Editor’s note: Tony Beshara’s article was the 4th most popular article on The Fordyce Letter in 2011. It originally ran in March.

Two or three times a month we get a call from a person who wants to leave their job primarily because the counteroffer that he or she agreed to three or four months earlier had, agonizingly, not worked out. Their approach is usually accompanied by an attitude of anger, disappointment, and disgust that they are back looking for a job with more determination than ever. The perceived promises in the counteroffer they accepted didn’t materialize and they are really committed to leaving their job . . . this time.

“Buying” an employee back when they try to resign, a counteroffer, rarely works out, even in the short run. Ninety-eight percent of the time, the employee leaves within six months, and often with more acrimony than the first attempt. Counteroffers rarely work out because:

1. Management makes a counteroffer to solve an immediate problem. You got caught with your pants down. It couldn’t have come at a worse time. You had to do something quickly. You put your finger in the dike. Later, you realize you were blackmailed. You were held up by an employee who was unhappy and leaving. You needed them more than they needed you. You wake up and realize you were “managed!” And you are damn mad about it!
2. The relationship that you had with this employee is not the same anymore. This employee, in essence, fired you and the company. Or, at least, tried. You and your company, as with anyone else, don’t like being fired. It dawns on you, a few days after your counteroffer was accepted, that this person doesn’t give a flip about you or your company. You did what you had to do to hang on to them, but, we are not “all in this together” any more.
3. Money and title, the two most popular tools used in a counteroffer, are temporary. Most of the time, the adjustments you made to keep this person are cosmetic and will rarely overcome the underlying reasons as to why the person wanted to leave in the first place. Your company, the job, personalities, etc., may have been given a couple of minor changes, but the underlying nature of your company hasn’t changed. After the “glow” of the importance of money wears off, your employee is mentally and emotionally right back where they were before.
4. Now that the “tail” has wagged the dog, everyone in your company, in spite of what you think, knows what this person did, and it is just a matter of time before others are going to try it in their own way. You and your company have lost the respect of the employees who are aware of the counteroffer. The fear of this happening again is driving you nuts.
5. The emotion of the moment forced you to make this person feel special. But, how long is that feeling of euphoria going to last? What is going to happen when it wears off?
6. An employee leaving never comes at a good time. Here is what you will eventually say to yourself: “How could he/she do this to me? . . . It couldn’t have come at a worse time. . . . What am I going to do if they do it again? So, when (not if) is this person going to do it again? If that happens, I’m gonna look like a real schmuck and nobody is going to respect me as a manager.”
7. Normally, for the counteroffer to be successful, you had to involve other managers, including those one or two levels above you. What are they going to think of you if this happens again, not only with the person you just bought back, but also with others in the organization? Even though they all bought into it because they had to, you are going to be held responsible for all of the problems this has created. When/if this person eventually leaves anyhow, your management acumen will be questioned.
8. Good companies don’t buy people back. In your heart, you know that. So, the insult to injury is that, not only were you blackmailed, but you know that you and your company are not considered to be well managed.
9. The employee that you bought back probably got a significant increase in salary. That fact is going to eat at you, and when the salary reviews come around again, you’re going to remember how you were leveraged. You are going to feel like the employee already got a raise. The employee doesn’t feel that way at all. He or she is going to expect a raise like everyone else. It is a “no win” deal.

Counteroffers rarely work. It seems like a good idea at the time. If you have to do it for sheer survival, start looking on a confidential basis for your employee’s replacement. We know because we work with hundreds of “confidential” searches every year. Many times they are “successful” counteroffers being replaced.

This article is from the May 2008 print Fordyce Letter. To subscribe and receive a monthly print issue, please go to our Subscription Services page.

This week we are counting down some of the most popular articles from FordyceLetter.com in 2011. We hope you enjoy revisiting these articles as we look ahead to 2012!

Since 2008 we have seen businesses fail, jobs lost, inventories cut, marketing budgets slashed, and lots of markdowns. Over the past year however, life has seemingly resumed again. People are starting to buy extravagant items, businesses are getting back on track, and, if you don’t read the news on a daily basis, you’re feeling pretty good about life.

However, a new trend has recently popped up and it’s not a simple matter. Perhaps being in the executive search universe, we are more focused on it, but it cuts across all sectors, functions, and companies. I call it the “Art of the Negotiation.” And it’s not just playing out in the courtroom anymore.

