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The Dangers of Accepting a Counteroffer


In one of the tighest labor markets in recent history, more and more companies of all sizes are extending counteroffers to their employees than ever before. The reason is obvious: why go through the trouble and hardship of replacing that particular person when you can have an opportunity to keep him/her by paying some extra money to retain good employees. Furthermore, it prevents a disruption in the workflow and reflects better morale for the other employees than if there were higher turnover.

From the employee who is receiving the counteroffer, it may be "flattering" and of course, financially rewarding, but beware of the consequences! Studies show that well over 50% of employees that succumb to this arrangement leave the company within a year anyway. Oftentimes their bosses will look to replace them because "they are no longer a team player" among other reasons. Also, if the company is going to pay the extra compensation, they naturally will be expected to work harder or given additional responsibilties (often that are above their heads!). Consider the following from the employees' point of view:

If I were making $50,000 today, why all of a sudden am I worth $60,000 tomorrow. Did I do anything different to deserve such a large increase other than to threaten to resign? If I were that appreciated, I would've gotten that increase based on merit, not by putting a gun to their head.

Don't look back-although it may be emotionally (and sentimentally) hard to break away from my current employer, the "new" company I am going to is welcoming me with open arms. Look forward to the new challenge.

Take virtually everything my current boss is saying to me with a grain of salt. In effect, "I'm firing him/her". Therefore, being on the defensive end, they will say almost anything I want to hear to make me stay. Wouldn't I do the same if I were in their shoes?

Although you may have felt comfortable before you resigned, you showed your dissatisfaction with your current situation and the relationship with your boss will probably be strained and never the same again.

Think about the ultimate reason I was looking in the first place (besides money). Would anything really change if I stayed? The same problems will still exist.

Author's note: Being in the employment agency industry for over a dozen years, I've seen too many scenarios as described above where the employee decides to stay and accept the counteroffer and later regrets it.

HOWARD KUTCHER received his bachelor's degree in accounting from Baruch College (CUNY) in 1981 and passed the CPA examination shortly afterwards. He started his career by working as an auditor with two small/medium-size CPA firms. Realizing that he would rather work in the tax field, he joined the tax department of Main Hurdman in 1983 and worked there until 1987, when the firm merged into Peat Marwick Mitchell & Co. Following KPMG Peat Marwick, he left to join the corporate tax department of Sterling Drug, Inc. (a Fortune 500 Corporation). When that corporation was acquired by Eastman Kodak in 1988, he entered the tax placement field with the intention of capitalizing on the fact that unlike most recruiters, he understands the complexities of taxation. He is President of Kutcher Tax Careers.

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