Sometimes a counteroffer is a sensible commercial decision. When it becomes the organisation's primary retention strategy, something else is going wrong.

Someone resigns, and suddenly their value becomes remarkably clear. The salary that couldn't be increased last month can now be reconsidered. The promotion that wasn't available becomes is floated as a viable option. Flexible working arrangements appear, and development courses materialise. Senior leaders who previously had little contact or interest, call out of the blue to understand what it would take for them to stay.

Sometimes this is entirely rational. Losing an experienced person can be expensive. Recruitment fees are only part of the cost. There is lost productivity, onboarding time, knowledge walking out of the door, pressure transferred onto the remaining team and disruption to customers, projects and relationships. For a genuinely critical role, paying more to retain somebody is often considerably cheaper than replacing them. A counteroffer can therefore be a perfectly legitimate business decision. It can keep a critical operation running while buying time to strengthen succession, redistribute knowledge or address a capability gap.

The problem isn't the counteroffer, it's what had to happen before the organisation recognised the person's value. When resignation becomes the trigger for recognition, the organisation has effectively created a system where leaving is the most effective way to progress or leverage an out of cycle pay rise.

That creates some strange incentives. The colleague who diligently performs under radar, develops others, delivers consistently and remains loyal may receive the standard annual increase. Someone else resigns and receives 15% to stay. Word inevitably travels. It might not appear on an organisational chart or engagement survey result but people notice these things. The lesson is quickly learned. You don't necessarily get rewarded for staying. You get rewarded for threatening to leave. That is where occasional counteroffers can turn into counteroffer culture.

I've seen the extreme version of this. The same person resigned three times. Three times they were persuaded to stay, each time with improved terms. Eventually they progressed into a role that only 12–18 months earlier they had been considered too inexperienced for.

Perhaps they had developed significantly during that period. But it was difficult to escape the contradiction. Repeatedly demonstrating a willingness to leave had created more progression than staying and performing appeared to.

Meanwhile, others watching could reasonably ask what loyalty was actually worth. The person who had resigned three times hadn't demonstrated more loyalty to the organisation. They had simply created three moments when their departure became an immediate problem that needed solving.

That's the unintended message counteroffer culture can send. Loyalty becomes economically irrational.

It usually doesn't happen deliberately. Managers are trying to solve an immediate problem. A resignation lands, the individual is difficult to replace and losing them creates potential operational pain. The easiest intervention is throw money at the issue.

Problem solved, except sometimes it isn't.

If somebody started looking elsewhere because they felt undervalued, lacked progression, was promised development, had a poor relationship with their manager or had simply stopped believing in the organisation, additional money only temporarily suppresses the reason they wanted to leave. The resignation was the event, but not necessarily the cause.

There is also a leadership question hiding underneath all of this. If somebody is genuinely worth considerably more the afternoon they resign, were they worth considerably more the morning before they resigned? If the answer is yes, why did the organisation need a resignation letter to recognise it?

Good retention should happen much earlier and be a proactive activity. It happens through conversations about ambition before somebody starts applying elsewhere. Through understanding who would be genuinely difficult to replace. Through succession planning that exists before the vacancy does. Through recognition, development and pay decisions that reflect contribution rather than negotiating leverage. And through managers knowing their people well enough to notice when something has changed.

None of that means organisations should never make counteroffers. There will always be circumstances where retaining somebody is commercially sensible. Sometimes the market has moved faster than internal pay structures. Sometimes an external offer exposes a genuine salary discrepancy. Sometimes personal circumstances change. Sometimes keeping somebody for another twelve months while building capability underneath them is exactly the right decision.

Leadership seldom lives comfortably in absolutes. But repeated counteroffers aren’t a strategy. If the same organisation continually discovers how valuable people are only when they resign, the counteroffer isn't really the solution. It's the receipt for a cultural retention problem that should have been dealt with much earlier.