Counter-offers….should you, shouldn’t you?

They are happening more and more and the question applies to both employers and employees.  Should you offer them, should you accept? 

What is a counter-offer?

Counter offers are put on the table by an employer when an employee hands in their notice.  They usually involve a significant increase in salary to entice the person to stay.  Very often the employer insists on an immediate answer; an all or nothing situation.  High pressure indeed.

In our experience they are rarely successful long term, research suggests 80% of people who accept counter-offers leave within 6 months and 90% within 12.  That’s really all you need to know.  

If you are still not convinced, read on to find out why you should think long and hard before offering or accepting a counter-offer at the point of resignation.

Let’s start with employees:

A number of factors can lead a person to resign from their current position and it’s probably not just salary.  Environment, culture, a poor relationship with a boss or others in the team, lack of opportunity or just a desire to do something different are all possible reasons for starting a job hunt.  Overall it’s usually dissatisfaction, it’s unusual to look for a new job if all is well with the current one. Let’s look at the pros and cons of accepting a counter-offer…..

Pros of counter-offers for employees:

You get that much wanted payrise.

You don’t have to go through an awkward notice period.

You don’t have to be a newbie in a new role.

You stay put, no one finds out you were going to leave, you get more money, you feel like you’ve hit the jackpot…..for a while.

Cons of counter-offers for employees:

Aside from money, none of the reasons you had for leaving your current role have been resolved.

Your boss knows you were unhappy and willing to resign.

Your boss knows you’ve talked to other companies (possibly competitors) about why you wanted to leave.

Colleagues may find out which can be awkward if they know you were counter-offered…why should you get more money than them, they didn’t try to leave.

Your commitment to the team, company and role will be in constant question.

You will also be questioning their commitment to you – often a counteroffer leads employers to start looking for replacements.

Ultimately money doesn’t solve any of your original problems but in fact creates more.

57% of counter-offers made are accepted

90% of those people will leave within a year.

Now let’s look at Employers:

Why make such a grand gesture to someone who wants to leave your team and business?  Why not offer that to the people remaining in their jobs to ensure their loyalty?  The person resigning isn’t committed to their role, they’ve moved on both emotionally and mentally; money will not change that for long.  Yes, it’s never easy to lose a good member of staff and they can be tricky to replace but it’s highly likely this person will eventually leave.  If that happens you lose not just a team member but also the extra money spent. Let’s look in more detail at the pros and cons for an employer….

Pros of counter-offers for employers:

You don’t lose a key member of the team.

You don’t have to go through the process of recruiting someone new.

It is probably going to cost you less to counteroffer than it will to make a new hire.

You avoid telling your team someone is leaving; particularly important if it’s a key team player.

Cons of counter-offers for employers:

You are essentially trying to buy loyalty and commitment.

You now have an employee staying because they are paid more than before – you will be doubting them for as long as they remain in your’ employment.

If word gets out, you will have some very angry staff knocking on your door – in their eyes you’ve paid someone for being disloyal.

Your team becomes disjointed and work productivity drops off.

The person leaves anyway and you’re left with far bigger problems than if you’d let them resign in the first place.

You may even find other resignations follow.

80% leave within 6 months of a counteroffer – it really is all you need to know.

For all involved, it’s too little, too late.

9 out of 10 employees offered a counter offer leave within 12 months.

Are you just delaying the inevitable?

If you want to discuss this or any other recruitment concerns please give us a call on 01235 536440 and speak with one of the team. We’ve ‘been there done that’ for over 61 years and have a lot of advice to share. If you’d rather email then get in touch here [email protected].

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