Counteroffer: Should You Fight to Keep a Resigning Employee?

What Is a Counteroffer?

A Counteroffer is an offer made by an employer after an employee resigns, usually to persuade the employee to stay. It often includes a salary increase, but it can also include a promotion, title change, bonus, flexible work arrangement, revised job scope, new reporting line or promise of future growth.

ViewHR explains that a counteroffer happens when an employer offers an incentive to convince an employee to remain after the employee has announced that they are taking another job.

Reference: ViewHR Should I Make a Counteroffer to Stop an Employee From Leaving

The key point is timing. A counteroffer happens after the employee has already decided to leave, which is exactly why it needs careful thought. If the company only gives better salary after resignation, the employee may wonder why the value was not recognised earlier.

Why Employers Make Counteroffers

Employers usually make counteroffers because losing a strong employee is expensive and disruptive. A resignation can affect projects, clients, reporting, team workload and business continuity.

Common reasons employers make a counteroffer include:

• The employee holds important company knowledge
• The role is hard to replace quickly
• The company does not have a ready successor
• The resignation affects client delivery
• The team is already short staffed
• Hiring a replacement may cost more
• The manager wants to avoid immediate disruption

Forbes notes that a counteroffer can work in the short term because it may retain talent and knowledge while removing the immediate cost and effort of recruiting and training a replacement.

Reference: Forbes Should I Make a Counter Offer to an Employee Who Has Resigned

These are valid concerns. The question is whether a counteroffer actually solves the problem, or whether it only delays the disruption.

The Risks of a Counteroffer

1. Money rarely fixes the real reason

People seldom resign over salary alone. Limited growth, a difficult manager, burnout, lack of recognition or poor fit with company direction are common reasons too. A pay rise can quiet the problem for a few months, but if the root cause is still there, the employee may simply resign again later.

2. It can encourage others to do the same

If the team sees that resigning leads to a raise or promotion, some may start to see resignation as a negotiation tool. That can quietly damage your pay structure and culture.

3. It can create fairness issues

An employee who receives a counteroffer may suddenly earn more than colleagues with the same role or experience. Those colleagues may notice, and that can hurt morale and trust.

4. Trust can change on both sides

Once an employee has resigned, the relationship is different. Managers may wonder if the employee is a flight risk, and the employee may feel awkward about having used a job offer to get a better package.

5. The decision to leave may already be made

By the time someone hands in their resignation, they have usually been thinking about it for a while. A counteroffer may delay the exit instead of preventing it.

Why Counteroffers Can Be Risky

A counteroffer becomes risky when it solves the symptom but not the reason behind the resignation.

If the employee resigned because of salary, and the salary was genuinely below market, a counteroffer may help. But if the employee resigned because of poor management, limited progression, burnout, unclear direction or weak culture, more money may not fix the problem.

Robert Walters Malaysia explains that counteroffers can act as a short term retention tool, especially when the reason for leaving is mainly financial. However, if the deeper reasons still exist, the employee may begin looking again within months.

Reference: Robert Walters Malaysia Why You Should Not Accept Counter Offers

From the employer side, this means the company may pay more but still lose the employee later. The business then faces both higher cost and delayed replacement planning.

The First Question: Why Is the Employee Leaving?

Before making any employee counter offer, employers should understand why the employee resigned.

Do not assume the answer is salary. Some employees say salary because it is easier to discuss than manager conflict, burnout or lack of future growth. Others may have already accepted another role because they want a fresh environment, not because they are unhappy with pay alone.

Employers should ask calm and specific questions:

• What made you start looking outside?
• What does the new role offer that we currently do not?
• Is your decision mainly financial or career related?
• Have you already accepted the other offer firmly?
• Is there anything we could realistically change?
• If we address this issue, would you genuinely want to stay?

A counteroffer should only be considered after the employer understands the real reason. Without that, the company may be negotiating blindly.

