News And Advice

Insights, tips and news for job seekers and employers.

When to Make a Counter Offer

No one likes to see a valued employee go. So when someone you can’t stand to lose tenders their resignation in order to accept another job, it’s tempting to “sweeten the pot” by making a counter offer of a higher salary, greater responsibilities, or a more impressive title. According to a 2007 study by Hays Recruitment Consultants, 48 percent of companies said it is their policy to make a counter offer when an employee resigns. With the economy rebounding, it’s reasonable to assume the practice will only become more widespread as employees begin feeling comfortable enough to leave the security of their current employer for what they perceive as greener pastures. The question is whether counter offers are actually in the company’s best interest. Most of the time, apparently they are not.

According to the Hays study, 30 percent of the time, the employee rejects the counter offer and goes ahead with their plan to resign. Forty-two percent accept the counter offer and stay with the company, but ultimately end up leaving within three months. Another 8 percent leave within 12 months. Just 20 percent hang on for 12 months or more.

Once an employee has made the decision to tender their resignation, they are psychologically ready to go. Most of the time, it’s not about the money. They have already made the decision to go. At this point, offering them more money will only give them a bargaining chip as they seek to make the most lucrative deal possible with their new employer.

Counter offers are problematic all the way around. Even if an employee agrees to stay, things will never be the same again. Any semblance of loyalty goes out the window. The seeds of doubt have been sewn and mistrust sprouts up in the absence of a strong employee-employer contract. Not only has the employee in question been given an inflated sense of importance, but other employees may learn of the deal and you could end up with mass mutiny on your hands as they seek to make a similar deal for themselves.

Most of the time, it’s best to resist the temptation to go into panic mode and make a knee jerk reaction you’ll regret in the not-so-long run. Instead, focus on making sure your employees are engaged and happy with their current situation. If they seek more responsibilities, carve out developmental opportunities that will prepare them for greater things in the future. That will be a far more effective approach than making a counter offer in a moment of perceived chaos.

For more information on counter offers and other aspects of the employment contract, contact High Profile Staffing today.