Never Make Counter-Offers

business 4 December 2011 | 71 Comments

At many companies, the way you get a raise is to quit. As a matter of policy. I am not exaggerating.

The way it works is this: Management figures they’ll save money on salaries by leaving it up to the employees to negotiate for their own pay. So they don’t give raises until someone tries to negotiate for one. Naturally, anyone asking for a raise is viewed as having no negotiating stance unless they have a credible claim to quitting, so raises are only given as counter-offers, generally matching or slightly beating the offer the employee has elsewhere. Management figures as long as they always match what someone is offered elsewhere, the employee will always prefer to stay, because that’s easier to do, and salaries are kept to the absolute minimum they can be with no real risk.

This is completely insane.

Think about what this does to employees. The most devoted, upstanding employees are the least paid, and the most conniving, disinterested ones are paid the most. Sooner or later the lower paid employees are either going to get the feeling that all the necessary secrecy around salaries means they’re getting screwed (because, um, they are) or find out that someone got a raise by quitting, and go about doing it themselves. Maybe in the process they’ll find a job which they realize they actually like better. They have no reason to feel appreciated in their current job, after all. And there’s a good chance they won’t even listen to the counter-offer, much less take it. Soon the whole workplace is completely toxic, with everybody either underpaid, having one foot out the door, or being one of the assholes who views periodically finding a job offer you don’t plan to accept just to get a raise as normal and reasonable.

You should never make counter-offers. Ever. If an employee tells you they have a job offer, tell them that if they take it then you’ll wish them well, and stick to it. Don’t send the message to the rest of the employees that you’ll reward them for shopping themselves around, and don’t hang on to people who don’t want to work for you.

So how should you retain employees? Have clear and consistent salary guidelines, and regularly give raises to people who are outperforming their pay level. Don’t be a tight-fisted, short-sighted moron.

johnny cash ring of fire mp3 download
car rental in chicago
new york limo service
interior design in new york
attorney nyc
new york city computer repair
cosmetic dentist new york
new york limos
new york carpet cleaning
limo san diego
Phoenix web design
limo los angeles
los angeles cosmetic dentist
limo service chicago
limo chicago
limo service san diego
divorce lawyer san diego
plastic surgery in san diego
plastic surgery san diego
atlanta carpet cleaning
atlanta insurance

  • http://twitter.com/abditum Griffin Boyce

    Could not agree more. These types of policies create unnecessary workplace drama as well as just being inappropriate.

  • http://wizims.com Wizims

    I totally agree..

    In fact, it’s better to give them a good salary from the beginning as this will make them appreciate and afraid to loose their job, and as a result, working better :)

    And of course this must be combined with the “raises for results” thingy..

  • Roxanne Wong

    Now explain tenure in such an eloquent way…

  • http://www.tammycamp.com Tammy Camp

    Tell it like it is Bram!

  • Christinasu79

    If the world were run by sociologists and social workers in regards to running companies and the treatment of employees, your scenario would be entrenched in every company. If the world was run by people with Asperger’s the world would be full of respect and peace.

    There aren’t any high status men who are open about Asperger’s which is very disappointing but I guess that’s what Aspeger’s comes with, but thank you for being open about it. Many men like my hubby live their lives hiding it and I think it’s cause there’s not enough people like you who embrace it. But I always wonder why there are so many Aspie men who are brilliant but can’t hold long time careers, or even jobs? I know it’s part of the symptoms that effect employment but would you hire Aspie men, when most of them like yourself only finished college and didn’t go to University and as long as they’re in the IT field?

    I love your life story because it was very similar to mine. I had worked with boys with AS in my field placement, and I always knew something was different about my hubby but it was these boys who made me realize that my hubby may have it. So I asked him about it and took online tests. This was the start of my struggle with him to seek a diagnosis. We don’t have kids yet because he is afraid of having kids like himself because he may not be able to handle it since he only has enough energy to deal with me. I wonder how your wife is? I’ve had such a difficult time and it has helped to find another wife who just gets it. I use online groups but because I’m such a social creature and I do a lot of writing and planning with my hubby that all I want is personal real life support, not cyber support. I love my hubby very much but I think as your wife may understand, that it is very draining to be always running on an empty gas tank(emotional support or affection from hubby). He tries very hard but it’s still very hard. Even trying to boost his self esteem to stick with a career so that we can save up money to start a family has been hard. Your prob not even going to read this or your wife may not either, but when your in this type of relationship you become desperate for answers and solutions, and validations, and even a hug.