When a Counteroffer Can Make Sense

A counteroffer is not always a bad idea. It can work well when the reason for leaving is clear, fixable and genuinely worth correcting.

It may be worth considering when:

• The employee is a clear high performer
• The employee has critical knowledge or client relationships
• The reason for leaving is clear and fixable
• The salary is genuinely below market
• You were already planning a salary review or promotion
• The role has grown beyond the current title or package
• You can offer something structural, not just a higher number
• The change will not create unfair internal imbalance

For example, if a high performing employee leaves because their salary has not been reviewed for years, and market salary has clearly moved, a counteroffer may be fair. In this case, the issue may be compensation correction, not loyalty.

However, employers should also ask why the salary gap was not addressed earlier. A counteroffer should lead to better salary review practices, not become the normal method of retention.

Reference: 2026 Salary Guide for Popular Jobs in Malaysia

When It Is Better to Let Go

In some situations, a respectful farewell and smooth handover serve the company better than a counteroffer.

This may be the right decision when:

• The main reasons are culture, management style, burnout or values
• The employee has been disengaged for some time
• The reason for leaving cannot be solved
• The offer would break your internal salary structure
• The employee is mainly staying because of money
• The manager no longer trusts the employee's commitment
• The employee's career goals no longer match the company

Forbes suggests that if the employee has already checked out or the company cannot provide what they are looking for, it may be time to say goodbye rather than spend energy managing someone whose heart is no longer in the role.

Reference: Forbes Counter Offer Employer Considerations

Letting someone leave is not failure. Sometimes it is better for the company, the manager and the employee.

5 Questions to Ask Before Making a Counteroffer

Before responding emotionally, employers should slow down and ask five practical questions.

• Why are they really leaving? Ask openly and listen without defending.
• Would we have made this offer if they had not resigned? If not, think about what that says about your retention process.
• Can we fix the underlying reason? If the answer is no, a counteroffer is only a short term fix.
• How will the rest of the team react? Consider fairness, salary structure and precedent.
• What would replacing them realistically cost us? Include recruitment time, onboarding, lost productivity and team disruption.

These questions help employers decide whether the counteroffer is a smart retention move or only a panic response.

Counteroffers Can Affect Internal Pay Fairness

One risk employers often overlook is internal pay fairness. If one employee receives a large salary increase only after resigning, other employees may feel punished for staying loyal.

ViewHR highlights that counteroffers can set a precedent if employees realise they can secure pay rises or benefits by resigning first.

Reference: ViewHR Counteroffer Risks

This can create unhealthy behaviour. Employees may start using external offers as negotiation tools. Managers may feel pressured to respond emotionally. Salary structures may become inconsistent.

Employers should consider the wider team before making a counteroffer. One decision can affect trust across the department.

Counteroffers Can Change the Trust Relationship

Once an employee resigns, the relationship may change. Even if the employee accepts the counteroffer, the manager may wonder whether they are truly committed. The employee may also feel watched or judged.

Jobstreet Singapore notes that after a counteroffer, loyalty can be questioned and future workplace relationships may feel different.

Reference: Jobstreet Reasons Not to Accept a Counter Offer

For employers, this is important. Keeping the employee is only useful if the working relationship remains healthy. If trust is damaged, performance and engagement may still decline.

A counteroffer should therefore include an honest conversation about expectations. Both sides need to be clear about what changes, what stays the same and how the relationship will move forward.

How to Handle the Conversation Well

How you respond matters as much as what you decide. A rushed reaction can make the conversation emotional, while a calm response gives both sides room to think clearly.

Employers should:

• Stay calm and curious. Start with questions, not offers.
• Do not decide in the first five minutes. It is acceptable to say you need time to review the situation.
• Be honest about what you can and cannot offer. Over promising will create more problems later.
• Respect the employee's choice. Whether they stay or go, treat them well.
• Keep the relationship professional. Former employees can become future clients, referrers or returning team members.

