The raise won't fix why they're leaving
Hi Everyone,
When a valued employee tells us they have an offer from another company, most of us start working out a raise before they've finished talking.
That raise usually solves the wrong problem. Gartner's HR research arm followed employees who accepted counteroffers and found that half left within 12 months anyway.
The money buys time, and rarely more than that. Here's how to handle the conversation, and how to decide whether a counteroffer makes sense at all.
The first five minutes after the news
Start by thanking them, and mean it. By telling you before deciding, they're giving you a real chance to respond.
Then say something like: Thank you for telling me directly. I want to take this seriously, so give me two days before I respond. Can we sit down together on Thursday?
Two days protects you from offering a panic pay raise. It also signals that their decision deserves real thought. Don't name a number in that first meeting, even if you know what you'd pay. An instant raise raises an obvious question – if the money was there, why did it take another company's offer to get it?
Is it really about the money?
Before the initial meeting ends, ask one more question: What made you take the call in the first place? Then stay quiet and listen.
When McKinsey surveyed employees who had quit, employers assumed pay and work-life balance drove them out.
But employees named different reasons:
- 54% didn't feel valued by their company,
- 52% didn't feel valued by their manager,
- And 51% didn't feel they belonged.
A raise won't fix the problem if the answer points at the role, the manager, or a promotion that never came.
Answer these three questions before you counter
Can we change the thing that made them look? A raise fixes underpayment. It doesn't fix a manager relationship or a role someone has outgrown. Counter only when you can change the reason they started looking.
Can we pay this and keep everyone else's pay fair? Engineering leader Bethanye McKinney Blount, who ran teams at Facebook, Linden Lab, and Reddit, told First Round Review: 'If you are making a counteroffer, you've already lost. You're inevitably going to overpay at that point.'
If the counter pushes one salary far above the others in the same role, expect the rest of the team to find out and to ask for the same.
Blount allows one exception. Overpaying can make sense when you need this person to finish a specific project, and you plan for them to leave when it ships.
Would we hire this person again today, at this price? If the honest answer is no, the offer on the table is a clean exit for both sides.
If the answer to all three is yes, make the counter, and put the fix in the same conversation. Offer the raise together with whatever made them look, whether that's the promotion, a new manager, or a bigger role.
Try this today
Write down the two or three people whose departure would genuinely hurt, and book 30 minutes with each of them next week to talk about where their role goes next.
Feeling unvalued or overlooked builds for months before a recruiter ever calls, and these conversations are where you hear it early enough to act.
Go deeper
👉 First Round Review: Counterintuitive Comp Tips for the Unwary and Uninitiated — read this before your next comp cycle; Blount's rules for pay decisions that won't come back to bite you.
👉 Harvard Business Review: Why People Quit Their Jobs — use it to spot the moments, like work anniversaries and milestone birthdays, when your people start looking.
👉 Gallup: 42% of Employee Turnover Is Preventable but Often Ignored — read this if you want the case for talking to people before they interview, plus what replacing them costs by role.
👉 Knowledge at Wharton: Why External Hires Get Paid More, and Perform Worse, than Internal Staff — worth reading before you assume the replacement will be an upgrade.
Coming up tomorrow
In tomorrow's issue, you'll learn how to calculate your personal cash runway and what to do if it's under 12 months.
Have a great week!
P.S. Have you ever accepted a counteroffer yourself? Hit reply with how long you stayed afterward.