A counter-offer is what a candidate's current employer offers to make them stay after they resign, usually more pay or a new title. In India it tends to arrive during the notice period, weeks after the candidate accepted your offer. You cannot prevent it, but you can prepare for it from the first interview.
Why candidates accept
Staying is easier than moving. The candidate knows the team, the commute and the manager, and now the pay gap has closed. If money was the main reason for leaving, a matching raise removes that reason. If the reason was the work, the manager or a lack of growth, a raise leaves it in place.
Find the real reason early
In the first conversation, ask why they are looking and what would have to change for them to stay. Then ask directly whether they would stay if their employer matched the new salary. A candidate who hesitates is telling you something useful. You need not drop them, but your offer must then be about more than CTC (the total yearly pay), and you should keep a second candidate in the process.
When the counter-offer arrives
- Talk the same day. A call from the hiring manager works better than a message from HR.
- Ask what was offered and how they feel about it. Listen before you respond.
- Go back to their reasons. Repeat what they told you about why they wanted to leave, and ask whether the counter-offer changes any of it.
- Leave their employer out of it. Criticism makes people defend the place they work.
- Agree a date for the decision. An open-ended wait costs you your other candidates.
Raising your offer, and what to do if they stay
If you offered below what the role is worth and can fix it, fix it once and say that it is final. Avoid a round-by-round auction, because a person who joins only for the highest number can be bought again by the next one. If your offer was fair, hold it and explain what the role gives them that their current job does not, such as the kind of work and the people they would do it with.
If they decide to stay anyway, accept it politely and move on quickly. This is why the second-choice candidate should hear from you throughout the process, long before you need them. Keep the door open as well. Some people who accept a counter-offer start looking again when the original problem returns.
For every offer you make from now on, write down the candidate's stated reason for leaving on the day they give it. You will want that note when the counter-offer call comes.