Six Things You Should Consider When Making A Counter-Offer

Counter offers can be effective -- if they are done strategically, and done right. (Photo by Dreamstime)

Earlier this month, we heard about some of the extraordinary counter-offers that Google was making to its departing employees (specifically engineers). In a follow up story, Techcrunch reported that it was still continuing:

What’s Google offering? An immediate response for starters. They have put policies in place to ensure that an employee gets a response within 24 hours, we’ve confirmed from sources close to Google. Raises of 15 percent – 20 percent aren’t uncommon, as are new restricted stock grants ranging up to $500,000 in value. Employees are also often offered a different job, a move into a managerial role, etc…

And worse – he’s confirmed that many Google employees are interviewing with Facebook and Twitter, among others, simply to get a hefty raise. “Many people at Google use Facebook offers in order to get a big raise,” says (former Googler now Facebooker Paul) Buchheit.

This isn’t good for Google. While I don’t agree with people who say you should never do a counter-offer, these sort of mistakes could have easily been avoided if they had followed a few simple considerations.

In defense of counter-offers

I’ve been on both sides of the counter-offer debate. On one hand, I have been scorned as a recruiter by a person who ended up accepting the counter-offer of the company we were trying to recruit them from. I’ve also been the recruiter that has been used by an employee to leverage a raise or promotion. And I’ve been the one who ends up defeating a counter-offer by either choosing to stand pat on our offer or moving something around.

On the other hand, I’ve also been the one who has aggressively gone after departing talent. Some of them have been successful and others were not so much (either because the person stayed and were terrible or they still left).

I can tell you flat out that counter-offers do work if done right. Sure, you’ve read some statistic somewhere about how the success rate of counter-offers is so low. Yet, other things that are statistically daunting in life (such as the coin flip chance that a marriage will survive) doesn’t keep millions of people from happily enjoying their marriage.

The fact is, every situation and employee is different. And that’s why you need to analyze each departure instead of doing this across the board policy that Google is apparently using.

1. Don’t have a counter-offer policy

Google’s mistake is that they made their counter-offers a de facto policy. When you make the company’s response reliable in the counter-offer department, you start opening yourself up to serious abuse. Competitors recruiting employees from you start using that as a tool against your company. They figure they’ll either grab your talent or blow a bunch of money you weren’t planning on spending.

2. Be very selective as to who you counter-offer to

It’s a mistake to counter-offer all departing employees or all employees in a department. Be selective and pick your top talent only to do a counter-offer. And most importantly, start with a blank slate. Don’t come at them with a 10 percent pay increase, a couple thousand in stock, and a parking space written out in a counter ready to be signed. You’ll likely be wasting your time. Top talent will be looking for something else.

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3. Counter-offers aren’t a retention technique

Your company, the environment you put your employees into each day, and the compensation and recognition they get for the job they do is a retention program. A counter-offer is a last ditch effort, one that should never be depended on for long term success. Those high performers you would counter-offer to if they were left? It’s time to figure out what they want before they decide to accept another job.

4. Let some go without a fight

Want to take a care of people who are bluffing about job interviews or offers in order to leverage a raise? Let some go without a fight. Again, you’re being selective about this, right? If they are truly being recruited, you can let them go and work on a replacement. If they aren’t, it will be quite the test for the employee in question.

5. Don’t always offer money

And certainly don’t offer money without an increase in responsibilities. Counter-offers are not a salary negotiation tool. Let’s repeat that: counter-offers are NOT a salary negotiation tool. When someone chooses to leave, you need to be brave enough to not go back and forth on salary with another company. Get to the root cause of the displeasure and take care of that first. Better yet, be proactive and don’t let it get to that stage.

6. Get ready for questions

When someone takes a counter-offer after already announcing to colleagues they are leaving, employees are going to have questions about why a counter-offer was given and how can they get in on that. This is why you want to be able to say, “This was a special situation and while we don’t have a policy of making counter-offers, we will do them when it is the right move for the company.”

Do you make counter-offers? What considerations do you take into account before deciding whether or not to make one?

Lance Haun is the practice director of strategy and insights for The Starr Conspiracy, where he focuses on researching and writing about work technology. He is also a former editor for ERE Media, broadly covering the world of human resources, recruiting, and sourcing. 
He has been featured as a work expert in publications like the Harvard Business Review, The Wall Street Journal, Fortune, MSNBC, Fast Company, and other HR and business websites.
He's based in his Vancouver, Wash., home office with his wife and adorable daughter. You can reach him by email or find him off-topic on Twitter.