Counter offers - are they worth it?
January typically is a peak month for resignations. Employees use the Christmas break to re-evaluate their lives and given we spend a large percentage of our lives at work, this factors majorly in the mix. So given that it is inevitable that employees leave organisations, is it ever worth making a counter offer?
Why do companies make counter offers?
Quite simply it is cheaper to retain an employee than to hire a new one. Our article on the impact of bad hires prices am average hire at over £30k. Giving a leaver £10k to stay therefore seems a cheaper option. Existing employees also have a great deal of knowledge that is useful to the organisation. So it is understandable why counter offers are made.
Are Counter offers successful?
Surveys show that between 50% and 90% of employees leave within 12 months of the counter offer being made. So if the average strike rate is so poor, how can you improve your chances of retaining them for longer?
Understand the reason for leaving
You can dramatically improve the chances of a counter offer succeeding by understanding why the employee is leaving. Is it because of:
- career development?
- commuting time?
- poor management?
Once you’ve got the root cause, you can assess how realistic it is that you can turn this situation around. Be honest with yourselves. A token increase or a small extra responsibility is unlikely to convert a leaver into a content long term employee.
If money is the only motivator, a reasonable increase may tempt them to stay for a while. If you need the employee to remain whilst a specific project is completed then incentivising the completion of that task may prove more effective than loading base salary.
If career development is the issue, can you actually meet their needs? Be realistic here. If you can’t, there’s little point trying as you will only be delaying the inevitable.
If it is commuting or some other personal reason that is causing the issue, you could try implementing a flexible working arrangement. This may buy you some time to get a successor ready to take over.
Finally if it is poor management that has caused the rift, take time to evaluate whether you’ve got the right people in the right positions or whether they need coaching support.
Is it always a bad thing to have leavers?
All the above assumes that it is the right thing to retain all employees who wish to leave. Clearly that isn’t the case. Some attrition is healthy; new hires bring new ideas into the organisation. Some people aren’t right for your organisation and a parting of ways is sometimes the best thing for both parties. So don’t always think resignations are a bad thing, like with most things, in moderation it can be good for you.