Counter Offers: Do they help or hurt your company?

Insights from Recruiters and Executives on how and when they use them

May 2017 – Copenhagen, Denmark.

The traffic lights on the financial highway are all turning green, and firms are starting to pick up speed. As the quest for speed has begun, firms are now trying to bring skilled employees onboard, to help them break through the wall. This quest has led to firms struggling for manpower now more than ever, and consequently the counter offer has become a part of every firms toolbox. Employees however, have also picked up the tool, and are trying to leverage this perceived opportunity. But just how widespread and common is the counter offer, and what implications does it have? This is what CSA CPH wanted to shed some light on, and therefore conducted a survey where a questionnaire was sent to 60 firms, ranging from small to large, of these 31 responded. The main findings are presented as per below.

  • 75 percent of the firms have experienced that a potential new employee has declined, because of a counter-offer.
  • 60 percent of the firms have resorted to counter offers, in their efforts to retain courted.
  • 78 percent of the firms have conducted more than 15 new recruitments over the last couple of years.
  • 35 percent of the firms have experienced a counter-offer
  • In 10 of the 27 cases where a potential new employee has been declined due to a counter-offer, it has been after a signed contract.
  • In 82 percent of the cases the counter-offer contained a pay raise, while in 52 percent of the cases the employee was offered more responsibility.
  • 10 percent of the employees who accepted a counter-offer, have since then left the firm (anyway).

The implications

The impact of the counter offer is ambiguous, in being a positive or a negative. Firms might be able to retain key employees, but at a higher pay level, and in some cases the relationship is compromised because of the process. Another study, done by Antal international reported that more than half of the respondents who accepted a counter offer, were looking for a new job a year later, because they were dissatisfied and unhappy following the counter offer. This suggest that the counter offer is not necessarily a positive, even though it can lead to higher pay and more responsibility for the employee.

The findings suggest that counter offers can be costly for the firm making the offer, but also for the hiring firm and the other candidates. Some Candidates decline the job offer late in the hiring process, because they merely wanted to leverage the job opportunity to trigger a counter offer. This imposes major costs on the hiring firm, and leaves them in need of a new candidate. Thus the process needs to be reopened, and the other candidates might have lost interest after being rejected, which could be detrimental to the process. Even a signed contract does not necessarily equal a new employee, as the study shows, and something firms need to be aware of.

Playing with open cards

To combat the different problems surrounding counter offers, firms are advised to address the possibility that a candidate is using the job offer to get a counteroffer. This is done by thoroughly screening the candidate’s motivation, and explicitly asking them about potential counter offers. Furthermore, the other candidates may need to be kept on standby for longer, in case the first drops out in the last minute.

The counter offer is likely to become even more apparent if the economic growth continues, and firms needs to develop competencies in dealing with it, if they are to keep their car on track.

Written by Nickolaj Schultz
May 2017

CSA – Denmark

Contact with:
Camilla Treschow Schrøder
Ryesgade 108 B 2100 | Copenhagen | Denmark
Tel: +45 41271257
camilla.treschow@continental-search.com

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