Never before in my professional life have I seen this – and I used to sell furniture for a living. It seems we can’t get by without some haggling. Nothing, and I mean nothing, is taken for face value anymore. Everything is a dance – in which both parties say exactly what they want, how they feel, and are happy to draw a line in the sand.

Negotiations Double Time to Offer

Over the past year, the average time it takes to finalize an offer has more than doubled. At times, the negotiating process is even longer than the search itself. When a candidate and a client fall in love, it can all dissipate if the numbers aren’t quite right. More than ever before I’ve seen this dance take the wrong turn, spurring bad feelings, counteroffers and ultimatums.

On the client side there is a mentality that people were overpaid during the frenzy of the pre-2008 timeframe and that this recession should have opened their eyes and made them aware that everyone is replaceable, that they are lucky to have this offer, unwilling to budge. Needless to say, the candidates are less inclined to recognize their good fortune. From their perspective, they feel that that the economy is better, businesses are starting to boom again and 20% salary increases should be compulsory to even thinking about taking on a new job.

Job Pre-Nups

Then there is the middle ground, where the recruiter tends to act as mediator. Think of hiring a new employee like a marriage, two entities joining together to form a team, one that is bound by certain promises and pieces of sacred paper. The negotiation process is somewhat similar to drawing up a couple’s prenuptials. It’s quite uncomfortable, always takes longer than one expects, and it’s difficult to make both parties absolutely 100 percent happy – but hopefully, there’s a compromise.

My role is to advise clients about the market realities, and help them to understand that their requests may be too extravagant. On the candidate side, I have to guide and mentor them through the divergences of their fantasies and the clients’ less romantic standpoint. Fortunately, we almost always get there – in the end most parties see the bigger picture and understand the realities of the situation from the others’ side, not just their own.

Everything we experience is an opportunity for growth and learning. The “Art of Negotiation” is a dance that we are all perfecting in our own way.

Recruiting history was made this month. You may not be aware that last week marked the culmination of the most sophisticated recruiting effort executed in this century, one that will go down in history as a case study on how to recruit “game-changers.” The approaches used and the lessons to be learned are almost without comparison. If you want to recruit the best to your organization, don’t miss this opportunity to learn how “game changer” recruiting differs dramatically from typical recruiting.

“Game Changer Recruiting” Is Needed in All Organizations

You do not have to be a sports nut to realize that for the last two months numerous NBA teams have been pulling out all the stops and spending unlimited amounts of money to recruit basketball star LeBron James to their team. Simultaneously, almost-as-intensive recruiting efforts have targeted other game-changing stars including Dwyane Wade, Amar’e Stoudemire, and Chris Bosh.

Sports teams and corporations alike need all the game-changers (individuals who can change the entire direction of an organization) they can get. While you might think that sports recruiting is not comparable to corporate recruiting, that notion would be erroneous. This sports-superstar recruiting effort is ultimately an illustration of world-class “game-changer recruiting.”

If like most organizations, yours could use a few more “game-changers,” innovators, or exceptional performers, consider the lessons that can be gleaned from the events of the past eight weeks.

Lesson #1 — Calculate the Economic Value of a Game-changer

The first lesson to be learned is to calculate the dollar impact a game-changer can have on revenue. Most recruiting managers focus on the cost of recruiting individuals (i.e. cost per hire), ignoring the potential return or the economic impacts that recruiting a game-changer will have. The LeBron case study illustrates a superior approach, one focused on return on investment.

Historically the largest economic game-changing recruit was Michael Jordan. One study conducted by Fortune estimated that Michael Jordan had a $10 billion dollar impact on the NBA. LeBron will have a similar impact, not just on team revenues, but also on complimentary businesses in the greater metropolitan area. One economist recently estimated that impact could be as large as $3 billion.

Unfortunately, few corporations invest in calculating the dollar impact of recruiting a game-changer on their organization. Those that do, often find that focusing solely on cost to recruit is silly. Google for example has estimated that a top performer generates three hundred times more revenue than an average performer. What would be the dollar impact if Warren Buffett joined your investment firm or Steve Jobs joined your technology firm? On a less-grandiose scale, can you imagine the impact on your organization if the inventor of the iPod or the iPhone were to join the organization?

When doing calculations, remember that the economic impacts of acquiring a game-changer are not limited to their direct contributions, but also include the attraction of investors and other high-caliber recruits that will also impact the performance of the organization. In addition, recruiting a game-changer from a direct competitor may significantly impact their ability to compete. Once your executives understand the startling economic value, they will support the use of a game-changing recruiting approach.

