When a valued employee resigns, panic often sets in. Leaders scramble to retain them with promises of higher pay, promotion, or better conditions. It feels like a quick win — but in reality, counteroffers often fail to achieve what you want.
In Australia, studies show that more than 80% of employees who accept a counteroffer leave within 6–12 months anyway. That statistic alone should make employers rethink their retention tactics.
Why Do Employees Resign in the First Place?
Rarely is it just about money. Most resignations are driven by factors like:
- Poor leadership or management
- Lack of career growth or purpose
- Burnout or lack of flexibility
- Misalignment with company values
Throwing money at someone who’s already mentally checked out doesn’t fix the root issue. In fact, it may backfire — signalling to other employees that loyalty isn’t rewarded, but threats to leave are.
The Psychology Behind Counteroffers
When an employee resigns, they’ve usually already detached emotionally. A counteroffer may bring a temporary pause, but trust has been fractured:
- The employee now knows their value is negotiable
- You’ve shown you can pay more — so why weren’t you?
- Resentment can build if promised changes don’t materialise quickly
From their perspective, accepting a counteroffer is like agreeing to stay in a relationship that’s already ended.
What It Signals to the Team
Accepting a counteroffer doesn’t just affect the individual — it sends shockwaves through your culture:
- Colleagues may feel devalued or question fairness
- Team members could see resignation as a negotiation tool
- Leaders may lose credibility if decisions are reversed under pressure
This undermines the stability and trust you’ve worked to build.
Case Study: A Cautionary Tale
An IT company in Sydney offered a counteroffer of $20,000 more per year to a software engineer who’d resigned to join a competitor. The employee stayed — for three months. Then left anyway.
The result?
- Disrupted team projects
- Strained internal trust
- Wasted onboarding and retention investment
- The role was vacant again — with additional reputational risk
What to Do Instead of Counteroffers
1. Exit Interviews That Actually Matter
Rather than convincing people to stay after the fact, dig deep into why they’re leaving — then fix the problem for future talent.
2. Build a Real Retention Strategy
One that includes:
- Career mapping
- Regular stay interviews
- Compensation benchmarking
- Manager effectiveness reviews
3. Strengthen Your Talent Pipeline
Having pre-qualified candidates, clear role handover templates, and a lean onboarding process reduces panic when someone resigns.
4. Backfill Before Desperation Sets In
Hiring out of fear is dangerous. Engage a recruitment partner early to build proactive capacity, not just plug gaps.
Who You Hire Next Matters More Than Who You Lose
When done right, replacing someone who wants to leave can be an opportunity to:
- Reassess the role’s scope and KPIs
- Inject fresh energy or skills into the team
- Realign cultural fit and motivation
Staying focused on what your business needs next — rather than clinging to what it’s losing — creates better long-term outcomes.
Partner With the Right Recruitment Experts
Working with a recruitment firm that understands more than CVs is key. Services like Ingenious People go beyond matching skills — they assess alignment, risk appetite, and career motivations to ensure you’re hiring people who want to grow with you, not leave you.
A counteroffer might feel like damage control — but prevention always beats reaction.