Negotiating Against Counter Offers: Are Your Recruiters Having These Four Conversations?

Hiring Tips
May 4, 2022
min read
Pave Team

There’s nothing better than finding an amazing candidate to join your company.

But the reality of a candidate’s market is, when labor is in high demand, great candidates often get a counteroffer from their current employer. 

Especially in a recruitment scenario, companies will make a bid to keep their high performing employees from leaving. Usually those offers are put on the table once a strong performer has submitted their notice and threatened to leave.

Now, statistics about counteroffers are notoriously hard to measure. It's very hard to garner accurate data on how often they get counteroffers from their current company, how often they accept the counteroffers, and how long, on average, they stay after having accepted a counteroffer.

But what’s more important than the number is the nuance. To manage the possibility of candidate counteroffers, recruiting and hiring teams have to think in terms of the conversations they want to have to achieve their goals.

In this post, we’re going to share strategic advice on preempting counteroffers from candidates' current employers, as well as negotiating against them after they have happened. Rather than trying to put words in your mouth, we’re going to approach this challenge as a conversation. After all, each small interaction you have with potential candidates builds up over time to strengthen your relationship and improve the likelihood of them joining your team.

Next time you receive a counteroffer from a candidate you don’t want to lose, here are the conversations you should be having.

The Curiosity Conversation

Ben Franklin once commented that an ounce of prevention is worth a pound of cure. This is the mindset recruiters need when preempting the counteroffer.

We encourage recruiters to preempt the counteroffer conversation before it happens. Ask candidates two critical questions:  

  1. What is motivating them to change jobs?
  2. What happens if your current company offers the same, or more money than what we offer?

Their answers to both questions will reveal a lot.

If the candidate's motivation for leaving is primarily compensation related, then you can reasonably infer that they are likely to accept a counteroffer. If the reason for leaving is motivated by culture, their role scope, or something that's not compensation related, then you can reasonably infer that they are less likely to accept a counteroffer.

After your candidate reveals that their current employer has made them counteroffer, the most important initial response is curiosity.

If the candidate does reveal that they have received their counteroffer, it's time to remind them of the reasons why they are looking, assuming those reasons aren't compensation related.  The best way to do this is with questions, such as:

  • What made you want to start looking for a new job in the first place? 
  • Last week you came into our office for an onsite interview. Can I ask why?
  • Are you more motivated by money, growth, benefits, or other career aspirations?

Additionally, you might want to dig deeper to learn more about how their current company operates:

  • If you accepted this counteroffer, when would you receive your next raise?
  • Is your counteroffer coming out of your next raise and instead being granted early?

Compensation is a complicated process with many nuances, and employees have historically been kept in the dark about many of them. Now you have a chance to break open that black box and show that your organization values comp transparency and fairness.

Also, remember that candidates will start interviewing because they’re not happy about something. Maybe comp, operational, managers, whatever made them unhappy in the last six months, their next six months are likely to reflect that process, rather than the one week the company is backed into a corner, trying to retain them. Be cognizant that how a company acts in retention mode is different from day to day.

Ultimately, even if the current employer’s counteroffer beats your offer by a little, remind the candidate that this is just where you are starting their compensation. It’s likely that their current employer feels they have “caved in” to the candidates’ demands, and therefore, will be unlikely to raise their compensation again anytime soon.  Meanwhile, the new company they would be joining has no qualms about what has been offered, and is far more likely to revisit compensation in the following few months.

The Value Conversation

Since money is literally on the table, approaching the counteroffer conversation from a financial perspective can also be helpful. For context, here’s a helpful heuristic. In the investing world, the financial markets are driven by two powerful emotions, fear and greed. Fear is the response to threat, and greed is the response to opportunity. Fear seeks to preserve an asset, and greed seeks to expand it.

You may have seen CNN Money’s framework called the fear and greed index. It’s based on the premise that excessive fear can result in stocks trading well below their intrinsic values. 

