Do counter-offers actually work when an employee resigns?
Someone's just resigned…
Your best developer, your marketing manager, whoever.
You're panicking.
Your brain goes straight to: "What if I offer them more money?"
It feels like the obvious solution: pay them more, they stay, problem solved.
Except it's not solved. You've just bought yourself a few months of them putting up with the same shit that made them want to leave in the first place, except now they're doing it for more money. And you know what happens next? They leave anyway. Usually within 6-12 months.
Counter-offers don't work. Or rather, they work in the short term and make things worse in the long term.
Here's why.
Why counter-offers fail
When someone hands in their notice, they have already emotionally left. A counter-offer does not change what pushed them there. It just pauses the exit.
They didn't wake up one morning and decide to quit; this has been building for weeks, maybe months. They’ll have updated their CV, have been looking at other jobs out there, having conversations with recruiters, sitting through interviews, weighing up another offer.
By the time they walk into your office to resign, they've already done the hard emotional work of leaving.
Offering them more money now doesn't undo any of that.
It just asks them to ignore all the reasons they wanted to leave in the first place and put up with it for a higher salary.
Once someone has resigned, the original version of the relationship is usually over.
Think about it like an actual relationship break-up. If your partner told you they'd been unhappy for months, had been looking at other options, and wanted to leave - but then you offered to change and they agreed to stay - how often does that actually work if nothing fundamentally shifts?
Not often. Because the trust is broken. They know you were fine with how things were until they threatened to leave. You know they were actively planning their exit. And now you're both pretending that throwing money (or promises) at it will make everything go back to normal.
It won't.
What do counter-offers actually look like?
Counter-offers aren't just about matching the salary offered.
They can include:
A straight pay rise
A pay rise with a promotion or new title
A one-off retention bonus
Promises of future change (career progression, flexibility, different manager)
Matching the external offer exactly (like-for-like on salary and benefits)
Some interesting stats behind counter-offers from CIPD's 2023 Labour Market Outlook…
Counter-offers have become increasingly commonplace.
In the year preceding the 2023 report, 40% of employers had made a counter-offer in the past year, with half of those offering more counter-offers than before.
40% offered salaries above the competing offer.
These stats show just how heavily businesses are relying on this tactic to keep hold of people.
However, only 45% of employers believe counter-offers are effective at retaining staff for 12 months or more, meaning more than half either don't think they work or aren't sure!
The hidden costs you're not thinking about:
Even if they do stay, here's what you've actually bought yourself:
Resentment from the rest of the team:
Why did this person have to threaten to leave to get a pay rise? What does that say about how you value the people who've stayed loyal?
A dangerous precedent:
Now everyone knows how to get more money. And your best people are watching.
The same broken system:
The reasons that made them want to leave: unclear expectations, impossible workload, lack of support, your management style… they’re still there and they’ll likely make the next person leave too.
A relationship that's permanently changed:
You'll always be wondering if they're still looking and they'll be wondering if you only value them when they threaten to leave. Performance often drops because they're doing just enough until the next opportunity comes along.
You're paying more money for less trust, lower morale and you’re still stuck the same underlying problem that caused this in the first place.
What to do instead:
Prevention, not panic
I’m not saying you should never pay people more or improve their terms.
The problem is waiting until someone resigns to discover they’re unhappy.
By that point, you’re negotiating under pressure, not leading.
If you want to keep good people, you need to know what would make them leave before they reach breaking point.
That means having regular, grown-up conversations about:
What’s energising them
What’s draining them
Where the role no longer fits
What they want more ownership or challenge in
Not once a year in a polished performance review, where everything's polite and sanitised. Ongoing, honest conversations where you actually listen.
And here’s the bit most founders miss: you then have to act on what you hear.
High performers don’t usually leave for money alone. They leave because of friction they’ve stopped believing will change: unclear expectations, impossible workloads, micromanagement, lack of progression, or feeling taken for granted.
If the only time you talk seriously about their needs is when they resign, you’ve already lost them.
That’s why tools like Stay Interviews work - because they surface issues early, while there’s still trust and room to fix them.
Ask regularly, take it seriously, fix the small cracks before they turn into resignations.
That’s retention.
Everything else is damage control.
What if it's already happened?
Once someone's resigned, you can't undo it, but you can decide whether it becomes a one-off or the start of a pattern.
