When a valued employee hands in their notice, it is often tempting for an employer to counter offer to keep them with the business - but is it really the right thing to do? Grant Nisbet, Lead Consultant for Jonathan Lee Recruitment’s Manufacturing & Commercial Division, discusses the potential pitfalls of the counter offer.
The war for talent is a reality in the manufacturing sector today, with highly skilled people in constant demand. So when a valued employee is tempted to move on, it's no surprise that many employers consider making a counter offer in order to retain their services.
But how do you decide whether making a counter offer is the right thing to do? There are a number of things all employers should consider in this scenario.
UNDERSTAND THE WHY
Firstly, it is really important to understand the employee's motivations for looking for alternative roles in the first place. A recent snapshot of the information provided by engineering professionals to specialist recruiter Jonathan Lee Recruitment demonstrates that there can be a variety of factors including: job content & more interesting or challenging work, remuneration & benefits, greater recognition of skills, abilities and contribution, better personal & career development opportunities, dissatisfaction with a manager or the business culture.
Interestingly, whilst salary is a often key factor in moving on, it is rarely the sole driver and there are usually other factors at work. It is important for employers to identify exactly what their employee is looking for in a new role or new company and consider whether a counter offer addresses the underlying reasons for the move.
AVOID EMPTY PROMISES
Our data suggests that over 80% of people who accept a counter offer still leave the business within 12 months. The explanation for this is simple. Most people are anxious about change and therefore when an employer offers them more money and the message that they are really wanted or that things will change, they are often tempted to stay, forgetting about the negatives that led them to look elsewhere in the first place.
However the reality is often that the money was not the only consideration in the decision to look elsewhere. If promises made at counter offer negotiations are not followed through, employees can dis-engage from the business and their management and the decision to move on second time around is made easier.
Make sure that if you counter offer an employee that you try to address the underlying issue. If this is not reasonable or achievable, it may well be best to part ways sooner rather than later.
Companies should also avoid being caught in a bidding war which can, if not managed carefully, result in workers holding employers to ransom by using a counter offer as leverage in negotiating up their worth to other interested parties and then trying to get more from you.
Then there is the question of loyalty. Sometimes employers find it extremely difficult to accept a person back into the workforce (even if they didn’t leave) once they have voiced their interest in moving on. If you re going to counter offer - make sure you don't hold a grudge. Forgive and forget, and if you can't do this, it's best to let them go.
GET AHEAD OF THE GAME
In a market as competitive as this one, if you have great people that you want to keep, make sure you have a plan! Regular communication, succession planning, career development plans, new reward schemes are all ways in which a supportive employer can involve their staff in the future of the business, understand their motivations and ambitions and keep them engaged for the long term. Action is always more positive than reaction...
However flattering, a counter offer is often regarded by the outgoing employee as a belated recognition of their value and contribution in response to the threat of losing their skills. This can often leave a sour taste. Why does it take a third party to recognise their worth before you do? Make sure that any counter offer is perceived positively and will not cause future problems.
You also need to consider the effects on other employees; if they see a colleague receiving a promotion, pay rise or increased benefits as a direct result of handing in their notice, might they follow suit?
WHAT IF IT'S ME BEING COUNTER OFFERED?
You've made the step of looking for a new role, you've handed in your notice and your employer is making you a counter offer. How do you decide what to do? Here are some questions to stop and ask yourself:
I made the decision to leave because I felt the new position offered the environment to fulfil my career needs. If I stay, will the situation here really improve just because I said I was leaving?
If I stay, will my loyalty be suspect and affect my chance for advancement once the dust has settled?
The rise makes me very expensive for the job I am now in. How will that affect any future rises or prospects elsewhere?
I received this counter offer because I resigned, will I have to do that the next time I think I am ready for a rise or promotion?
One thing to keep in mind: the salary increase you receive as a counter offer is likely to be less than the amount the company would have otherwise spent on recruiting your replacement.
If you would like any advice regarding counter offers, talent management, engagement and retention or would like to discuss your recruitment requirements in more detail, then get in touch with Grant who will be happy to help.