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HOW TO COUNTEROFFER PROOF YOUR OFFERS

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Ben Franklin said “…an ounce of prevention is worth a pound of cure…” It’s an old English proverb (as in “Ye Olde”) that goes back many centuries even prior to Franklin.

Counteroffers are now rampant. One out of every 3 offers involving recruiters (i.e. candidates that were not looking for a job in the first place) are resulting in counteroffers in my office and with our clients.

The only way to prevent a counteroffer from derailing three months or more of search work is to have the right offer presented in the first place. This means the strongest  possible offer in terms of salary denomination, and perks, benefits, hiring/starting bonus etc.  No low balling, no slightly-less-offers, no let’s-test-the-waters offers, etc.

All the ammunition available should be presented to the candidate prospect without having to force the candidate to engage in petty negotiations. A good offer is the best prevention. It’s worth pounds and pounds of cure. But everyone has a different idea of what a good offer is.

Definition of a “Good Offer”

Most offers are presented at percentages that are 10-20% above the recruited individual’s current salary. Many factors weigh in on what percentage increase will be necessary including:

·      Local cost of living

·      Average industry wage for the compensation level being filled

·      Internal HR compensation tiers

·      Scarcity of talent in that particular niche

Offer Formula

Generally speaking, offer percent increases fall into these general ranges:

1.    0-10% = Poor to Fair Offer Increase

2.    10-20% = Fair to Very Good

3.    20% - 30% = Good to Excellent

4.    Above 30% = Outstanding

Most counteroffers are lame and equivalent at tossing a bone out to someone which the original company suspects does not really have the chutzpah to resign in the first place. Since the company suspects the resigning individual is undecided, easily dissuaded, or lacking in follow-through, that individual is likely to be presented with a counteroffer. To the company the candidate is being recruited from, a counteroffer is their  ounce of prevention that is far cheaper than a finding and training a new hire which could take months or years to replicate.

Generally speaking counteroffers are usually anemic. Rarely do counteroffers exceed 10-12.5% of the individual’s current salary. They also rarely work in favor of the formerly-resigning-but-now-changing-his-mind candidate. *See why by viewing this flow chart.  

Here are a few other considerations regarding counteroffers:

1.    They usually come at the expense of next year or year(s) raises.

2.    They can create some resentment internally

3.    Come with other strings/promises rarely carried through by management as once the offer has been rejected, and the risk of departure forestalled, the company is no longer in a bind.

DEFLECTING COUNTEROFFERS

One thing is for certain, the days of a standard ten percent increase-in-salary offer are gone. 15% salary increases have become, in many specialties (see our chart) the defacto baseline in what is now a fiercely competitive job market in many niches. 

If you think you'll get someone now earning $150k to move for $165K (10% more) your offer stands a much higher probability of being rejected or crumbling apart under the pressure of a counter-offer, even if all other items line up correctly. 

See our chart on offer percentage differentialsto determine if your offer is sufficiently above the level of someone's current base salary to withstand the threat of a counteroffer.

What remains surprising to some clients and executives, is when we tell them that offers are being increasingly presented at salaries that are 20-35%, and even 40-50% above someone's current salary --- an upward trend that has accelerated since 2012. 

Keep in mind those percentage rates involve college educated professionals, often comfortable in his/her current job, with rare talent that is usually scarce and involves being recruited away (was not actively looking in the first place).
 

This is yet another reason why a seasoned, experienced, search firm with a twenty year track record of hiring experience, can be highly worth a company’s investment. 

The best way of avoiding and “bullet-proofing” your offer to resist a counteroffer, is to have the percentage increase (The percentage the new offer represents above someone’s current salary) within the “counter-offer resistance range” necessary to deflect a counteroffer.

If counteroffers in a particular niche are commonly no greater than 12%, then an offer that is 20% above the individual’s current salary will be necessary as the “base line”.

OTHER CONSIDERATIONS

Other considerations will also have to line up of course. These include:

·      Annual Bonus

·      Auto allowance

·      Career promotional opportunity

·      New position fulfilling the candidate’s motivating objectives

Nothing will matter in the end scheme of things if the percentage increase of the new offer does not sufficiently exceed the benefits of accepting a counteroffer. The percentage must be 15-20% greater in the currently fierce conditions we’re encountering or all other bets are off.

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BIOGRAPHY

Frank Risalvato founded www.iresinc.comin 1991 and has been placing professional for fees even in the depths of recessions. He later built his www.searchwizardry.comcoaching practice in 2001.

Frank’s recruiter training websiteprovides over 2 hours of COMPLETELY FREE audio and video training --- more than what most “trainers” charge thousands of dollars for.

Check out the “audio download”page. His “Maximizing Search Firm Successrecruiting training bookis the first ever published for the purpose of educating clients on the proper business practices. Frank is reachable at 704 243-2110 and fris@iresinc.com

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