The goal now isn't "how do I save this person?"
The goal is to stop the same thing happening again.
Here’s where to focus:
1. Get the truth instead of negotiating
The biggest mistake founders make after a resignation, is rushing to bargain.
More money. More flexibility. A title change.
That usually shuts down the most useful conversation you could’ve had.
What you need now isn’t “what would make you stay?”
You need to understand what made them stop believing things would change.
Ask questions like:
When did you start checking out and what made you feel that way?
What did you stop raising because it felt pointless?
What did you try to tolerate before deciding to leave?
This is intelligence gathering, so position this in your mind as an exercise in curiosity, rather than anger, reaction or desperation. It’s also definitely not an exit interview.
Even if they still go, this gives you information you can act on immediately with the rest of the team. Without it, you’re guessing.
2. Use the notice period to reduce repeat damage
Most notice periods are wasted. Founders either:
Disengage completely (or think “f*ck them, they’re dead to me” - true story from a CEO I once worked with)
Hover awkwardly while hoping the person changes their mind
Get frustrated and try to squeeze every last drop of output from someone who’s already checked out
That’s short-term thinking and it’s unhelpful. Instead, use this time to:
Capture knowledge properly
Identify where the role became unclear, overloaded or misaligned
Gather info that will help the next person to succeed in this role, so you don’t have a repeat in 6 months time
This is where you quietly reduce the cost of the resignation, even if you cannot reverse it.
3. Manage the message to the people who stay
Every resignation sends a signal and your behaviour now teaches the rest of the team what it takes to be valued.
If you panic, bargain, or suddenly offer things that were never on the table before, the message is clear:
"You matter most when you're halfway out the door."
Damage control here looks like:
Being calm and steady.
Acknowledging the resignation without drama.
Reinforcing what is staying the same for everyone else.
You’re no longer managing the leaver. You are managing the story the team tells themselves about what this exit means.
4. Fix the crack, not the person leaving
It’s tempting to pour all your energy into saving the person who’s resigning.
That energy is almost always better spent fixing the thing that made leaving feel like the only option.
This might be:
A role that didn’t resemble the dream you sold them, or that has grown impossible over time.
A manager who is guessing instead of leading.
A lack of clarity that forces people to carry too much ambiguity.
Treat the resignation as a lesson and a signal, not a betrayal.
Stop spending energy on the person who’s leaving and start fixing the things that will make the next one stay.
5. If you do counter-offer, do it cleanly
Do not let it turn into an emotional bidding war and make sure you have some boundaries.
This means:
One clear offer, not a negotiation spiral.
A defined review point with explicit expectations on both sides.
An honest acknowledgement that trust has taken a knock and needs rebuilding.
You’re both deciding whether it’s genuinely worth resetting the relationship, rather than “win” the argument.
A resignation does not mean you have failed.
But how you respond to it determines whether it becomes a one-off or a pattern.
Counter-offers feel like taking action and sometimes, they might be the right move if you're genuinely willing to fix what's broken and rebuild trust properly.
But most of the time, they're a panic response that costs you time and money, and delays an exit that was always going to happen anyway.
Preventing resignations before they happen by actually listening to your team and fixing problems early, takes more consistent effort. But it's a hell of a lot cheaper and less painful than the revolving door of people who accept counter-offers, stick around for six months in a broken relationship, then leave anyway.
And when someone does resign? Use it. Learn from it. Fix what's broken so the next person doesn't have the same reasons to leave.
That's how you turn a resignation into useful information instead of just an expensive mistake you keep repeating.
Want to talk about what’s happening in your business?
I’m Maritsa Inglessis, The People Keeper!
I help UK founders of small tech and digital businesses with 10 to 50 staff who are stuck in the same cycle of people leaving and not knowing why.
If you’re sitting at around £2 to £5 million turnover and growth feels impossible because the team won’t stay long enough to make it work, this is exactly what I fix.
Through my Employee Retention Mastery framework, we find out why your people are actually leaving, fix those issues properly and build a team that sticks around long enough to help you grow.
Clients I work with reduce their employee turnover by 50% within the first year and save over £100k. Most importantly, they finally get the stable team they need to grow.
I’m location-agnostic and work remotely with founders throughout the UK (London, Manchester, Bristol, Leeds, Edinburgh, Cambridge, Norwich and beyond).
Get in touch or book a call with me to see how I can help!
