Why Do Companies Make Counter Offers?

Companies have a bottom line… and this is business.  While most of our client companies would love to have endless funds to pay top of the market salaries for their employees, this is often not reality.  They work to secure the best talent for market costs.  The challenge is knowing what market value actually is in such a rapidly growing sector.

Overpaying vs underpaying is a tricky thing.   In the Technology Sector, demand outweighs supply, and compensation averages will continue to push upward in the short and long term future.

Companies look at a lot of variables when considering a counter offer, but I believe these are typically the four main factors…

1. Employee value to company
2. Replacement costs
3. Time to replace
4.  Impact to the business (this is the most complex factor, as there can be both a financial and emotional impact)

Emotions are most often not a part of the equation in this decision making process.  It comes down to logic, value and cost.  However, the moral hit to a corporate culture when losing a key player can be significant.

My advice to Companies (Counter Offers):

• Know the market… and be competitive.
• Take a pro-active stance to promote and reward top talent
• Create tangible growth paths and plans for your employees
• Constantly work on corporate culture and employee engagement

Thoughts from Employers, Human Resources, and Hiring Managers…