While the challenging economic climate of the past two years has given employers a bit of a break, there is no denying that the war for talent is back on again.
The economy is picking up and a lot of people have made “finding a better job” their number 1 New Year’s resolution. Still, most employers will be caught off guard when a valued employee hands in his or her notice.
Many will default to the age-old sales strategy of making a counter offer. As someone who recruits professionals and assists companies in trying to hire the best talent, I have frequently observed how the counter-offer game is being played. Rarely does anyone win.
The resignation of a high-performance employee means considerable loss of knowledge and revenue to a company. Add to that the average cost of 1.5 to three times that employee’s annual salary to find a replacement. Presenting a better offer appears to be the only realistic option to prevent significant loss to the company.
I firmly believe in doing whatever you can to retain your top employees, but the moment an employee makes it known that he or she has another offer on the table, the dynamics of the relationship between employer and employee shift dramatically.
If you are not prepared to accept the resignation, there is no real alternative to making a counter offer. However, this makes it an act entirely born out of desperation. I like to call it the forbidden fruit of employee retention, and as tempting as it may seem – don’t touch it.
Employees who are truly invested in the well-being of their company will always bring up their concerns and, at times, challenge their employer. Only when they repeatedly feel disappointed will they consider the last resort: making the conscious decision to leave.
You might be able to persuade them to stay on by making all sorts of promises and possibly paying them a better salary. Almost all companies who make a successful counter offer still end up losing the person within the next six months.
The reason: a counter offer only sugar-coats issues that are much deeper rooted and can’t be resolved as easily. Eventually, employees will remember why they were looking in the first place. And that has rarely to do with money, benefits, vacation time or job title. Most employees leave because of their bosses.
Sometimes, employees hand in their notice completely out of the blue. Before rushing into a counter offer, take a moment to think about this: Why did they not bring up any of their concerns before? If they never bothered raising their concerns and observations with you, are they really the kind of individual you want as part of your business?
You may be able to convince them to stay on, but be aware that their productivity level is compromised as they have already checked out mentally. Also consider for a moment the effect a successful counter offer sends to your other staff. People talk, and your other employees will soon have figured out that they have a very powerful bargaining tool at hand. Do you really want to put your company into such a vulnerable position?
That said, there is one circumstance when touching the forbidden fruit can be excused: in a pinch, a manager may very well want to use this tool, especially when the immediate cost of losing the individual outweighs the risks of the counter offer.
Keep in mind that the odds are against you if you think you will be able to retain the individual permanently. Instead, use the counter-offer strategy to buy yourself some time. Remember, by threatening to leave, the employee has just shown you how little they believe in a future with your company. You can no longer be sure of their loyalty and commitment. Use the time you bought with the counter offer wisely and do whatever you can to find a replacement as soon as possible.
A word of caution to any professional considering accepting a counter offer: think very carefully about the implications of your decision. If you have gone through an in-depth interview process with another company but turn down theat offer because you accepted a better deal from your current employer, your true motivations will be questioned.
In my experience, companies don’t make job offers lightly and will wonder whether you were simply out shopping for a better deal. This will definitely limit your future chances with this company and whomever you met during the interview process.
Receiving a counter offer is very flattering but be aware that you will invariably be considered a flight risk even if you decide to stay on. Your employer can no longer be sure of your loyalty. What will this mean for your future career?