Counter offers should be expected, as nobody wants to lose their best people. It is a lot easier to make a counter offer than to try to find a new person. Especially one that is top talent.
In some strange way a counter offer is a good thing. It signals that the candidate’s current company values them and they don’t want them to go. The hidden assumption in this is that the person is top talent. That is a good thing. The bad news is, now what? How should the new company handle the counter offer? Should they offer more money? Match the counter offer? Walk away and start the hiring process all over again? Negotiate with the candidate? There are lots of options, none of which are all that great.
Here are 4 ideas on how to avoid the counter offer.
1) The best way to handle a counter is by avoiding the candidate receiving a counter offer. It has been my experience that few companies ever discuss the potential counter offer with the candidate. It just never comes up. This is a mistake. The hiring manager should begin discussing the potential of a counter offer as soon as there is genuine interest in the candidate. This may be at the end of the first interview.
I have never yet heard a hiring manager say to a candidate, “We want to proceed with you and would like to bring you back to meet more people. I want to respect their time and yours. If we proceed, I’m curious as to how you will deal with a counter offer should your current company make one?”
This is important because now you are starting to tie the person down. Few candidates even think about the counter offer. By asking this question you are beginning the process of getting the candidate to commit to you. They are starting to put their word on the line.
After every interview you should continue to tie the candidate down by adding more ropes. Continue to bring up the potential of a counter offer. Before the offer is made, the hiring manager should once again ask the question, “We are going to proceed to the offer, however, before I do that I would like to understand more about how you will deal with a counter offer should it happen?” Follow up with, “ We only hire top talent. I view you as that and I know if you were on my staff, I would be concerned if you left. What will you say to the CEO when called into their office to discuss what it will take to keep you? What will your comments be?”
Once the offer is made you can add one more tie. “I want to make sure you don’t burn any bridges when you leave your company. What are you going to say to your boss when you give notice?” What you are looking for is if the candidate left the the door open to a counter or are they telling their boss thanks for the time together, but my mind is made up; I’ve given my word and I’m completely committed to this new opportunity.
This may sound like overkill but it sure beats having to deal with all the issues if a counter offer happens.
2) Never get into a compensation war. You won’t win. If the candidate accepts more money now, they will never be satisfied. They are opportunistic and will leave you at the first opportunity they get for more money or they will hold you hostage by constantly asking for more money.
We always recommend making your best offer and leave it at that. Let the candidate know you are making your best and only offer. Remove the chance of getting into a wage war. We have rarely seen them work out successfully.
3) Too often companies make an offer and that is the last contact with the candidate until they walk in the door two or three weeks later. This a a major mistake. Did you pick up on the word “major?”
For the next three weeks whatever energy, excitement, enthusiasm, and bonding that built up during the interviewing process begins to wane. The current company has all this time to express their love for the candidate, how much they appreciated their work, how much they will miss this person, and on and on.
You have to be in the game. After the candidate gives notice you should contact them. Ask how it went and probe how they feel now that they gave notice? How did their boss respond to the news? The biggest thing to know, have they made the announcement to their team and the company? If they haven’t, or their boss asked them to wait until next week before announcing it to the staff, get ready, a counter is imminent.
The notice period is your opportunity to begin the candidate’s mind transition to your company. Meet with them, give them some work to start, invite them to staff or company meetings, include them in emails, and begin the process of putting them in their new job.
4) Understand exactly why the person wants to leave their current role.The real reason is rarely the first reason they give. Don’t accept the first canned answer. Probe to understand what is motivating this person to seek a new position. This is key if a counter offer happens.
Rarely will they tell you money. Usually it deals with some other reason, they are not happy in their current role, they lack career growth, the position isn’t challenging, their boss isn’t allowing them to take on new projects, or they have reached their limitations in the current company. Does your position address these issues? If it does, this is ammunition to use if a counter offer happens. You can now remind the candidate why they told you they are leaving. Since it wasn’t about money, how will a counter offer address their issue?
Since you asked the candidate in the interview why they want to leave their current employer and they gave you a bunch of stuff about career growth, and said that money wasn't the reason for leaving and then they accepted a counter offer based on money, chances are they lied to you.
Now you can respond, “We made you what we think is a good offer and our best offer. You indicated you weren’t leaving due to money and now it appears that isn’t the case. Our culture is built around high integrity, trust and values. It would be a good thing for you to accept the counter offer, as you probably wouldn’t fit in our culture.”
Even if you do everything perfectly, the candidate may fall prey to the counter offer. You are dealing with people and nothing is100%. All you can do is work to avoid the counter offer before it happens. Most of the time you will win, but not always.
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