What, specifically, is the employee uncomfortable about?
As a general rule, counteroffers are rarely a good idea for either party.
Employees rarely leave jobs solely for money - so throwing more money at them doesn't fix the real reasons they're looking to leave.
And if they're worth more money Monday, why weren't they worth more money two months ago. Why did they have to decide to leave for them to get more money.
I routinely counsel candidates not to accept counter offers. I have had candidates who did accept counter offers call me back - sometimes in tears - to see if they could now accept an offer that is, of course, no longer on the table. The record was 48 hours - she realized management had completely lied to her - but by then she had blown up the great offer she had on the table from us.
And even if candidates do accept a counter offer, most have already made the emotional decision to move on. After the glow of those first few bigger paychecks wear off, typically they're gone in 6 months anyway.
And depending on just how mercenary your employee is, they may use your counter offer to go back to the potential new employer to get THAT offer increased.
FYI - I don't bite on this nonsense either.
REGARDING: "he said it will be my job to deal with the fall out when her peers learn about it"
Typical - he creates the mess and you'll have to clean it up.
So if he's the one approving compensation changes, ultimately it will be HIS job to deal with the fall out.
This is another reason why counter offers are typically not a good idea. If you employees are smart, they will start asking for comparable raises.
Depending on your relationship with the employee, you could ask her to keep this matter confidential - no guarantee that she would though.
Personally, I feel the appropriate response to an employee turning in their resignation is "good luck in your new job!".
Since it sounds like your boss is unfortunately the one making the decisions on this, you might start by asking your employee the reasons she was looking for a new position - you can then re-enforce that the counter offer you're presenting her will change none of those things.
Good luck - please keep us posted.
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