Compared to 10 years ago – do you think counter offers are more or less relevant? Do you think they are more or less successful at retaining and engaging your stars for the long term? As your organisation is more sophisticated in its HR practices, does the utilsation of counter offers fit into your HR toolkit? Counter offers may well have been a godsend in years gone by, but today more than ever, HR views them with high skepticism and a low payoff activity that only serves to compromise the longer term HR strategies.
Even if you succeed in retaining that employee, how long will they stay and how effective will the employment relationship be?
When discussing whether counter offers feature in the toolkit of our clients, the general consensus is that the need for counter offers has diminished dramatically with inverse correlation to the sophistication of HR practices. Key HR interventions should drive improved communication with employees regarding their career development and the alignment and successful communication of the employee value proposition. This should diminish the need for (and arguably the success of) counter offers – if an employee understands exactly where they stand at any point, then there will likely be no ‘offer’ that can be thrown up to them that will be successful at retaining them.
Digging a little deeper, there are some compelling features of today’s business environment that may, however, positively impact the relevance and utilisation of counter offers. Taking into account factors including an unemployment rate that is arguably quite low, an election around the corner, our reliance on China maintaining demand for iron ore and the exchange rate pressures, businesses are trading in very challenging times. Overall, we see that company appetite for risk is quite low.
Companies with a lower risk profile view the impacts on their recruitment/HR strategies and plans as are based on securing the candidate who can deliver to expectations whilst presenting the lowest risk option – note, this candidate is not always the ‘best’ candidate in the market. So, intuitively, an organisation’s adjusted risk profile may increase the relevance and use of counter offers – organisations may be more likely to counter losing a known (high or above average) performer by incentivizing them to stay with a counter offer. This employee may be critical to assisting the organisation to position itself for strong future growth, or equally may be a fundamental resource on a business survival project. Either way, losing this person would be high risk.
are you just deferring a tough decision or a little bit of extra work in the short-term
Regardless of motivation and rationale for making a counter-offer, the reality is that the employee has sacked the organisation. Even if you succeed in retaining that employee, how long will they stay and how effective will the employment relationship be? If they have felt that their trust has been broken, if they believe that by putting you (as the employer) in an awkward position that you will bend to their demands, if they believe that the only way that you will meet their expectations is by them resigning…how effective is that relationship, and how ‘unique’ will your HR plans need to be to this individual verses the rest of the organization? Is your organisation a strong team or solely reliant on this individual?
There may be some highly compelling reasons to consider the use of a counter offer, however, should you succeed, generally the negative impacts will outweigh the benefits and all you will be left with is an employee who is retained on a tenuous arrangement that becomes particularly challenging to maintain (whilst also maintaining effective relationships with all your other employees). Ask yourself, are you just deferring a tough decision or a little bit of extra work in the short-term whilst creating more headaches for yourself and your business in the longer term? Given that the long term success of counter offers is so low, consider the possibility that it would be a better outcome if that employee resigns, moves to another role and organisation, and then realises that the grass isn’t greener on the other side – What a powerful message that would send to your existing employees.
