Do Counteroffers Really Work?
Whew!!! It sure is an active employment market out there! Whenever there is strong demand for specific skill sets or types of people, salaries rise and counteroffers become a retention tactic. Which is where we are right now for many job functions in NZ.
Employees leaving for new roles at other companies is an everyday fact of life. They leave for a variety of reasons, such as more money, progression opportunities, a location closer to home, they did not like their manager, or they did not like the company.
Leaving a role to take on a new job is a big decision for anyone to make, and mostly once they hand in their resignation, their mind is made up to go. So as their employer, is it worth giving them a counteroffer to stay or is it best to let them go?
In the latest edition of our accounting and finance salary guide, ‘What the Buck!’, we asked hiring managers if they would consider counter offering an employee who was looking to leave. We also asked employees, if they were to be counter offered by their current employer when trying to move company, would they accept it?
84% of hiring managers said they wouldn’t consider or were unsure about counteroffers, and 58% didn’t believe they worked in the long-term.
We were surprised at how high this was – given the number of counteroffers we are encountering right now – however, we specialise in hard to fill roles where counteroffers are more likely.
On the employee side, 71% of employees said they wouldn’t consider or were unsure about accepting a counteroffer, which points to the fact that money isn’t the sole motivator for people to leave their role.
We are showing our age (some would say wisdom!), but these numbers show that counteroffers really are only a short-term fix, and they fail as a long-term retention strategy. In fact, they often create other dramas like pay equity and employee standoffs. Having said that – we did have an extraordinary counteroffer this year – a $30k counteroffer for someone who was on $95k. This just goes to show that in the hard to fill roles, some employers are happy to stump up in order to keep people on their payroll.
Currently – we spend a lot of time with candidates discussing their current role, their motivations for leaving and the level of salary they are happy with. We are very mindful of a small minority of candidates entering into a salary auction via counteroffers – a silly move that most often means the candidate might get a short-term bump in pay, but it is generally at the expense of longer term opportunities.
As an employer – use counteroffers with caution and be very aware that often you have not fixed the real reason why the person wanted to leave. For employees out there hoping for a quick bump in their salary via a counteroffer – this is a risky business which you need to think through as it is easy to accept more money at the expense of job satisfaction.
**These juicy morsels of market intelligence are some of the many treats awaiting you in ‘What The Buck!’ – the (unofficial and slightly cheeky) most informative, fun and interesting salary guide for the best hiring managers in the accounting and finance industry.
Grab a copy for your hot little hands before we run out (again!). Click here to get yours!