Ask HN: Is it good to have a company policy that normalizes counter-offers?

Employees will definitely shop around if it means they can force higher pay.

If they ever get an offer from a huge company, you would get stuck trying to match what such companies can afford, even if they didn't actually intend on leaving, and just wanted a raise. Then when the rest of the staff know how much they could be making, you'll end up with a lot more problems - either you'll have to raise them all, or put up with disgruntled employees who want to leave because you "aren't being fair" to them.

It also doesn't force you to keep someone who is under-performing and raise them to the rate offered by another company that isn't necessarily aware of why you do not believe they are worth that amount.

Also don't forget that they can tell their new offer that they got a counter offer, and there is a good chance they'll raise them even higher since they've already deemed the candidate valuable enough to hire, and started that ball rolling already. Essentially it's a two-step bidding war that is stacked against you.

This is basically why it's best to not say anything out loud. There will be times that you will not feel so generous toward an outbound employee.

Thinking further, how would you even know that a claimed job offer is authentic, and not just a ploy to get a raise? You wouldn't be able to call the alleged new place up to ask.

What if the employee continues to shop, looking for even higher offers to game the system? Will you give them a raise each time?

This is assuming that not everybody is honest or completely ethical when it comes to money. I'm not really alarmist, but I wouldn't invite this kind of unverifiable abuse, either.

I don't think the right way to look at it is from the "counter-offer" perspective. It frames it as adversarial and between you and the team-members, between your company and others. It also makes it "reactionary" as in a reaction to something external.

It is similar to someone exclusive and married telling their spouse: "if there's someone else out there courting you and you're considering leaving me, tell me and I'll match their offer and take better care of you".

It sets the wrong incentives and makes the care, the offer, conditional to another offer from a third party. A better clause would be one that explicitly unhibits conversations about compensation, future, careers, equity, but that should not be conditional to anything, or counter to anything. It should be "we can talk about pretty much everything here".

I think an alternative is to act from within and make your offers neither conditional to anything, except the company's finances, nor counter to anything except to your own offer. I think that showing the intent and the willingness to act from within with your actions day in and day out is better: you value and respect the people enough that you will generally do right by them throughout the relationship, that will not necessarily end with their departure, within the constraints of the company that will generally be shared. That means that your actions will make them trust you enough that they will know they're not being screwd. They'll know that you will, within your means, spontaneously bump their compensation without them even asking.

A sequence of spontaneous bumps as the company picks up steam goes a long way.

Talking, probing, observing, sensing. You're amongst colleagues. They'll share how they view things, what they want to do, what their constraints are. Doing the right thing every time, or trying, goes a long way.

Many of the problems result from information asymmetry and people's imagination. Imagining they're left behind or missing out on something or being dealt a bad hand. Your actions every day puts their mind at ease.

Building an organization where compensation is not the only factor people are choosing to stay for, even though it is important, is important. In other words people who leave an organization for just a marginal incrase in compensation is symptomatic of deeper problems. While building this, actions day to day speak louder, and doing right by the people is more effective than adding a clause that sets the wrong incentives.

I agree that it is a bad idea, as you optimize for "shopping around" behavior.

You should optimize for "I enjoy working here, and will do a good job because I want to" which is somewhat harder.

Two things spring to mind: Make sure to automatically increase salary with time, at least to match inflation, but more to match what an employee shopping around could expect.

- Why switch to a new job with a slightly higher pay, if you're reasonable sure of stable increases where you are now?

As far as you can, try to increase pay more for people who do a good/over average job.

Make it known during onboarding, that pay increases with time. This won't entirely discourage "shopping around" and there are lots of average/below-average types who base their entire career on jobhopping, let them leave, you don't want them anyway.

This seems equivalent to Netflix policy of paying people at the top of their personal market rate. (Someone who's worked there can no doubt give better insight into how it works in practice). The difference I see is that Netflix e.g. could do some market research to get the realistic market range for a person and then pay them the top rate. In your case, you are asking them to explicitly demonstrate a rate, by getting an offer. It seems more efficient to go the Netflix route and pay for some good compensation info, rather than making folks go through the process themselves (and no doubt be more likely to take the offers having been courted for a new role). If this is just about comp, better to just keep folks appropriately paid.

I think this is the norm, written or unwritten. My first boss hinted that someone else did the same thing and they matched the offer. And every other boss has been quick to counter offer as soon as I hand in a resignation, but by that time I've already mentally clocked out. Keep in mind that the interview process can be grueling. It takes tremendous energy to change jobs, and anyone who went through the trouble is probably already lost.

An alternative solution might be doing what my current job does - if anyone has a goal that they need more money for, they should bring it up with their manager. You're probably not going to get a raise if you're comfortable, but some people have to deal with debt, housing costs, medical/family expenses, weddings, and these people feel like there's no other choice but to job hunt.

However, I think the honesty is reassuring.

A startup in early stage can’t afford to have such policy. Instead encouraging the obvious shopping around, try to focus on the good things corporates usually don’t have. Developers will appreciate continuous challenge, career path, anything that can tap the ego (e.g. encourage public speaking or blogging), and general out of the box thinking when it comes to company perks. Money isn’t the first factor that will cause attrition…

Your advisors are right, this is a bad idea. If knowledge retention is a problem, always have a spare dev or two around to cushion for people leaving. That would still be cheaper than what you are planning.

I think that is capitalism at work. When companies shop for the lowest price vendor, that's rewarded. When employees do it, it's establishing the market rate for their skills - like it or not, people will get offers for what they are worth - no more, no less.

A policy like this will force your team to get very clear on the value of the work and what they are willing to pay, relative to the type of candidate you will hire to do the job. Most people like to over-hire (we're looking for someone who has done this specific thing for at least 2-3, but more like 3-5 years. If you want to over-hire, you are going to have to over pay. Realistically, you'll have to decide whether or not you really need to over hire for specific experience, or what you really need is someone capable of working at scale, who can read open-source documentation and figure out how to learn new software packages, with the assistance of Google.

Or, you can do what FAANG does and over pay for the top talent, even though many of those folks write relatively trivial code.