Similarly, when organizations are operating out of fear mode, they’re acting from a place of scarcity. Decisions are made to protect their assets. Whereas if they’re in greed mode, their work centers more around abundance and opportunity.

Therefore, if a job candidate comes back with a counteroffer, you might start the conversation around what the money points to, which is value. See if you can tease out why this candidate’s manager is offering them a raise now that they’re resigning. There’s no way to know if the threat of resignation triggered this sudden expression of generosity, so you may have to probe deeper:

  • If you weren’t valuable enough to be given a raise before, why would your boss be willing to give you more money now?
  • If you put in your two weeks and your employer gives you a counteroffer, might that suggest you weren't fully appreciated in the first place? 

This can be a sensitive issue, so you’ll want to start the value conversation in a manner that’s respectful. You can modify your questions depending on the amount of rapport and trust you’ve built with your candidate.

Just remember, this conversation isn’t about money, it’s elevated to a more human issue, which is value. It’s not the easiest subject for candidates to discuss, but within that tension, you have a chance to demonstrate just how much you value this person’s candidacy, employment and contributions.

The Operational Question

We’ve already established that counteoffers in response to someone threatening to leave is a normal, human fear response. The company, or at least the direct manager, is in some degree of crisis mode. They’re not only scared about the person leaving, but they’re scared about what their departure would mean from a cost (money, time and effort) perspective.

As we explained in our post, The ROI of CompTech: Time, Speed & Sanity, there are soft and hard expenses, including separation costs, transition costs, hiring costs and cultural costs. It’s going to cost any employer exponentially more to hire someone new, than to throw ten thousand dollars at an employee with one foot out the door.

If you’re hoping to hire someone who’s negotiating with a counteroffer, invite them to consider what their leaving would mean from a time, expense and effort standpoint to the company. Position this conversation in the most empowering way possible:

  • If you left the company tomorrow, what invaluable domain knowledge would go out the door with you?
  • Does this counteroffer send a signal that your manager is afraid of dealing with the work disruption of your leaving?
  • Once you’ve shown your employer that you're willing to leave, could that create any stigma that will negatively impact your day to day work?

To be fair, it’s normal for a candidate’s ego to feel flattered by being offered more money. Who wouldn't be walking on air after getting an offer for a ten percent bump in salary? 

But it’s a slippery slope, as someone’s sense of pride may cloud their judgment on what the best career decision is for them right now. If a counteroffer comes in, help that person understand some of the operational issues underlying their departure that they might not be considering.

The Time Conversation

More than likely, an increase in salary is a short term solution. The bump in comp is compelling in and of itself, but that doesn’t necessarily alleviate an employee's long term job satisfaction. 

Three months down the line, they could easily become disengaged and unhappy again. 

At which point they would realize it wasn’t about the money all along. There was something else about the job, like management, culture, process, and so on, that was the core problem.

LiveCareer conducted a study of 1,161 professionals in the U.S. via Amazon Mechanical Turk. They collected data specifically from employees and hiring managers who had experience with counteroffers. Here are a few standout data points:

  • 44.8% of hiring managers felt counteroffers weren't a long term solution
  • 37% of hiring managers believed counteroffers set a bad precedent
  • Only 22.6% hiring managers say a counteroffer helped employees stay for an extended period

If someone is considering leaving their position, there must be aspects of their job that are significantly unsatisfying to them. As such, if an employee ends up accepting a counteroffer and staying for more money, their job satisfaction could revert back to the previous dissatisfied state. Their reasons for wanting to leave the company may eventually resurface. 

That’s what happens when someone tries to treat the symptom, not the problem. They become slightly wealthier, unsatisfied people.

As you can see, these four counteroffer approaches are less about numbers and more about nuance.  

If you have candidates you don’t want to lose, invite them into these conversations around curiosity, value, operations and time.

Learn more about Pave’s end-to-end compensation platform
Pave Team
Pave Team
Pave is a world class team committed to reinventing the world of compensation and help build a more transparent future of work.

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