Lesson #2 — Realize That Game-changers Are Different

The second lesson to learn from the LeBron case is that game-changers, innovators, and top performers truly are different and must be recruited in a unique manner. The traditional corporate recruiting and executive search models will not work when recruiting most game-changers because those models do not accommodate superstar personalities, unusual expectations, and an unbelievable array of decision-influencers. To get the attention of a game-changer, you must understand exactly how they are different. While game-changers are not all alike, in general, they exhibit the following characteristics.

• Not looking for a job — they are probably currently employed and they are almost always well treated where they currently work. As a result, they are not actively looking for a new job and if they did hear about an ordinary opportunity, they would not pursue it.
• Power — they fully understand their value and their importance and as a result, they expect to be treated differently than the average applicant. They know that they hold the power in any potential new relationship or recruiting opportunity, so they expect to be courted.
• Difficult to approach — they are incredibly busy and there is a constant demand on their time. As a result, most erupt numerous barriers that would prevent strangers from even approaching them with opportunities. In order to make an initial recruiting contact, you will probably need direct assistance from someone who influences them.
• Trust is required — experience has taught them to be cynical of strangers and promises. As a result, you will need a strong relationship built on trust before they will seriously consider any offer from you.
• A triggering event required — because they are successful and well treated at their current position, they are generally satisfied with their current situation. As a result, it will likely take a major negative career-impacting event at their current firm to shift them into job search mode. In the absence of a negative event, it will take a major “WOW” jaw-dropping positive opportunity before they would even look at a job opening.
• A game-changer recruiting approach is required — the final thing to understand about recruiting any individual who is in high demand is that they almost always have an intense dislike for standard recruiting processes. Instead, they expect and require a “tailored” or personalized recruiting process that requires little of their time, that meets all of their expectations, and that contains not a single turnoff or “dealbreaker” element.

Lesson #3 — Shift to a “Game-changing Recruiting Approach”

The primary differentiator between a game-changing recruiting process and all other recruiting processes is the level of effort that is put into truly understanding the candidate and their needs. Most recruiters would argue that they already understand the needs of their candidates; however, heavy workloads force most recruiters to generalize and make numerous assumptions about what candidates need and expect.

In direct contrast, the game-changer recruiting approach is tailored to the individual who is being targeted. It is a market research/sales-driven approach that puts together a sophisticated candidate profile that covers the candidate’s job search process, how best to contact them, and their job acceptance decision criteria. This in-depth profile takes a significant amount of time and resources but is necessary if you want to have a realistic chance of success. There are 10 activities involved in developing a deep understanding of your target and creating a candidate profile. They include:

