June 2, 2020
The Contrarian POV: Why Counteroffers Can Lead to Stronger Retention
The viability of counteroffers has been covered ad nauseum over the past few years, and to much chagrin. “Counteroffers are madness!” declares one article headline. The statistics are dire: nearly 90% of those who accept counteroffers are gone within six months. The truth is that counteroffers can actually lead to stronger retention. The reason they don’t is two-fold: 1) By the time you’re in a position to offer one, it’s usually too late. And 2) the offer likely doesn’t align with what the employee is truly looking for in the first place.
As an HR executive or business leader, you can expect to receive quite a few resignation letters throughout your career. Modern workers change companies up to four times before the age of 32. When those letters come from highly valued employees, it’s likely worth your time to consider a counteroffer. If you’ve been taught they’re not worth it, it’s time to reframe your thinking. Here are five steps for navigating resignation letters and considering counteroffers.
Step 1: Confirmation is Key
If the employee has already accepted another job offer, tread lightly. Professionals who accept an offer only to change their mind after turning in their resignation stand to damage their reputation and hinder future job searches. If that’s the case, use this situation to make organizational changes that might prevent it from happening in the future. However, if the employee in question has received an offer from another company, but not yet accepted it, you’re free to consider a counteroffer. Despite conventional wisdom, money is typically not the catalyst for change. Your best course of action is to identify the ‘why’ behind the letter.
Step 2: Understand the ‘Why’
Understanding the employee’s reasoning for job hunting on the sly is critical regardless of whether or not an offer has been accepted. Either way, an honest, transparent conversation can help you uncover what left them dissatisfied. Take a genuine interest in their perspective and ask open ended questions about the most appealing aspects of the new job offer. You might be surprised to find that their reasons have more to do with responsibility, growth, or flexibility than they do with salary or title. It could be something as simple as a shorter commute or a flexible schedule that allows them to better balance work and family. Understanding the motives behind a job change can also help you reevaluate your company’s policies and procedures.
Step 3: Evaluate the Role
Employees are recruited, onboarded, and then left to their own devices until their formal review, typically a year later. Annual reviews leave a lot of time for employees to become disillusioned with their role in the company. It’s possible that your vision of what the position entailed simply doesn’t align with the work that employee is actually doing on the daily. That dissonance can lead to frustration and disengagement. It’s more common than you might think. In fact, Gallup’s 2020 State of the Global Workplace report found that only 13% of employees worldwide feel engaged in their work. In order to put together a counteroffer that will lead to growth and long-term retention, consider:
- How the employee’s role has changed since being hired
- The trajectory of their career with your company to-date
- Successes, failures and milestones
- Their unique skills/knowledge and professional growth
- How their personal life has changed since being hired
- The benefits coveted among professionals now that weren’t before
If you determine that the employee outgrew or became disenchanted with their role in a way that the company is unable to accommodate (such as desiring a much higher salary or wanting to specialize in a skillset unrelated to your business), there’s little point in countering. However, maybe you’ve not put enough importance on employee recognition or professional development. Perhaps there’s room for improvements that might change the employee’s mind and help to prevent other valued employees from moving on too soon.
Step 4: Be Thoughtful
Before you do anything else, let the employee know you’re taking the time to craft a thoughtful offer that addresses their concerns. The fact that you’re taking them seriously shows empathy, a trait 96% of employees consider important for employers to demonstrate according to a 2018 State of Workplace Empathy study. That’s good for business; empathetic companies outperform their more callous counterparts by 20%.
Armed with an understanding of why your employee chose to look elsewhere, their short- and long-term goals, and a thorough evaluation of their role, you’re ready to put together a counteroffer. Be prepared for the employee to respond with a counteroffer of their own: negotiations are a fundamental component of human interaction and shouldn’t be feared or forgotten. It’s ultimately up to you to determine whether their requests are reasonable and practical to implement, or if they’re beyond the scope of what your company can feasibly offer. If you’re able to reach an agreement based on mutual trust, it’s a win-win. However, if they do decide to move on, handle their resignation with grace and gratitude. Either way…
Step 5: Be Proactive
Whether or not the employee in question decides to stay, it’s in your company’s best interest to use everything you’ve learned during the process to improve retention practices. Schedule frequent, less formal one-on-one meetings to address concerns and recognize achievements. Create a culture of transparency where employees at all levels feel comfortable speaking up and heard when they do so. Identifying recurring issues and opportunities for improvements before they become serious problems can lead to more engaged employees and stronger retention.
If your business doesn’t have the internal resources to handle negotiations, consider getting outside assistance. Professional recruiters, like the team at JurisTemps, negotiate on a daily basis and can help articulate individual and firm goals, while at the same time providing an objective lens through which to view each side’s perspective. Find out more about our unique human resource management expertise.