Picture the scene: you step into the office on Monday morning. There is an envelope on your desk. You open it; a member of your team is resigning. And not only that – it’s one of your best employees. The colour drains from your face as you try to work out how you didn’t see it coming. If only you’d noticed the signs. But now comes a decision: should you make them a counter offer?
And if yes, how should you go about doing it?
Often, there is a lot of emphasis on the employee’s end of counter offers, but very rarely is the employer’s position discussed. Below we will look at whether a counter offer is the right option for your business. As well as this, we will offer some tips, should you choose to make one, that will improve your chances of it being successful.
Why You Might Want To Make A Counter Offer
Making a counter offer may be your last opportunity to hold onto a valued employee. However, whether or not it will work in your favour is another matter. When an employee hands in their notice, your initial reaction will be to react with an emergency revision of their role, salary, benefits or all of the above.
This could be worth doing for a number of reasons. For example, replacing an employee can be expensive. We wrote a blog post on the subject of the costs involved in replacing a bad hire, and while you probably wouldn’t make a counter offer if it turned out you’d hired the wrong person, the costs involved in replacing a good hire are still very similar.
Counter Offers: The Stats
Before we go any further, let me start by saying this: when you Google “counter offer statistics”, you will find a lot of figures, and the majority are based on very little, it seems. These statistics, such as “80% of employees who accept a counter offer leave within 6 months”, are cited on a number of websites. But, when you dig a little deeper, it’s very, very hard to find a concrete source for them.
Having done a bit of further research, the only legitimate study, with a clear source, is from CEB, in their study “The New Path Forward: Creating Compelling Careers For Employees and Organizations“. Within that, it states that only around 50% of employees who accept a counter offer end up leaving anyway.
As an IT recruitment agency, it may surprise you that we’re mentioning this. After all, our business relies on people successfully LEAVING their jobs. But we also aim to equip our clients with knowledge that will help them to make the best possible decisions for their businesses.
Step By Step Guide To Making A Counter Offer
So, let’s say you’ve decided to proceed with making a counter offer. How should you go about doing it?
1. Decide What You Want To Offer
A critical thing to bear in mind when making a counter offer is considering exactly what it is that you would like to offer. Herein lies the main problem that most companies have: they try to fix everything with money.
Most people would have no problem admitting that they work for money. It is the dominating motivator for why people get up in the morning and go to work. However, it isn’t all that people care about when it comes to work.
You need to ensure that you understand the root problem that your employee is experiencing. And you will achieve this by talking to them. Instead of running with your knee-jerk reaction and offering more money, try this: talk, find the real problem, consider what you can do to fix it, then make an offer that will have a meaningful effect on the employee’s quality of life.
If you’d like to sweeten the deal with a pay rise as well, go for it; it definitely wouldn’t hurt.
2. Make The Offer In The Correct Way
A key part of making a counter offer is actually making the offer. This won’t come as a surprise, of course, but you should put some thought into the way you deliver the offer itself.
Before making the offer, put yourself in the mind of your employee. A key concern for a lot of employees, when it comes to accepting a counter offer, is the idea that things slip back to how they were. The worry is that they accept the offer, the element of the role that they were unhappy with is improved, but then bit by bit, over the coming months, they end up back in the same position as they were in before.
This will often result in another notice being handed in and, this time, it’s unlikely there will be any way to turn the situation around. So it’s important to get this right.
So how can you make the offer in a way that inspires confidence in your employee? Firstly, do it in an official setting. Instead of blurting out your proposal in the break room while you’re both making a cup of tea, call a meeting. If needs be, invite other relevant staff to attend such as the HR manager.
Here is the critical step: make your offer – in writing. Doing it in this way, with a physical record of what has been offered, and what the employee is agreeing to, will hugely ease any doubts.
3. Give Them Time And Follow Up
If you want to end up with a result that works for everybody, you shouldn’t put pressure on the employee for an instant answer. You need to give them time to consider.
Once the offer has been made, allow them some time to decide how they would like to proceed. Give them a few days then follow up with them for a definitive answer. If they still wish to proceed with the other role, perhaps it’s time to cut your losses. Begin looking for a replacement.
The counter-offer is something that, if used in the correct way, can be a fantastic tool for holding on to your top employees. However, often, if an employee is handing their notice in, the damage may already be done. Ultimately, it’s down to your own judgement to decide whether it’s worth making a counter-offer. Remember, staff turnover is a good thing in the right quantities. It provides excellent opportunity for new ideas, new personalities and growth.
If you’d like to learn more about how you can keep your best employees on board, watch the replay of our free-to-view webinar “4 Easy Ways To Drastically Improve Staff Retention And Save Money On Recruitment Fees”