This year has truly been the year of the counteroffer for our recruitment agency, and in sixteen years of recruitment I have never seen so many companies enticing staff to stay with promises of salary hikes and promotions. That being said, the truth remains that a large number of employees who resign, and subsequently are counter-offered go on to leave within 12 months. This figure tends to be between 50% and 80% depending on the sector and job role, with most studies falling nearer the latter amount.
I was reading a study conducted by the CEB in 2016, and the head of HR practice concluded “it’s almost like when you’re in a relationship and you’ve decided you want to break up, but your partner does something that makes you stick around a little longer. Employees who accept a counter–offer are most likely going to quit at some point very soon.”
As a recruiter, experience has taught me that it is always useful to remain in contact with candidates who have rejected a position due to a counteroffer. Quite often I catch the same candidate a few months later at a time when their eyes have begun to wander again and then go on to successfully place them, often into the company they were initially interviewed at! I am sure I not alone in this approach, but it might be something your recruitment/HR team might want to implement should they find themselves in the same position.
Below are four reasons I have found counteroffers do not tend to work and, where if you are an employer, you need to address the problem to stop an employee’s departure a few months down the line.
- Employee reasons for leaving usually don’t change
Most counter offers come in the form of an uplift in salary, but that is not always enough. A candidate’s fundamental reasons for wanting to leave the business remain. That might be that the candidate feels undervalued, their interest in working for the business has stagnated, they don’t get along with certain colleagues, there is no scope for progression or into senior leadership. Issues like this cannot be resolved with a quick cash injection.
- The employer is looking after themselves
A counteroffer is simply viewed as a temporary means to protect a business. Replacing an employee is costly and time consuming. Furthermore, a salary rise might lead to less increases in remuneration for the employee further down the line.
- The risk factor
After resigning the employee becomes high-risk. They have threatened to quit once and there will always be concerns they will do so gain. The ‘disloyalty tag’ is often hard to shrug off and employers are likely to plan for contingencies and keep an eye on the market for a replacement.
- The employer has been backed into a corner
“We really respect you as a valued member of the team”… “we don’t want to lose you” … “we’ll match whatever the other business is offering”. These are comments that someone resigning might hear. A manager really does care or, rather, it’s only at resignation when they show their appreciation.
For employers, a pre-emptive intervention is the best way to deal with employees’ wandering eyes rather than waiting for someone to get an offer and then countering it. The cost of replacing someone is high – generally 2x the salary for Sales replacements (when one accounts for lost fee income, time and money spent on replacing someone). So if it is a pay rise that someone is after, a few thousand pound doesn’t seem so big, does it? Great companies rarely need to make counteroffers!