The Insider Guide to Careers
Insider information, secrets and tips about getting hired and building careers. For employees and job candidates.
The short answer to this question is never to accept a counteroffer from your current company. If you decide to leave, you should go, and there should be no looking back. Let us look at each step before you reach this point of getting a counteroffer.
The employee’s perspective: In every company, there are some days when you face a lot of pressure in the workplace. These pinpricks are normal and do not make you consider leaving the company. The actual pain points begin when either your skills are not a match for the position, you have a terrible manager, or the company culture doesn’t match yours. In the big picture, these aspects are beyond your control, whether it is your current lack of skills, your manager not being able to manage, or the company culture not resonating with you.
The compensation may need to be better for many employees, or the medical coverage and benefits may be below par. Still, frankly, nobody leaves a company for reasons of pure compensation. Moreover, it was a fair deal when joining the company, so it could not suddenly become a bad deal. While an employee may rationalize the job search by stating compensation as the reason, it is rarely the case. The actual reason will always lie with the team, manager, and the company. A bit of prodding during exit interviews always uncovers a can of worms.
Academic research says that after two years in a company, your compensation begins to go below market, but your chances of promotions increase. Similarly, if you move jobs, you can get quick compensation increases, but your chances of promotion are low for the first two years as you prove your worth and loyalty. Remember that there is no easy path to wealth or promotions; there are only trade-offs.
The manager’s perspective: For a manager, loyalty is the most critical characteristic of the employee. It is all about belonging to the family. If a person deserts, it is equivalent to leaving the tribe, and the person becomes part of the out-group, a non-believer (if not a traitor) in the company’s mission and beliefs. Managers also begin to have a lot of friction with some of their employees around the time their team members start to look for jobs. They are sometimes relieved that you have decided to move on to a different company; otherwise, they may have to go down the path of putting you on a performance plan (PIP).
The only reason the manager may decide to retain you is that they dread that in your absence, the work may not get done by others in the team or that it may take too much time to find your backfill. Hence, they may give a sweetener in terms of increasing your current compensation a bit or matching whatever compensation you get from outside. But, at the same time, they are burning their budget to retain you, and they will hate you for it.
Even if the manager keeps you inside the team through a counteroffer, they know you will leave the team again if things don’t work out in your favor. So they will create a backup plan to upskill another team member in your work and expect you to do a knowledge transfer to the team member. If that indeed happens, you can be reasonably sure that your name will be on the next list of layoffs when the business climate deteriorates.
The HR perspective: The moment you attempt to leave the team or the company, you become a deserter. This reaction should not be the case, but HR in most companies need to be more mature and change their ways of thinking.
There can be a lot of dire consequences for your career:
1) When it comes to any promotions in the future, when there are limited budgets, more preference will always be given to a loyal employee compared to someone who tried to quit. Lack of loyalty will also bite you when being considered for VP or CEO positions.
2) Regarding compensation hikes, since the retained employee recently got a hike, they would not be considered for another comp increase for a long time.
3) If there are year-end bonuses since the manager has already burned their emergency funds to retain you, there is no way you will get a large bonus at the end of the year. Therefore, your bonus is likely to be sub-optimal.
4) Large salary hikes can often be a bane for your career. It is easy to go well over the Compa ratio for your salary grade. Because you have no idea of the salary range or mid-point numbers, you may assume that your revised compensation is both within range and normal. I have discussed compensation and salary ranges in this post, which you should read. If your compensation is above the salary range, there are long-term consequences of limited salary hikes. Your revised comp will be the same for a long time unless you get promoted. But as I mentioned in point 1) your lack of loyalty will ensure that your promotion opportunities dry up.
Exceptions: In the software industry, it is common for employees to move across companies. Big tech is more mature and accepts that employees quit if they are underutilized and there are bad managers. So they are happy to see employees leave, prosper elsewhere, gain skills, get promoted, and return to the earlier company at a higher position. There is even a term for this – helicopter careers.
For positions with immense competition, like promotions to CEO, promotion to VP, or promotions to Director, threatening to resign to go to a competitor could help you achieve your goal. For example, one criterion for CEO positions is whether other comparable companies are willing to give you the CEO title. Sundar Pichai was headhunted as CEO at other big tech companies like Twitter before he got the top job in his company. I don’t think Sundar intended to quit Google, and it was a negotiating tactic.
Academia is well known for this practice. When a Ph.D. student graduates from an institution, the expectation is that the outstanding researchers find a job in a peer institution, gets recognized elsewhere, and then come back to the parent institution in a comparable or higher capacity. There is an expectation that you do not spend your life in a single institution, especially working in the same place where you did your doctorate. You should get out of your familiar surroundings and prevent “inbreeding.”
Summary: When you want to leave, leave and don’t look back. Likewise, for all the reasons mentioned above, you should not return to your earlier company after working in other companies. The exceptions are typically big tech, where some employees have extraordinary skill sets.
An example I read yesterday was an India Today media article titled “Google, Apple once fought to hire and retain 2 IIT engineers, here’s what happened“. It outlined the dramatic situation of the CEOs of Apple and Google going to war over two engineers to define the future of AI. The engineers, Srinivasan Venkatachary and Anand Shukla (fellow IIT alums) have worked at Google, joined Apple, and returned to Google.
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