Employee retention is an important aspect of reducing company overhead. It takes a lot of money to find and train new employees, and you may consider some of your employees to be irreplaceable. If one of your top employees tells you they are leaving for another position, do you make them a counteroffer?

Counteroffers are Often a Bad Idea

Many companies have a policy of never making counteroffers when an employee announces their intention to leave the organization. These companies say that even if the employee accepts the offer, the organization suffers. According to a recent survey:

  • 80% of respondents claim the employee’s production suffers.
  • 70% of respondents say employees don’t see this as a long-term solution.
  • 50% of employees will leave in two years anyway.
  • Most managers question the employee’s loyalty.

The negatives that result in an accepted counteroffer often outweigh the positives of keeping a valuable employee.

Why Make a Counteroffer?

If counteroffers are counterproductive, why should a company consider them as a method of employee retention? Another survey found that 40 percent of managers would attempt a counteroffer if the employee has skills that are hard to replace. Another 27 percent of managers will make a counteroffer to an employee if they have a long-term relationship with the organization and extensive knowledge about the company.

Valuable skills and company knowledge can be good reasons to try to keep an employee, but before you can decide on a counteroffer, you have to understand why an employee wants to leave.

Why Counteroffers Don’t Work

Many times, counteroffers don’t work because salary isn’t the main reason employees accept another job offer. Usually, people leave the organization for a position that offers more responsibility, job growth or because the opportunity is more in line with their career goals. This means offering to raise an employee’s salary isn’t going to entice the person to stay.

When to Make a Counteroffer

There are times when offering a raise will help retain a top employee. If the individual’s salary is below industry standards, then a job change may be based on better wages.

Counteroffers don’t always have to focus just on salary. If you can offer the employee more responsibility, a different position or benefits more in line with what your competitors are offering, then a counteroffer may keep your employee without hurting productivity.

Before you make a counteroffer to an employee, you need to consider:

  • Why the employee is looking to leave;
  • Will the employee accept the counteroffer;
  • Will making a counteroffer set a bad precedent in the organization;
  • What are the industry standards for the position;
  • What the company would be willing to pay to keep the employee; and
  • If the company afford the increase in salary and benefits;

If the employee is justified in looking for more benefits and better opportunity, and the company can afford to make an offer the worker will accept, then you may want to consider a counteroffer.

If you are looking to fill vacant positions in your company with top candidates, contact Job Store Staffing. We can help you find employees who meet your needs and possess skills that are valuable to your organization.

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