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Editorial Team
19 Oct 2018



I do or I do not? Understanding Counter Offer and When to Serve Them

employee retention strategies

Understanding the two sides of counter offer, why A-listers leave – the role of managers here, is it just about money and worth the trouble? 

Linda Sullivan did not quite fancy being the office manager for a Chicago based testing firm. Administrative positions are good, but she and her capabilities felt bouts of claustrophobia. So, what next? No, points for guessing that our Linda, updated her resume and became an active job seeker, just like the thousands of other unhappy employees. Seekers find what they desire (almost always). So, Linda too got a lucrative offer and then decided to break it to her ‘now’ boss. 

So, any guesses what did the “boss man” say? He said something that left Linda pleasantly surprised. He patiently listened and insisted that she should have been more vocal about the situation. He went aboard on some generosity trip and offered a $5000 raise and a Director of Marketing position. Now Linda is happy and talking about bad blood; there is none! 

And, I must say that you just read a corporate fairy tale. If you are a stickler for happy endings then Bruce (changed name) will tell you otherwise. He was with a project in a real estate firm, he received a better role elsewhere decided to move. Sounds simple till now? The next step was straightforward too, the top ranks gave a counter offer of a promotion and a pay hike. But, hold on and do not imagine Bruce sipping lemonade in his suburban backyard, not just yet. The organization, kicked Bruce out, right after they were done with the project. They stated trust issues and thought they are better off without him. 

The Not-So-Glorious Statistics 

80%, yes, that is the percentage of employees who leave the current company 6 months after the counteroffer. 50% of the employees go under the active search radar within 60 days. Not very cherry on the top, a situation it seems. Once an employee puts down papers, it's just 38% of the managers who will never throw a counteroffer on the table and 57% of the times employee will accept the offer (This statistic, in particular, is the stuff of every recruiter’s nightmare).  

Why does it look that they almost never work? 

So, enough wrangling with data, now let’s focus why counteroffers stumble. As a first, the practice of bribing your employee with just a salary hike is flawed in more than one ways you can imagine. You see, an employee may not always leave you for a fat hike somewhere (and sometimes they do). So, understand why they are leaving. Linda, as we mentioned earlier, was leaving for a better challenge. And when she got it here, she was happy to stay in an environment she knew. 

And Pop Comes the Trust Issue 

Environment - now that is a major factor. Employers at times get too attached to the concept of their workplace as a big family, well, it sounds all nice and rosy, but real life is not that perfect and plush. Even after the counter offer and employee acceptance, employers harbor animosity. They have trust issues, somewhat as Bruce faced. The good mornings and smiles may replace suspicious stares. And that will be the day one after the employee accepts the counter offer - unnerving, right? Employers at times have second thoughts assigning those Ivy League projects to these employees. Every day is an acid test for the employees, only this time they start from the negative. And voila, your employee is on a lookout once again (the new place will start his acid test from zero at least). 

So, if you are coming up with a counteroffer, a bit of empathy and trust are a given from you. After all, counter offer means an increased cost of retention, you take efforts to negotiate, maybe create a new post to keep the star employee from leaving you. And no one, likes their efforts go down in the dumps, right? 

But You Cannot Trust Anymore! 

What is the plan of action then? You know now that your blue-eyed employee was going behind your back and discussing career game with your competitors. Can you trust that person anymore? The job acceptance can just be a ruse to increase his market value, to have better negotiation points. So, should you just do away with the counteroffer? 

Blanket curb against counteroffers may lead you to lose the stars of your company. Accept this fact that the best of your employees will get hired at someplace else soon. They are good and that is the reason they are your best!  

People Leave Managers and Not the Brand 

Be proactive, understand what makes the employees tick and what makes them stay. Take a stoic look at your mirror, are you the manager that makes alphas in your team leave? Christopher Kenny from Star Group LLC believes that “Nothing demotivates an A player more than having to work with a bunch of C’s.” So, weed out C’s and make an A-team. Challenge your Alphas and give them projects that test their efficiency. Induction program showed them a rising learning curve, do not let that curve go flat. 

Nothing ticks off an employee than an abrasive or hush-hush line of communication. Be open, even if you plan to set the gear on cost-cutting mode, tell them. Employees want you to respect their maturity. Now, I get it you are an ambitious manager and you want your team to be comfortable with the uncomfortable. But, without the right mentoring dose, your sarcastic and aggressive motivational management style can backfire. Make sure that you balance the good cop and bad cop act well here. (Let’s just avoid Steve Martin’s “Good Cop Bad Cop” routine from the Pink Panther Franchisee.) 

Accept that Even Diamonds Have a Shelf Life 

So, now, you are proactive, you give them a great workplace. You have a work environment you can vouch for, the learning curve is all exciting and you are having those regular Tete-a-tetes with your team. But, still, they come to your cabin and put their papers down. What do you do then? Well, you understand the cause of leaving. Fix a one-on-one meeting at a later time. Evaluate, the retention cost and how important is the retention. Be truthful and ask yourself, can I offer this one a better role? If the answer is no, then wish her luck and throw a luncheon for the team as a token of appreciation and just give a little speech about how your doors are always open.  

Understanding that even the best of your people will leave you is the key. And at times letting them go, with grace, saves you a lot of heart and pocket burn. At times, employees will come up with a resignation letter, to just wring a counter offer from you. This practice is a two-way sword. Recognize it and curb it. Employees should do away with the practice as it raises red flags in the integrity department. 

The employee who stays should just not stay because you have forwarded a juicy dole of salary hike (employees take a note). You, as an employer should have much more to offer than just money in a counteroffer. If that is not the case, do not bother much with the counter offer (and employees do not accept such offers). It remains a delicate gamble, play wise! 

What are your experiences with counter offers? Are you disenchanted by the practice or have you just preserved it for the A-teams? How does your company culture allow you to deal with a resignation? Have you ever said yes to a counter offer by your employee, why or why not? Do share your stories and experiences with us. 

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