There are a lot of inflated statistics flying around in the recruitment industry about counter offers that seem to have no basis in real research or fact. Particularly often cited, is that 80% of employees who accept a counter offer leave within 6 months and 90% leave within a year.
Frustrated by the lack of data to support these claims, a recruitment influencer on LinkedIn, Jan Tegze, conducted his own research and found that, in his experience, 48% of employees who accept a counter offer will leave within a year and 92% would leave within 3 years. [1] The reality might actually be quite different therefore to the online hysteria. Why might that be?
Well, the overwhelming advice online is that counter offers never work and should (almost) never be considered. Perhaps that is why these alarming figures seem to have taken on a life of their own. They support that narrative and serve to shock. So is, dare I say it, ‘fake news’ impacting current thinking on this sensitive, but important subject?
To be clear: I do not disagree with the premise that counter offers should be approached with extreme caution by both employers and employees, however, there are absolutely circumstances in which they can benefit either or both parties, especially in the short term, but very occasionally, for the long term too.
So, can counter offers work?
Put simply, yes, they can. But – and it’s a big but – only rarely and only in very specific circumstances. In fact, now might be a time in which employers consider this approach more than ever. Given that nearly 4 in 5 employers globally report difficulty finding the skilled talent they need in 2023,[2] with the top technical skill employers are seeking being ‘IT and data’, many benefits to employers of retaining trained, skilled staff are magnified. The benefits are fairly obvious and well cited, but include avoiding the cost, time and effort of recruitment to replace – and when recruitment of vacant roles is already a challenge, then retention becomes even more important. Of course, retention strategies should focus on rewarding, motivating, and developing employees, so that counter offers never need happen. However, even the best employer will of course lose skilled staff sometimes.
To counter or not?
Let’s assume that you find yourself in a situation where a key employee resigns. What considerations should you make when thinking about whether, or how, to counter offer?
- Can you afford to counter? Simply, can your business realistically match the salary and conditions the employee is leaving for and if so, is that fair on your other employees?
- What are the employee’s stated reasons for leaving? And do you believe them?! If they are citing just one aspect of the job, such as salary or working conditions – and you don’t suspect any other motivation – then it may be worth considering a counter.
- How much do you want them to stay? This is of course open to interpretation, but we all know there are some employees who are more valuable and business critical than others. If losing this person fills you with dread, then you might be well advised to listen to your gut!
- How difficult would it be to fill the vacancy? E.g. do you already have vacancies for similar roles? How is the candidate market for this level and discipline? Speak to your recruitment consultant to gauge the current market if you’re not sure.
Once you’ve evaluated these considerations, you can better decide whether a counter might be appropriate. It should not be a default approach. If every person who resigns knows it’s coming, you’re opening yourself up to trouble. Perhaps they are just bluffing to get more benefits; maybe the person who you really want to stay does not take it seriously because they know it’s a default reaction and not a reflection of how much you value them… The list goes on.
Short term gain, long-term pain?
If you do decide to counter AND it works – and both are pretty big ifs – then can you really return to business as usual with the employee in question? And can they with you? Well, probably not if we are all being honest with ourselves. It’s highly likely that there’s been some degradation of trust and you may both be biding your time until the ‘inevitable’ comes to pass.
But, maybe, in that time you can add to your team to bolster the skills you have access to, or test out contractors with a view to filling future gaps that way. If buying some time is going to benefit your organisation, then the counter offer is not necessarily a failure, even if the employee leaves down the line. And how many people are ‘lifers’ with one organisation these days? So one organisation’s failure may be another’s successful outcome.
In the rare case that it works out for the long term and the employee stays for several more years (if you would count that as a success), then you should find yourself in a better position to replace them. So, let’s end on a positive and highlight that sometimes it can work out well for both parties and all depends on what you regard as success. Let’s not forget, it’s about how you approach your entire people strategy as a business that counts.
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References
- https://jantegze.medium.com/48-of-employees-who-accept-a-counter-offer-will-leave-within-a-year-cb8acb5afa81
- ‘2023 Global Talent Shortage’, Manpower Group, https://go.manpowergroup.com/hubfs/MPG_TS_2023_Infographic_FINAL.pdf