Can counter-offers stop top talent from leaving?

Published on Wednesday, Mar 25, 2009

Today’s recession-hit times have ‘necessitated’ large-scale downsizing and lay-offs at all levels. Yet, while companies are voluntarily trimming down personnel, they still cannot afford to have their top employees walking out of the door, that too of their own accord.

The downturn itself has made retaining skilled members of the staff a topmost priority. And why not, after all you cannot afford to simply stand by and watch the organisation’s valuable investment in the employee going down the drain, as he is enticed away to greener pastures!

So, once a human asset announces his decision to leave, the management has to go all out to stop him at the door. They try to lure him to stay by sweetening the pot as much as possible, at times above and beyond the new job offer. This is what is known as the ‘counter-offer’.

Yet, convincing an employee to stay after he has decided to leave is tricky territory. It requires careful groundwork and handling to be successful.

The counteroffer should be prepared in such a manner such that it serves the company interest and also satisfies the employee. Let’s take a look at what goes into making a counteroffer a win-win situation:

What’s on offer?

It goes without saying that the organisation has to hold out something extra, something out of the ordinary to keep the about-to-leave employee from doing so. This unscheduled offer normally ranges from a salary raise, bonus, promotion, additional benefits to even stock options.

Yet, the attractive offer often does not eliminate the root cause of dissatisfaction that had provoked the employee to quit in the first place. As the problem is bound to crop up again, making a counter-offer will just prolong the inevitable. In fact, it has been proved that most employees who accept counter-offers leave within the next six months.

Instead, it makes sense to dig into the underlying discontent and try to solve the issues, thus actually making the employee ‘want’ to stay. Towards this end, you should determine the employee’s needs, interests and ambitions, examine his performance records, speak to his manager, colleagues or even the employee himself or even check out the new company and job to understand what has tempted him to move.

Then, try to make necessary changes that will address the problem and turn the situation around. For instance, if the employee abhors the lack of challenge, offering a tough project, top assignment or extra responsibilities will reignite the excitement. If its stress or burnout, an extended or paid vacation is just what the doctor ordered.

Similarly, opportunities for further training or career development can help one move out of a stagnating career. Again, if an employee is looking to start a family or needs work-life balance, options such as structured leave, telecommuting or flex time can do the trick.

Other underlying issues such as unsatisfactory office environment, personality clash with manager or co-worker and commuting dilemmas also need to be tackled appropriately, as simply offering more money or projects will not make them disappear.

Way to present it

Even if you have worked out the ideal solution, a counteroffer is a sensitive issue that screams handle with care.

You have to present it in a sincere, objective and trustworthy manner sans any ill will, for it to be accepted.

Be open with the employee even as you discuss the merits and demerits of the new job, the benefits of working for your organisation or the potential pitfalls for leaving.

After all, a counteroffer is a sort of recommitment and only fair treatment can help the employee to reconnect with his job.

Flip side

Well, the counter-offer is not without its inherent risks and consequences. It can send out the wrong message that employees only have to mouth the ‘I quit’ threat to provoke the desired raise or promotion.

Moreover, making constant counter-offers not only smacks of desperation, it can also wreak havoc with the company pay structures.

It even demoralises loyal employees who resent the apparent favouritism as benefits are doled out to ‘unworthy’ employees.

Yet, the jury is still out on the wisdom of making counter-offers. As a top HR manager remarks, “I’ve seen it go both ways.

We’ve had some employees who have accepted counter-offers and remained here for years and others who have accepted counter-offers and left after six months.

Managers should be in tune with each employee’s commitment to the company so that this type of thing doesn’t come as a big surprise.”

Companies should always evaluate the pros and cons of the situation without making a counte-roffer the common practice.

Restrict it to those employees who are critical to the success of the company or possess knowledge and skills that are hard to replace.

Above all, keep in mind that a counteroffer is actually only an attempt to buy time till you can yourself find an appropriate replacement!

PAYAL CHANANIA