Posted Mar 28, 2023
Counter Offers: why they may not be as effective as one might think
When an employee leaves, it can often be extremely costly and time consuming to not just recruit new talent but also go through a loss of productivity, skills output and so much more. Even when new talent has been recruited, it will be a while before the new employee can work at the same pace that their predecessors did.
With counter offers, the way it works is, by promoting an employee or promising an improved/ increase in salary, you are hoping that it can persuade them to withdraw their formal leave notice
Though they might look like a great tactic to play, it can also end up blowing up in the company’s face. Below, we will outline a few ways counter offers are not as effective of a staff retention tactic as one might think…
1. Not a long-term solution
If your company wants its most talented employees to stay, the compensation benefits, competitive salaries, promotions and recognition must all be set forth from the get go. These sorts of factors are essentially what keeps them motivated and working for your company for a long time
Deciding to make these factors available just when they decide to leave or hand in their notice might be a little too late. The minute an employee starts to look for new job roles, they are in the mindset of starting anew. Even if your efforts prove successful and they take up the counter offer, there is no guarantee how long they will stay for until they start applying for new roles again.
2. Other underlying issues
Although counter offers address peoples compensation related issues, they do not address other underlying issues that may have caused them to go job hunting in the first place. Though money may be a factor, other factors can include the need to simply work in a new industry, perhaps the opportunity to work from home, better leadership and so much more.
3. Can negatively impact team morale and can create doubts about your capabilities as a leader
Not all elements of a counter offer are visible to other team members unless the employee says something about it (this can include salary rates, retention bonus, etc)- however if the counter offer is in the form of a promotion, it will be news amongst the team/organisation. This can be viewed as showing favouritism from the other employee’s point of view.
In cases as such, it has the tendency for morale to take a hit as employees may interpret your action of providing a counter offer in a way that makes it seem that in order for them to get a promotion or some sort of other counter offer, all it takes is a resignation threat.
Instead of employees focussing on their own performance levels, what could end up happening is you receiving a vast series of resignations in hopes that you would offer a better deal
