Should I make a counter offer to keep an employee?

Productivity. People Management

In today’s competitive job market, retaining valuable talent is a top priority for businesses. When a key employee receives an external job offer, many employers face a crucial decision: whether or not to make a counter offer to persuade the employee to stay. According to a recent CIPD survey, 40% of employers have resorted to making counter offers in the last 12 months.

While counter offers can seem like an effective solution, they come with both advantages and drawbacks. In this blog, we’ll delve into the pros and cons of making a counter offer to an employee in the UK, helping you make an informed decision.

Pros of Making a Counter Offer:

  1. Retaining Top Talent: One of the most significant advantages of a counter offer is the potential to retain a skilled and experienced employee who has contributed positively to your company. Losing such talent can disrupt team dynamics, productivity, and institutional knowledge.
  2. Cost Savings: Replacing an employee involves recruitment costs, training expenses, and potential productivity loss during the transition. Offering a counter offer might be more cost-effective than recruiting and training a new employee.
  3. Shorter Learning Curve: An existing employee is already familiar with the company’s culture, processes, and workflow. This means they can quickly resume their duties without a learning curve, helping maintain stability and productivity.
  4. Employee Morale: Making a counter offer shows your employees that you value their contributions and are willing to invest in their well-being. This gesture can boost employee morale and strengthen their loyalty to the organisation.
  5. Preventing Competitor Gain: If a competitor is attempting to lure your employee away, a counter offer can help prevent them from gaining a competitive edge by acquiring your talent and potentially sensitive company information. This is a very good reason for making you have good restrictive covenants in your employment contracts.

Cons of Making a Counter Offer:

  1. Temporary Solution: Often, counter offers provide only a temporary fix. While they might keep the employee in question for a short while, the underlying issues that prompted the job search might persist, leading to them leaving at a later date.
  2. Negative Precedent: Making a counter offer might set a precedent that employees can use external offers as leverage for higher salaries. This could create a culture of employees regularly seeking better offers elsewhere to secure raises.
  3. Distrust: Offering a counter offer might lead to mistrust among other employees who didn’t receive similar offers, potentially causing feelings of inequity and resentment within the team.
  4. Future Career Development: If an employee has sought opportunities outside the company, it may indicate a desire for career growth that your organization cannot provide. Even with a counter offer, their long-term career development might be hindered.
  5. Reduced Engagement: Once an employee has explored external opportunities, their engagement and commitment to the company could already be compromised. A counter offer might not fully restore their previous level of dedication. You can read our previous blog for ideas on increasing engagement.


Deciding whether to make a counter offer to an employee requires careful consideration of the specific circumstances and potential consequences. While counter offers can be effective in retaining valuable talent and saving costs, they should not be seen as a guaranteed solution. Addressing the root causes of an employee’s decision to explore other options is essential for long-term retention and overall organisational health. When contemplating a counter offer, strike a balance between valuing your employees’ contributions and ensuring the best interests of the company and its team dynamics are maintained.

As an outsourced HR consultant based in Edinburgh, and operating across the UK, Albany HR can help you make good decisions on what to do in these circumstances. We can also help with:

Please get in touch for a chat about how we can support you, 0131 364 4186.