Counter offers: when to accept, when to turn it down

Applying for jobs elsewhere then asking for a counter offer could land you a huge pay rise – but it’s also a risky move.

Workers hunting for a decent pay rise may benefit from a little job shopping, as the average counter offer to keep an employee far exceeds the typical pay bump for loyal staff.

But experts warn playing this card comes with risks, and short-term gains may not match the long-term damage.

Exclusive figures from recruiter Robert Half reveal three in five bosses extend a salary increase when making a counter offer to retain an existing employee, and the average increase is 9 per cent.

For comparison, the Australian Bureau of Statistics shows base hourly pay rates increased just 1.5 per cent across the workforce in the year to March, while a 2020 survey by Robert Half found employers that intended to offer a pay rise this year planned an average bump of 6.3 per cent.

WHY IT MAY NOT BE A GOOD IDEA

Robert Half Australia director Nicole Gorton understands why someone hoping to stay with their employer might apply for a job elsewhere as leverage for a higher pay rise, but warns this strategy can ruin their reputation and future career prospects.

Robert Half’s Nicole Gorton says employees can ruin their reputation if they aren’t careful. Picture: Supplied

“It’s pretty manipulative to use a counter offer to get a pay rise,” she says.

“You can have that remuneration conversation without taking it to market and using it as a blackmail conversation.

“(Your organisation) will think you are going to do that again.

“What’s your reputation as a result of doing something like that?

“If (your employer) is having to use a counter offer to retain somebody, it doesn’t feel good for anybody.”

OTHER WAYS TO APPROACH IT

Employees are better off researching salary benchmarks and what similar jobs are paying in the market, Gorton says.

“Ask yourself: What responsibilities can I increase in my existing role? How can I add value to be able to have a more fluid conversation that benefits the company and makes them think ‘this person is definitely worth a pay rise’,” she says.

“Have this conversation before the counter offer stage.”

WHAT IF YOU GENUINELY PLANNED TO LEAVE?

Gorton says it is usually not a good idea for workers wanting a job elsewhere to stay with their employer based purely on a financial counter offer.

“People typically join a company for the opportunity but leave a person and a lack of opportunity,” she says.

“A counter offer doesn’t always work for the long term if it’s purely financial.

“It can work if it’s a job change or exposure to a new project or a geographical change or new team.”

The Robert Half research finds more than half (52 per cent) of employees who accept a counter offer still leave the company in a year or less.

Saxon Wyatt was offered a 30 per cent pay rise to stay with his employer. Picture: Toby Zerna

This was the case for freelance brand consultant Saxon Wyatt.

He had been working for an advertising agency and was being poached by another organisation.

“I kept rejecting it but then the money (kept increasing and) was so substantial it was definitely worth moving across so I spoke to my managing director,” he says.

“They came to the party and met the offer and I ended up staying.

“I only stayed for about another year, though, because having that seed of doubt in the back of my mind that I could have jumped ship meant that job got a bit stale.

“In hindsight, I wish I had just moved across.”

Wyatt ended up securing a 30 per cent pay rise from his employer to match the other agency’s offer.

Now, he works as a freelancer and can renegotiate his salary every six to eight weeks at the end of each contract.

Hender Careers’ Paul Bell says there is more to think about than the money. Picture: Supplied

QUESTIONS TO ASK YOURSELF WHEN WEIGHING UP A COUNTER OFFER

SOURCE: Paul Bell, principal consultant, Hender Careers

1. Why are you only being offered a pay rise now?

You should be receiving regular performance reviews and, if expectations are met, pay rises should be occurring.

If you only get offered better conditions when you are at risk of leaving, this is cause for concern.

2. What is your career plan?

Seeking a higher salary is not necessarily the primary motivating factor for seeking other opportunities.

Sometimes it can be more to do with a greater alignment of a longer term career plan.

3. What is your relationship with your manager?

If you feel accepting a counter offer and a pay rise may cause uneasiness and result in a different dynamic, it may be better to start afresh and build new relationships with another manager.

Alternatively, if you feel “it’s better the devil you know”, staying put and devoting energy to consolidating your relationship with your manager may be the best option.

4. Are there other issues?

If you accept a counter offer and stay, are you going to still be happy after this novelty wears off?

If there are other issues behind your decision to look elsewhere – such as a poor culture or values that don’t align with yours or the actual industry isn’t the right fit for you – you could find yourself looking around again within three to six months.