The Downsides of Making a Counteroffer to Retain an Employee

During the Great Resignation, millions of Americans have said “I quit” and moved on from their organizations. As the talent pool shrinks, leaders are prepared to do just about anything to keep good employees from walking out that door. The counteroffer is one retention tool at leaders’ disposal. In fear of losing an employee, a leader may counter with a promotion, a merit increase, a one-time bonus, equity grants, or an opportunity to move to another team. But leaders, beware the perceived power of the counteroffer. Based on her experience leading teams, the author presents a number of downstream consequences you likely haven’t considered if the employee accepts. Here’s why making a counteroffer to an employee who has resigned can do more harm than good.