A respectful conversation protects your employer brand, even when the employee decides to leave.

What Should a Counteroffer Include?

If the company decides to make a counteroffer, it should be structured carefully. Do not rely on a vague verbal promise.

A counteroffer may include:

• Revised salary
• Clear effective date
• Updated job title if applicable
• New responsibilities if agreed
• Career development plan
• Manager support plan
• Flexible work terms if applicable
• Review timeline

Employers should avoid promising things that cannot be delivered. A vague promise of future promotion may buy time, but it can also create deeper frustration if nothing changes later.

The offer should be realistic, documented and connected to the reason the employee considered leaving.

Reference: Salary Offers Malaysia

What If the Employee Rejects the Counteroffer?

If the employee rejects the counteroffer, employers should handle the exit professionally. A respectful departure protects employer reputation and keeps the door open for future relationships.

Employers should confirm the notice period, final working day, handover plan, unused leave, final salary and return of company property.

Reference: Notice Period in Malaysia

Managers should also avoid taking the resignation personally. If the employee has made a firm decision, pressure may damage the relationship and create unnecessary tension during notice period.

A professional exit is better than a forced stay.

Start Replacement Planning Early

Even if you are considering a counteroffer, replacement planning should start early. This does not mean the company wants the employee to leave. It means the company is protecting business continuity.

Employers should review the role immediately:

• Is the same role still needed?
• Should the job scope be updated?
• Can internal staff cover temporarily?
• What salary range is now realistic?
• How long will replacement hiring take?
• Do we need recruitment support?

Sometimes a resignation becomes an opportunity to redesign the role. The company may need a different skill set, stronger leadership or a more suitable salary range.

How to Reduce Resignations in the First Place

The best counteroffer is the one you never need to make. Employers can reduce the risk by understanding what key employees need before problems build up.

A practical retention process may include:

• Reviewing salaries regularly against the market
• Holding stay conversations with key employees
• Creating clear growth paths
• Recognising good work consistently
• Reviewing workload before burnout starts
• Improving manager communication
• Clarifying promotion criteria
• Planning succession for critical roles

Forbes also notes that employers should focus on preventing resignations by offering competitive salaries, benefits and career opportunities before employees decide to leave.

Reference: Forbes Prevention Before Counter Offers

A resignation should rarely be the first time you learn what an employee wanted.

How a Recruitment Agency Can Help

A professional Recruitment Agency can support employers during resignation and counteroffer situations by providing market clarity.

Eternity Recruitment helps employers understand whether the employee's salary expectation is aligned with market rates, how difficult the role may be to replace and what kind of candidates are available.

We can support employers with:

• Salary benchmarking: Understanding whether your pay is competitive for the role.
• Market insight: Understanding what candidates are expecting in your industry.
• Fast and targeted shortlists: Supporting replacement hiring when you decide to let an employee go.
• Headhunting support: Helping employers approach senior or critical talent that is hard to fill.

Recruitment support can also help employers avoid making decisions based only on panic. If the market has suitable replacement candidates, the company may not need to overextend with a counteroffer. If the role is genuinely hard to fill, the employer may decide to retain the employee while improving internal succession planning.

Final Thoughts

A Counteroffer is not always wrong, but it should never be automatic. Employers should make the decision based on employee value, reason for leaving, internal fairness and long term business impact.

An employee counter offer may work when the issue is clear, fixable and genuinely worth correcting. However, if the resignation is caused by deeper problems that the company cannot solve, a counteroffer may only delay the employee's exit.

Employers should also remember that retention should happen before resignation. Salary reviews, career planning, better communication and fair workload management are stronger than panic offers made at the last minute.

With support from Eternity Recruitment, a trusted Recruitment Agency, employers can make better decisions when employees resign, understand market salary expectations and plan replacement hiring when needed. The goal is not only to keep people. The goal is to build a team that wants to stay for the right reasons.