Counter offers are back – how to manage them

Counter offers are back – how to manage them

Counter offers in the workplace had all but disappeared in the past three years as workers ‘bedded down’ in current roles during the recession - but now they are back.

A counter offer is an offer the current employer makes in response to a job offer from another organisation. It usually includes a variety of new promises such as an attractive promotion, a pay rise and/or an increase in benefits.

Robert Half General Manager, Megan Alexander, cites one example is a recent Robert Half candidate who returned from the UK a year ago and took up a temporary maternity cover position in a clerical role, paying $48k. She wanted to be an Assistant Accountant and was offered a permanent position with a new company paying $50k plus 10% bonus. Following this, the original company counter offered her $65k to stay.

Another candidate received a 23 per cent pay rise as a result of a counter offer from her existing employer.

Alexander says the problem with counter offers is that they don’t address the original reason people look to leave an organisation, such as the need for a change or career progression.

“Managers should consider the possibility that some of the factors that caused the candidate to look for a new opportunity (outside of financial advantages) are not likely to change after a counter offer is made.

“Some managers also use the counter offer as a self-serving strategy to address concerns on capacity, or as a way of buying time until a suitable replacement can be made.

“The reality is that counter offers are generally ineffective not only for employers, but for employees as well, as their company loyalty is questioned. In our experience, 80-90% of employees who accept a counter offer end up leaving the organisation within in a year.”

In the current business climate, Alexander says salary is driving movement in the market. People are not going to move just for an opportunity; they want a pay rise as well. The message to managers is that it’s time to review your salaries if you would like to retain your staff. Monitor market trends and keep informed with information such as Robert Half’s Finance & Accounting Salary Guide which contains useful information on what your market is paying.

There are of course perks other than salary that can be offered to employees by way of reward. These include flexible working schedules, more holiday time, or other incentives or bonuses.

A recent survey by Robert Half found that 62 per cent of employers are worried about losing their staff to other job opportunities in the next year. The two examples above show there is good cause for concern.

The typical tenure in a finance role is 3-5 years. Workers have hunkered down during the recession, but now increased market optimism is encouraging people to start exploring new job opportunities and they’re considering stepping up into new roles.

Essentially, the best way for employers to manage a counter offer situation is to avoid it happening in the first place. They can do this by providing the workplace culture, environment and remuneration that keeps staff happy. If an employee decides the time is right for them to move on, more often than not, the right decision is to let them go.

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