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It's always puzzled me why many tech companies seem so reluctant to give counter-offers to departing employees. Trying to pay as little as possible and not easi

by mppm 2y ago

It's always puzzled me why many tech companies seem so reluctant to give counter-offers to departing employees. Trying to pay as little as possible and not easily giving raises, even to their most productive employees, is at least somewhat understandable. But if a valuable employee is about to leave, possibly taking some critical knowledge with them, you'd think that a 50% raise should be on the table out of pure self-interest. So why doesn't this usually happen? Is it just part of keeping up the charade (a big raise is a tacit admission that they have been underpaying massively)? Is it to increase the barrier to negotiations (you have to actually leave rather than just get an offer)? Is it because HR people get more points for bringing in "new talent" rather than keeping the current workforce? Or is it just that neither HR nor management have any clue who their critical employees are, so they are unable to prioritize?

Sebb767 2y ago
I think a lot of your points play a role, but a major one is that when the employee is handing in his resignation, it's likely they have mentally already closed that chapter in their life and won't remain happy or productive. At best they leave soon anyway, at worst you're now paying a premium for worse work.
- rwmj 2y ago
  For the company that might still be a worthwhile trade-off. Gives the company time to train up replacements and avoids an immediate cliff-edge.
Arisaka1 2y ago
I saw someone explaining how they would never accept a counteroffer because it proves how the company was fine with not giving them a raise they seemingly deserved until they finally found it somewhere else.
rollcat 2y ago
Perhaps it's because the ones who stay always pick up the slack, thus a single employee doesn't actually matter that much? Maybe it's because we still feel too entitled to consider collective action?
michaelt 2y ago
I've made some counter-offers in my time as a manager, but I've never had a counter-offer accepted. For a start: everyone resigns because of multiple factors, and money is of course one of them - but when handing in their resignation, in order to leave on a positive note they'll focus on factors outside of anyone's control. Usually people tell me they're leaving because of something like because they want to explore new challenges, or that they just feel that it's time for a change, or because a shorter commute will give them more time with their kids. Such reasons do not invite a counter-offer. You want to spend more time with your kids? Good for you! I won't try to argue you out of it. For another thing, when someone offers their resignation you only have a few hours to pull together a counter-offer - so on the occasions when I was able to make counter-offers, they were pretty meagre. I always get my team as close to the top of the salary range for their role as I can, so there's no headroom for anything big without getting a bunch approvals for a special exception. And finally, a lot of people who leave get offers that are kinda good, or at least good for their situation. If a kid's leaving my employer, who most people haven't heard of, for somewhere like OpenAI? That recognisable brand might well be great for their career. Leaving to get a PhD? Great, so long as they know what it really involves. And if I wouldn't council them to stay, I'm not going to be able to sell a counter-offer persuasively.
- ttyprintk 2y ago
  Great comment. Side note about PhDs: only some countries generously support you during it. And only some jobs are easier than it. I’ve only found people with multiple PhDs to have gained very related advanced skills.
lacker 2y ago
I think counteroffers in your typical high-quality tech company are generally bad for three reasons. First, you should be giving people pretty good compensation packages. If you're underpaying massively in the first place, then you're going to consistently lose your best employees. Second, you should recognize who the best employees are, promote them, and pay them more. Third, you should be giving people at the same level very similar compensation packages. It will get a little bit off but you want to try to keep things fair. Given these rules, counteroffers lead to trouble. If you have ten equal engineers and one of them is overpaid 1.5x, do you just keep them overpaid by 1.5x the rest of their career as you promote them? Do you keep it a secret from the other ones? Etc etc. Usually when a counteroffer seems like it makes sense you are screwing up one of these principles of a well-run company. Maybe you're underpaying people but also not getting what you're paying for. You're paying 40th percentile pay and getting a 20th percentile team. You give every engineer an equal salary. Then your star engineer gets an offer from Google that doubles his pay. Yeah, then it makes sense to counteroffer. But it would be better to not be in this situation.

by mppm 2y ago

Sebb767 2y ago

I think a lot of your points play a role, but a major one is that when the employee is handing in his resignation, it's likely they have mentally already closed that chapter in their life and won't remain happy or productive. At best they leave soon anyway, at worst you're now paying a premium for worse work.

rwmj 2y ago
For the company that might still be a worthwhile trade-off. Gives the company time to train up replacements and avoids an immediate cliff-edge.

Arisaka1 2y ago

I saw someone explaining how they would never accept a counteroffer because it proves how the company was fine with not giving them a raise they seemingly deserved until they finally found it somewhere else.

rollcat 2y ago

Perhaps it's because the ones who stay always pick up the slack, thus a single employee doesn't actually matter that much? Maybe it's because we still feel too entitled to consider collective action?

michaelt 2y ago

I've made some counter-offers in my time as a manager, but I've never had a counter-offer accepted. For a start: everyone resigns because of multiple factors, and money is of course one of them - but when handing in their resignation, in order to leave on a positive note they'll focus on factors outside of anyone's control. Usually people tell me they're leaving because of something like because they want to explore new challenges, or that they just feel that it's time for a change, or because a shorter commute will give them more time with their kids. Such reasons do not invite a counter-offer. You want to spend more time with your kids? Good for you! I won't try to argue you out of it. For another thing, when someone offers their resignation you only have a few hours to pull together a counter-offer - so on the occasions when I was able to make counter-offers, they were pretty meagre. I always get my team as close to the top of the salary range for their role as I can, so there's no headroom for anything big without getting a bunch approvals for a special exception. And finally, a lot of people who leave get offers that are kinda good, or at least good for their situation. If a kid's leaving my employer, who most people haven't heard of, for somewhere like OpenAI? That recognisable brand might well be great for their career. Leaving to get a PhD? Great, so long as they know what it really involves. And if I wouldn't council them to stay, I'm not going to be able to sell a counter-offer persuasively.

ttyprintk 2y ago
Great comment. Side note about PhDs: only some countries generously support you during it. And only some jobs are easier than it. I’ve only found people with multiple PhDs to have gained very related advanced skills.

lacker 2y ago

I think counteroffers in your typical high-quality tech company are generally bad for three reasons. First, you should be giving people pretty good compensation packages. If you're underpaying massively in the first place, then you're going to consistently lose your best employees. Second, you should recognize who the best employees are, promote them, and pay them more. Third, you should be giving people at the same level very similar compensation packages. It will get a little bit off but you want to try to keep things fair. Given these rules, counteroffers lead to trouble. If you have ten equal engineers and one of them is overpaid 1.5x, do you just keep them overpaid by 1.5x the rest of their career as you promote them? Do you keep it a secret from the other ones? Etc etc. Usually when a counteroffer seems like it makes sense you are screwing up one of these principles of a well-run company. Maybe you're underpaying people but also not getting what you're paying for. You're paying 40th percentile pay and getting a 20th percentile team. You give every engineer an equal salary. Then your star engineer gets an offer from Google that doubles his pay. Yeah, then it makes sense to counteroffer. But it would be better to not be in this situation.