By Andy Medici – Senior Reporter, The Playbook,
Throughout much of 2021 and 2022, recruiters say they were seeing a wave of counteroffers like they’d never seen before as companies desperately tried to retain talent.
Things have changed in 2023.
Just like with salary increases, counteroffers are still very much a factor — they just aren’t quite as aggressive as they were a year ago.
“There were some crazy sign-on bonuses and crazy counteroffers if somebody was looking to leave and they were trying to keep that person,” Dawn Fay, operational president for Robert Half International Inc., recently told The Playbook. “We’ve seen that quiet down a bit. It was nuts, and some of the numbers were really big.”
Experts say the question of whether or not to make a counteroffer to a departing employee is one businesses have typically wrestled with. The pandemic has made it even more difficult and time-sensitive.
“Depending on the situation, and certainly in this market, you may need to act sooner than later. Dragging it out signals to the employee they are low on your list of priorities and the conversations have been more of a formality,” said Davonne Helmer, managing partner, global human resources officers practice leader at ZRG Partners.
That could hurt morale within the company by showing employees they aren’t valued. Some experts say businesses should make it a point to counter within 24 to 48 hours.
Of course, that’s assuming you want to make a counteroffer at all. Experts say there are several factors to consider when deciding how to approach a pending employee departure. In many cases, the best route may be not countering.
Do your homework
Helmer said employers should review the employee’s past performance data with a clear understanding of their contribution and their impact, as well as their reviews over the years.
“It’s hard to have a strong counteroffer unless there is a clear picture of how you got to this moment. Get underneath the stated reason to the root cause. Is it just pay-related? Lack of career path, desire for hybrid work, especially with some companies now looking for employees to return to the office, culture misalignment and manager malaise are other root causes,” Helmer said.
Then, you can construct a counteroffer that not just includes what they want, but possibly creates “guardrails” that include time-based or performance-based incentives.
Kristen Fowler, vice president of human resources at Clarke Caniff Strategic Search, agreed a good counteroffer needs to zero in on the reasons why the employee is leaving and address those concerns. If they are leaving for a higher salary, a counteroffer needs to contain competitive compensation, for example.
“Employers should also consider the long-term implications of a counteroffer. If the employee has already made up their mind to leave, offering a counteroffer may only delay the inevitable and may harm the employer’s relationship with the employee in the long run,” Fowler said. “Employers should carefully weigh the cost of losing the employee against the cost of offering a counteroffer.”
Counteroffers could still lead to disappointment
Bu at least some experts believe that, if an employee has already taken the time to go out and interview — as opposed to receiving an unsolicited offer — then no matter what the counteroffer, they will still eventually head for the exit.
“Making a counteroffer to an employee that has already made a decision to leave the company is typically a losing strategy. Trying to convince the employee to stay with a counteroffer is just a Band-Aid,” said Jeff Andes, University of Phoenix vice president of talent management. “The times where it makes the most sense for a counteroffer is when the employee is in a critical role or has some legacy knowledge you cannot afford to lose or may be working on a key large-scale project where missing the deadline would have significant business impact.”
Andes said even if the employee suggests the counteroffer, it would be best to start rebuilding your talent pipeline and create a potential succession plan — including developing other workers — to avoid any disruption if the worker leaves.
Sometimes, if an employee raises concerns that can be addressed, and they are a high performer, it could be good to counteroffer and get them to stay. But if it’s not realistic to address those concerns, managers and owners should be up front and transparent about that.
“This approach leaves the exiting employee with a positive brand experience and also signals to the remaining team members that the manager is going to be honest with them,” Andes said.
Employers should be proactive
Employers should work ahead of time to ward off potential offers so they are not in a position to have to make counteroffers in the first place, experts say.
A good strategy for that, according to Andes, is to identify high performers or high-potential employees early and understand their needs and motivations with discussions and assessments to keep them engaged — and so they don’t take that call from an external recruiter.
Once an employees gets to a point they would interview with another company, the battle has often already been lost.
Helmer said employee engagement and communication is the “mortar” assuring that employees are heard.
