From JobSeekerNews.com:

The Psychology of Counteroffers: Understanding the Pitfalls
By Thomas D. Meyerhoeffer and George Vasu of iThrive

Overview
A counteroffer is an offer your employer makes to you
after you have received an offer from another firm.
It usually represents a variety of new commitments to
you such as an overdue promotion and/or an increase
in salary, benefits, a reduction in hours, or an
offer of other rewards.

Objective
Identify the most important reasons behind your search
for a new position, and whether or not these objectives will be satisfied if you accept a counteroffer. The following strategies are designed to prepare you for potential counteroffers and make you aware of their implications.

Strategy 1: Keep Your Emotions in Check
Many people take a counteroffer as a grand compliment,
and then let their emotions play a part in directing
their decisions. As with any successful business move,
such emotions cannot play any part in the decision-
making process when you find yourself in a counteroffer situation. In other words, you must maintain your objectivity at all times if you wish to make a decision that is going to have a positive effect on your future.

After all, the company you work for does not let
emotions get in their way when they make an important
decision, so why should you? Do not let the actions of
others determine your destiny.

Strategy 2: Don't Fear Change
Often, it is natural for people to experience a sudden
fear of change at the last minute when making a big
decision. However, when it comes to counteroffers,
remember this: you didn't come to the realization
that you needed to change jobs overnight, so you
shouldn’t decide to abandon your quest for greater
happiness, higher income, and expanded responsibilities overnight either. If you are not completely satisfied with your current compensation, working environment, potential for advancement, level of challenge, recognition, and opportunities for professional growth, don't look back. It's time to move on.

Strategy 3: Trust Your Instinct
When it comes to counteroffers, always remember that
you need to make decisions based on your own "gut
instinct." For instance, when the counteroffer is made
to you, is the person who makes it doing so to
accomplish any type of ulterior motive? Remember, the
decision to make a counteroffer will also reflect upon
and directly affect this person's career, so be objective about their motives. Go back to the reasons why you wanted to make a change in the first place. Most likely, those things have not changed.

Here's something else to consider: do you think that you may have to either threaten resignation or aggressively pursue a review each time you want to advance in your company or increase your income?

If you can answer "yes" to this question, you should turn down the counteroffer.

Strategy 4: Beware of Employer "Damage Control"
If your employer offers you too much money to stay in your position, they may just want to pay you that extra money as a stopgap measure until a replacement has been identified.

This way, they can possibly avoid the costly process of finding and training your replacement. In addition,
the raise that your company gives you as a part of a
counteroffer could just translate into your review date being pushed back while others receive reviews at their regular time.

Strategy 5: Don't "Fish" For a Counteroffer
If you find your current job pleasant enough to work at, conveniently located, and staffed with people that you like, don't try to threat, indirectly suggest, or send "through the grapevine" that you are thinking about leaving for a position that pays more. This is not the way to increase your income or advance in the organization.

The reason is simple: studies show that 80% of counteroffers fail to pan out within one year of acceptance. The time to find higher income, advancement in responsibilities, and professional growth awaits you, so forge ahead.

About the authors

George Vasu and Thomas D. Meyerhoeffer are Co-founders
and Directors of ithrive.com.