A Bridge Too Far: Why Counter Offers Usually Fail in the Long Run

More money can’t always change the underlying reasons for switching jobs

When one of your top-performing employees announces that they’ve found a new position, do you try to hold on or do you let them go? It’s a tough choice, by any measure. The best people in almost any organization have special skills and unique expertise, meaning they bring far more value to a company than an average worker.

However, despite the inconvenience and potentially significant financial loss that can come with losing a top employee, you shouldn’t attempt to retain a great worker for the wrong reasons. When most people quit their jobs, they do it for very specific reasons, and the most common one is simply because they want to work somewhere else. So, if you decide to present a departing employee a counter offer, do so carefully, keeping in mind that many of them don’t work in the long run. Here’s why:

Studies show the majority of workers who accept counter offers leave the organization within 6 months

There’s no point in going to the trouble of extending a counter offer to a worker who’s going to leave anyway, unless it’s a short-term necessity. They may be leaving soon, no matter what you offer. In fact, a study of employees across the U.K. revealed that 60% of workers who accepted a counteroffer left the firm in question within 6 months. That means firms are going to a lot of effort and expense with little return except a delayed reckoning. Worse, many employers find that they’ve put extra money and effort into keeping an individual, only to find them working for a major competitor within less than a year.

Employers who think more money can always retain employees may be out-of-touch

Many employers mistakenly believe that earning money is the only priority and goal of their employees. Thus, employers reason, more money can solve almost anything. That just isn’t the case. While earning a sufficient salary is undoubtedly crucial for employee satisfaction, it’s far from the only or even always the most important contributor. Studies consistently demonstrate that factors like job advancement, flexibility, quality benefits, job security, and good work relationships may be equally or more important than salary for many workers.

While companies trying to retain an employee may promise to change these factors, it’s surprisingly difficult to deliver on this promise. Despite your best intentions as a business owner or executive, you can’t simply change the work culture and policies to satisfy one employee. In the end, making promises that can’t be kept may be yet another contributor to the high rate of attrition among employees who receive counter offers from their firms.

“It’s not you, it’s me” – some employees just want a change of pace

When your best worker decides to break up with your company, try not to take it too personally. It may be that nothing is wrong or lacking, but simply that the worker wants something different. This might mean that they want to live in another city, work in a slightly different industry, or take on a different role that your company simply cannot provide – and that’s okay. To evaluate this factor as well as others, make it a priority to have an open discussion about their reason for leaving.

It’s much easier to keep a key employee motivated with the right benefits than to find a new one

Employers like to issue counter offers in part because finding new employees can be an expensive hassle – but in many cases, you can take concrete steps to make sure your key people don’t want to leave in the first place. In part, this can be done by making sure employees feel valued and appreciated by giving them top-notch incentives, like specialized employee training plans, trips to conferences or important industry events, or benefits like executive disability insurance policies or individualized savings and investment plans.

The key here is individualization. By accurately assessing the individual needs of your key employees, you can design incentives that will appeal to them. And many of these plans have delayed costs, or expenses that are tied to performance gains for the company, allowing you to offer programs that keep them engaged without destroying your budget.

The exception: When counter offers might actually work

If, after knowing the potential odds, you still want to attempt to retain an employee with a counter offer, do so carefully – and only after an in-depth conversation with the worker. While many things about a workplace can’t be altered or fixed, some can. And if you really believe that you can make a change that an employee wants, such as a raise, working remotely (either full or part time), or additional benefits, you may be able to satisfy them for the long haul. But first, you have to make sure that those are the reasons that the employee has sought out new work (and they often aren’t).

In addition, it’s important to understand that resigning from a job can be a stressful situation, and employees may not always be straightforward with you about the true reason they are resigning. While they may sound polite and complimentary about you and your company, in reality, they might not have liked working for you as much as you thought. Therefore, the last thing you want to do is to pressure someone to keep a job they don’t like (especially if you’re offering them a bonus for doing so). Your ROI calculation about retaining an employee should account for a number of factors, including the cost to find a replacement and the cost of keeping a disengaged employee.

Be sure to devote resources and thought to keeping your current employees happy, plus finding new employees who actually want to work for you and are enthusiastic about doing so. That’s the only way to truly ensure that your workforce is motivated, productive, and engaged in both the short and the long run.

To learn more about how to manage employees effectively, reduce risk, and improve worker satisfaction at your company, contact Karp HR Solutions today for a free consultation.