An employee walks in with a resignation letter and a competing job offer, and the instinct for many employers is to reach for the chequebook. 50% to 85% of employees who accept a counter offer still leave within six to twelve months anyway, and around 65% later regret accepting it in the first place. That doesn’t mean a counter offer is never the right call, replacing an employee can cost up to 20% of their annual salary, so retention is genuinely worth pursuing in the right situation. This guide covers when a counter offer actually works, when it’s likely to fail, and how to structure one properly if you decide to make one.
What Is a Counter Offer?
A counter offer is a revised offer, typically improved compensation, a promotion, or a role change, that an employer presents to a resigning employee in an attempt to retain them after they’ve accepted or received a competing job offer elsewhere.
Employers make counter offers to avoid the direct and indirect costs of replacing a departing employee, replacing an employee can cost up to 20% of their annual salary once recruitment, onboarding, and lost productivity are accounted for, and business continuity concerns are especially acute for employees in specialised or hard-to-replace roles. A counter offer is not the same as a routine raise or promotion, it’s specifically a reactive response made after an employee has already decided, or nearly decided, to leave.
Should Employers Counter Offer an Employee Who Has Resigned?
Employers should counter offer selectively, only when the employee’s reason for leaving is genuinely something the counter offer can fix, since the data shows most counter offers fail to retain the employee for long even when accepted.
The numbers are worth sitting with before reaching for an offer. 50% to 85% of employees who accept a counter offer leave anyway within six to twelve months, and that roughly 88% of employees leave a role for reasons beyond money, meaning a salary-only counter offer usually addresses a symptom, not the actual cause. If an employee is leaving because of culture, a blocked career path, burnout, or a difficult manager, a bigger paycheck rarely changes their underlying calculation, it just delays the same decision by a few months. Counter offers work best when the departure genuinely is compensation-driven and the employer can also credibly address any secondary concerns the employee raises.
What Are the Risks of Making a Counter Offer?
The main risks of making a counter offer are a high chance the employee leaves anyway within a year, internal pay equity problems among other staff, and a weakened trust relationship even if the employee stays.
The employee likely leaves within the year anyway
With a 50-85% re-attrition rate within six to twelve months, an employer who counters is more often buying a short delay than a genuine retention, and still has to run the replacement search eventually, now with less notice.
Internal pay equity problems
If colleagues discover a peer received a raise only after threatening to resign, it signals that the fastest way to a pay rise is to shop for outside offers, a pattern that can quietly spread and undermine your normal compensation review process. This is particularly important when employers are hiring foreign professionals, as companies need to balance internal salary structures with market competitiveness and the Malaysia Employment Pass Minimum Salary Requirement when determining appropriate compensation packages.
A weakened trust relationship
Even when an employee accepts and stays, many employers report the relationship changes afterward, the employee has demonstrated they were prepared to leave, and the employer knows it, which can affect how future opportunities, projects, or promotions are handled on both sides.
It delays your hiring pipeline
Accepting a counter offer pauses your search, if the employee leaves anyway a few months later, you restart the search later than if you’d simply accepted the resignation and begun sourcing immediately.
How Do You Decide Whether to Make a Counter Offer?
You decide whether to make a counter offer by working through four steps: understand why the employee is actually leaving, assess whether you can genuinely fix that reason, weigh the role’s replaceability, and check your own track record with past counter offers.
Step 1: Ask why, before you ask how much
The first question should be “why does this employee want to leave?”, not “what will it take to keep them?” Salary is often the stated reason but rarely the only one, and starting with a number before understanding the real reason risks solving the wrong problem.
Step 2: Assess whether you can realistically solve the real problem
If the honest answer is compensation and nothing else, and you have room to move, a counter offer has a reasonable chance of working. If the honest answer includes career growth, management issues, or burnout, ask whether you can credibly fix those things, not just whether you can afford a raise, a counter offer that ignores the real reason rarely holds.
Step 3: Weigh the role’s replaceability and criticality
A highly specialised or business-critical role raises the case for a genuine retention effort. A role that’s realistically replaceable within your normal hiring timeline may not be worth the internal pay-equity risk of a counter offer, weigh the cost of a rushed replacement search against the cost and risk of countering.
Step 4: Check your own retention history with this kind of situation
If you’ve made counter offers before, look honestly at what actually happened to those employees over the following year. Your own data, more than any industry benchmark, is the most reliable predictor of what will happen this time, if past counter offers at your company mostly bought a few extra months before the employee left anyway, that pattern is worth factoring into this decision.
How Should an Employer Structure a Counter Offer?
An employer should structure a counter offer around the employee’s actual stated reasons for leaving, put any agreed changes in writing, and have an honest, low-pressure conversation rather than a rushed reactive one.
Have an honest conversation first, not just a number
The conversation should not feel like pressure, listen to the employee’s concerns fully before presenting anything, an offer made before you’ve actually heard them out reads as reactive rather than genuine.
Address more than salary where relevant
If career growth or role scope came up, consider a promotion, new responsibilities, or a documented development plan alongside or instead of a pure salary increase. This can be particularly important in highly competitive sectors such as the IT industry, semiconductor industry, and data centre sector, where experienced professionals often have strong external opportunities. A counter offer that addresses career progression, responsibilities, and long-term development is more likely to solve the underlying reason for resignation than one that simply offers a short-term salary increase.
Move quickly once you decide
A competing offer usually comes with its own deadline, a counter offer that takes a week to assemble internally may arrive too late to matter.
Document and follow through on any agreed changes
Whatever is agreed, whether it’s a raise, a title change, or new responsibilities, put it in writing and implement it promptly, a verbal promise that doesn’t materialise quickly will damage trust faster than not making a counter offer at all.
Prepare to lose the employee anyway
Given the re-attrition data, start a quiet contingency conversation about coverage or a backup hiring plan even if the counter offer is accepted, treating retention as guaranteed is what catches employers off guard a few months later.
Hiring with Trust Recruit
Trust Recruit has operated in Malaysia’s hiring market for over 20 years, and the moment a key employee resigns with a competing offer in hand is one we regularly help clients think through, both the decision of whether to counter and the parallel step of opening a confidential search in case retention doesn’t hold. Through passive candidate sourcing, recruiters can proactively identify qualified professionals who are already employed and may not be actively looking for a new role. Having a hiring partner already lined up removes the pressure to make a rushed counter offer purely because a replacement search feels daunting.
Conclusion
A counter offer can be the right call when an employee’s departure is genuinely compensation-driven and the underlying relationship is otherwise healthy, but the data is clear that most counter offers only delay the same outcome. The employers who get this right ask why before they ask how much, address the real reason where they can, and keep a contingency plan running in parallel rather than assuming a counter offer has solved the problem for good.
Facing a key resignation and want a confidential backup search running in parallel? Contact Trust Recruit today for a free hiring consultation. Get your free consultation now
Frequently Asked Questions
Rarely for long. Research shows 50% to 85% of employees who accept a counter offer still leave within six to twelve months, and about 65% later regret accepting it.
When the employee’s reason for leaving is genuinely compensation-driven, the employer can realistically match or exceed the competing offer, and the working relationship is otherwise healthy.
The employee often leaves anyway within a year, other staff may learn that resigning is the fastest route to a raise, and the trust relationship can weaken even if the employee stays.
No. Around 88% of employees leave for reasons beyond money, so a counter offer that only raises salary without addressing career growth, management, or workload concerns is less likely to succeed.