It’s never a great place to be when one of your best employees is standing in front of you informing you that they have been offered a job at another company and want to leave.
You thought they were happy with the job, you are certainly happy with their work and you really don’t want to lose them – especially if it’s to a competitor!
Before the economic downturn, making a counter offer to valued employees was the norm. Employees handed in their notice and would be prepared for a negotiation. When the market crashed, there was a definite change in how hard companies fought to retain employees.
But as the transport and infrastructure markets are once again flourishing and candidates are regaining their power, we are seeing a significant increase in both the frequency of counter offers made to resigning candidates and the amount they are promised to stay.
Generally, there are two clear camps when it comes to company views on counter offers. The “Never counter offer” people and the “It depends” people. So what should you do if you find yourself staring at a letter of resignation?
Should you counter offer or not?
Statistically speaking, if an employee has reached the point where they have an offer from another company, then they are as good as gone. Around 65% of employees still leave their organisation within 12 months of accepting a counter offer.
One of the most important questions you should be asking is, is this person critical to business success? If there is an employee internally who is capable of instantly taking on their responsibilities, then chances are, as much as you value the individual, a counter offer isn’t worthwhile.
If you do feel that they are an irreplaceable asset to the team, then it is critical that you get to the root of the problem. I cannot stress enough, that money is probably quite a long way down the list of reasons they have for leaving and simply sending them off with a nominal pay rise is like polishing the brass on the Titanic.
Yes, money is most likely going to play a part and a counter offer will almost always involve a financial incentive. But nine times out of ten, if the employee was truly happy in their position, the lure of a better salary package wouldn’t be enough to get them to leave.
You need to find out the underlying causes for leaving and then assess whether or not you can feasibly make enough changes to fix the problem, not just temporarily ease the pain. Exit interviews are useful feedback regardless of whether or not they bring to light any issues that you can use in a counter offer. It is important to find out what’s going on in your teams and someone who is leaving may be a little more forthcoming on team dynamics and what’s causing dissatisfaction.
Some problems have a clear solution. If it turns out they are leaving because the commute is a nightmare then they may be able to work from home a few days a week, or if the role isn’t challenging enough then you can increase responsibilities or assign them a new project.
Others may not be so clear cut. Do not make promises if you can’t keep them. This will not only push the employee out of the company in a matter of months, it sends a bad message to your remaining staff.
What should you counter offer?
This is where you really need to sit down and consider the employees worth.
In today’s competitive market, if you are to attract and retain the best talent then your remuneration packages need to reflect this. If you can successfully negotiate all of the intrinsic issues that caused the employee to look externally then a financial uplift will also be on the cards. In our experience, candidates have sometimes turned down job offers based on a counter offer of between 15-20% salary increase. The most extreme case we have encountered is a candidate being made a counter offer of a 62% pay rise.
That being said, any offer needs to be fair to the rest of the team, especially employees of the same level. Unless you are legitimately promoting them to a more senior position, you need to decide if it is reasonable that they are receiving a significant pay uplift when others won’t be.
What is the best counter offer procedure?
Once the employee has handed in their notice and you have had an in-depth discussion about why they are leaving, it is wise to involve someone senior who is slightly removed from the situation, that the employee has a good relationship with. It could be your line manager, the HR Director or a former mentor of the employee. You, as their line manager, may think you have discovered the root of the upset, but if the upset is in fact you, then it is unlikely they will brazenly tell you.
Once you have 100% of the facts you can go away and put together a counter offer to discuss with them in person.
If this counter offer fails, then you can go one of two routes; admit defeat or bring in the big guns. Up the offer, get someone very senior to wine and dine them and convince them that this company is best for their future. The latter is most common when the employee is identified as a high potential individual who really can go far with the business.
Then, once an offer is agreed, it needs to be put into writing and actioned immediately. Any delay and you will just frustrate and lose the talent you have worked so hard to retain.
Sometimes counter offers aren’t the best route for your company or they just don’t work out. If a key member of your team has recently resigned then click HERE to discuss how we can help.