1. Identify factors that trigger a job search — a job opportunity by itself will not be enough to trigger a game-changer into job search mode. Instead, a combination of a positive job opportunity and the simultaneous occurrence of a negative factor that makes the target uncomfortable in their current situation is needed. To time your recruiting effort precisely, you need to be aware of what negative triggering events could arise and when they are most likely to occur. You must conduct research and interviews with those who know your recruiting target extremely well in order to compile a list of the specific events likely to trigger a desired change. Such events might include a corporate merger, management turnover, corporate scandal, or a significant cut to their budget.
2. Map their job search process — whenever a game-changer does begin to consider change, you need to understand and map out the process they will use. If you fish using bait, you understand that to catch a trophy fish you need to understand how a trophy fish searches for food. Likewise, recruiters must find out how their target found opportunities in the past, how and where they research opportunities, and what factors get an opportunity on their “short list” of opportunities to consider. Once you fully understand how, when, and where they find opportunities, you need to customize your approach to mirror their activities. Additionally, there must be a process to reevaluate the quality of your recruiting process against world-class standards, because a game-changer will likely judge your entire organization based on the experience they receive. It is quite common for recruits to assume that their candidate experience is a direct reflection on how they will be treated when they become an employee.
3. Determine who must do the recruiting — in many cases, game-changers expect to bypass traditional recruiters and instead be contacted and recruited by professionals of similar stature (or even by senior executives). As a result, you must identify their expectations and shift the initial contact and much of the recruiting to individuals who they respect and trust. Leading off with the wrong person can result in your opportunity being filtered.
4. Identify the best way to communicate and to reach them — if you want prospects to respond to your messages, you need to understand their communication preferences. That means you must research their most-favored way to communicate (i.e. in person, telephone calls, text messages, e-mail, on Facebook, etc.) and what must be in a message for them to respond to it. You must also identify other opportunities to communicate with them, including events they attend, publications they read, and websites and blogs regularly visited. If you do not know precisely where they “lurk,” you dramatically reduce the chances on reaching them. It is also important to note that the sites game-changers frequently are likely to be learning on content sites related to their professional growth, rather than job or career-oriented sites.
5. Identify the factors that will grab their initial attention — due to the volume and level of competition for their attention, if you expect to get on their short list, you need to identify the factors that would cause them to initially consider your opportunity. Once you identify the factors that will get their initial attention, you must make sure that compelling information on those factors is clearly visible on the sites they routinely visit. You may also have to educate their friends and colleagues about your organization, so that they will know about you and as a result, may speak highly of your organization during their interactions with your recruiting target. If you are an unknown organization or if you have a weak employer brand image, this step is even more important in order to prevent them from immediately ignoring your opportunity.
6. Identify the decision criteria they will use to accept an interview — game-changers routinely turn down opportunities to interview for new positions, so understanding what it takes to excite them about a particular interview invitation is a critical factor in the game-changer recruiting process. Identifying interview acceptance criteria requires extensive research and benchmarking and some guesswork. In the end, you must develop a ranked list of the criteria that they will use when deciding whether to accept an invitation and make sure that you convincingly communicate each of them in all of your initial recruiting and interview-related communications.
7. Identify “deal breaker” or knockout factors — in addition to positive criteria that game-changers will use to filter opportunities, there are also negative factors that will influence their decisions. Your research must identify each of these “deal breakers” (i.e. a weak boss, no budget, restricted decision-making, a lack of control, etc.,) and ensure that there is not even a hint of one of them present within the organization.
8. Identify their decision criteria and the information they need to accept a job offer — this is without a doubt the most critical step in the overall process. Consider the recruiting process similar to the sales process for big-ticket item. In both cases, successfully making a sale requires understanding a customer’s buying criteria and a product that meets that criteria as closely as possible. Some identify a candidate’s job acceptance decision criteria by asking them directly at the beginning of the interview process, or by interviewing friends and colleagues. Typical decision criteria include their degree of independence, the extent of their authority, their ability to build their own team, their ability to select projects, and the availability of ample resources. The entire interview process must be geared toward convincing them that this job meets every one of their acceptance criteria. It is also important to periodically ask them during critical points in the interview process if you are successfully meeting their criteria.To ensure that the target candidate remains engaged in the process, give them some input into it, so that they do not view it as inflexible. Ask them what specific information they need and what questions they need answered before they can make an affirmative decision. You should also ask them who they must meet and talk with before they can make a final decision on your offer. The overall interview process should provide them with an excellent candidate experience and you should use it not just as an assessment tool but also as an opportunity to provide a comprehensive sales pitch.
9. Identify who will influence their decision — game-changers are much more apt to consult with and seek the advice of friends and colleagues than the average candidate. As a result, make an attempt to identify and then proactively “sell” those individuals who will influence the candidate’s final decision. Incidentally, the process of identifying and educating “influencers” on the powerful selling points of your firm needs to start at the very beginning of the interview process.
10. Develop a counteroffer strategy — it would be highly unusual for a game-changer not to get a compelling counteroffer from their current organization. Because the normal reaction of a game-changer is to “stay put in a known environment,” you need to proactively research what that counteroffer is likely to be and to prepare a compelling strategy to overcome it. In addition, you should anticipate that the game-changer will get several external offers, so you need to do your research and benchmarking to ensure that your initial offer is clearly superior and most closely aligns with your candidate’s dream job.

Final Thoughts

Some people viewed the recruiting process used to attract LeBron James as a circus. However, on closer examination, it was unique, targeted, and comprehensive. There were numerous WOW factors, including the city of New York crafting a customized video including a message from the mayor, and several cities organizing mass public recruiting parties to show their commitment. Teams used high profile individuals including Jay Z and even the President of the United States to influence the process. Numerous websites were created, blogs were written, and literally millions of tweets were shared on the topic.

To further highlight the importance of this recruiting effort, Lebron’s offer acceptance was televised in an hour-long TV special (a first). During the special, his decision criteria were disclosed, including the probability of winning a championship, a new coach, a choice of teammates, team chemistry, supportive owners, a large fan base, broader media exposure, and lifestyle considerations including the interests of his entourage, and of course hundreds of millions of dollars in compensation.

