Is the counteroffer ever a good idea?
As a society we’ve just weathered one of the greatest storms to affect businesses in the 21st century (COVID-19). I, like many business owners and managers, am still apprehensive as to what will come next for the business community. So, naturally with so much still unknown we as managers are inclined to want to keep the strongest hands-on deck, to make us feel prepared for the next storm that may be brewing around the corner. But what happens if the strongest team members announce they intend to jump ship?
Companies in Australia are eager to hire new talent. Employment website Seek said it just recorded its second consecutive record month of job ads. Businesses are looking to secure top talent to chart the way forward, after the tumultuous year of 2020. With talent in short supply, it is a fact of life that your employees are now juggling multiple options. Applications per ad are at the lowest level since 2012, so if your talent is looking at other jobs, they have a good chance of success. The last thing you or I want to hear, is that one of our top talents is resigning in favour of a better career opportunity.
Given there is intense competition for talent right now, counteroffers certainly become an attractive solution to keep that high performer from leaving. Particularly in today’s uncertain business climate, it appears easier ? and faster ? to put together a counteroffer than face the reality of losing key team members and spending time recruiting.
However
a counteroffer is usually a reflex action from a Manager who will do almost anything to maintain their current team, instead of addressing underlying issues. A counteroffer can suggest a team doesn’t have a workforce planning strategy in place and there is no talent ready to take over the role or be nurtured into the position. It also highlights that there is an opportunity to work on the engagement of that team. While a counteroffer often addresses a candidate’s compensation issues, it does not magically erase any of the other factors that compelled them to go job-hunting in the first place. Usually, the reason the employee has gained another role is because they are not engaged in their current role. If a Manager is only finding out their employee is disengaged when they announce their resignation ? that ship has probably already sailed.
Not to mention a seed of doubt has now been planted, can I trust they won’t resign again?
The answer is no, often employees who take counteroffers leave the organisation within 6-12 months. According to a Harvard Business Review survey, 80 percent of senior executives say that trust is diminished when an employee accepts a counteroffer.
Instead of counteroffering, you should be having discussions with your employees about their level of engagement and satisfaction long before an employee considers leaving. This means, you don’t just wait for someone to threaten to leave to provide promotions. To keep your employees onboard, you should be compensating them on performance and in line with the market. Ideally, you should have your employee’s best interests at heart, and you should want the best for them going forward. It’s important to understand the key drivers of your employees and how you can keep them engaged at work. I suggest establishing a strong personal connection with your team and consistently talk to them, so they know where they stand before rather than after an offer comes their way.
Regardless of the industry or global location, the best way to handle a counteroffer is to simply not make one or accept one (if you are an employee). As a Manager be proactive and provide market rate salaries, invest in employee engagement strategies and when the time comes, be motivated to bring new hands-on deck.