Should you make a counter offer when your employees receive another job offer?

Zig is an engineer working for manager Tim. Zig is not a top performance but an above average one. For various reasons, Zig like other engineers in the company is getting paid below the market level.

Zig comes into Tim’s office one day: “Tim, I love working with you and the project. However, company X offers me a job with much higher pay. With my current situation, I must go for it.”

Tim is shocked as he has gotten Zig into a critical project and Zig really loves this new project. Zig is a loyal engineer who has been with the company for over 10 years. Tim quickly rationalizes in his mind that he can’t lose Zig. Even though matching Zig’s offer would make Zig the highest paying employee in his team, Tim sees no other way out.

After some exchanges to understand more about the situation and the offer, Tim: “What if we can match the offer?”

Zig: “I would love to stay.”

Zig gets a bump in compensation. 

Unbeknown to Tim, the news about Zig spread across the organization like wild fire regardless of both Zig and Tim’s swear to keep the matter confidential. 

Employees quickly learn that to get a raise, they can generate an offer from another company and threaten to quit. 

Employees also learn that people get a raise anytime not just during an appraisal review. In other words, they learn that their managers lie to them when stating the company policy that raise can only happen during an appraisal review.

Employees also learn that they could ask for a raise. This encourages politics in the company. The aggressive employees would ask for a raise and would not back down till they get what they want. The less aggressive ones might ask but would not get it. Quickly, people learn that they must be vocal and aggressive.

While managers can save someone from leaving from matching the offer, it has a consequence that is difficult to deal with in the long run.

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