Counter Offers - A dicey situation

Counter offers have become increasingly common as talented employees go in search of new opportunity. Although this may seem like a great situation in some cases, the fact that a counter offer is even being made is because there is something missing, and if the employee accepts the counter offer, it is likely that they still won't stick around for much longer after this. 

Counter offers have consequences that all parties should be aware of. So don't gamble or leave things to the throw of the dice - be one step ahead of the game. We have seen a notable increase in companies making counter offers to employees following their resignation and employees accepting these counter offers.

Why are counter offers trending?

Whilst unemployment remains high, talent and good skills are scarce. More and more employers are resorting to counter offers in an attempt to retain employees with hard to find skills. Money is not necessarily the primary motivator for employees seeking greener pastures, yet money is often the motivator for them staying.

This raises a few issues:

What should employers consider before making a counter offer?

  • You may be setting a precedent by sending a message to other staff that the way to get an increase is to present you with a job offer. Others may feel disgruntled knowing that their colleagues have received an increase, not in recognition of their performance but simply because they placed pressure on you. This may also raise questions amoungst your staff as to how market-related your salaries are.
  • There are clearly longer term risks of driving your salaries bill up by 'encouraging' employees to challenge current remuneration levels in your organisation.
  • Have you addressed the real reason the person wanted to move - boredom, lack of challenge, opportunity or management support? Are you going to be able to deliver and meet their aspirations going forward or are you just delaying the inevitable?

What should employers do to retain good staff?

A good place to start is to develop a Retention Strategy which encompasses areas such as:

  • Hiring the right staff- this is where it all begins. Besides the overall job and person specifications, organisational fit should be a key aspect in recruitment.
  • Conducting regular performance reviews- providing employees with a realistic view of their contribution and areas for improvement.
  • Developing clear career paths- so employees can see their future in your organisation.
  • Developing succession plans- which indicate a future for key staff and which takes the pressure off you having to make a counter-offer, as you are able to fill the position.
  • Market related remuneration packages- if you want to keep good staff, you need to compensate them fairly for the value they add to your company.
  • Employee development plans- employees that feel valued and appreciated are likely to be more loyal to your business. If you invest in your employees they will feel that you are aware of their worth.
  • Open communication - if you have an open relationship with your employees and are approachable and aware of their needs, they will feel more comfortable communicating any concerns they have with you before it becomes a deal (or employment) ending problem.

What should employers consider when recruiting?

  • Careful consideration should be given to the package offered - including money and career prospects. Be mindful that an applicant may get a counter offer and that you may lose the opportunity to bring that person on board if your offer is only a marginal one. Your Recruitment Agent can assist you in formulating an attractive offer.  

What should employees consider before accepting a counter offer?

  • Is the counter offer simply sugar to help you swallow a bitter pill? You should reflect on the real reasons for looking elsewhere. Whether it was career advancement, working environment, money or management style, does the counter offer address the problem?
  • Has trust been broken and will you be viewed with suspicion every time you leave the office? Will your employer feel insecure as to your long term commitment and how will this affect your career progression?
  • Are you simply flagging to your employer that you may not be around for long and that they need to find a replacement for you?
  • Are you burning bridges? Employers that are rejcted, especially after they have made you a counter offer, feel resentful of time wasted and many, even years later, won't consider you.

What should employees do to avoid the "uncomfortable" counter offer?

Think about your response to a counter offer before starting your job search. If there is a reason you would stay - then rather raise it with your employer before going out there.

If you have done this and still see the need to look elsewhere and are then faced with a counter offer, then know that you have made your employer 'agree to your demands' under duress - and that will most likely not sit well with your employer going forward.

I hope this has given you some insight into dealing with the tricky situation of counter offers.