    My hubby is very smart and talented but others never see this or they take credit from him and use it for their advantage. It isn’t fair. My dream, even though it’s very unlikely to happen is that I make millions like you, and I will hire as many Aspie men as I can and create an environment that they can excel in rather than give them anxiety in. Another would be to one day meet you and your wife. I wanted to meet Bill Gates but I don’t like that he is not open about AS, as people speculate that he has it. I don’t know if you ever made friends with another Aspie man who is open about it,but it’s a feeling you’ve never felt in your entire existence, and it’s the most relief one will ever feel in their entire lives. My connection with the wife who’s partner has Asperger’s was so wonderful because I felt relief as well. She’s the only person I’m able to tell the truth to and I don’t have to fake being happy. She gets that I had a really bad incident with my hubby and I never have to reason or argue with her about it cause she knows why.

    I also wonder why most Aspie men never find out they have until they’re fully grown adults? I don’t understand how parents never thought something was different when these men children, when it’s so obvious to me when I work with children, who may or may not be on the spectrum.

    Anyways, I wish you a lot of success, and I hope you become more and more successful so that more Aspie men can look up to you and more of society will have more respect for Aspie men.

    • Luc Patry

      I think all humans are equal. Your hubby is too. I am glad Bram Cohen is surviving. I am sorry Christinasu79 (Replying to Christinasu79) have hard time. Bottom line: Nothing wrong with your hubby. Nothing wrong with my wife who has cancer. Nothing wrong with my son who is autistic (not AS…, that is my son does not have Asperger Syndrom, he is autistic (and smart too, I believe)) But there is something wrong when gifted people ( that might include me also) do not even get a chance to earn a living.

      luc.patry@gmail.com

  • AJ

    This only works if every employee is rational, though. Unless the intent was to talk about “in a perfect world…”.

    • http://brividocosmico.wordpress.com/ La Joe

      AJ..sorry but the matter is about amployers and not employees!
      It’s up to the employer to direct the employees and to create some conditions ( = stimulate real good workers and not so much the other ones )
      And I’m not talking about beeing “human” or good-natured/benevolent…I know that bussiness is like a kind of war. But it really is about bussiness… How do you think a non-motivated employee would treat a customer? And how a willing and motivated amployee instead?
      If the employers want to have a good name on the market, and be competitive should lean on the right employees as well, in order to gain
      customers and so on.

      (excusme for my english, I’m not native speaker)

  • Dan

    Sounds like a job with the Canadian Government. Regular raises; clear salary guidelines, and bonuses (at the executive level). Of course we only got all that by having a union. Otherwise, the government (particularly the current Conservative government) would be out to screw employees just as badly as in the private sector.
    By the way, my salary is public, and appears on this page:
    http://www.tbs-sct.gc.ca/pubs_pol/hrpubs/coll_agre/pa/pa08-eng.asp#toc288725025
    I’ve worked in both the public and private sector, and things are much nicer in an office where everyone knows what everyone else makes (and nobody really cares; we just do our job)

    • lekoshe

      The author suggested linking pay raises to overperformance. I’ve never heard a union suggest that. Nor a western government. Please do followup if the Canadian government’s pay agreement is actually different.

  • http://landley.livejournal.com/ Rob Landley

    I’ve never taken a counter-offer (and I’ve been offered several). If I decide to leave a place, I do so. By the time I’m telling my boss that I’m leaving, the decision has been made, past tense. (Telling my boss “I’m unhappy” is different from telling him “I have made the decision to leave”, although one can lead to the other.)

    If I was motivated by money I’d be willing to consider rattling my leash as a negotiating tactic, but more than once taken a pay _cut_ for more interesting work. Money is really like a chronic disease, my financial situation is something that _intrudes_ on what I want to do, and prevents me from doing it unless I keep it treated. Either the work is interesting, or it isn’t what I want to do with my life. (You turn 40 at the same time regardless of what you’ve been doing, the question “was it worth it” is not a dollar value question.)

    I suspect all real geeks are like this. Being paid very well to sit in a cubicle with nothing to do (been there, quit that) is low-grade torture.

    • Tessa

      I wouldn’t be surprised if most or all real geeks have that *motivation*, but when you have children to support, sometimes you find that you can’t change jobs just because you find something boring.

      • Tony Nassar

        Tessa, I agree, when I hear younger geeks deride my own compromises (I have two small boys; compromises are inevitable). OOTO, I know how things are in geek world: If you’re not up to date, you become expendable, and I’ve quit boring jobs *because* of my family. What I mean is that I don’t want to be expendable when I’m 56. I’m 50 now, and I don’t tolerate boredom any better than I did when I was 22.

      • Rhousedorf+bram

        Second this.

