As an executive search firm with over 44 years of experience, counteroffers were rarely an issue. It seemed as though an employee would, upon accepting an offer from a new employer, resign and that would be the end of it. Employers would never even consider issuing a counteroffer and might even show the employee the door that very day.
More recent entrants into the industry have encountered a markedly different landscape, as this scenario has changed drastically over the last decade. Social scientists may have a better understanding of the changing dynamics, but it is now a fact that employees are not only susceptible to counteroffers but will actually take them and stay with their existing employers more often than not, especially in this hot market of 2021. Further, rather than showing the departing employee the door, employers are readily willing to issue counteroffers because they understand the cost of backfilling a key position.
It's also interesting that people nowadays are swayed to stay at their present employer when that organization showers them with more money, more responsibility, a bigger title, a visit from the CEO and other perks that were not offered just moments ago. We’ve seen a multitude of candidates who have signed or verbally accepted an offer from a new organization only to renege on their promise without a second thought.
Counteroffers: Tips for Employers
For employers, especially those actively recruiting, anticipate the counteroffer. It should come as no surprise – top talents are in high demand. Therefore, it is dangerous not to plan for this situation. Here are a few other tips to consider when combating counteroffers:
Prepare to Counter the Counteroffer
Be prepared to stretch your compensation ranges and have a counter-to-the-counter offer. Ask candidates specific questions in the interview process that provide you with insight into their biggest motivation for leaving. Leverage their answers and remind prospective employees about why they decided to seek a new position in the first place.
Evaluate Your Existing Hiring Processes
Employers would be well served to evaluate existing hiring processes from beginning to end to portray their organization as an exciting and welcoming place to work with loads of upside opportunities. Our latest infographic, The Road to Recruiting Executives, may help you quickly evaluate your hiring process and ensure it’s on the right track.
Offer Comprehensive Compensation Packages
Culture, innovation and impact are all incredibly important factors in attracting talent in a candidate-driven market, but compensation is the determining element. Organizations must stay competitive with their compensation structures.
This requires due diligence and market research. Know what your local and national competitors are paying and seek guidance from a compensation consultant. Run a compensation analysis on base pay, annual performance bonuses, retention incentive bonuses, stock options, retirement plans and contributions, health and life insurance benefits, and miscellaneous perks. If your total package doesn't live up to market standards, you’re in for disappointment and frustration.
Counteroffers: Advice for Employees
For employees, we issue some words of caution. If you accept a counteroffer and remain at your existing employer, that relationship is forever changed. Next time there is a promotion opportunity or a plum, sought-after project to be divvied out, you may be subliminally removed from the roster because you held your employer ransom. People remember disloyal employees, especially if you consciously or subconsciously used an outside job offer to improve your situation. Despite employees’ increased willingness to jump on the counteroffer carousel, there is growing evidence that things do not go as expected after a counteroffer is accepted. It has been estimated that 80% of people who decide to accept a counteroffer and remain at their employer end up leaving in the next 12 months. Why? It’s not always about the money. Many times employers make promises at the counteroffer stage that they do not keep. No amount of money can change a loss of trust, a poor workplace environment or a toxic boss.
Loyalty is loyalty; promises are promises; good faith is good faith, but talent acquisition has evolved into a free agent market – just like professional sports.
Should you have questions about this topic or any talent recruiting, retention or compensation issue, connect with our authors, Jay Meschke (816.945.5401) and Omar Davis (720.529.3749).