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Successful businesses are built by dedicated, highly skilled and hard-working people. When a company is faced with the potential loss of one of those people it can be incredibly disruptive and if that employee was a key cog in the machine it can really knock the whole business for a six. So what solution do companies deploy as a last-ditch attempt to retain a valuable employee who is trying to leave? They present a counter-offer.

 

A counter-offer can include greater flexibility around work hours, more benefits and perks and better career development opportunities; but typically the counter-offer is centred around one thing, which possibly has the biggest pull on people universally, and that’s money.

 

From our 25+ years’ experience as recruiters we’ve seen an increase in the number of counter-offers being presented to employees who are attempting to move to another company. A candidate who has been engaged throughout the whole job application process reaches the final offer stage and is about to sign the contract, they’re excited and eager to advance their career with a new company, but then next minute they abruptly decline the job offer, because their existing employer has presented them with a lucrative counter-offer that they just can’t pass up.

 

The hiring company is left in the lurch, the whole recruitment process comes to a grinding halt, leaving everyone scratching their heads wondering how it went so pear-shaped. Suffice to say neither the hiring company nor the recruiter is happy with the outcome, hiring new staff can be expensive and time-consuming, so to be sent back to square one can be frustrating to say the least.

 

There are pros and cons for both employers and employees to consider when either offering or accepting a counter offer, so here are a few to be mindful of:

If you’re an employer:

PROS

  • You retain your employee and don’t need to start the recruitment process for a replacement, which can be especially time consuming and challenging when replacing highperforming employees and/or hard-to-fill specialist roles

 

  • Retaining existing employees is cheaper than acquiring new talent, at least in the short term

 

  • There’s no disruption to existing projects that that particular employee was involved in

 

  • Overall it’s a relatively quick and easy solution, which means less stress!

 

CONS

  • You’re just prolonging the inevitable and paying more in the longterm. Your employee is still likely to resign again at some point – some statistics suggest they’ll be out the door in 6 months’ time, meaning you’ll be paying a higher salary to them while they remain with you and then you’ll still have recruitment costs to find their replacement

 

  • The employee may not be as engaged, their productivity will slip or stagnate. If the counteroffer doesn’t resolve all the issues an employee had with their role and/or the company then they’re only staying for the increase in pay and have little else motivating them

 

  • Trust and loyalty become questionable. Your employee has indicated they want out and they’re willing to go as far as to actually resign, so while you’ve managed to convince them to stick around for now, you’ll constantly be on edge wondering if they’ll resign again (and actually commit to it) or if they’re staying for the wrong reasons and you might have been better to just let them go

 

  • Consider your company culture and the effect on your other employees – do you really want to retain someone who doesn’t want to be there? If other staff find out they resigned and were then offered a counteroffer to stay they might attempt the same or resent the fact that the employee managed to sweeten their remuneration package in that way

 

If you’re an employee:

PROS

  • You’ll get a significant increase in salary

 

  • You get to stay in a familiar environment with familiar peers, so you avoid any stress with having to change jobs and adjust to a new workplace

 

CONS

  • Future pay increases are unlikely as you may max out what your company can afford / is willing to pay you. Also if they suspect you’ll attempt to jump ship again they might be unwilling to invest more in you

 

  • If the other reasons that caused you to resign in the first place are not addressed and resolved, you’ll be just as unhappy in your role as you were before regardless of how much more you’re now being paid – you need to ask yourself is it really worth it?

 

  • You could be seen as disloyal and untrustworthy by both your current employer and the new one you were about to join. Plus it’s expensive to hire new staff, so you’ll end up with a bad reputation with the new employer, which can quickly spread across an industry if it’s small or well connected

 

  • Your role may stagnate – large, important and longterm projects might not come your way if your current employer anticipates you’ll attempt to jump ship again

 

  • In a restructure you may bump yourself to the front of the chopping block line, because your employer will see you as less committed to your job than your peers

 

  • If your current employer really valued you they would have addressed your concerns, increased your salary, reviewed your career development opportunities before you resigned.

 

Ultimately a counter-offer is a stop-gap solution and the cons clearly outweigh the pros for both employers trying to retain resigning staff and employees wanting a career change. While a counter-offer might seem like a pretty sweet incentive, in the long term both parties end up paying more, not just financially but in terms of foregoing a positive and productive working relationship.

 

Written by Alisa Moore, Research & Community Manager at Gaulter Russell Numero.