  • aravenel

    I completely agree. Pro-active salary increases (not just the standard inflation raise…) go a long way towards showing employees that you value them.

    On the other side of the negotiation, employees who have their current employers come back with a counteroffer after tendering their resignation should think long and hard before accepting that counteroffer. 9 times out of 10, the gain in happiness from the raise would be short, and a few months later, you’d be out on the street looking to leave again.

  • Rik VanBeer

    Wow, this is exactly what happens in Brazil as well. Now I see it might be a worldwide issue. I don’t know if I feel good because it’s not only my country or feel bad for the same reason.

  • http://twitter.com/JimMcKeeth Jim McKeeth

    I used to work in the Banking industry, and it was even worse there. The industry standard was that the salary offered to new employees was more than the current employees, and if you came back to a bank you previously worked for then you would retain your original seniority.

    The result was people would change which bank they worked for every 5 years or so. It was frustrating as an employee when someone would get hired back and jump ahead of you in seniority for vacation day selection, etc.

  • Guest

    Unfortunately, I think so many of us get/have been conditioned to this type of asshole behavior because, its the tight-fisted, fat-walleted assholes usually running things, that even if you land a job at a place that doesn’t work like this, you expect them to and stick to the old habits. Can’t get ahead in this country by getting a job at a big company and working your way up through the ranks for life anymore. All that shit got outsourced to China and India. Here’s hoping my view changes at my next gig.

  • Dave

    I completely agree … if you aren’t appreciated to begin with, you never will be. The same is true of other benefits as well. I recall taking my skills to a company in Switzerland where I was offered a job with a comparable salary, but with 5 weeks of vacation instead of 2, and the company shut the doors on the weekends because that was “family time”. It was a shockingly different attitude towards keeping employees happy than anything I had ever experienced.

  • http://brividocosmico.wordpress.com/ La Joe

    sad but true!
    My workplace was so toxic that I decided to quit and started university. No counter-offer was worth staying there!
    In a certain way I have to thank them….if it wasn’t that toxic I would never have understood what I really wanted to do. It was a good lesson after all.

    As you may imagine, I don’t have kids or family etc. I’m on my own, and that allowed me to do my choice. But…If I had stayed there….I would never had the chance to even think of having some of those things in the future (I just say, that with public financial support for student and summer jobs, I have the same money of my old regular job….)

  • Silvermannn

    Its hard to know how much to pay. Sometimes the only way to know the market value of an employee is when they shop their value.

    • redditor

      That means you are completely incompetent as a manager.

    • redditor

      Just to clarify, if the only way to know what an employee is worth to your business is to have a wiser employer try to hire them out from under you, then you clearly are incompetent and are simply burning through your gullible investors’ money until your life collapses in a pile of lawsuits.

  • Squelch

    sounds Like you are trying to say that the communists/military has it right when it comes to “pay grade”

    • pulegium

      Yes, because then you get paid for what you’re capable of doing and not your negotiation skills. If I hire a builder, I’m not interested in his/her negotiation skills. All I wan’t is him/her being capable and skilful builder. And I want to pay for just that, nothing else.

    • http://www.facebook.com/bram.cohen Bram Cohen

      What part of ‘regularly give raises to people who are outperforming their pay level’ is so difficult for you to understand? Nowhere have I said that meritocracy is a bad thing.

  • onomojo

    And sooner or later you’ll be standing around in an empty office

  • Guest

    Nice sentiment, and I agree, but the morons who do this will never read this, and even if they do, they won’t understand what you’re talking about. *sigh*

    Just keep on truckin’ Bram!

  • WindBreaker

    After three years of salary freeze (my company was hit hard by the housing bubble bursting), HR announced a new compensation policy that was redesigned from the ground up to encourage, reward, and give incentive to people who worked hard and did a great job. Since I’ve always been that kinda guy, I was happy to hear that.

    Long story short, they slotted us into job clusters, and assigned a min, max, and mean for each cluster. My current (frozen, remember?) salary was several thousand dollars above the max for my cluster. I asked what that meant for me. The answer was disappointing, if abundantly predictable: I would receive no pay increase until the industry caught up with my salary.

    #RichPeopleProblems, I know. I am very generously compensated even as it is. But I make good money because I have been able to convince a lot of people that I’m pretty good at what I do. Go ahead and tell me that because I made the mistake of rising too fast, I have to pay for it now by cooling my heels for however long it takes others to make what I make, but don’t smile at me and tell me that that’s supposed to encourage, reward, or give me incentive! If I wanted smoke blown up my heinie, I’d be sitting in my Aeron with a pack of Luckies and a length of flexible tubing.

