Better the devil you know, as the old adage goes. When it comes to staff retention, however, this isn’t the case. If somebody resigns then it should actually be ‘better the devil you chose’. The dynamics of a counter offer are always tricky and will inevitably come with a health warning. As a recruiter I have seen people be tempted by counter offers: salary rise, better work-life balance, and/or a promise of progression are usually all on the table. For some people these things might be able to provide a fix, but only if it addresses the real root of why somebody started looking to leave.
As an employer there is a responsibility to be honest about what you can give your employees and a good employer will look critically at themselves to say what they are and are not able to do. This is essential for a successful counter offer. The two most common push factors which lawyers speak to me about are either their work-life balance, or their opportunities for progression and development – and both of these can potentially be addressed by a counter offer.
When somebody says they want to leave because of work-life balance this sometimes conjures up images of people who want to clock in at 8:59am and leave by 5:31pm, but this is rarely the case. Usually it means someone wants to have dinner with family, know they can commit to a regular engagement once a week, or not work on Friday evenings. If you can genuinely provide the change they are looking for your employee will be extremely grateful and you will, probably, see their productivity increase. If, however, there really isn’t the scope for what somebody is looking for in the current structure then it is essential to be honest with the employee and not try to keep them for the short term. This will breed resentment, productivity will decrease, and you will have the same resignation back on your desk in a matter of months.
Similarly, when somebody is looking to leave in search of progression there will always be the temptation to get one more year, one more quarter from a high performer. Again, honest introspection is essential. Telling somebody they will get a promotion or receive a secondment might allay the immediate problem, but it must be genuinely possible to deliver on this promise. If the team structure or firm strategy is not aligned with the individual’s aspirations, or if it involves a different timeline, then this must be communicated truthfully. To not do so will inevitably result in a loss of trust; the individual promised X in two years only to then be told it will be another two years is much more resentful than the individual who is told it will be four years from the start. Honesty is appreciated and a counter offer which says, ‘we can’t give you X in one year, but we can give it to you in two’ is more likely to succeed.
The least successful counter offers are the ones which think money is the only answer. When I speak with lawyers this is almost never the sole reason why somebody wants a move. Everybody wants to be paid well, but the person whose move is money-motivated will be looking for at least a 25% increase in remuneration. The problem this creates is that either (a) You actually won’t counter offer more money so the exercise is a waste of time, or (b) You counter offer enough but this puts an individual significantly outside the earnings of their peers.
Of these two situations (b) is by far the worst (even though it may solve the immediate issue). Firms who go down this route will find that the other employees discover the counter offer and become, understandably, disgruntled. At this point outcomes vary: there is either a pay raise for everybody to the new level; a surge in the number of employees feeling undervalued and tempted to make a move; or the firm will ultimately have to bring the counter-offered individual back in line with their peers, normally by freezing their salary bringing you back to the starting point. None of those three outcomes could be classed as a success and you
have now wasted time, money and energy.
The best employers promote two-way honesty and should start well before a surprise resignation. If your firm is able to discuss what individuals are looking for in a forum where they know it’s not jeopardising their careers then you are more likely to have an early ‘heads up’ about issues on an employee’s mind. This will enable you to choose, together, whether that is something which the firm can offer or not. Having that conversation not only properly and honestly, but also early, will mean your team member knows what to expect. And that doesn’t always mean they will leave. I have seen much higher levels of frustration from people who feel they have been misled than from those who know they have been given the truth. If, however, the team member does think they will still want to move on in future then you will be prepared and able to choose a replacement in advance. The worst case scenario is that somebody (who was always going to leave) leaves happy with the firm and their time with you.
The best strategy for counter offers is to avoid them completely by already knowing the concerns and push factors for your employees and having regular conversations about the possibility or impossibility of resolving those concerns. Indeed, when a resignation comes in you always need to get to the root cause of it. If you can honestly look at the problem and fix it, then do. If you can’t then you should accept the resignation and focus your energy on choosing somebody new. You don’t want to be six months down the line with lost time, lost energy, lost money and the same lost employee.