If an employee hands in their notice, you might be tempted to make them a counteroffer. You’re not alone – nearly a third of employers offer counteroffers as part of their retention strategy, although, 60% of managers perceived counteroffers as more negative than positive.
Before making any kind of counteroffer, it’s important to take the time to think about the skills and value an individual brings to the firm and whether it would be sensible to retain them or whether you should let them go and look for a replacement.
In this article, we’ll outline the pros and cons of making a counteroffer so that you can consider whether it’s the right thing for you and your firm.
Why you should make a counteroffer
1. Recruiting can be costly
We know profitability is crucial. The cost of finding someone new will likely be one of the first things to cross your mind when you receive that letter of resignation. While your counteroffer might be in the form of a pay rise, this increase might be less than the price of paying a recruiter and the cost of any commercial downtime.
2. Recruiting can take time
If you can persuade your employee to stick around, you won’t need to embark upon what could be a lengthy recruitment process to replace them.
3. You won’t need to induct someone new
It can take weeks, even months for a new employee to settle in and get up to speed. If your counteroffer is accepted, however, you can avoid this commercial downtime as your employee continues in their role within your team.
Why you shouldn’t make a counteroffer
1. It might not be accepted
There’s no guarantee that your counteroffer will be accepted. Employees who have explored the jobs market will have already mentally moved on and the promise of an improved role or pay rise is unlikely to be enough to persuade them to stay.
2. The employee is likely to be disengaged
Once someone has decided to explore new opportunities and been offered (and accepted) an attractive alternative position, they’re likely to have mentally checked out of their current role.
Even if they accept your counteroffer, they’re probably not going to be as productive and engaged in their work as they once might have been, unless they perceive that their role has improved significantly.
3. It could cause unrest within the rest of the team
Flippantly making a counteroffer could do more harm than good, particularly within the wider team. While the news might not get out to your other employees, it would be naïve to expect this will always be the case, especially if the individual in question has close relationships with their colleagues.
If others get wind of the fact that their teammate has been counteroffered (even if they’re not privy to the specifics), this could ruffle feathers and lead them to question whether they’re getting their fair share of recognition or rewards. In the worst-case scenario, they might even be tempted to leave, themselves. If you make a generous counteroffer, you need to be prepared to match this for others.
4. Your offer might not be realistic
Whether a counteroffer includes a pay increase or the promise of promotion or career development, it’s important to think carefully about whether you can truly commit to upholding this offer. Is a Head of Department position realistic for this individual within your team? What might the repercussions be for other team members? Is this the best decision for the profitability and success of the firm?
5. You’ll always treat them differently
Sadly, your relationship with that team member is likely to have been tainted and the trust between you broken. Even if they say they’re committed to remaining at the firm, as they’ve had their head turned once, there’s nothing to say it won’t happen again.
They’ll also be conscious of the shift in your relationship which could lead them to be open to further conversations with other firms that persuade them to leave.
6. They might leave anyway
Even if your employee accepts your counteroffer, there’s a high chance that they’ll end up leaving anyway. Data suggests that 50% of those who accept a counteroffer end up leaving within twelve months because of the underlying issue that motivated them to explore new opportunities in the first place.
Want to improve your employee retention rate?
In today’s tight recruitment market, retention is crucial. Firms need to make sure they work hard to engage their staff to reduce the chances of them looking elsewhere. As well as spending time dealing with under-performers, it’s essential to pay attention to your best staff. Recognise their achievements and invest in their career development to pre-empt the possibility that they’ll decide it’s time to move on.
At Realm, our specialist team can help you refine your attraction to retention strategy (and your Employer Value Proposition) so that you’re better able to attract and retain the lawyers that will help you grow sustainably and profitably. Get in touch today for a confidential, no-obligation conversation on 03300 245 606 or contact us via this website.