FORBES published the results of a recent survey that indicated more than one in five employees (21 per cent) say they plan to switch jobs this year or next year.
As a way to hold on to staff, an increasing number of companies are becoming more willing to propose counter-offers, some even offering up to 25 per cent pay rises. This trend is fuelled by today’s candidate-driven market as the talent war heightens, especially for senior executives.
With such an emphasis on talent shortage, companies are more likely to turn to rash solutions, focusing only on how many people they can retain.
But making counter-offers a part of their retention strategy can actually tarnish their employer brand.
If employers regularly propose counter-offers, employees will start to view the company as a place where one’s voice can only be heard if there is a job offer in hand — a reputation no company wants to uphold.
Responding to a counter-offer
So when senior executives are offered a counter-offer, how should they respond?
If money is your only concern, then accepting a counter-offer might in fact be a blessing, as you will be able to maintain your seniority and stay in the company you are comfortable with and enjoy working at.
Your company will also definitely regard this as a blessing as it will be able to retain a valuable member who has developed essential skill sets that are needed for the job.
Without the need to engage in another round of recruitment for your position, followed by a training and adaptation period, your company will have saved a significant amount of time and energy along with other resources.
In addition, this offers an excellent opportunity for your company to re-evaluate various aspects of the company that you were unsatisfied about.
Your company can then work to enhance various communication channels to be more aware of employees’ needs and ultimately improving their overall experience within the company.
It’s not just about money
For some senior executives, money is not so much the issue as dysfunctional management, unchallenging work or even debilitating career growth.
If you are in this situation, while your current employer might be more attuned to acknowledge how undervalued you felt, counter-offers for senior executives mostly just entail a salary raise, a title promotion or a different reporting structure, all of which are insufficient, in the long run, to appease your initial ambitions of leaving the company.
Moreover, this manoeuvring can reflect negatively on your work ethics of loyalty and trustworthiness.
By accepting the counter-offer, employees are actually destroying valuable relationships with both the current and potential employer along with current colleagues.
Throughout the recruitment process, your potential employer will have invested invaluable time and energy in you, so if you inform them that you are taking up your present company’s counter-offer, you are essentially violating the trust and faith they had in you.
You will have lost all your credibility and it is unlikely that the company will hire you again in the future.
At the same time, your current boss will ultimately feel betrayed and anxious even if you stay; he may have the uneasy perception that you might leave again soon enough.
Bloomberg Businessweek quoted a study that found that more than 50 per cent of employees who accept counter-offers leave the organisation within six months.
The National Business Employment Weekly found that nearly four out of five people who accept counter-offers are gone within the year.
To keep or to let go
Even as counter-offers continue to grow in popularity, companies should be aware that it is not a sustainable long-term solution to staff attrition.
To avoid losing top talent, companies should take a proactive stance and recognise what their employees value to provide a positive employee experience and lower job dissatisfaction and turnover rates.
According to Bloomberg BNA, employers typically have a 48-hour window to decide whether to present a counter-offer, but only 14 per cent of companies have official counter-offer policies for preparing and evaluating offers. Of such, only 4 per cent of such policies are documented.
To prevent employees from using counter-offers as bargaining chips for a career boost, companies should first establish a set of policies that articulates the various types of employees that they seek to retain, followed by identifying the high performers who possess those particular critical skills.
In addition to developing guidelines that include short and long-term salary and benefit increases, companies should also determine who should present the counter-offers and provide descriptions of individuals or positions that are eligible for counter-offer proposals.
With these concrete guidelines, companies will be able to identify whom to keep and whom to let go.
A Deloitte study that was conducted from 2009 to 2012 on talent management showed that overall, 44 per cent of employees ready to resign would stay for additional bonuses and financial incentives, 42 per cent would like a promotion or other job advancement and 41 per cent would remain for a raise in base salary.
Article by Ati Simatupang, head of South-East Asia at Bó Lè Associates, an executive search firm in Asia with a well-developed regional network. It is a wholly owned subsidiary of RGF, the world’s fifth largest and Japan’s largest HR service provider. For more information, visit www.bo-le.com