In the past three years, millions of Americans have said, “I quit.” The counteroffer is one retention tool at leaders’ disposal. Leaders, use caution when you choose this strategy! CEB’s data suggests 50% of employees who accept a counteroffer leave within 12 months; that is unsettling! Paired with undesirable outcomes, the counteroffer could be more costly and damaging than parting ways with the employee.
Four Counteroffer Cautions: (What if we make this neutral and simple: “Loyalty”, “Employee Morale” “Promises” “Unintentional Inequities”?) They are supposed to be Cautions and “Respect Loyalty”, etc. aren’t really cautionary.
1. Lost Loyalty (what if we turned it and said ‘Respect Loyalty’ – positive?)
Nearly 71% of senior executives and 67% of HR leaders said that superiors in the current company would question the employee’s loyalty after accepting a counter. It’s hard to believe in anyone’s undying loyalty once they’ve told you they are leaving. Even if you try to overcome it, you’ll always think of and treat them differently. This makes it far more likely for them to go permanently– and relatively soon. Our clients and candidates confide in us, and let us tell you, this is an unfortunate reality. Respect the loyalty of your other employees and carefully consider the impact countering has on the rest of your team.
- Negatively Impact Employee Morale (perhaps Maintain Employee Morale – positive?)
Stephanie Retchless has first-hand experience at her previous employer of the negative impact counter offers can have on office culture. She and the leadership team made a compelling counteroffer to a team member they wanted to retain. Ultimately it left their colleagues frustrated (as much as compensation shouldn’t be discussed, it was – especially among younger employees) and management thought they would gain a more productive & engaged employee for the additional money but that didn’t actualize. The kicker, ultimately the individual left for another role. The cautionary tale: be prepared for a ripple effect that negatively impacts your team. When everyone starts looking for their “counter,” your spending could quickly get out of hand, affecting your ability to make other strategic pay adjustments (on your terms) or hire more employees.
If your counter is compelling enough to retain the team member, they could be in the “I can’t leave” mentality — even if they are miserable or disengaged because the compensation is better than they could get anywhere else. This will impact team morale and hinder your ability to fill the role with someone who wants to be in it and is eager to excel and contribute. Keep your employee morale positive.
- Promises Keeper
“After almost a year of reflection, I have made a huge mistake in staying on with my current role. After nearly one year of broken promises, I am seeking another opportunity again. Tami and Cindy, are you able to help?” – Returning Candidate. This professional was matched with one of our clients; her company countered, and she accepted. After 12 short months, she regretted the decision and wondered if the opportunity she passed on was still available. The position had been filled. Unkept promises will lead to departure. Make sure you can execute on what you promise if you make a counteroffer.
- Unintentional Inequities
As you think about giving more money, vacation, responsibility, or other perks and benefits to a strong performer you are trying to keep, be prepared to provide the same opportunities to your entire team.
When an employee tenders a resignation, an astute manager might ask, ‘What are they offering you?’ At this point, the auction process begins, and the question ceases to be one of career development and becomes one of material enticement. This is not sustainable or scalable. Consider strategic adjustments for every employee, not just the one you try to retain. Counteroffers should spark compensation and benefits policies that can be applied consistently and fairly.
Stay before the Negotiation
Researchers agree that preemptive intervention is a better way to deal with employees’ wandering eyes than waiting for someone to get an offer and then making a counteroffer. Ask yourself if a counteroffer addresses the issues underlying why the individual resigned in the first place. Is it enough to keep them happy and thriving on your team? Or is it just a temporary band-aid to avoid solving a more significant issue? If it is a band-aid, avoid the counteroffer even if is uncomfortable. Long-term, your team and business will benefit.