Glossary · Compensation
Counteroffer
A counteroffer is a revised proposal (usually more pay, a promotion, or improved terms) made by a current employer to keep an employee who has resigned or received an external offer.
Counteroffers are common at senior level but statistically fragile: the reasons for leaving often remain. Handling one well means being honest about what actually prompted the move.
In practice
A counteroffer is triggered by a resignation or by a competing offer, and can arrive in the same conversation or shortly after it. Assembling one means pricing the cost of replacing someone — the search, any notice to be served, the time to full effectiveness — against the cost of keeping them, a calculation that draws in the line manager and HR alike. The terms put on the table may be ones the employee had already asked for; what has changed is the point at which the request is being answered.
Whether a counteroffer resolves anything depends on what prompted the move. Where the reason was pay, the terms can meet it directly; where it was the remit, the reporting line, or the person above them, a revised package leaves that untouched. Accepting can also change how the employee is seen internally, since the employer now knows they were willing to leave. On the hiring side, a withdrawal at offer stage restarts a search that had reached its final candidate.
Common questions
- Why do employers make counteroffers?
- Employers make counteroffers when the cost of replacing someone looks higher than the cost of keeping them. That calculation includes the search, any notice to be served, and the time a successor takes to reach full effectiveness. A counteroffer can also hold a seat while a successor is identified. Which of those weighs most varies with the role, the timing, and who else could cover it.
- Is a counteroffer the same as a pay rise?
- No. A pay rise is granted through a normal review cycle; a counteroffer is made in response to a resignation or a competing offer. The money can be identical, but the trigger is not, and neither is the record: a review documents performance, while a counteroffer documents that the employee was ready to leave and that the employer chose to match.
- What can a counteroffer include besides more money?
- A counteroffer can include a title change, a wider remit, a different reporting line, additional equity, a budget or headcount commitment, or a promotion at the next cycle. Terms of that kind speak to reasons for leaving that money does not reach. They also depend on the person who agreed them staying in post, which is why they are sometimes written down rather than left as an understanding.
Placed, not posted.
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