The Rise of the Counter-Offer
The Rise of the Counter-Offer
The War for Talent is heating up with HR teams battling to retain their talent, and love them or hate them, the use of counter-offers as a last attempt at keep employees from leaving is becoming even more common.
As Ireland moves towards full employment in 2018, there is no doubt that the volume of counter-offers will increase substantially as organisations attempt to retain employees and to keep turnover costs down. But research has show that 60% of UK-based employees who accept a counter offer leave the organisation within six months, and that trust between both the employee and the organisation is undermined. The employee wonders why the organisation didn’t try to make them happier all along, and the organisation now questions their employee’s trust.
What is a counter-offer?
A counter-offer is anything offered by an employer to try and persuade an employee to remain with the company after they have handed in their notice. And not all counter-offers revolve around money, as not all employees leave organisations as a result of money.
Nevertheless, an increase in salary is usually the quickest and easiest solution used by the employer to tempt someone to stay and is more than likely the first negotiation tactic. If you are offered an increase in salary, always calculate the net amount into your pocket after tax to see if it is really worthwhile to stay on in the role. A big lump sum increase might look great on paper, but how much will you really get into your pocket every week after tax?
But if you have chosen to move on due to non-financial reasons such as work-life- balance or lack of promotion, you need to ask yourself if more money is really enough for you to stay on in the role? Or whether now is the time to make a clean break and a new start. After all, if you have secured a new role with another company, you clearly have a lot to offer any
The War for Talent
The phrase ‘the War for Talent’ came about in 1998 after a year-long study by McKinsey of 77 companies and almost 6,000 managers and executives. The results of the study indicated that over the next 20 years, demand for highly skilled talent would increase while the supply would decrease, resulting in companies having to work harder to either retain their employees or tempt new employees to join.
Today in Ireland the War for Talent is indeed having a huge impact on the jobs market. A CIPD survey of 900 HR professionals in 2016 found that 50% of respondents reported increased voluntary employee turnover over the last two years, and 44% expected their turnover trend to continue over the next two years.
To retain employees 63% of respondents’ organisations are engaged in up-skilling the current workforce, 57% are increasing the number of development opportunities for employees and 46% are working on their employer brand to attract talent to the organisation. However, when all else fails, there is always the counter-offer as a last attempt to persuade an employee from leaving.
Why is there more money now?
Counter-offers are notorious for undermining trust in the relationship between the employee and the organisation and it’s not hard to see why. Imagine if you had made previous requests for a salary increase and were told each time that there was no money there. And then when you hand in your notice, an extra €10,000 magically appears. Of course, you couldn’t help but question why is there more money now?
Naturally, this leads to a breakdown in trust, and it comes as no surprise that more than 60% of UK-based employees who accept a counteroffer leave the organisation within six months.
And there is always the possibility that the organisation could quietly start looking for a replacement in the background as they might presume that the employee will be gone within a year and they want to be prepared.
As we specialize in recruiting in Engineering, Construction, Manufacturing, and Life Sciences, it’s clear that demand for highly skilled talent in these areas has skyrocketed, but we are fortunate to have seven offices located across Europe and access to a wide talent community of highly skilled professionals.
Unfortunately, the counter-offer stands in between an employee leaving an organisation and joining a new company. Looking at the research that has been done around this area, it would indicate that counter-offers rarely end well for either the employee or the company with lack of trust on both sides being the most commonly cited issue. But if do you choose to accept a counter-offer, give it plenty of thought. Will this offered address all of the reasons that prompted you to leave the organisation in the first place or will you become of the 60% who leave within six months?
Euro Executive Recruitment is one of Ireland’s leading recruitment agencies in Engineering, Construction, Manufacturing, and Life Sciences along with Marketing, Sales, HR, and Finance. If you considering changing roles check out our jobs. We also offer free CV and career advice.
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