As an employer, one of the most challenging situations you may face is when a valued employee tenders their resignation. The instinct to keep that person—especially if they are integral to your organization—can lead to offering a counteroffer. It’s tempting to offer a salary increase, a promotion, or other incentives to convince the employee to stay. But while counteroffers may seem like a quick fix, they rarely solve the underlying issues.
In fact, statistics suggest that 80% of employees who accept counteroffers leave within six months, and 90% leave within a year. The immediate benefit of keeping the employee is often outweighed by long-term problems that arise from the decision.
Here are 10 reasons why employers should never make a counteroffer:
1. It Undermines Trust
Once an employee has decided to leave, offering a counteroffer may temporarily prevent them from walking out the door, but it doesn’t restore the trust that has already been broken. The employee has demonstrated that they are willing to leave for the right offer, and while they may stay for now, you’ll always be aware that their loyalty is fragile.
Similarly, the employee may see the counteroffer as a sign that you weren’t willing to pay them their true worth until it was too late. This creates a mutual erosion of trust, which can damage the working relationship.
2. You’re Addressing Symptoms, Not the Cause
Employees rarely leave solely for financial reasons. When someone is ready to resign, it's often because of deeper issues like dissatisfaction with the work environment, limited growth opportunities, poor management, or a desire for change. A counteroffer, which usually focuses on salary or benefits, addresses the symptom but not the root cause of their departure.
By ignoring the underlying reasons for the resignation, you’re only postponing the inevitable. The issues that led to their desire to leave will likely resurface, often in a more pronounced way.
3. It Sets a Bad Precedent for Other Employees
Offering a counteroffer can set a dangerous precedent for the rest of your workforce. If other employees see that resigning is a way to get a raise or better working conditions, they may be tempted to follow suit. This creates an unhealthy dynamic in your organization where loyalty and hard work are devalued in favor of tactical resignations.
Over time, this could lead to a workplace where employees feel that the only way to negotiate better terms is by threatening to leave, undermining morale and trust across the board.
4. The Employee Is Likely to Leave Anyway
Statistics show that 90% of employees who accept a counteroffer leave within a year. This is because the core issues that prompted their resignation are rarely resolved through a simple salary increase. By offering a counteroffer, you might delay their departure, but the chances are high that they will still leave within a short period.
Instead of wasting resources on a temporary fix, it’s often better to focus on finding a new hire who is fully committed to your organization.
5. It Can Hurt Team Morale
When other team members see that someone is being rewarded for threatening to leave, it can create resentment. Those who have stayed loyal to the company may feel undervalued and start questioning whether they need to threaten resignation to get the same treatment. This can erode morale and foster a toxic workplace culture where employees feel that loyalty isn’t rewarded, but brinkmanship is.
6. It Disrupts Succession Planning and Workforce Development
Counteroffers can interfere with your long-term succession planning. When an employee resigns, it’s an opportunity to evaluate your team structure and identify potential successors or new hires who can bring fresh energy to the role. By making a counteroffer, you might be delaying necessary changes and preventing new talent from stepping into leadership roles.
Succession planning and workforce development are critical for business continuity. Holding on to an employee who is halfway out the door can disrupt this process and prevent your organization from evolving.
7. It Sends the Wrong Message About Leadership
Making a counteroffer can signal weak leadership. It may appear that you’re willing to cave under pressure or that you didn’t recognize the employee’s value until they were ready to leave. Strong leaders anticipate and address employee needs proactively, rather than waiting for a resignation letter to offer fair compensation or career development opportunities.
If employees see that resignations are the only way to be valued, they will lose confidence in your ability to lead and motivate the team.
8. You May End Up Paying More for a Less Committed Employee
Counteroffers often involve significant salary increases, but what are you really buying with that extra money? An employee who has already expressed a desire to leave is likely less committed to the organization than before. You may find yourself paying a premium for someone who is simply sticking around because of the raise, not because they’re fully invested in the company’s success.
In contrast, hiring someone new who is enthusiastic about the role may result in a more motivated and productive employee, often at a lower cost than the counteroffer.
9. It Creates Doubt About Your Company Culture
When you make a counteroffer, you’re acknowledging that something in your organization wasn’t working for the employee. Whether it’s compensation, management, or career development, you’ve admitted that the company wasn’t meeting their needs. This can create doubt among other employees about whether the company is truly invested in its people.
If you regularly find yourself making counteroffers, it’s a sign that your company culture might need addressing. Rather than relying on reactive measures like counteroffers, it’s better to build a culture where employees feel valued and fulfilled before they consider leaving.
10. It’s Often a Temporary Solution
Even if the employee stays for a few months after accepting the counteroffer, they may continue to explore other opportunities behind the scenes. In many cases, accepting a counteroffer is just a way for the employee to buy time while they search for the next opportunity. The data speaks volumes: 80% of employees leave within six months of accepting a counteroffer.
As an employer, it’s far more effective to accept the resignation, learn from the situation, and focus on finding a candidate who is genuinely excited about the role.
Avoid Counteroffers—Focus on Proactive Retention
Making a counteroffer may seem like a quick way to retain a valuable employee, but it often leads to long-term challenges that outweigh the immediate benefits. From the erosion of trust to the potential damage to team morale, counteroffers rarely provide a lasting solution. The statistics are clear: employees who accept counteroffers usually leave within a short time, making the effort and resources invested in them a poor return on investment.
As an employer, it’s better to focus on proactive retention strategies—fair compensation, career development opportunities, and a positive work culture—so that employees don’t feel the need to look elsewhere in the first place. If someone is ready to leave, it may be time to accept their resignation and move forward with a fresh perspective and new talent.
Rather than relying on counteroffers as a temporary fix, build a workplace where employees are motivated to stay and grow without needing extra incentives to remain loyal.
