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.
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.
Personally, once I've gone to the effort of getting my resume out and interviewing, I'm going to take the new job rather than listen to a counteroffer from the old one.
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.
If his only reason for being dissatisfied with his current job was the money, why didn’t he just go to his manager and say “hello, I was looking at salary surveys and other information about the job market, and reviewing all the ways that I have made money for you guys over the past year, and I think I deserve such-and-such more than I’m getting right now”? Why is he finding staying in the familiar environment of your company less attractive than job-hunting in his spare time, possibly even burning vacation time for interviews, and then going out to work with a bunch of strangers?
I had the experience of being underpaid (while I was still in school so it wasn't all about the money) but after I graduated I wanted to make at least close to what is going around here.
I had it pretty lucky that I could just waltz into the boss's office and say I need to make more.
It had been over a year and I had graduated in that time frame so I felt I had a bit of an argument and I am the guy who hates confrontation.
At that point it was pretty much only about the money as almost everything else I did like.
There are plenty of reasons this could happen. It's a mistake, and you should analyze the situation to see why it was made. But that doesn't imply you should let people walk out the door just because you made a mistake.
You assume that anyone who comes up with this thing implies a particular scenario, when it really doesn't. It could simply be that e.g. an employee got a cold call from some friends who recently got some funding and is toying with the idea of switching jobs, and the higher salary is the one thing that really makes him think of taking the offer.
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.
This isn't folklore. There are roles and companies where counteroffers are pathological; sometimes it's overt and the company is trying to screw you over, and other times it's subtle and emergent and has more to do with the inevitable loss of traction that comes of the company preparing itself more deliberately for your eventual departure.
If I ever end up in this situation again, I'm certainly going to bring this concern up directly and immediately. It's something you can work out if you're negotiating in good faith; it's not the case that there's no such thing as a successful counter.
By this I mean, don't look to contractual provisions to mitigate the risk of a bad-faith (or bad-in-effect) counteroffer. You'll either establish real trust in your employer or you should walk.
Does this actually happen? Has it happened to you, or have you gotten rid of someone as a manager in this way?
You're under no obligation to believe me, but I've heard this corroborated by people in the know.
- Signed, the guy with 23,000 karma, who was once #2 on the leaderboard and is still in the top 30.
As soon as your manager gets an inkling that you'd rather be somewhere else or doing a different kind of work, the clock is ticking. No manager wants to waste time or energy on someone who'll move on to greener pastures in half a year.
I hear what you are saying but you cannot generalize this. One anecdote: my wife successfully got a counter-offer from one of her jobs a few years ago and stayed for a long time afterwards. her company/boss wanted her and did not think of her leaving to get a decent raise as a threat. They understood and obliged.
I mean, startups usually fail. Does that mean one should never start a startup?
Every raise have made me happier.
I will welcome every raise with open arms.
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"
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).
Why can't you be a devoted and upstanding and also treat your relationship with your employer as a business one?
Remember - sweet, kind, loyal dogs get put down as often as mean biting ones. And you're lucky if your employer thinks of you as anything higher than a dog.
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.
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.
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.
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?
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.
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.
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.