“I’ve just received a counter-offer from my employer”, – these words can send shivers up the spines of recruiters or hiring managers. With the market for talent slowly heating up, these words (counter-offer) are cropping up more and more in IT Recruitment circles.
What exactly is a counter-offer? A “counter-offer” is an offer (pay rise or new title or new/better conditions) received from a current employer once a resignation has been handed in.
You may have seen lots of blogs and articles about what a candidate should do if they receive a counter-offer, but what about the impact on the employer who is offering one? In this blog, we explore both sides of the fence.
Firstly, put yourself in the shoes of a candidate and let’s look at it from the candidate perspective:
Receiving a counter-offer can definitely be an ego boost; your current employer finally seeing your value and rewarding you for it. You start thinking “this place isn’t really that bad after all, look what they are doing for me, all the nice things they have said. I now feel valued and satisfied!”
However, what about when the honeymoon period dissipates? Only a small percentage of people who accept counter-offers stay for any longer than 12 months – why?
1. The reasons you wanted to leave have not changed
One of the main reasons counter-offers rarely work is that the initial issues or reasons for leaving in the first place are not resolved. Typically, people leave roles for reasons other than just money – poor management style, lack of career progression or bad company culture are just some. These issues are probably all still there, regardless of what management promises.
2. Lack of trust has been created by the employer
Was the counter-offer just a cost saving exercise by the employer? Consider whether (and this may seem cynical) the company offered a counter-offer to solve the problem of finding a replacement which can be a lengthy and costly exercise. A counter-offer is sometimes used to stall the process until the employer finds your replacement. You may also feel you should have received a pay rise before having to resign. Both of these beliefs can lead to a damaged employee-employer relationship which is difficult to rectify.
3. Lack of trust has been created by the candidate
Can you be trusted to have the company’s best interest at heart given you have already expressed a desire to leave? A resignation can cause distrust from management and even your peers. Every phone call can be seen as someone canvassing you and opportunities of advancement may even start to disappear if they think you have already one foot out the door.
Some people have been known to use a resignation as a tactic to get more money from their employer. Whilst this can be effective in the short-term, it is a tactic to be used only once as eventually the employer will see through it. It may also leave your employer questioning your integrity and reasons for staying with the company. You need to be prepared to follow through on your threat, so be sure you are really ready to leave if it comes down to it.
Employers – Should You Offer a Counter-offer?
The extension of a counter-offer can be a risky proposition and has limited impact on long-term retention. So, should you ever offer one? If this resigning person is mission-critical to a project or to the success of the organisation, then $5,000 (for example) and a new job title, may be a small price to pay to save yourself the disruption their resignation could cause.
However, you also risk setting a precedent of counter-offers to get a pay rise, which can be an expensive strategy. Instead, hold regular reviews with employees to gauge job satisfaction and performance enabling managers to address any problems proactively, and review salaries to ensure they are in line with market rates, thereby limiting the need for a knee jerk reaction if a key employee resigns. Having your ear to the ground, knowing the temperature of the business and the people within it will help with this.
It is not always easy to hear that someone is leaving, but it must be remembered that after all the initial panic, the sun will come up tomorrow and the world will go on. Take a deep breath, get what you need from a handover and plan your next move. It may just be that your organisation cannot offer what the individual needs at this stage of their career. It happens and it is OK.
Don’t let the fear of a lack of talent hold you to ransom. If the motive is purely money, then the money will never be enough, give a little and they will want more and more. There is always talent available, contact us, we are always happy to give independent advice.
As a Recruiter, we will always advise against giving or accepting a counter-offer (unless a genuine mistake has been made in the handling of said person and it is easily rectified). This is not said from a selfish, “we want to make a placement fee” point of view, but one of experience. They rarely work out well. Once someone has decided to go and has gone down the path of resignation (which, let’s face it is a pretty big step), the relationship is already damaged. Be brave, accept the decision and move on. Tomorrow is a new day.