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March 19, 2012

The Dark Arts: Defeating a Counter-Offer

Tomorrow, your great new hire is going to resign from their current job. Think about the risks: If you want grade-A talent, so does that other company. If you’re recruiting from an established company, they’ve probably got more cash, perks, and stability to offer than you do. And your new hire probably has a close personal tie with someone at their current company - maybe that’s how they ended up there in the first place. That means you’re vulnerable to a counter-offer from both a financial and an emotional standpoint.

But you’ve got one advantage - you know the counter-offer is coming, so you can work to lessen its impact.

The day before your new hire is going to quit, sit down with them. Reconfirm the elements of the opportunity that mean the most to them - the chance to make an impact, the exciting product you’re building, the technical challenge they’ve got to figure out -- and remind them how dedicated your organization is to seeing them succeed in this new role. Now get them ready for the conversation they’re about to have: Tell them that because they’re so talented and valued, they should expect to get a counter-offer from their current employer.

Create a mental anchor for the offer. Tell your new hire that most often, standard counter-offers involve a 10-20% bump in salary and a future title change promise, but since they are so highly valued their offer will most likely be X. Make X a high number. Then confirm the plan - ask the candidate what they’re going to do when they’re offered X. Before you leave the meeting, find out what time the following day they’re going to resign.

On the day itself, call your candidate before their resignation meeting. Ask them how they’re feeling. Empathize with what they’re about to do, and talk again about how excited you are for them to take this next step in their career. After the meeting, call them again to touch base. At the end of the day, meet with the candidate after work for a drink to start their transition.

Here’s what you’ve accomplished: First, you’ve undercut the other company’s financial advantage. By setting the candidate up to expect a counter-offer, you’ve reduced the natural tendency to feel flattered by the attention. Throwing out a big number means they’ve gone into their meeting expecting something that (if you’ve done this right) their current employer most likely won’t offer. When they hear something lower than X, they’ll be feeling less than loved. Plus, you’ve made it hard for them to justify to you that they’re sticking with their current job for anything less than X.

You’ve also undercut your rival’s emotional advantage. Reaching out during the resignation day helps the candidate get through a genuinely difficult thing - disappointing people. And meeting with them at the end of the day makes it hard for them to seriously consider a counter-offer because they know they’re going to be looking you in the eye a few hours later.

What other strategies have you seen to counter the counter-offer?

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Alex Kinnier

Alex Kinnier is a Venture Captial Partner at NEA. He's an Xoogler, a passionate product developer (from ad servers to air conditioners to Febreze) and a fan of NYC pizza. He is a father of 2 angels.

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