  • abalone

    I love it when intellectual property thieves lecture others about how to compensate intellectual property creators.

    • Leo Mata

      this is like calling car manufacturers murderers because a lot of people die by getting run over or in accidents… This guy isn’t the thief.. he created an awesome technology, all the other cheap morons use it for thieving. get your facts straight

    • LindaM

      How is a man who created the most powerful digital distribution mechanism in the world a thief rather than a creator?

  • http://www.followupboss.com/ Dan Corkill

    I forget the exact quote, but yep you don’t get paid more sitting in the same seat.

    The first raise I negotiated was exactly like that:
    I want a raise
    I need to think about it, work it into budgets etc (stalling tactics)
    I’m quitting unless I get one by next week.
    Raise granted (why didn’t I do this sooner)

    • piyushnp

      “why didn’t I do this sooner” me too!!

  • http://sieveandsand.com/ Roger Mugs

    “Don’t be a tight-fisted, short-sighted moron.” so applicable to soooo much more than just this topic

  • http://www.facebook.com/nalybuites Michael Wright

    I totally agree. When I left a big consulting firm and they tried to make a counter-offer, I told them that it would be a waste of their time and mine to even put one together. My reasons for leaving weren’t about compensation or benefits, but rather issues that I had brought to management’s attention multiple times to no avail. Most good employees and workers just want to be treated fairly, and that doesn’t always mean higher compensation. Most management doesn’t realize that.

  • Gautam

    This is quite common in the IT sector of my country, India, too. People hop jobs like anything, they won’t mind changing 4 to 5 jobs in 2 years just to have a nice pay.

  • Guest

    I currently work at a company that follows this exact same salary guidelines. (I feel motivated to disclose the name of the company, this comment might then show up on Google searches and might help future candidates to not accept job offers from them) If they cannot find new people, they would probably value the employees that they have much better. What do you guys think? Should I disclose the name of the company?

    Because of these policies, employees are unhappy, many leave every year and they have a hard time finding good resources.

    • Guest

      Would it be:
      strlen(name) == 3
      name[0] == ‘I’
      ?

      • Guest

        strlen(name) == 12
        name[0] == ‘C’

        An environmental services company in the US. Headquartered in the state of MA.

  • Michael Langford

    You’ll also underpay your female employees on average (who typically negotiate less). You don’t want audits showing a 70 cents on the dollar female to male pay ratio per position.

  • GB

    The problem is more serious when there are employes on H1 visas. They cannot just quit and join a company because of their visa status. This is how employees get stiffed by their managers who know for sure that the H1 visa employee has nowhere to go. So, the average salaries are held down artificially because of these visa holders – the poor sods.

  • Tom

    Bram, the right solution (as most larger companies have figured out) is to do annual or semi-annual reviews, and be aggressive about raises and compensation for your top quartile performers.

    Honestly, I don’t agree with your statement about management trying to minimize salaries of good employees (at least at better companies.) Management tries to minimize _overall compensation costs_ relative to productivity. That’s not the same thing. One of the biggest drivers of extra compensation costs is _turnover_, especially when it costs on the order of 50K+ to hire a new employee (not just comp, but time spent by other employees interviewing candidates, etc.) It’s not in management’s interest to have below-market comp if it means more turnover than necessary, because it’s a lot more expensive to replace employees than keep them.

    Does that mean a company never has to match an offer, or try to adjust someone’s job role so that they enjoy their work more? No, because no system is perfect – there are going to be times when even the best comp system fails to recognize the marke value of a good engineer. Setting a hard and fast rule that you won’t match offers, or that you won’t come up with alternate plans to answer outside offers, just cripples your own company and leaves you with the folks nobody else wants to hire.

  • lekoshe

    Here’s the skinny. Great people aren’t motivated by money. They like to get paid, sure, and become ornery when they feel underpaid. But a smart policy is to pay your people enough that the whole discussion around pay is off the table, and the discussion about motivation is about the job.

    On the other hand, if your policy wasn’t to hire great people, then your company is already in the death spiral; you just don’t know it yet.

    • Programmer

      Unfortunately, most managers stop at “aren’t motivated by money”. Management loves living in a dream world.

    • http://karlo.org/ Tom K.

      The funny thing about the discussion around pay is that there’s really never so enough you can pay people that it goes off the table. (Look at banking.) The only way to make it go away is by making work more rewarding / interesting, which is possible sometimes, but not always. At the end of the day, people still have mortgages to pay, etc… enjoyable work is great but it won’t fix your leaky roof or pay for your kids’ college.

