Wednesday, October 10, 2018
The Role of Counter Offers in Executive Search

Filling an open executive position can take a significant amount of time – for both the companies and the candidates involved. On the company side, the process requires identifying must-have candidate attributes, executing an exhaustive interview process, assessing cultural fit, and completing reference audits. Then once a candidate has emerged as the top choice, there is an active compensation negotiation process. Finally, an offer letter is signed.

However, there is one step that can potentially derail everything and send you back to square one: when the candidate gives notice with their current company. Doing so often results in a counter offer from the candidate’s current employer.

Both candidates and hiring managers should be prepared for the possibility of a counter offer.

Candidates and Counter Offers

If you are an executive in your company, you will definitely be countered when you put in your notice (after all you are a “rock star,” selected from a large group of highly qualified candidates). The counter offer can take a number of forms, such as more money, a promotion, flexibility to work from home, a better benefits package, or additional RSUs or stock options. You will suddenly feel very valued, fielding calls or having face-to-face meetings with your boss and all the higher-ups. You will hear a lot of appreciation and recognition of your work, and leadership will express how much it means for the company if you stay. You will feel guilty for leaving the company that gave you so much and for leaving the team that you built without its captain. While you were ready to move on, you may now question your decision to leave.

What you need to understand is that it is easier for a company to counter you than it is for them to find a suitable replacement, especially if they need to replace you quickly. Your exit may create undue stress on the organization and the people within it, which can sometimes carry over into the marketplace. A counter offer is your company’s opportunity to avoid the work associated with your absence.

What you also need to understand is that, yes, the company may truly value you, but the reasons you were ready to leave still exist, and by staying you will lose the opportunity you are currently presented with. Most importantly, you will also lose credibility with your current company, and your long-term loyalty going forward will be questioned. Our experience indicates that most people who take counter offers leave within a year anyway. And, though you may be tempted to use that counter offer as leverage with your new company, such a tactic will almost always have negative consequences – your future employer may even go as far as rescinding the offer altogether.

At HFA, we strongly advise candidates to be firm when giving notice and avoid getting themselves into the counter offer situation. It is tempting to see what your current company will offer you, but by agreeing to consider a new deal, you will end up accepting or rejecting the counter offer, which will inevitably burn bridges either with your current or prospective employer.

Companies and Counter Offers

If you are seeking to hire a new executive, understand that although the candidate may appear to be closed – they have signed an offer letter, after all – that is not always the case. The counter offer is a common tactic used to retain top-tier executives, and it can have a swift impact on the outcome of your search. Prepare for this possibility. Make sure that the topic of a counter offer is discussed before the negotiation process begins, and then stay close to the candidate. Follow up with them after they give notice; schedule an in-person meeting in the first few days and reiterate how interested you are having them join your company.  

If you have questions about the role of counter offers in the executive search process, I’d be happy to answer them. Reach out to me at 215.568.8363 or search@hfischer.com for further discussion.

Kostya Lebedev, Principal