Do Counter Offers Work to Retain Employees?
A manager doesn’t want to lose a strong performer as they need them to meet business goals. So what happens when an employee gives notice, especially if the person is critical to the operations or project? Does it make sense to create a counter offer in order to entice them to stay?
Employees leave for many reasons and in some cases money is the primary reason. Though in my experience, money is not usually the precipitating factor when an employee decides to leave. Most likely the job didn’t just materialized and they accepted it. Rather the employee may have updated their resume and started looking long before the offer came to them. If this is the case, how do you think a counter offer will work? What are some of the scenarios if you decide to counter offer in order to keep a key person.
The employee gives notice because he/she feels that the work isn’t challenging and they can get more money if they move. Maybe they have mentioned it to you but you were busy and didn’t hear their frustrations or maybe they said nothing and decided to put their resume out on the market and see if there were other opportunities. You offer them new responsibilities as well to match their offer and they accept. Everyone is happy.
In my years in Human Resources I’ve found that employees let you know they are not happy, either verbally or with non-verbal behaviors. They become quiet, less engaged, though still do their work. They found out their market value or someone else was making more money than they were in the company and they felt you didn’t appreciate their contributions enough to pay them a higher salary.
One of the top reasons that people leave is they don’t like their managers, so unless you are offering them a new person to report to, more money or responsibilities will not likely entice them to stay.
Keep in mind when an employee decides to leave, they are one foot out the door. If they stay, you will not trust they will not look again, and they may feel that the working relationship has changed and feel anxious that you may replace them. If they don’t leave right away, they will leave either on their own or you will let them go.
In all of the cases I’ve experienced counter offers the employee left within a short period of time. They used the counter offer increase in salary as a base to get even more money. I never recommend counter offers, rather if the employee gives notice, see if you can extend their stay to help with the transition. Maybe they could work at night to handle priority work while you look for a replacement. See if they can recommend a replacement. Thank the employee for their contributions and wish them the best in their new job.
Let them go — as it rarely works out for the company or the employee.
Then step back and see if you are vulnerable to losing someone else. Research each person’s market value, check in with them on how they are doing and recognize them regularly when they are contributing to the success of the company.
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