times for a raise and promotion that I never received).

Sadly, I'm still seeing it happening and in a completely different industry
and in a much higher level position.

FWIW: I'm one of those "too loyal for their own good" types (who get abused
for such a trait, as described by others above).

------
hartror
_The most devoted, upstanding employees are the least paid, and the most
conniving, disinterested ones are paid the most._

Why can't you be a devoted and upstanding and also treat your relationship
with your employer as a business one?

~~~
mikeash
You can, but as this relationship is obviously toxic, those devoted,
upstanding employees who treat the relationship as a business one won't stick
around.

~~~
nailer
Why is it toxic? People are under obligation to their shareholders as much as
companies are. It's not personal.

~~~
mikeash
Requiring people to go out and get other job offers in order to get any sort
of raise is toxic because it forces a great deal of effort and risk just to
keep up with inflation.

------
fpgeek
An important corollary (learned painfully) is: Never take a counter-offer.

There are reasons you went out into the world, found an alternative and
decided to take it. Even if money was part of the motivation, it's not the
sole reason. Money can paper over those issues for a while, but they will come
back.

~~~
rgovind
@fpgeek, Can you please elaborate, what was so painful?

------
JeremyMorgan
Depends on the industry. I think for software development, this advice holds
true. We're at a time where really good developers are at a premium, so to get
good work you'll have to pay for it.

There's also another side to this: don't create ultimatums for your employer.
I don't know about you guys, but I get contacted by recruiters nearly every
day. There is a huge demand for our work. This makes it very easy to "hold
your boss hostage" but it only breeds contempt and distrust as they look at
you as someone with one foot out the door. The best time to negotiate salary
is up front, or while being promoted.

~~~
rhizome
_it only breeds contempt and distrust as they look at you as someone with one
foot out the door._

Are there any anecdotes or anything about this actually having an effect on
anybody's job, or that it actually exists at all? Surely there are people here
who have managed those who have gone down this path who can speak to its
practical results.

~~~
gav
In my experience it works like this: you go to your boss as part of the review
cycle and ask for a raise and your boss goes off and talks to the people that
make those decisions. They say no. You tell your boss that you are going to
look elsewhere, as you are on good terms, they ask you to at least see if
they'll make a counter-offer before you hand in your notice. You end up
getting more money than you wanted in the first place, your boss is happy that
they've kept you.

Any sensible manager should know that if your staff is underpaid, they are
very likely to be looking elsewhere. Personally I've always been supportive of
my employees looking elsewhere, do you really want people that only work for
you because nobody else will have them?

------
zaidf
I wish you emphasized _make extremely fair initial offers_ as much as "Never
Make Counter offers".

------
alanfang
Have the mods been editing titles to include the year of the article recently?
I've noticed a lot more of the front page articles include the year in
parentheses now.

~~~
evincarofautumn
It’s supposed to be standard HN practice for a poster or moderator to do so if
the article isn’t from the current year. I’d guess you’ve noticed it because
there are more such articles, not because there’s more moderation.

------
dools
Previous discussion: <https://news.ycombinator.com/item?id=3549384>

------
rutigers
By the time employees think about taking a job elsewhere, it's often already
too late. A counter-offer only retains the talent temporarily and more often
than not, there's some fundamental dissatisfaction with the job.

One begs the question, what should employers do to retain talent?

The author left us with "Have clear and consistent salary guidelines, and
regularly give raises to people who are outperforming their pay level." This
takes the approach that prevention is key.

In my last job, I thought about quitting months before actually giving the
notice. My employer counter-offered with 10% above what the other guy was
offering. This temporarily retained me. However, for months after, I wasn't
performing at my peak and eventually sought employment elsewhere.

~~~
marcosdumay
"By the time employees think about taking a job elsewhere, it's often already
too late."

Is that really true? Well, not for me. Every time I changed jobs, it was
because of the money. The only time I worked in a bad environment, my boss was
let go before I quit.

All those times, if I could receive a bigger salary without changing jobs, I'd
probably stay there.

------
codegeek
It really depends. If your company/boss is just lazy to give you a raise (upto
his limits imposed by HR mafia), you like your job and boss/team a lot but
decide to move _primarily_ because of money, a counter offer may not be a bad
idea especially if the boss values you.

However, if you are just not happy with the job/boss/company/team whatever and
decide to move, then counter offer may not be a good idea. Also, in certain
cases, if the company/boss needs you only for a short critical time period
(e.g. accountant during fiscal year end is critical), then counter offer might
be tricky since they could always get rid of you later if you are not valuable
overall.

So yes, it all depends.

------
larrywright
I have a policy of never making counter offers when someone says they are
quitting. If they say it's about the money, it's never _only_ about the money.
In 16 years, I've seen people "saved" by a counter-offer, but it never lasted.
They were always gone in 6-12 months anyway.

------
charlesju
Off topic, but please change the background on your blog, it's not very user
friendly.

------
halayli
Hiring a new employee, and ramping them up (which results in communication
overhead and noise from learning) is very costly. Sometimes, a counter-offer
is a good solution.

------
chrisbennet
"Your W2 is your review"

