Your employee says they've been offered another job. Should you make a counteroffer? It pays to analyze the employee's reasons for leaving first, as a counteroffer may not be the best route in the long run.
When an employee shares the news they’ve been offered another job, what’s your reaction? Often, the news brings immediate stress and a flood of questions: What are we going to do? What about our other employees? Who’s going to do their work? Why didn’t they tell me they were unhappy? How and when am I going to replace them?
Maybe you can afford to make a counteroffer to keep them, but what if you can’t? It pays to analyze the employee’s reasons for leaving before you counter, as it may not be the best route in the long run.
As staffing and recruiting specialists, here is our take on counteroffers.
Debbie Oberbillig: In the ’80s and ’90s, counteroffers were rarely made. The assumption was that a company would only “buy back” an employee until a replacement was found, and that employees considering other opportunities would continue to look and eventually leave.
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When I started recruiting, employees looking for a new job weren’t only focused on higher pay. Their reasons were varied: getting a new manager, not having work friends, long commute, no work/life balance or a need for greater challenges. A counteroffer based on money wasn’t a good move because those underlying problems remained. If an employee had a reason to leave you couldn’t address, they would still usually exit within six months, even if you paid them more.
Many employers felt they were being blackmailed when presented with another offer, and saw the move as lacking integrity. Instead of looking for a new job, the employee could have asked to talk about his or her career or issues before wasting everyone’s time by interviewing and accepting a job offer elsewhere. Even if a counter was accepted, the trust between the employer and employee was gone, and the candidate’s reputation was damaged with the other company. Bottom line: Counteroffers weren’t very popular.
Ryan Biancofiori: Now it’s a candidate’s market and counteroffers are more the norm. There are lots of successful companies in the greater Seattle area that have created a high demand for top talent, and all companies want to keep their good people.
During the 2009 downturn, most companies cut deep, eliminated raises and kept only their best people. From a candidate’s perspective, looking elsewhere now is a smart move because many still aren’t paid at market rate. In order to get whole with the market in 2015, people are looking at 15 percent increases or more, so getting a new offer can be very appealing. It’s even better if their current company counters, as it eliminates the need to learn a whole new system, worry about a culture fit, make new friends or prove themselves on the job.
From an employer’s perspective, losing a top performer can be a huge loss that’s worth countering, even if it means meeting or exceeding a big salary hike.
Still, it’s not always about money. Top performers may leave because they don’t have enough responsibility, don’t see a clear growth path or need a more flexible schedule. Sometimes this doesn’t come up until the exit interview, and that’s where the problem lies. What are you doing to avoid falling into the counteroffer trap?
Our advice: Many things have changed over the years, but this is one that’s stayed the same: Counteroffers are rarely the right move. Once a candidate has made the decision to look and apply — and taken the time and energy to interview and involve family and friends in weighing pros and cons — they already have a foot out the door. If you counteroffer, statistics continue to show the employee will be gone within six months anyway. In addition, trust may not be there. Are they still looking? Are you looking to replace them?
Our recommendation is to evaluate your people. Ask yourself what you’d do if they left, and then do what you need to do to keep them now. Conduct “stay” interviews and ask each of your people, “What would it take to keep you here?” Then accommodate their needs, if you can.
Funny advice for headhunters to give, isn’t it? Let’s face it, a counteroffer is painful. You can’t prevent it, but you can decrease the odds by truly understanding each employee’s career motivators.
At the end of the day, we don’t want to pull people out of a position that they are happy in. We want to help people take the next step in their careers. If good people leave because of money, it may be time to update your compensation. But if they’re leaving for reasons you can’t fix — and you’ve done your “stay” interviews — you’ll know when to expect it, and will be able to plan around it.
Debbie Oberbillig is the founder and president, and Ryan Biancofiori is vice president of Allen Partners, which provides recruiting and staffing for corporate, finance and accounting professionals in Seattle and the Northwest.