Making an offer? Get ready for the counteroffer

Wily companies are using the counteroffer--more money, a promotion, better projects--as a tool to hold on to those valuable IT employees you want to hire.

In this article:
Mulling it over
You've finally met a candidate with a great resume and a great attitude, and you've made her a great offer. But unless she has a great reason for leaving her old job, she may end up going where thousands of restless, promotion-hungry IT professionals are going these days: nowhere. She may end up deciding to accept her current company's counteroffer and simply stay put.

Ben Slick, president and CEO of PeopleScape (, the San Jose-based staffing firm, says that before making the effort to match a candidate with a job opening, his firm looks to see if the candidate has an "exit motivation"--a reason for leaving the old job. "If they don't have it," Slick says, "we don't waste our time."

That's because counteroffers are becoming a common--and effective--defense strategy for employers that have grown tired of losing their skilled IT workers. A recent study by the Cleveland-based executive-search firm Christian & Timbers ( says companies are losing as many as 50% of their chosen candidates to counteroffers.

Another study, this one by Search Management Services a Dallas-based consulting firm, indicates that nearly four out of five departing IT employees receive counteroffers from their current employers. In many cases, the employees take these offers and stay.

Mulling it over
Does that candidate for an IT job in your company look a little distracted? Here's what might be going through his mind if he's pondering a counteroffer.

Reasons he might accept the counteroffer and stay put:
1. He already knows the company.
2. The company already knows him.
3. He's aware that in today's IT market, companies aren't necessarily looking for loyalty (just warm bodies).
4. He'll retain his seniority and get the added benefits and vacation days that often come with long tenure at a company.
5. He knows that if things don't improve, he can always quit later.

Reasons he might reject the counteroffer:
1. His loyalty will always be suspect--an important factor at promotion and bonus time.
2. He knows who will be first out the door in case of a downturn.
3. He thinks that the circumstances that made him want to leave will recur.
4. He doesn't really want to work for a company that refuses to pay him what he's worth unless he threatens to leave.

Which side is greener?

In today's tight IT hiring market, businesses are increasingly being forced into these bidding wars to fend off IT headhunters and retain technical talent. It's a pretty basic concept: With technology workers continually leaving for greener pastures, companies are trying to make their own pastures look a little greener.

Sometimes the greening is a matter of money--a company might increase an employee's salary or offer a promotion to prevent a departure. Other times it's a matter of offering the employee a spot on a tempting new project or giving the employee training on the latest technology. Some companies might dangle a "We have big plans for you" or even attempt to make an employee feel guilty for leaving.

And this is not just for top employees. Jeffrey Christian, president and CEO of Christian & Timbers, says that in today's market, even an average performer can be a "hot candidate." Truly excellent performers might have multiple companies after them.

No longer a stigma

A few years ago, it would have been career hara-kiri for a typical employee to accept a company's counteroffer. The employee's loyalty would have been forever in question. Counteroffers of the past often were merely a stalling tactic that gave an organization time to find a replacement.

But today's scramble for skilled IT workers has changed all that. "Five years ago, an employee might worry about being labeled as disloyal," says PeopleScape's Slick, "but accepting a counteroffer today doesn't carry the same stigma."

Outsourcing firms that rely on IT job-changers have been the hardest hit by this new defense strategy, and many have started to fight back. During the interview process, some firms counsel prospective candidates on counteroffers. They urge candidates to remain focused on their initial reasons for leaving and to resist employer pressure. Many outsourcers have gone as far as posting on their Web sites lists of reasons why departing employees shouldn't accept counteroffers (see box, "Mulling it over").

These firms sometimes cite statistics indicating that a high percentage of employees accepting counteroffers leave or are terminated within six to 12 months anyway. At the Web site of R. Gaines Baty Associates, an executive-search firm based in Dallas (, an article by R. Gaines Baty says 50% of the firm's clients who succumbed to "counteroffer coercion" were looking for jobs in less than 90 days. One unlucky soul was back on the street in less than a week.

Counteroffers don't always work

Most employees leave for reasons other than money, according to PeopleScape's Slick. That's why counteroffers sometimes fizzle.

Is a "feeling of community" a factor in attracting IT professionals to your company? How do you promote that to prospective employees? Let us know in an e-mail.
A company that makes a counteroffers of more money won't retain an employee who is leaving to gain new skills or broaden his or her work experience. And there's nothing much a company can do to retain an employee who is leaving because of an unbearably long commute. Counteroffers can also backfire when workers are angered that they have to go to extreme measures--like leaving the company--to get the recognition they deserve.

What all this means is that the job search isn't over until it's over. In the search for new IT staff members, expect and plan for the counteroffer and expect prospective employees to weigh their own needs very carefully. As Diane Tunick Merello of Gartner Group, the IT market-analysis firm, puts it: "Today's IT workers are taking greater control of their careers." //

James R. Wolf is an assistant professor of Computer Information Systems at Cedarville College in Cedarville, Ohio, and a freelance writer specializing in Internet-related topics. His e-mail address is


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