      • lekoshe

        You are just flat wrong. I only need one counterexample and I can quote it from personal experience: I’ve worked in a product development environment where pay was extremely generous, standards very demanding, the team quality universally high and the entire motivation structure was about peer respect, performance and satisfaction. The company was very successful and is still around.

    • http://www.skmvasu.com/ skmvasu

      Unfortunately most of the companies DON”T care about what they’re hiring. True story!

  • an

    liked your last line.

  • John Nicholas

    you are asking to never have a pay raise again in your life. I hope y our employer reads this and holds you to your ‘logic’. Just because it is consistent isnt a reason to be proud.

  • Eugene

    If you wouldn’t written the last paragraph, I would disagree with your article altogether. With it I couldn’t agree with you more.

  • Ngqmusic

    Have seen you seen the youtube vid with Dan Pink talking about motivation Bram?

  • babass

    First time I read your blog and I already like it !

  • Tazan

    When I leave I’m always offered more money, sometimes a lot more. But at that point it’s too late. I’m not going to tell them until I have a firm start date at the new job. If I’ve said I’m going to be at the new job on a certain date I will be there.

  • http://profiles.google.com/elitescripts2000 Matt Kukowski

    If you can program, then start your own business. That is what I did. I run 1 Linux server, code everything for automation and I am the boss. The downside to complete freedom is that it can get boring, due to loneliness and it can be challenging to stay motivated after some years of success.

    But, nothing is worse then coding your heart out, only to be fired or let go knowing all your code is now some corporate stock trading board member’s.

  • Guest

    neat and fair.
    however the counteroffer thing is mostly applied and grew in industry like lawyers, brokers, etc… its’ all their fault.

  • http://www.facebook.com/profile.php?id=1480582681 Bill Cismar

    It has always been my policy not to consider counter offers when I give notice. A counter offer is little more than an admission that the employer has not be compensating/valuing me fairly. My mother wisely taught me, nothing you get by virtue of a threat is truly yours.
    So either they’ve been stealing from me the whole time, or I am positioning myself to steal from them.
    I’m no thief and I don’t work for thieves.

    • Cory Gross

      Well said. Your mother is a smart woman.

  • Dan Seipel

    oh, so you expect to be paid for performance? so do musicians.

  • yz42

    Labor economists have entire theories about this stuff. One hypothesis is that if someone accepts a job during a recession, there will forever have a lower income regardless of whether or not the economy actually gets better. They would have to “restart” the clock by going back to school or pretending to want to quit.

  • JP Forbes Dupont

    As a business owner sometimes you don’t know until you know. Sometimes you know but you can’t act. But most often 20 percent of your people are responsible for 80 percent of the firm’s success. Clear and consistent guidelines can be bad business.

  • erikpp

    The problem is that an outsider has made the counter-offer already. Not making your own counter-offer won’t change anything to that. The fact that someone leaves for a better outside counter-offer, leaves behind the same, devastating conclusion: it seems to make sense for this person to move on in order to do better. If another company can pay more, it may also mean that their projects make more sense, and that the person will be working on more important things than at the previous company. There is nothing more devastating than the conclusion that the company is trying to hang on to resources that would be put to better use elsewhere.

  • Lincoln

    Go make a note of this on glassdoor.com and save someone else the pain. I’ve been there and glad to not be the only one who does not want to fight for more. Companies who give small regular raises to at least combat inflation enable this stuff to be brought up in a less adversarial way.

  • RedbelleATL

    Good article…I wish my employer would take this advice. Sadly they don’t. It seems that only the threat of their good people leaving is the only way to get their attention not the quality of their work. I have outperformed so many times that instead of a raise I get nominated to clean up others messes and was held back from a promotion within the dept because me being where I am makes their lives easier. I totally agree with your stance its common sense something that a significant portion of the upper mgmt in my organization doesnt seem to have

  • http://www.facebook.com/profile.php?id=100000191843449 Yort Llan

    actually I think having employee’s do their MANAGER/SUPERVISOR’s review should be allowed. So many times have I seen upper management give reviews to MANAGER’s or SUPERVISOR’s never having worked with them. The immediate workforce should have a say with REVIEWS especially when it comes to PAY/SALARY.

  • Magnum

    What about sitters? I mean what if the people who are apparently loyal are just warming and not really contributing while people who actually try to jump out are the contributing ones? Happens in many cases I’ve seen. Of course the solution would be for mgmt to identify and compensate such people well in advance but they never do for reasons I don’t know. So, they end up with the counter-offers arm lock. IMHO.

  • http://devtools.korzh.com/ devtools.korzh

    Never did and would never do, I guess.