Why Counter Offers Fail to Keep Good Staff
A good employee hands in their resignation, the business scrambles, and puts together a better offer that convinces them to stay. It feels like a win, but research from Harvard Business Review tells a different story. Roughly half of employees who accept a counter offer leave within twelve months anyway, even though the pay rise worked and the title may have changed. Why counter offers fail so often is not a new question. In fact, the answer goes back to work done by psychologist Frederick Herzberg in the late 1960s, and it still holds up today.
Two Different Questions, Two Different Answers
Herzberg separated what makes people dissatisfied at work from what actually motivates them, because he found they are not opposites on the same scale but are driven by entirely different factors.
Pay, job security, and working conditions are what he called hygiene factors. Get them wrong, and people become unhappy; get them right, and you simply remove a source of irritation, rather than creating motivation. In other words, hygiene factors stop people leaving for the wrong reasons, but they do not give people a reason to stay for the right ones.
The real motivators are different: growth, achievement, recognition, and a sense that the work actually matters. These are the things that make someone want to build a future inside a business, rather than simply tolerate being there.
This Is Why Counter Offers Fail to Fix the Real Problem
A counter offer works on the hygiene side of the equation, patching the immediate irritation, usually pay, and buying some short-term relief. But it rarely touches the motivators. The reasons someone started looking elsewhere, feeling stuck, feeling unseen, not being able to picture where the role leads, are all still there once the excitement of the new number wears off. In short, the hygiene has been patched, but the underlying cause has not been addressed.
This is why counter offers fail to solve the real issue so often: without a change to the growth path, the recognition, or the sense of purpose behind the role, the same conversation tends to resurface within a year.
People Do Not Leave a Destination
Businesses that hold onto good people long term are rarely the ones offering the highest wages. Instead, they tend to be the ones with a clear direction, a path that team members can see themselves growing into, regular recognition, and a genuine sense that the work contributes to something worthwhile. As a result, people are far more likely to stay when they can see where things are heading, and far more likely to leave when the role starts to feel like a dead end, regardless of what it pays.
That points to a useful discipline for any business owner: think further ahead than the next twelve months, particularly for the people you most want to keep. After all, a team member who can see a two or three year path ahead is a very different proposition to one who is simply waiting to see what next year’s pay round brings.
A Question Worth Asking
If you are ever weighing up a counter offer, pause and ask what has actually changed: is it the number, or is it the underlying cause that prompted the person to start looking in the first place? Likewise, if you are losing good people more broadly, reaching for the pay lever first is rarely the fix it appears to be.
The strongest retention decisions are not reactions made under pressure, when someone is already halfway out the door. Instead, they are built well ahead of time, around a clear sense of where the business, and the people in it, are heading.
If growth planning, remuneration structure, or building a longer-term view for your team is something you would like to think through properly, we are happy to help. Get in touch with the team at MBP to start the conversation.