“What’s it gonna’ take to get you to stay?” Financial Leaders, you may have asked this question recently of a departing employee, but I believe to counteroffer or NOT to counteroffer is the real question you should be asking yourself… And the next area you’ll need to focus on after this immediate crisis is, how to retain employees WITHOUT money used as a counteroffer.
Recruiters talk ad nauseum about how they can help their clients avoid losing candidates to counteroffers. Few, if any, talk much about the flip side of the coin – whether their clients should or shouldn’t engage in giving out counteroffers to retain top talent.
The answer is…it’s complicated.
One thing is clear; it’s a common practice, and one that is rampant in the current low unemployment, candidate-driven market.
Even in 2018, a survey of 5,500 hiring managers by Robert Half International Inc. found that 58 percent of managers make counteroffers to retain employees who receive job offers from other companies. The most common reasons cited were to “avoid the loss of the employee’s institutional knowledge and to dodge the cost of finding a replacement.”
Sounds pretty one-sided and self-serving, doesn’t it?
Not to mention, counteroffers can create a “management debt” that can divide teams and employees over who did and didn’t get a raise or promotion, and WHY they got them.
Counteroffers may offer only a short-term band aid
This is because most people who seek out other opportunities aren’t motivated solely by money, so in the end, they may leave anyway within a short time.
Think about your last career move. Did you leave because you found an opportunity that was better for your career and family?
Or was it for money or some other reason that could be easily solved by your management team?
If the latter, would you have wanted to stay with a company that could have offered you what you needed, but chose not to until you dangled another job offer under their nose?
Now flip it around.
If your employee is leaving for an opportunity that will better their career and family situation, in which they will gain something they can’t get if they stay, is it in THEIR best interest for you to leverage a counteroffer to prevent that move?
In select situations, a counteroffer may be the right choice, particularly if you can quickly move heaven and earth to fix longer-term problems for all the employees on your team.
But more often than not, the best course of action is to take the high road and wish that person the best in their new endeavor.
How to retain employees without money
Then as you begin the process of searching for a replacement, consider how to retain employees without money used as a counteroffer. This departure might be a symptom of one or more larger issues, such as:
- Your company’s pay scale and/or benefits aren’t keeping up with market trends.
- Your company doesn’t prioritize promoting from within.
- Your company is offering jobs, not career paths.
- Your company is shrinking, declining, or otherwise deteriorating.
- Your company’s management approach, culture, technology, practices, or processes are in some way not keeping pace with what employees are seeking in a modern employer.
If any of these ring true, now is the time to re-evaluate and make changes, BEFORE you make the next hire, and BEFORE the next resignation letter shows up on your desk and you need to decide on the fly if you’ll make a counteroffer.
Forbes also offers some great proactive ideas with 15 Alternative Ways to Keep Talent Onboard.
If you need some help with that replacement, check out our Source Strategy for Hiring Superstar Financial Talent and get in touch with us!