The End of the Counteroffer? Why Strategic Retention Is Replacing Quick Fixes

In an employment market defined by transparency and shifting priorities, counteroffers are losing their appeal. Data from 2024 reveals that while 63% of employers increased salaries to fill roles, 57% chose not to make counteroffers to resigning employees—a five percent rise from the previous year. This trend marks a broader shift towards proactive retention and long-term engagement over reactive responses.

Kaajal Khelawan, HR Manager and Operations Lead, explains, "Employers are shifting away from making reactive offers and focusing more on proactive retention." Rather than scrambling to retain staff once they hand in their resignation, more businesses are investing in the experience and growth of their current teams.

"If an employee has chosen to leave, you need to let them go."

Khelawan is direct about the limitations of counteroffers. "They don't work. They're a band-aid solution," she says. Most employees who accept counteroffers end up leaving within six to twelve months anyway. More critically, such offers can lead to pay inequality, damaging morale and creating internal tension when colleagues learn about unequal compensation.

With growing emphasis on pay transparency, businesses are increasingly aware of how last-minute salary hikes may erode trust. As organisations strive to ensure fairness in pay structures, counteroffers become a liability rather than a lifeline.

Juma Mrisho, Talent Acquisition Business Partner, agrees. He links the decline in counteroffers to deeper structural shifts: "Reactive offers are seen as a short-term fix that doesn't acknowledge the deeper issue within an organisation." He notes that companies are now prioritising long-term strategies such as employee engagement, leadership development, and cultural alignment.

Mrisho also challenges the assumption that salary alone is the reason people resign. "The idea that a salary increase will solve the issue of someone leaving is a misconception. People are also leaving due to cultural or leadership issues. A counteroffer won’t fix that."

The trend is clear: businesses are becoming more strategic with pay and retention. Rather than relying on quick fixes, they are creating environments where employees feel valued, supported, and motivated to stay.

Khelawan concludes, "The goal is to create workplaces where employees don't want to leave, rather than scrambling to keep them once they've resigned."

As we look ahead, the decline in counteroffers suggests that employers across Australia and New Zealand are embracing a more considered, people-first approach to talent management—one that values foresight over quick fixes and stability over short-term wins.