Why Counteroffers Rarely Work – For Candidates or Employers

The whole process of exploring and securing a new role, then resigning from the old one, is emotional. Nervousness, excitement, relief, and doubt all bundle together. And the same thing happens for employers. The shock and fear of losing a valued employee triggers crisis mode. If they're not ready to let them go, a counteroffer is the likely response.

This can seem like a win for both sides. The employee feels valued, the employer retains a key person, and the disruptive change on both sides is avoided. But the reasons for exploring greener pastures to begin with are rarely resolved.

According to Launch Corporate Services specialist Jaz Kuthubdeen, counteroffers rarely work out the way either side hopes.

"Ultimately, the reason why they are leaving can't always be changed. Seventy per cent of candidates who accept a counteroffer leave within a year, anyway, according to SEEK."

The most common reasons for resigning are pay, wanting a change, burnout and dissatisfaction with management. Only one of those is addressed in a counteroffer.

People don't resign spontaneously. It is the result of serious reflection that usually comes from repeated frustrations. Most commonly with culture, leadership, or a lack of growth. These frustrations build over time and become the anchoring reasons to leave. Taking the step to move on most often means that those problems are considered too big to fix.

Yet, still, when a counteroffer is presented, the relief of being wanted and valued can blur those reasons.

As Jaz explains, "You have to remember the reasons why you're leaving. That's really important. What were your original motivations to leave?"

A counteroffer can feel validating, but it rarely changes the factors that led to the initial decision. "Once they say, 'I'm leaving,' and the manager says, 'We'll give you more,' they're not remembering that bad company culture or their other motivating factors," Jaz says.

Her advice to candidates is this: "Money will follow. You have to go with what feels right at the time. You shouldn't have to resign for them to realise your worth and what you bring to the company."

Accepting a counteroffer can also have longer-term consequences. "It can limit your market value," she explains. "It tarnishes relationships with the organisation that's spent time taking you through the process. People talk."

For employers, the instinct to respond quickly to the threat of a resignation is understandable. Retaining them feels like the safest outcome. You have less disruption, less recruitment pressure, less loss of knowledge. But a counteroffer usually only pauses the inevitable if the underlying reason for leaving can't actually be changed.

As Jaz explains, "When someone hands in their resignation, find out the motivating factors, but don't go straight to a counteroffer. Ultimately, the reason why they're leaving sometimes can't be changed. Seventy per cent of candidates who accept a counteroffer leave within a year."

Rather than treating a resignation as a threat, Jaz encourages leaders to view it as insight. "Use it as a learning opportunity," she says. "If there are valid reasons, address those root causes."

Otherwise, a counteroffer risks doing more harm than good. "It almost rewards the threat of leaving and not performance," Jaz says. "You keep the person, but they're not engaged. They're there in body, not in spirit."

And even when an employee accepts and stays, it's hard to get back the original dynamic. Trust shifts on both sides. "When someone hands in their notice, you start wondering when they'll leave again or what they're really thinking," Jaz adds.

For employers, retaining someone who's already disengaged can be more costly than replacing them. "It's usually more cost-effective to recruit a motivated replacement who actually wants to be there," Jaz says.

Before saying yes to a counteroffer, take a step back and think beyond the short-term gain.

What's changed since I made the decision to leave — the role, the culture, or just the salary?
If I stay, what specific commitments has my employer made, and how realistic are they?
Have I already mentally moved on? Would staying feel like progress or compromise?
What would my next 12 months look like if I accepted? Would that version of me be fulfilled?
Am I reacting to fear or acting on conviction?