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Are Counter Offers Counter Productive?

Posted at September 11, 2017 | By : | Categories : Ag 1 Source News | Comments Off on Are Counter Offers Counter Productive?

The competition for talent is ever growing and many companies are taking more strides to keep top talent within their organizations.  Productive measures such as team assessments, management evaluations, helping employees build a framework to advancement and continuing to build on an employee’s strengths are all steps in the right direction, but what happens when that’s not enough?  When an employee receives a job offer from another company, should you make a counter offer?

Counter offers typically offer an enticing financial component, but at the end of the day, the reasons for that employee seeking a new opportunity typically have more to do with lack of career path, lack of challenge, management issues, etc.  More money typically comes with a career change, but just throwing more money at an employee to try to keep them only provides a temporary band-aid.

Do Counter Offers Work?

Statistics show that 80% of people who have accepted a counter offer will not be with that employer in six months and 93% will not be there in eighteen months’ time.  That basically says that 7% of counter offers retain top talent for longer than eighteen months.

It may bide you time in finding a replacement, but will there now be a trust factor wedged in the relationship between you and that employee, things will more than likely just not “go back to normal”.

Employee Morale

As much as we’d like to think employees keep these conversations confidential, more than likely it will get out that employee X received a counteroffer to stay.  And if you made a counter offer to one employee and not another, will others deem the employee that stayed a “favorite” and be resentful.  Is team resentment worth the risk?

It’s not really about the money

If the counteroffer only provides more money to the individual, is that really solving the issues as to why they tried to leave to begin with?  More money may seem to make it better for the short term, but after a while those same concerns will rise again if they are not fully addressed.  Money doesn’t solve everything.

Trust

With the statistics mentioned above, if someone accepts a counteroffer, it has set a precedent to question their loyalty going forward.  How long will they really stay before they have another job offer that they accept or you cannot make another counter offer against?

Everyone wants a counter offer

Other employees may now be spurred to go out and get another job offer in hopes to receive a counter offer and make more money.

Payroll Issues

If you do make a counter offer that an individual accepts, how does that affect the compensation parameters for others in the same role.  More than likely other employees will find out and then there could be resentment that an individual is not being paid more than everyone else.  Again, is the counter offer worth the potential morale issues within the team.

There are a few situations where counter offers do seem to work and keep the peace with everyone, but more often than not, they tend to cause other issues and with 80% of individuals who accept a counter offer are gone in 6 months anyway, is it really in your best interest to make one to begin with.  More than likely not.

Being proactive in understanding your employees, their goals and having open communication, will be a much better way to prevent an employee from leaving than a counter offer ever will.

Source: https://smallbiztrends.com/2014/06/counter-offer-to-an-employee.html