What Do You Do When Your New Hire Gets A Counter Offer?

Businessman pulled by two big hand. Fight for talented employees. business competition and human resource concept.

“How do you think Maxim (Integrated Products) will react when you resign?” I asked Jeroen. We had just signed a $12 million term sheet for our initial funding, and Jeroen and I had agreed that now was the time for him to resign and become our full time Vice President of Engineering.

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“I don’t know,” Jeroen said.

“I’ll tell you exactly how they’re going to react because I worked there (for over ten years),” I said. “They’re going to everything in their power to keep you.”

Jeroen’s joining the company was critical to any success we expected to have. In fact, let me go one step further. There would be no funding if Jeroen backed out at the last second because our investors would, rightfully, back out.


It’s on you, the hiring CEO, to make sure anyone you recruit doesn’t back out.


Jeroen resigned the next day. And, not surprisingly, Maxim’s management put a full court press on to keep Jeroen. I checked in with Jeroen every day for the length of his two week notice.

I asked Jeroen how things were going at Maxim, and Jeroen told me everything they did. It was quite impressive because they didn’t want to lose him. And none of it surprised me:


A. They offered to promote Jeroen if he stayed.


Gee, what a surprise. Why not appeal to his ego. It’s a classic maneuver that actually works a lot of the time. In fact, when I left Maxim, Maxim’s CEO, Jack Gifford, offered to promote me if I stayed.

It works because there’s the safety of staying combined with the prospect of increased responsibility. And, many times you, the hiring company, are being used a stalking horse so the person you’re hiring can get a better deal by staying put.

You know what, it’s tough to turn down a promotion. It’s up to you to make the promotion irrelevant by giving your new hire something they can’t get anywhere else.

That’s exactly what we did with Jeroen. I made Jeroen a co-founder. Jeroen now would be a key member of the team, helping build a world class company.

Plus, I gave Jeroen the ability to build his organization exactly as he wanted. And, because Jeroen was part of our management team, he would get to interact directly with our board of directors.

There was no way Maxim could match any of these things, so it made it for an easy contrast for Jeroen. He could either stay in the safety of Maxim, doing the same thing he had been doing, or he could take a risk by joining with us and help build a world class company.


B. They offered to increase his salary and stock.


Promoting Jeroen played to his ego, but increasing his compensation is more challenging for a startup to match. Think about it. Maxim’s market cap was over $10 billion, with close to $1 billion in cash.

They had infinite resources. How could we match that?

Well, the challenge that all big companies have is they have very well-defined pay scales for jobs. And most big companies are loathe to pay someone beyond their level.

In our case, I knew we couldn’t match Jeroen’s overall cash compensation of salary and bonus. However, we could give him a very good salary and something Maxim couldn’t give him; founder’s stock.

Jeroen would own a large percentage of our company. He would make significantly more money working with us, if we won, than by staying at Maxim.


C. They badmouthed me and our prospects.


“They’re saying a lot of unflattering things about you,” Jeroen told me a week after he gave notice.

“I’m not surprised,” I said. “Let me guess. They’re telling you I’m difficult to work with, and that I have a temper.”

“Yes,” Jeroen smiled. “Don’t worry, I already knew that about you from our meeting with ‘Donald Ventures’.” “Raul”, the partner we working with at DV had asked me, point blank, about what bad things he would hear about me. I told him that would hear from some people that I was difficult to work with.

“Maxim has nothing to worry about,” I laughed. “Even if we’re successful, it’s not like they’re going away.”

“I think they’re more worried about you stealing their best people,” Jeroen said.

“Yeah, that’s a fair worry,” I said. “However, they have so many good people that it’s unlikely we’ll take all of them.”

Get ahead of the story if you can about any bad things about you or your company. This builds trust, and it takes the sting out of anything someone might hear about you.

Again, none of it surprised me. It’s straight out of the FUD (Fear, Uncertainty, and Doubt) playbook that a large company would follow.


Get the potential hire involved in your company before they join your company.


The recruiting process with Jeroen, from our first meeting at Starbucks to Jeroen officially joining the company, took over one year. It was over six months from the time Jeroen agreed to join us and when he finally left Maxim.

That’s a long time.

Jeroen didn’t join us sooner because we were raising money in the middle of the Great Recession. Raising our initial funding wasn’t a given. It didn’t seem fair, or realistic, to ask Jeroen to quit his job and join us.

I’d be lying if I didn’t say I was nervous about Jeroen joining us. We’d be dead if Jeroen backed out. However, as nervous as I was, I also felt that Jeroen would join us.

I asked Jeroen to participate in our strategy meetings and to meet with potential investors. This kept Jeroen involved in the company which increased the chances of him joining us when the time came.


You can do everything right, and the prospect may still not join your company.


Fortunately, Jeroen, true to his word, joined us as planned. We repeated variations of this strategy with many of the people we hired.

Our track record was pretty good, but not perfect. I can remember one senior hire that backed out at the last minute, staying with his existing company.

Business is competition. And there’s huge competition for the best talent. It’s up to you do everything you can to that new hire to join your company.


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