While millions were spent to recruit him and millions more will be spent to pay him, the economic return (likely to be in the billions) will far outweigh the costs. Believe it or not, the same dramatic results can be obtained by recruiting a single game-changer in the corporate world, although the fanfare would likely be less dramatic! If you are not landing your share of game-changers, the process that corporate executives must follow has been spelled out, all they need to add is … courage.

Nope, it’s true…they are making a comeback!

At the 2010 Fordyce Forum, Jenifer Lambert led a great presentation on her research based on client needs and satisfactions.  One of the topics that came up in that discussion was the resurgence of counteroffers.  I remembered an article I had used in 2005 as we were experiencing incredible competition for talent.  I often gave this to candidates as I conducted their initial interview to try and head off counteroffer acceptances. I want to offer that to Fordyce Readers as a downloadable pdf to share with their candidates as the situation arises (and it will!).

Counteroffer – Just Don’t Take It!

Picture this scenario:  After working several years for your current company, you feel your job has become stagnant.  The working conditions have declined, or were never what you expected, your company or position has not been challenging to you, and there is little room or opportunity to reach your full potential.  Fortunately, you have secured a new position at another company and you are looking forward to a better environment, management, salary, commute, promotion potential, flexibility, or whatever the benefits may be that will be an improvement over your current situation. When you inform your manager of your decision to leave, s/he may give you an offer to entice you to stay, even promising to match whatever benefits your new position may be offering. It could be a higher salary, better benefits, more responsibilities, or a job title to make your colleagues green with envy.  This is too good to pass up, right?

While this may seem like a no-brainer, when you accept a counteroffer from an employer after you have announced your intention to leave, what you have really done is accepted an offer to stay and endure the same problems you were trying to leave behind including worse issues arising from identifying yourself as a dissatisfied employee who could leave at any moment.

A counteroffer is a proposal from your current employer prompted by your indication or announcement to leave the company.  If you have consistently demonstrated you are a competent, productive, and well-liked employee who has not caused major issues in your department, your departure may reflect negatively on your supervisor and their management capabilities.  To prevent their own career downslide, your manager will likely attempt to entice you to stay by making attractive offers focused on bringing your loyalty back to the company. The beginnings of a counteroffer may be similar to the following phrases:

• “You’re one of my best workers. The team will be demoralized by your decision.”
• “My performance review is coming up and this may not reflect well on me as a manager.”
• “I’ll be honest with you; this is actually the worst time for you to tell me you’re leaving.”
• “This comes as quite a shock, is there anything in particular you are most dissatisfied with?”
• “Our executives have mentioned to me they were thinking of having you lead a challenging project coming up the pike. Would it be possible to discuss this opportunity with you before you make your final decision?”

The truth is, counteroffers will rarely benefit you.  Managers understand the difficulties of career changes and are going to do their best to offer a primed deal to make you stay, but don’t take it!  Consider these points before yielding to a counteroffer:

• If your manager counteroffers with a better salary, bonus, benefits, and responsibilities, this will not change the current working environment which may be a large part of your reasons for leaving.
• Having already demonstrated your desire to depart from the company, after accepting the counteroffer, your loyalty will be scrutinized and your reputation as a “team player” will be lost.
• Counteroffers are often used to buy time for managers to find a replacement, so do not expect to be employed there for much longer regardless of what was promised.
• Conditions may improve from the counteroffer, but it will only be temporary and is not worth the stress to remain in a company you do not enjoy working for. Don’t expect your manager to treat you consistently better simply because you have indicated you have another job lined up.
• If threatening to quit prompted these offers, will you now have to repeatedly use this tactic to get a better working environment each time conditions are not what you feel they should be?  If so, it’s not worth your time and effort to improve your current employment situation.
• Truly well-managed companies will never need to resort to counteroffers to retain their employees as they will already have reasonable and fair policies in place.

There’s a good reason why employees leave their current companies.  Don’t let a short-term fling with counteroffers stop you from improving your career.  Continue to clear your desk and look forward to a fresh start with your new career.

Please click here to download this post as a PDF document.

These ideas stemmed from an article titled Counteroffer Acceptance Road to Career Ruin written by Paul Hawkinson. The article was originally published in National Business Employment Weekly in 1983 and later published in The Wall Street Journal in 1998.