When a high-performing employee hands in their resignation, most leaders immediately panic. The knee-jerk instinct is to present a counteroffer on the spot to stop them from walking out the door. Recruitment agencies in Canada see this scenario play out weekly. While the instinct to fight for your people is natural, counteroffers carry real risk.
Should you make a counteroffer? The short answer is that it depends on the circumstances. Sometimes a counteroffer makes strategic sense. Other times, it simply delays an inevitable departure. We’ll talk about when it makes sense and when it’s time for you to walk away.
When a Counteroffer Makes Sense
Counteroffers work best when the root cause of the departure is straightforward and transactional, rather than cultural or interpersonal. Here is when making a counteroffer makes sense:
- It is strictly a compensation issue: Market rates in Canada shift quickly. If an exceptional employee received an offer above market and your internal salary range simply lagged behind, adjusting their pay to match their true market value is a fair fix.
- They are indispensable top talent: If the individual holds critical institutional knowledge, manages key client relationships, or drives vital revenue, an immediate counteroffer buys you stability and time.
- The employee has genuine alignment: When a team member loves their role, respects leadership, and aligns with your corporate values, a counteroffer can successfully resolve an isolated gap in compensation or title.
The employee perspective: Should You Accept a Counteroffer? Maybe. Top Things to Consider.
When You Should Let Them Walk
Throwing money at a deeper problem rarely produces long-term retention. Here are situations when you should allow the employee to leave:
- The underlying issue is non-monetary: More money cannot fix a toxic team dynamic, burnout, lack of career progression, or a poor relationship with management.
- Trust has eroded: If an employee used an external offer purely as leverage, the employer-employee relationship is often fundamentally broken. Trust is not easy to rebuild.
- You risk setting an unhealthy internal precedent: Word travels fast. If your team realizes that securing an outside offer is the only way to get a promotion or raise, you create a reactive, counterproductive culture.
- The departure is only delayed: Industry data consistently shows that most employees who accept a counteroffer end up leaving within 6 to 12 months anyway once the initial pay bump wears off.
Related: 17 Signs It May Be Time to Let an Employee Go
Assess Every Situation on a Case-by-Case Basis
There is no blanket rule for counteroffers. Before making a move, pause and evaluate the real context behind their decision:
- Uncover the real ‘why’: Have a candid, honest conversation to determine why they took external calls in the first place.
- Evaluate team equity: Ensure that matching an outside offer will not create pay disparities with other high performers on the same team.
- Audit your retention strategy: If your best people are regularly getting poached, your compensation bands or career pathways need a proactive review.
More recruiter insights: Don’t Lose Another Candidate to a Counteroffer, Do These 4 Things Instead
A thoughtful counteroffer can occasionally save a vital relationship, but building an environment where your best talent never feels the need to look elsewhere will always deliver better results.
