So I have gotten myself into an interesting situation at work. I was recently offered a job by another company that I accepted due to financial reasons. I love my current company and have been with them for almost 4 years. After one week my boss has made me a counter offer that I would very much like to accept but there is a big catch.

I would be getting a big promotion/raise, but as a result someone else (who is severely less productive) would be getting fired. I expected all along to get a counter offer and that was sort of the goal. Unfortunately before offering me the promotion my boss sent out a company wife email announcing my resignation.

How do we proceed with the promotion/canceling of my resignation in a professional manner? We both currently fear that other employees may get the vibe that if they put in their two weeks they will get similar results which is not the case at all. We are a very small but very successful company (about 40 employees)

Are there any good excuses we can use for this scenario or are we better off just coming out truthful?

That company wife (sic) will get you every time .... {You are going to be disliked, disdained, and maybe even hated. Are you sure you can be productive if the employees do not support you because of this "trick" play?}

I guess the boss tells a little white lie and says he erred when he announced you had resigned.

I also hope your boss really means to keep you on.. Some companies will give you a promotion and raise under these conditions and then fire you as soon as they find someone else. [ To stick it to you for being unfaithful to the company. ]

What excuse is there? You changed your mind that is all that needs to be said. No one else in the company needs to know you got a raise or a promotion to stay. All you have to do is not announce the promotion right away and you should be fine.

I don't think "you" have anything to do with this.

He's your boss (owner of the company?) that will handle the entire situation. But I don't understand what there to "handle".

Common sense is: Your boss thought it was to the company's benefit to keep you and offered you a package that enticed you to make you stay. If your co-workers (and you) don't understand this, you all should be fired.

Dont worry about someone else being fired, its not your problem

Ask your boss to rip up your resignation, and put out a statement that your confident in the company and wish to remain. Simples!

I would resign. Studies show that people who resign then decide to stay are usually gone within a year.

just mention that you have come to an agreement to stay on - no need to mention the promotion until it actually takes effect and the other person is unfortunately laid off